Mark Leibovit's Morning Letter

Good Monday Morning,

Not covered much in the financial press in this country, but this week is a major holiday in China (May 1 to May 7)- the Labor Day holiday, which is one of the three 'Golden Weeks' that Chinese celebrate each year. The others are the Chinese Lunar New Year in February and the National Day holiday during the first week of October. On Tuesday, May 8, one day ahead of the FOMC announcement here in the U.S. the Shanghai market re-opens. In is my view that pent-up demand for stocks could make that one of the biggest up days in recent history. I am, of course, referring to the hot Shanghai Stock Index (herein recommended to our Platinum subscribers). That index after hitting a new low less than two years ago is now up over 270%. Since our markets are now following China, this information is vital to your trading and investing strategy. The play? Buy CAF!

I suspect that with all the talk of a 'Sell May and Go Away' strategy and with the technical tea leaves showing potential downside risk - even the best of us can get fooled as the market explodes yet higher and higher leaving the skeptics in the dust. Of course, this is not a market for the faint of heart and with all dramatic gains you have to be able to withstand the inevitable correction - so don't put all you eggs in one basket.

As you know, next Wednesday's FOMC meeting will be the focus of most analyst comments. It is clear Bernanke (with co-conspirator Paulsen) will do nothing to rock the boat. More than likely rates will remain unchanged. Behind the scenes, however, they have been busy as beavers driving the Dollar lower by opening the floodgates to liquidity and likely intervening with the Plunge Protection Team to give the Dow Industrials an added 'push' now and then to keep the momentum going. It is clear that housing weakness has been a financial and emotional drag on the individual investor and the economy. A balance has to be provided and that balance is the stock market surging to and staying at new highs! It's all very simple. It's called economic engineering!

My first Dow Industrial target of 13,300 has been more or less realized, but that still leaves open 13,600 and 13,800 over the near-term with higher measurements possible. For those watch my interview on PBS' 'The Nightly Business Report' last October (next interview coming up May 25, 2007), you know I predicted the Dow Industrials would see 13,600 in the months ahead. I don't believe anyone on the 'Street' made such a call.

I've been invited back to appear on 'The Nightly Business Report' with my old friend, Paul Kangas, Friday evening, May 25. Unsure whether I will do it via satellite or in person in the Miami studios, but in either event I don't think it will be as exciting as my October appearance at the Nasdaq Market Site in Time Square where I predicted a move

Great Trading,
Mark Leibovit

"TIMER DIGEST has named Mark Leibovit of 'TIMER OF THE YEAR' for 2006 and he currently stands in the #2 Position for 2007!"

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