The market closed up sharply higher on this Friday, extending its winning streak to a fourth straight day. For the week, all three major indexes were higher by about 2%. In fact, the market is now at its best level for the year. It would be difficult to imagine such an ending at the beginning of the week, when the market was sold off sharply due to pullbacks in China. But generally better-than-expected economic news simply put a floor in the market, at least for now. Valuation has certainly gone up a lot compared to a few months ago. However, the stock market remains attractive given that the interest rate is likely to stay at record low for a few more months and future economic news will probably continue to provide upbeating surprises. We got some surprsingly good data from the housing front today. The July existing home sales jumped to a 5.2 million annualized pace. Economists had been looking for a rate around 5 million. The month-over-month increase was a record 7.2%, indicating that the housing market could enjoy some good time in the months ahead. Separately, the Fed Chairman Bernanke said today in a speech "Economic activity appears to be leveling out, both in the United States and abroad, and the prospects for a return to growth in the near term appear good", which is the most optimistic view expressed by the Chairman since the recession kicked off 20 months ago.

All 10 major sectors finished the session higher led by industrial and energy. The CRB commodity index increased 0.9%. The US dollar was lower against most major currencies. Treasuries dropped with the yield curve steepened. The three-month US LIBOR declined 2 bps to 39 bps. The VIX index was little changed. The market breath was positive on both NYSE and Nasdaq. The volume was heavier compared to the previous session because of option expiry related activities.

The market moved higher for the third straight session and is now in the positive territory for the week. Some bulls argue that there is a floor in the market so any pullback will be viewed as an opportunity to load more shares. In my opinion, there is simply not enough news or market participants to move the market either way due to the seasonality. Late summer is usually a quiet period with many big traders taking time off. If there is a floor in the market, it is the fact that the economy will do much better in the third and fourth quarter compared to the first half of this year. China has so far been the best country that recovers from the financial crisis. Many programs that are implemented in China are now being copied by the US government. For example, following a successful "cash for clunkers" program that kicked off last month, the government is going to roll out another program "cash for dishwashers" to boost consumer spendings. In addition, we should always bear in mind that inventory at many retailers is at extremely low level so new orders will show up sooner or later. In fact, today's economic news also reflected that. The Philadelphia Fed Index came in at 4.2 and echoed the New York Empire Index earlier by showing expansion in the manufacturing sector. I won't be surprised to see the national manufacturing index moves back above 50 as early as next month.

All 10 major sectors finished the session higher led by financial and industrial. The CRB commodity index decreased 1.2%. The US dollar was mixed against most major currencies. Treasuries rose with the yield curve steepened. The three-month US LIBOR declined 1 bps to 41 bps. The VIX index dropped more than 1 point. The market breath was positive on both NYSE and Nasdaq. The volume was neutral compared to the previous session.

The market extended yesterday's gain and finished the Wednesday modestly higher. For the second time this week, the major indexes were under pressure ahead of the market open due to shar sell-off occurring in China. But unlike what happened on Monday, the market did move higher throughout the session and closed near the highest level for the session. There is a key difference between the stock market in China and the market in the US. The Chinese A market is mostly driven by liquidity with estimation that some 25% of the 4 trillion RMB stimulus funds flowing into the equity market. When that market started its sell-off two weeks ago, the PE ratio of the Shanghai Composite was well above 30 times of this year's earnings. On the contrary, the US equity market still has net outflows despite recent run-up. And the PE ratio is still under 20 times. Having said that, it is worth paying attention to what's happening in the Chinese equity market because China is probably in the best position to recover from the current Great Recession. A booming equity market there will make consumers feel rich and thus more freely to spend, which will certainly be a plus for multinational companies.

All 10 major sectors finished the session higher led by energy and healthcare. The CRB commodity index increased 1.6%. The US dollar was lower against most major currencies. Treasuries rose with the yield curve steepened. The three-month US LIBOR was unchanged. The VIX index was little changed. The market breath was positive on both NYSE and Nasdaq. The volume was a little heavy comparing to the previous session.

The market closed the session modestly higher. Similar to yesterday, volume was on the light side. We had some disappointing economic news from the housing front today. Housing starts for July unexpectedly fell due mostly to a 13 percent decrease in multifamily units, which include condominiums and apartment buildings. Building permits also fell 1.8% to a 560K annual pace. Separately, PPI fell 0.9% in July and was down 6.8% compared to a year ago.

All 10 major sectors finished the session higher led by basic materials and consumer cyclical. The CRB commodity index increased 1.0%. The US dollar was lower against most major currencies. Treasuries fell with the yield curve steepened. The three-month US LIBOR dropped 1 bps to 42 bps. The VIX index declined over 1 point. The market breath was positive on both NYSE and Nasdaq. The volume was on the light side.

The market dropped sharply in the first trading session of the new week. By close, all three major indexes were off by more than 2%. Ironically, shorts didn't get much chance as the market stayed where it opened for most of the session. The weakness really started in Asia with the Shanghai Composite index tumbling almost 6%, extending its decline from recent peak to over 15%. Investors put much of their hope that recoveries in the emerging markets may lead the global economy out of the current Great Recession. However, even a V-shaped recovery will face some headwinds from time to time and last week's poor consumer data just provided a good excuse for some investors to take profits. Volatility surged today but remained well below where it was last October. We will continue to face some choppy times in the next few sessions but I don't expect a deep pullback due to the simple fact that many professional investors have already anticipated it. It is usually the unexpected that will have the most shocking effect in the market. We had some good economic news from the manufacturing front today. The New York Manufacturing Index rose to the best level since November 2007.

For the week ending on August 14, most major trends remain the same. Both 50-day moving averages and 200-day moving averages continued to trend up. In addition, 50-day MAs are above 200-day MAs. We mentioned a week ago that the market could face some short-term pressure as some major indexes were traded far above their 200-day MAs. Sectorwise, coal, computer makers and commericial banks were among the best performers while paper, department retailer and real estate were among the weakest.

All 10 major sectors finished the session lower led by basic materials and financial. The CRB commodity index declined 1.7%. The US dollar was higher against most major currencies. Treasuries rose with the yield curve flattened. The three-month US LIBOR was unchanged. The VIX index surged more than 3 points. The market breath was negative on both NYSE and Nasdaq. The volume was on the light side.