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George Chamberlin's Money in the Morning

The rally of 2013 picked up momentum on Friday, taking the Dow Industrials to within 1 percent of the all-time high set back in October 2007. The blue chip index has been up for five consecutive weeks -- every week so far in the year. During that time, the Dow has gained nearly 7 percent and is up 114 percent from the bear market low of 6,547 set on March 9, 2009. Of course, the financial media has given little attention to the rally and instead is focusing on how big the correction will be when people realize this is a pseudo rally. The bearish reporting of the rally simply means most economists, analysts, newsletter writers and, of course, business reporters have missed the entire rally and are doing their level best to talk it down.

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An interesting article in Barron's this weekend analyzed the performance of the individual stocks in the Dow Industrials since the high of Oct. 9, 2007. Turns out the best performing stock in the index has been Home Depot, up 98 percent. That performance, of course, is counterintuitive, as the housing market was in a slide during most of period. The worst performing stock was Bank of America.

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So, is January really a good indicator for what the stock market will do the rest of the year? The January Barometer, according to the Stock Trader's Almanac, finds that since 1945, whenever the S&P 500 gained in January, it continued to rise an average of 11.2 percent during the remaining 11 months of the year, which is substantially higher than the average 7.1 percent price gain for all 11 month periods since World War II.
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The markets got a big boost from the employment report issued on Friday that showed a decent increase in payrolls during January -- up 157,000 -- and substantial revisions in the November and December reports. In addition, there was an increase in the University of Michigan's consumer sentiment index, as well as a series of reports showing auto sales in January hit 1.1 million vehicles, up 15 percent over the same month a gear ago. Ford reported sales were up 21.8 percent and registered the best January since 2006. An industry report also showed prices were up about $1,000 a vehicle for cars and trucks sold last month compared to January 2012.
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There's not a lot on this week's economic news calendar. There are, however, quite a few IPOs on the schedule including a company based in Vista. AutoGenomics, which develops molecular diagnostics systems, is scheduled to raise $65 million through its stock offering. The company had attempted to go public last year but pulled back the IPO because of market conditions. The shares are to be priced between $9 and $11 a share. The trading symbol will be AGMX.
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Well, the Super Bowl lived up to expectations. I'm talking about the various economic indicators used to predict the outcome of the big game. For instance, one study found the city with the lowest unemployment rate has won the game in 20 of the past 25 years. This time around the unemployment rate in Baltimore was 7.2 percent compared to 8.2 percent in San Francisco. And, a study by real estate firm Jones Lang LaSalle found the city with the higher office vacancy rate takes home the Lombardi Trophy. Turns out the vacancy rate in Baltimore is 15.5 percent compared to just 11.8 percent in San Francisco. So, the win goes again to Baltimore.
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I will be buying lunch for Carlos Rico, one of the fine reporters here at The Daily Transcript, because of a modest bet we made for the game. I was pulling for the Niners to win and was disappointed by the really bad decisions made by coach Jim Harbaugh. Why he called three pass plays in the final drive of the game inside the 10-yard line when the running game was working and the Raven defensive line was exhausted, I will never understand. Oh well.

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By the way, while Baltimore fans will be celebrating the victory with a parade, folks in San Francisco will be getting free Jell-O pudding. Most people probably missed the hilarious spot in the post-game show beginning with the announcer saying, "Congratulations, San Francisco, you might not be getting a trophy but you'll be getting a cup of Jell-O Pudding. Because nothing masks the bitter taste of defeat like the sweet taste of Jell-O." Free cups of pudding will be handed out around the city tomorrow after a downtown ceremony featuring former Niner star Ronnie Lott.

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