Rally Extends

The Dow Jones is back above the 7,000 level and the rally that began last week is extending into this week. The S & P index rose more than 10 percent last week and today marks the sixth straight day of upside. While it may be tempting to jump back into the market all at once, I suggest investing in small increments. We will most likely see a correction to the 6,500 level before we move up again. The fundamentals of the economy have not changed, which is why this rally seems overextended. Build a list of companies you like and invest in each cautiously.

To hedge against the risk of the market reversing itself, purchase gold. Gold around $900 is cheap considering its demand in this market as a safe-haven. All of the measure being taken by the government in addition to the very low interest rates will eventually start to have an effect on the market and create a slightly inflationary environment in which both gold and oil should benefit. ETF's such as GLD and OIL are the best ways to track and invest in the performance of these commodities.