Will the Dow's Gains Suddenly Vanish?

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Markets surged again today despite a second straight day of weak economic data -- specifically, worse-than-expected factory and consumer confidence numbers. Before we answer why the market is contradictorily soaring, let's take a closer look at how the three major indexes are fared and at a couple of stocks making headlines.

Index

Gain / Loss

Gain / Loss %

Ending Value

Dow Jones Industrial Average (INDEX: ^DJI) 115.260.91%12,767.17
Nasdaq (INDEX: ^IXIC) 36.471.29%2,872.80
S&P 500 (INDEX: ^GSPC) 13.741.03%1,342.84

Source: Yahoo! Finance.

We saw strong performances across the board as both the Nasdaq and S&P 500 both gained more than  1%, while the Dow's lagging performance is due to the technology's 0.5% gain lagging all other sectors. Finally, the markets' "fear index," the VIX (INDEX: ^VIX) , declined another 2% on top of yesterday's 10% plunge, its largest move of the month, in what could be the calm before the storm. Finally, technology and energy were the strongest two sectors, showing respective gains of 1.9% and 1.3 %. Of particular note was ATP Oil & Gas (NYS: ATPG) , which surged 30% on news that that the company was suing the U.S. government for $68 million in regard to the gulf moratorium following the Macondo spill. The jump in share price was well in excess of the full award, so this could be a case of investors piling in to high-beta stocks before the Greek elections.


The elephant in the room remains Sunday's critical Greek elections. If the far-left Syriza wins, it could spell trouble for the eurozone. That party's leaders insist they wish to remain on the euro, but they want to rip up the current austerity deal.

Amid all this potential chaos and negative news, why are markets up? Bad news for the economy is good news for investors if the Federal Reserve is forced to undertake another round of quantitative easing. Furthermore, it's rumored that central banks are preparing to prop up the markets should the new Greek government spook investors.

So will the Dow's recent gains suddenly vanish next week? Quite easily, if rumors of central bank intervention turn out to be just that or if the Fed continues flirting with monetary intervention instead of committing to it. While smart investors are greedy when others are fearful, jumping headfirst into this rally could burn short-term investors.

A long-term approach should consider what companies are poised to profit from the upcoming November elections here at home. Fortunately, The Motley Fool has you covered with our new special free report, "These Stocks Could Skyrocket After the 2012 Presidential Election." Each candidate has his own plan for getting America back on track, and The Motley Fool will have you prepared to profit -- no matter who wins! Download your copy now, for free, and discover unique ways to profit from the election -- if you buy the right stocks before the next president's term begins.

At the time this article was published David Williamsonowns shares of ATP Oil & Gas, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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