Dow Watch: Too Far, Too Fast?

(At 4:31 p.m. EDT)

The Dow's three-day winning streak this week has been an impressive one, good for a massive gain of 469 points, or 5.7%. The win marks the best three-day performance since April 2, and Wednesday's point gain alone was the fifth biggest in 2009 and the best since March 23.

Of course, such a rally always leads to some worry about where the market will head next, with many firmly expecting some sort of retrenchment. Paul Nolte, director of investments with Hinsdale Associates, called this week a sea change in sentiment, although not a lot has changed from the market's perspective.

"We've gotten a lot of good news, but we're still in a trading range, and the rally hasn't come on tremendous volume," Nolte said. "We're getting rotation in the market, and it's coming pretty quick. But the overall averages haven't gone really far since May. We're still stuck in a trading range. We got a lot of good news, but without the volume behind the rally, it makes it tough to say it's going to last."

That may sound pretty pessimistic, but Nolte backs up his assertion by noting that commentary from Dow companies like Intel ( INTC)and Johnson & Johnson ( JNJ) isn't all that positive.

"The top line isn't going anywhere for these companies," he said. "The whole reason they're doing OK is because they're cutting expenses. The commentary is not that great when they talk about the consumer. I think investors are extrapolating too much from what we've seen so far.

"In short, yeah, we've come too far, too fast," Nolte added.

Of course, it will be interesting to see how investors view JPMorgan Chase's ( JPM) latest earnings report, due out early Thursday. The stock rose 4.5% Wednesday and has jumped 12.1% this week after Goldman Sach's ( GS) stellar quarterly report.

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