May 4, 2010 - If you believe the economic recovery is just beginning, then the sell off on Tuesday was a welcome opportunity. The Dow Jones Industrial Average was down over 200 points. Most of the 30 stocks in the DJIA finished down, some with large dollar losses, ones like Caterpillar off $3.21, Hewlett Packard down $2.05, and DuPont cheaper by $1.51. If you bought those last week, you were hurting, but if you were looking to buy them, opportunity was at the front door.

The U.S. economy is recovering. All the data from manufacturing to housing sales, even employment, show improvement. Car sales were up 25% for most automakers in the month of April compared to last year's April. Factory orders rose 1.3% in March, helped by higher demand for machinery, appliances, and primary metals. Analysts thought the number would be negative .1%. Pending home sales rose a seasonally adjusted 5.3% in March. Analysts thought the number would be 4%. Pending home sales for the year to date are now up 21.1% from a year ago.

The evidence is everywhere: things are improving. Of course, some of that improvement, like home sales to first time buyers, has been helped by the federal government with tax incentives. But there's no denying that auto sales are jumping because real demand is coming back. GM saw sales up by 6.4% in April compared to April of last year. In its remaining core brands (Buick, Cadillac, GMC and Chevrolet) sales were up 19.7% over the same period last year. Breaking out the divisions, Cadillac and Buick sold 36% more cars. Chevy moved 17% more cars and trucks. GMC, the truck unit, improved by 18%.

Ford had the same story. Total sales were up 25%, mostly due to new models like Ford Fusion, Flex and Trasit Connect. Other car makers like Chrysler (up 25%) and Toyota (up 24%) also saw higher demand. Hyundai registered a 30% jump. Total sales for all autos this yearare expected to tally 11.2 million compared to 9.2 million a year ago. The higher the demand, the more cars will be made, the more jobs will be created.

As always, investors face a great deal of conflicting data. Most of the U.S. economic news is starting to look good. Earnings were, for the most part, very strong, with technology registering better than expected gains. There's a reason the stock market has advanced so strongly in the last 9 months: investors believe things are getting better. This latest bad news from Greece is troubling, but with every nation watching closely and the EU working to resolve the problem, most likely it will be contained. Once that is determined, expect this market to continue higher. And use broad sell offs as opportunities to buy companies that reported stellar earnings in the first quarter.

- Ted Allrich