Earlier, I blogged about how the Dow was having trouble crossing the 10,000 point barrier. The basic premise was that the recent market rally was not due to fundamentals, but rather due to the market previously being over sold.

Well, a recent article from the AP points out that “Alcoa returns to profit as cost cuts”, which I think supports one of my other thoughts on the rally. Namely, that the recent “good earnings” are not a sign of fundamental growth and profitability but rather due to reducing overhead.

“Painful cost-cutting and rising sales to automakers helped the nation’s largest aluminum producer return to profitability for the first time in nine months.”

This is an essential part of the market healing itself, but you can’t cut your way to growth. Unless the fundamentals change, the recent rally is going to run out of steam, if not head back down for a double dip.

I can’t predict the future, but I think this bears consideration and some caution may be prudent.

Still, there is some good news abroad in all this:

“We do clearly see growth, substantial growth … in China,” Alcoa CEO Klaus Kleinfeld told analysts and reporters after the company reported results. “(The) second half of the year is clearly better than the first half in many industries and many regions.”

• Mutual Fund Share Class Comparison Gets Easier. Investors who own shares of mutual funds are probably familiar with the 3 most common classes of shares: A, B, and C. But recent market conditions have led over 400 mutual funds to eliminate class B shares form their offerings. The reason for the elimination is cost. It simply costs......
• Another Market Crash Coming for 2010? (VIDEO). Stock market analyst Robert Prechter is seeing what he calls "the Biggest Bubble in History", and that's not a good thing for investors. According to The Wall Street Journal, Prechter told the Society of Technical Analysts in London that we are in the midst of a "grand, super-cycle top" and......
• Investing Term Tuesday - January Effect. In honor of just closing the books on January, I thought it might be nice to examine the January Effect. The January Effect is an investing term that refers to a general increase in the stock market during the month of January. This effect is typically attributed to an increase......
• My 401(k) is Over Its Pre-Crash Value! I braved my last 401(k) statement yesterday and lo and behold, what to my wondering eyes should appear but a fully reconstituted 401(k) balance! It got pretty ugly around November of last year, and I quite frankly stopped looking. But that doesn't mean I ignored it completely. I ramped up......
• 3 ETFs for the Bear Market Rally. When bear markets rally, it's often the small caps and technology stocks that lead the way. Here are 3 ETFs that may help you make the most of the current rally. iShares MSCI Emerging Markets ETF (EEM ). The EEM is comprised of 329 stocks from countries that have yet......

• Great Debates: Renting Vs. Buying Ah, one of the biggest Great Debates in the financial field, and perhaps the biggest argument when it comes to housing, period.  Which is more beneficial for your bottom line, buying a home outright or renting and investing the difference?  While the overwhelming majority of advisers maintain that buying is......
• Investing in Emerging Markets: Yes or No? Cynthia Cheng  Many people are talking about investing in emerging markets, countries that are not yet, but soon to be come mature.  If we look at these as human beings, they'd be like teenagers, or perhaps 20-somethings.  But why do we want to invest in emerging markets?  Why not......
• Hard Truth Week in Review - Ray of Market Sunshine Edition This past week demonstrated renewed volatility in the markets but they ended up so I am not complaining.  Now we need some positive indicators in the manufacturing sector so that investors have something to cheer about and to give them confidence.  In my opinion, the most of the recent market......
• How to Profit from Options I've discussed options briefly in the past, as part of my Investing 101 series.  While they can be useful as a way to profit from market movements without owning the underlying stocks, they can get a bit tricky.  To help you understand who profits from different option related situations, let's......
• Money and Emotion Continue to be Poor Companions Do you make financial decisions in moments of panic or other extreme emotion?  Gotta make an offer on that house before interest rates change?  Must buy that shiny red car on the lot today before someone else does?  Buy that dress, bauble, or gadget to boost your mood?  Quickly sell......