Sunday, April 16, 2006

Oil Back at $70

The stock market starts off the week with a bit of a head wind even thought the overnight futures are showing no sign of fatigue.  The price of oil in Asian trading touched $70 which should be sending chills down the Fed fearing market.  The Fed needs to rein in inflation and if oil continues to go up, maybe raising interest rates will help.  Such is the twisted logic of the market.  

In reality, last week was a bit of a down market but not too much.  The market has lost momentum and spent most of the week getting oversold.  Ideally, Monday will bring a rally that gets sold, again.  At this point, May is approaching and there should be ample reason to turn this market over and start digging into last fall’s rally.  And, then we may want to start digging into the rally of the past couple of years while we’re at it.  

We do expect the market to be trading much lower by the fall of 2006.  Right now, we are basically just waiting for the market to move prices in the same direction as the momentum.  Mid-week last week, the Dow bounced off its 50 day SMA and now is trying to decide whether it wants to break through it on the downside.  Meanwhile, the NASDAQ Comp ran up through its January high near 2330 and spent a few days in that rarified air before coming back down.  Now, it is sitting at 2326 after being down near 2300 on Wednesday and thinking about that 2330 line again.  By all counts, this week should be a good week for us to see what the market wants to do.  

Be careful out there…

Dow Industrials:  11,137.65  +7.68
RYVNX:   18.16
RYAIX:  21.76
TLT:  84.44
BEGBX:  12.85

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