Sunday, May 18, 2008

No Direction

Top Line: The market continues to float up in the clouds. As we sit here and wait, the market wants to extract as much pain as possible. There is some room to go on the upside if it wants to but we still don't think there can be much left.

The evening is again late and we have very little to say. We do have two items for you to read and they are simply to show you where the main stream media has finally come...over to what we have been saying for quite a while. (That should scare us a little...)

The first article comes from Gretchen Morgenson and the New York Times. It centers on how the Fed has entered an area that should not give confidence that the worst is behind us. That is the area of buying less than quality assets in exchange for cash.

The other article gets at what we have said about the consumer and the residential real estate market putting a drag on the full economy. And, while this article doesn't mention the global economy, there is another one that does.

Gold made a nice jump late last week, jumping about $40 in two days. We don't think this amounts to more than a retracement of some of the recent drop. This has corresponded to the jump in oil prices which will find a high in here somewhere. We still think XOM is going to be the best way to watch this develop. This includes the move in gold, which we think will head down again soon. The Dollar had fallen in the last few sessions but we think that is about to turn around, too.

Going back to oil, the government suggested it would stop its current build of the SPR (Strategic Petroleum Reserve) amid criticism that it has caused part of the price rise in oil. Since the government has been purchasing about 40% of our imports, that is not a bad assessment, as we see it.

FSI: 95.60 (mixed bag along with the broad market on Friday)

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