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Bitar's Weekly Market Letter
The most comprehensive stock market letter, fundamentally and
technically, all in one page.
22 Apr 2006
Fundamentally, these are the things to focus on: Differentiating the news from the noise. (A Wall Street wisdom).
 | The price of crude oil rose $15 in one month and closed at $75.17 per barrel on Iran's nuke tensions,
Nigeria's militants and a technical difficulty in delivery to gas stations
by trucks instead of pipelines due to the switch the Summer type of
gasoline. |
| The Q1 earnings reports are coming much better than expected. With 144 companies reporting so far, 100
beat Wall St. estimates and 27 missed. |
| The Philly Fed manufacturing index rose to 13.2 in April from 12.3 in March and the employment index
rose to 21.7- the highest since Sept. '04. The jobless claims, in the
meantime, are holding near the low 300,000 level. |
| The consumer price index (CPI) rose 0.4% in March. The core CPI, which excludes food and energy,
rose 0.3%- the biggest monthly gain in a year. The producer price index (PPI),
however, rose a tame 0.1%. |
| The minutes from the March 28 FOMC meeting - the first under Bernanke
- stated that " the end of the
tightening process was likely to be near". It also expressed concerns
about " tightening too much". The market responded to this news by jumping
close to 200 points in the Dow. |
Technically, these are the things to focus on : A picture is worth a thousand words. ( A
Chinese wisdom).
| The market jumped sharply this week on increased volume (see NYSE index chart- circles 1 & 2). |
| It did that despite a contentious rise in crude oil prices (see crude oil chart- circle 1). |
| The U.S. dollar, in the meantime, continued to decline ( see U.S. dollar chart- circle 1). |
The Bitar Advisor Market Perspective:
In previous letters I stated that
the apparent decline in the U.S. dollar is foretelling the near end of the
Fed's tightening cycle. Voila... The FOMC meeting on March 28 - the first
under Bernanke- confirmed this prediction. Chairman Bernanke, seems to be
steering away from Greenspan's blunder when he took charge in 1987. The
stock market responded positively when the minutes were released this
week. Baring any major disruption of the flow of oil from the Middle
East, the market seems to be handling this gradual increase in oil prices
well. Although those prices rose sharply over the last two weeks yet the
market also rose at the same time. (see NYSE & crude oil charts).
Sam Bitar
www.bitaradvisor.com
email: icbitar@verizon.net
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