Sunday, April 23, 2006

Weekly Review (4/17/06 -- 4/21/06)

Before the worries spread cross the market

The good earnings overcame the bad news during this week as I said in last week's review. The Dow ended up 1.9 percent at its second straight six-year high, the S&P gained 1.7 percent and the Nasdaq finished 0.7 percent higher. Meanwhile, both gold and oil reached their new highs this week. Most metal prices reached new highs too.

By reviewing the oil’s numbers, I cannot believe it is a normal market activity. It most likely some giant players jumped into the market, try to stir the market and get benefit of it. If this assumption is true, we would see the oil price will keep its customary to the next new high; if it is not, the oil price should have a mild adjustment.

In either case, the psychological impact to the market would not be trivial. Even with another week of strong earning, the traders will be afraid to push the market another step higher.

The high commodity prices will be represented into the stock market sooner or later. The energy and nature resource related sectors will get benefits from it; the others will be impacted in one way or another.

Mr. Bernanke will have a speech on the coming Thursday. Will he give the market a positive signal? I doubt it!

The possible good new are good earnings and an oil price adjustment. The possible bad news are a lot. I even wonder if any international news will damage the market. In any situation, to play save, not to gamble, I suggest you reduce your position widely except the stocks in the resource related sectors.

I am not optimistic anymore. I think the market will start to slip in the next week.


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