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Welcome Back, Kotter



I've finally got the TRS-80 up and working this morning (prediction: personal computers are going to one day be big, very big) so I wanted to get a quick note out on some things I see going on. First of all, inflation seems to be creeping back on everyone's radar screen. Meanwhile, the recent blackout has focused attention on energy infrastructure. Phoenix-area gas stations ran out of gas over the weekend. Elvis died. And my Betamax jammed halfway through the first episode of Roots, which I was taping so I could watch the series premiere of The Love Boat.

Wait a minute! For a moment there I thought we were back in 1977, not 2003. Ok, I did take some "creative" liberties in that opening paragraph. For one, I was only eight years old in 1977 so my parents wouldn't let me watch The Love Boat. Also, I wasn't allowed near the Betamax. (For you youngsters out there, Betamax was a popular video recording machine in 1977 roughly the size of a pool table whose video reproducing qualities can be approximated today by watching television with a tube sock over your head).

Here in 2003, the stock market indicators I follow remain negative for the short and intermediate-term, but positive longer-term, though at high risk levels. The short-term breakout in the Philadelphia Semiconductor Index (SOX) this morning merits respect, but as Toddo has discussed many, many times, the financials hold the key to the market's overall health. I agree with Tony's statement that there is very little reason to do much here until something gives. Meanwhile, there are a number of areas of interest outside of equities that should be watched going forward.

The chart of the dollar has stabilized considerably over the past few weeks and is now showing a more orderly series of higher highs and higher lows. The primary trend for the dollar remains negative and this chart isn't even close to challenging the longer-term downtrend, but the short to intermediate-term trends are positive.

Surprisingly, the chatter over the past few weeks regarding oil prices has been rather muted. The latest U.S. Dept. of Energy forecasts are for oil prices to moderate into the fall and settle below $30 a barrel by 2004. The charts of the futures contracts out to February hold a positive bias, however, suggesting higher prices.

These are not necessarily today's issues, but keep them on your radar. They both have implications for equities down the road. I'll be back with more later.

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No positions in stocks mentioned.

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