Beat The Dart -"Picking Stocks the Old-fashioned Way"

With the S&P 500 index still in the comfort zone, the general market is supplying many looks, both long and short. At 1435.04

0.50 nothing of significance occurred to change our view that downside support at 1415 offers enough room to take reasonable risks. Even though the underlying dynamics are negative, the convincing action of the S&P index remains the only game in town. Eventually, the party will end. Hopefully, we'll be prudently positioned to take advantage and remain ahead of a major down curve. ... It is incontestable that our subjective probability model performs the best when chaos reins. For now, allow the exuberance of the equities rally across the world to percolate. Investors are recapture losses of the past month from the dovish noise from the Fed and once again becoming complacent. .... What are the negative dynamics to derail the stock market? Three factors if circumstances cause them to coalesce can derail the stock market. (1) A continuing falling U.S. dollar against international currencies, especially the euro; (2) crude oil prices above $70 per barrel; and (3) a liquidity crisis within the U.S. banking sector prompted by mortgage defaults. Climbing energy costs are directly related to less valuable U.S. dollar to pay for it creates inflation, which in turn forces the Fed to keep interest rates unchanged at 5.25%. When the Fed offered a questionable bone by slightly changing the language that hinted of an interest cut, stocks rallied and presented the banking community with the possibility of more liquidity to support defunct mortgage paper. The financials, which represent 20% of the S&P 500, were the major movers, and how they go, the rest of the market follows. Thus, the stage is set for a critical disappointment. ... Enough for what will happen. For now - you cannot fight the tape. Since a new support as been established at 1415, we have a point to acknowledge and to trade against.

March 22, 2:40pm ... The oil closed above $62.00 a barrel, a direct result to the weakening U.S. dollar. ... 7:30am .... ...The S&P 500 index closed at 1435.04 24.10 and clearly establishes a near-term test of 1461.57. A situation difficult to comprehend considering the level of gyrations during the past month. By keeping interest rates steady and raising the possibility of a cut in the months ahead, the market heard what it wanted. Dartline still believes that the Fed cannot cut rates since a weak currency (U.S. dollar hit a two-year low against the euro and gold rose) would cause acute inflation and destabilize the economy. ... Moving to a "balanced bias" the Fed had signaled no rate increase in the near future, forecasted that inflation should receded over time and that the economy - despite strains from the housing slump and troubles facing lenders and borrowers of risky mortgages - should log reasonable growth over the coming quarters. Yet, the Fed slightly downgraded its assessment of current economic conditions, saying recent barometers "have been mixed." In contract, at its previous meeting in late January, the Fed said recent indicators :"suggested somewhat firmer economic growth." What is the truth? ... Dartline cannot fully buy Bernanke's outlook for moderate growth in the economy this year. Fears about risky mortages, economic slowdowns in international markets are still factors to warrant caution.

March 21, 2007, 2:32pm ...

... The S&P 500 index at 1425.20

14.80 sets the stage to test 1461.57. ... 7:30am ....

.. Within five points to test upside resistance, the S&P 500 index finished at 1410.95

8.88. If the index closes above 1415 today, a new support level would establish an upside trend to challenge the 52 week high of 1461.57. Never fight the tape, and right now, we must go with the flow, even though overall volume is anemic and not conducive for a sustained rally. .... Wall Street was on a wild ride since the Dow plunge more than 400 points exactly three weeks ago on concerns about global financial liquidity and a meltdown in the U.S. subprime mortgage market. But the market had found support since the middle of last week and stocks rallied Monday on news of big mergers and strong performance of overseas markets. Optimism continues with the hope of more liquidity to the market with a rate cut by the Fed. Investors have concluded that the worst of the correction is behind them. Since we projected that the Federal Open Market Committee will leave the rate at 5.25%, the statement that accompanies the decision becomes the main event. For many months, the Fed stressed the need to fight inflation, even as economic data showed that the economy is slowing. Pundits are hoping for a change in sentiment for the Fed to focus on the economic growth and open the door for a rate cut later this year. ... Since the mid and long term prospects of the market are still influx, cash is not trash and to commit with a horizon longer than thirty days would not be prudent. Accordingly, remain defensive, participate in stocks with near-term exit points and take profits.

.. . Purpose of the arrows: - projecting that DJIA, Nasdaq and S&P barometers will close higher at the end of the day. - projected consolidating barometers with limited directional action. - projecting all three barometers declining for the days.

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