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

The S&P 500 index will start at 1436.11 and within the trading channel to sustain further moderate action without any major movement on either direction. Since 1415 remains near-term support there's sufficient room to continue an aggressive stance, both long and short. .... The market is showing signs of volatility as investors are optimistic that a rate cut down the road would encourage consumer spending. The "value" day this week will be Thursday when the Commerce Department issues its final measure of fourth-quarter GDP. The Street is forecasting 2.2 percent growth, in line with government's previous estimate. If the GDP is revised lower, worries would rise that core inflation - which rose 2.3 percent for the 12 months ending January, above the Fed's 1 percent to 2 percent comfort zone - is outpacing GDP growth by too much, and that the Fed might lean toward a rate hike later in the year after all to curb rising costs. Add in Friday's report on personal income and spending for February, if income and spending don't rise to 0.3 percent, the market may interpret an economic contraction. As you can determine, it's a coin flip. For now - you cannot fight the tape. Since a near-term support was established at 1415, you have a point to acknowledge and to trade against.

March 23, 2007, 7:30am ....

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.

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.

.. . 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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