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

Remember our remarks on inflation? Called the "hidden agenda" to keep the international community in-check. Behind all the smoke is the U.S. dollar. The new spin-doctor is Dallas Federal Reverse Robert W. Fisher, who said in a speech Tuesday that inflation remains troublesome for the economy and that an increase in interest rates could be warranted. The Big Lie. Indeed, just the hint of an interest rate hike allows the U.S. to stabilize, and its' working. The U.S. economy cannot afford a weaker dollar going into '07. As noted yesterday, the huge U.S. currency account deficit widened in the third quarter to a record $225.6 billion, as higher oil prices and strong demand for Chinese and other foreign goods pushed imports up. Since the current account is the broadest measure of U.S. trade with the rest of the world, the huge U.S. deficit is viewed as one of major risks to the world economy, along with surpluses in Asian and oil-exporting countries. You have the picture? ... Let's understand the data that "hints" about inflation. The Labor department said Tuesday that the Producer Price Index, a measure of inflation at the wholesale level, jumped 2 percent in November. While an increase had been expected following two months of declines, the rise far outstripped the 0.5 percent increase analysts had been expecting. The core PPI, which excludes often volatile energy and food prices, rose 1.3 percent. Add the Commerce Department's report to the mix that construction of homes and apartments increased 6.7 percent in November, but also that applications for permits to build homes declined for the 10th straight month., and you have inconsistent data as if someone is "cooking the books." ... Don't get confused with the smoky noise. Your focus remains the S&P 500 Index. At 1,425.55 with a gain of 3.07 points or 0.22 percent, the index is doing exactly as predicted. Support remains at 1,410 as near term upside can drive the general market higher. Yesterday's range of 1414.88 - 1428.30 is our comfort zone. Technical resistance is Friday's intraday high at 1431.63. As the market churns, any new long side commitment should be carefully considered, while weeding out stocks with questionable forward earnings.

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