The Dow shook off a -160 point loss at Friday's open that was caused by worries over China, negative earnings guidance and a realization that the Greece problem had not been solved.

Market Statistics

The markets started off very negative on Friday after China raised the level of reserves banks must hold by +0.5% for the second time in 2010. This spooked the financial markets and sent commodities crashing on worries that China was really going to slow growth. The move by China ahead of their week long New Year celebration that starts on Saturday is another attempt to slow the loan activity level, which had started off the year with a sharp increase in loans.

Banks in China loaned 1.39 trillion yuan in January for the third largest monthly total on record. That compares to a record of 9.6 trillion in loans for all of 2009. The hike in the reserve requirement surprised some analysts because earlier this week the inflation numbers came in at only 1.5% and a level that should have kept the central bank on hold. The new reserve requirements mean that banks will have to keep 16.5% of their assets in reserve at the central bank. The 50 basis point hike will remove about 300 billion yuan from circulation.

Raising the reserve rates is a favorite method for China to remove liquidity. They raised reserve rates about nine times in 2007 and the discount rate six times. The central bank is expected to raise interest rates in Q2 and again in Q3. The central bank pretty much confirmed it would begin a series of tightening steps over the coming months when it promised to normalize monetary conditions. Analysts worry that China might be moving too quickly to slow growth and could end up slowing the global recovery.

The market was also weak after the EU nations offered Greece support but no money. The 16 countries that use the euro currency said only that "we will take determined and coordinated action, if needed, to safeguard financial stability in the euro as a whole." EU leaders said they would seek advice from the International Monetary Fund (IMF) after an assessment is due in March. Greece still needs to borrow 54 billion euros ($75 billion) to fund its 2010 budget. With the EU leaders offering only moral support the odds of borrowing money at a reasonable rate are falling.

Remember the rumor earlier last week about a German led bailout of Greece? Well, German officials are trying very hard to put that rumor to rest saying, "we won't let Greece be alone but there are rules and they have to be respected." That was seen as a "tough love" message to not expect anything from Germany.

Greek Prime Minister George Papandreou has promised to cut the deficit to 8.7% of GDP in 2010 from 12.7% in 2009 and the highest in the EU. Markets doubt he can do it because cuts of that magnitude would produce severe civilian unrest. Unions have already shutdown schools, airports and hospitals over the last several days to protest the austerity measures and a major 500,000-worker strike is scheduled for Feb-24th.

The Euro had rallied on Tuesday on the optimistic rumor of the German bailout. It crashed back to a new eight-month low on Friday at 135.25 to the dollar. On Friday Greece revised its GDP numbers lower for the last nine months meaning the debt to GDP numbers could be even higher than previously estimated. The European Commission immediately asked for the power to audit the Greek numbers in light of the 40 billion in debt the country hid in published documents last year. The commission wants to be sure there are no more cockroaches in the cupboard that Greece failed to disclose.

Chart of the Euro

The Q4 GDP for the entire Eurozone rose only +0.1% after a +0.4% rise in Q3. For the entire year the Eurozone GDP fell by -4.0%. Germany, the biggest economy in the group, registered zero GDP growth in Q4 while Italy and Spain saw their GDP shrink. According to Eurostat, the statistical office of the EU, Greece's economy shrank -0.8% in Q4. Eurostat also said industrial production in the zone fell by -1.7% in December. Germany's statistical office said the country's recovery lost momentum at the end of 2009.

The outlook for the Eurozone is not good. Albert Edwards, a strategist at Societe General, said the Southern European countries are trapped in an over valued currency and suffocated by low competitiveness, a condition that will eventually breakup the euro bloc. "Any help given Greece merely delays the inevitable breakup of the Eurozone."

It was comments like those that started our markets off on the wrong foot on Friday. Problems in U.S. economics also helped push equities lower. The Consumer Sentiment for February fell to 73.7 from the yearly high of 74.4 in January. Survey respondents expected high unemployment to continue and most expected no gains in home values or income for the year ahead. The current conditions component rose sharply to 84.1 from 81.1. However, the expectations component fell sharply to 66.9 from 70.1 and well below the analyst expectations for a gain to 71. The 12-month outlook dropped to 79 from 84. Falling consumer confidence means consumers are going to continue being cautious with their spending.

Consumer Sentiment Chart

Business Inventories for December declined by -0.2% from +0.4% in November. The drop was opposite of an expected gain of +0.2%. The drop in inventories after two months of gains suggests there is the potential for a strong replenishment cycle over the coming months.

Business Inventories

The economic calendar for next week is fairly busy and there are a couple earnings reports that will attract attention. Monday is President's Day and a holiday in the markets. There are no reports on Monday and some of the normal weekly reports have been pushed back a day.

The price indexes would normally be of importance but since there is no inflation in sight they should be ignored by the market, unless of course inflation suddenly appears in one of the reports. The Philly Fed survey is the next most important with a look at the manufacturing conditions in the Fed's Philadelphia region.

Probably the most important is the FOMC minutes for the January meeting. With China trying to slow down growth the market is going to expect the Fed to make changes soon. Bernanke's submitted testimony last week also suggested the Fed was going to take away the punch bowl soon. The minutes from the meeting tell analysts how far along in this process the FOMC was in late January. Thomas Hoenig voted against the last statement and favored a change in the "extended period" clause. However, Bernanke used the exact same extended period language in his prepared testimony submitted to the House Financial Services Committee on Wednesday. I do not expect the FOMC minutes to tell us anything we do not already know but it is always a volatile release.

Economic Calendar

The important earnings next week are Hewlett Packard, Dell, Wal-Mart, PriceLine and Kraft. These are important because they are influenced by consumer spending trends. The consumer is the important part of this recovery and with plenty of cautious guidance from other earnings reporters these will be watched to see if they say something different. Wal-Mart is the largest consumer outlet in the U.S. and what they say will matter.

PriceLine is important because of vacations and business travel. We will be able to tell if travel trends are slowing or accelerating. Dell and Hewlett Packard are an after thought to the PC earnings reports we have already seen but they both serve consumers and businesses.

These will be the last of the big cap majors to report for Q4. After this week the Q4 cycle is officially over although there will still be some stragglers every week. We are only couple weeks away from the start of the Q1 earnings cycle with mid quarter updates and about four weeks from the warnings/guidance period. We are officially half way though Q1 and analysts are busy updating their estimates for Q1 and the full year. Every day that passes now there is a flurry of upgrades/downgrades based on the sector earnings from Q4.

Ingersoll Rand (IR) was the latest Q4 reporter to really stink up the market. IR said sales fell -9.9% and more than analysts had expected. Their competitor United Technology reported a similar 13.5% drop in sales for Q4. IR warned that construction activity remained weak and that was dragging down sales of commercial heating and cooling equipment. The IR CEO warned "We expect challenging U.S. and European construction markets for most of the year and North American commercial markets to decline through the first quarter." On the conference call the CFO said U.S. supermarket chains had cut back on capital spending and weakened demand for refrigerated cases and air conditioning systems. IR reported profits of 48-cents that were below the analyst estimates of 53-cents. IR shares lost 8% on Friday.

Ingersol Rand Chart

Buffalo Wild Wings (BWLD) reported earnings that rose +8% but missed street estimates and Wings crashed and burned. Revenue increased +19.6% but same store sales rose only +2.6%. For a specialty store like BWLD the same store numbers are key. Once the public tires of your menu it becomes very tough to keep posting gains. A company can post overall revenue increases as long as they keep opening stores as we have seen from SBUX, PNRA, KKD, etc. Once they quit opening new stores the comparisons become extremely difficult. Customers tend to burn out on the same specialty menu and begin to stray. If BWLD breaks support at $40 I would start wondering if the Buffalo sauce is starting to lose its addictive appeal.

Buffalo Wild Wings Chart

Not every specialty restaurateur is doomed but it takes a special talent to keep the shoppers coming back year after year. The Cheesecake Factory (CAKE) reported a breakeven quarter but gained +4% on Friday on a marginal increase in revenue and sharp rise in operating margins. The stock is up +145% over the last year so somebody likes mango surprise ice tea. Personally, as somebody raised in the south on real ice tea, I would rather go hungry than eat at CAKE so they are not making those profits from me.

Panera (PNRA) also posted gains on Friday after Q4 profits rose +14% and revenue grew by 2.6%. I though when they had declined to $30 from $76 in 2008 they were going to follow KKD down the tubes but they got their act together and are back at $74 today. I like Panera as a restaurant and a stock given their rebirth and apparent return to profits.

Chipolte Mexican Grill (CMG) was the big fast food winner on Friday with a +3.75 gain to nearly $105. CMG saw its net income rise +86% to $389 million and earnings per share spiked 90% to 99 cents. Obviously that would be a lot of extra burritos to manage that kind of growth. It was not a secret ingredient in the tacos but some book cooking that produced the results. They bought back a ton of shares during the quarter so earnings per remaining share skyrocketed. Still, they must be soaking their beans in a highly addictive solution because they have $270 million in cash and only $3.9 million in debt. Whatever they are doing it has proved to be the right menu for investors with a 97% gain over the last year to close at a new two-year high on Friday at $104.

Chipolte Mexican Chart

Dow component 3M (MMM) lost a buck after Bank America downgraded them to underperform and predicted slow growth during the second half of 2010. 3M joined UTX and Boeing as the biggest losers on the Dow for Friday.

Alcoa and other materials and commodity stocks fell sharply on worries that China's attempt to slow growth would also slow the global recovery and demand for commodities.

Crude prices fell from nearly $76 on Thursday to $72.66 on Friday on the China demand worries and on a rise in inventory levels on the EIA report. The normal Wednesday report was delayed until Friday because of the snow in Washington. The EIA said crude inventory levels rose by 2.4 million barrels in the prior week. This was far less than the API report on Tuesday, which said inventories rose by 7.2 million barrels. The reports rarely agree but over the long term they always report the same thing. Each are produced from different records with a different cutoff. Note in the chart below the difference between reports but they always return to the same levels.

EIA - API Comparison Chart

The API is reporting crude levels at 337.6 million barrels and the EIA at 331.4 mb. Which one will turn out to be correct? Using the EIA numbers crude levels are -5.5% below February 2009 levels.

Gasoline inventories rose by 2.3 million barrels to 5.9% above year ago levels. Refinery utilization spiked sharply to 79.1% from 77.7% in the prior week. Utilization should remain under 80% until the spring maintenance period is over. Crude prices normally bottom around President's Day and then begin their climb as summer gasoline production increases. They normally top out in July/August once it is clear there will be enough inventory of oil and refined products to survive disruptions from the hurricane season.

The price of oil was also hit by the sharp rise in the dollar on Friday as a Greek bailout became less clear. The dollar is poised to break above 80.50 on the dollar index if comments out of the EU Finance Minister meeting on Monday/Tuesday do not assure traders Greece will not be a problem. Crude futures expire on the 22nd so there could be some serious volatility next week.

Crude Oil Chart

Everybody is worried about a Greek debt default and nobody was paying attention to the U.S. bond auction last week. On Wednesday the U.S. sold $16 billion in 30-year Treasuries. Maybe I should say, they auctioned $16 billion instead of sold. There are three types of bidders in a Treasury auction. Direct bidders buy direct from the Treasury Dept and consist of entities like the FED or a U.S. government agency or GSE.

Indirect bidders buy through one of the 18 primary dealers authorized to handle transactions. Indirect buyers are normally foreign governments or central banks. The primary dealers also buy for resale. Primary dealers have to bid on the securities offered in order to make sure the auction does not fail. If they are forced to purchase some debt they have to resell it, sometimes at a discount to free up their capital. Think of them as inventory purchasers of last resort. When nobody else bids the primary dealers have to step up. You don't want to see a lot of primary dealer purchases because it means there were not enough bids.

In Wednesday's auction of 30-year Treasuries the primary dealers bought 47%, indirect buyers 28% and direct buyers 24%. That was a record percentage for direct buyers. There are no records of who those direct buyers are. These are the equivalent of mystery bidders. This could be the Fed or other government entities buying to support the auction and give the illusion of sufficient bidding. From post auction documents we know that the Fed itself did buy 11% of the debt. The indirect buyers at 28% was a sharp decline from the 39.9% average. Indirect buyers are normally foreign governments. That is a troubling drop in purchases by entities that have supported us in the past.

I have been warning you for months that the U.S. was eventually going to have a failed auction that will collapse the house of cards and Wednesday's auction was a warning that we are getting closer.

Another past problem returned on Friday to plague investors. The credit default swaps on Dubai debt spiked to 630 basis points and within 4 points of the November high when the potential default was first announced. This suggests something is happening that has not yet hit the news.

Dubai CDS Chart

Dubai World, owned by Dubai, has debts of more than $60 billion. A Dubai World subsidiary, Nakheel, has billions in property developments and construction on many projects were halted when the recession hit. Without any completions it was impossible for Nakheel to pay off the construction loans when they came due. One loan was in the form of a sukuk or Islamic Bond for $3.52 billion. Abu Dhabi loaned Dubai $10 billion. Of that amount $4.1 billion was used to pay off Nakheel's sukuk and the rest of the money went to pay Dubai World's obligations through April 30th. Over 100 banks are in discussions with Dubai World on the $60 billion it still owes. From the rate of climb on the CDS it would appear the discussions are not going well. This will continue to roil the markets if the problems are not resolved and a new debt crisis is imminent.

On the local front Berkhire B Shares were added to the S&P-500 at Friday's close. BRK.B shares traded 23 million shares on Thursday. On Friday they traded 316 million shares and most of it was order on close buying. That volume means $24.3 billion in Berkshire B shares changed hands on Friday. That has got to be an all time record for market cap traded in one day. Buffet always said he did not want to split his stock because small share prices caused speculative trading while large share prices attracted long term investors.

Buffett had to agree to the 50:1 split in order to complete the Burlington Northern acquisition and avoid a taxable event for BNI shareholders. Buffet had to agree to liquefy his stock as part of the deal with BNI. Shareholders of BNI received $15.87 billion in cash, 80,932 Class A shares and 21 million class B shares. Berkshire became eligible for inclusion in the S&P when they split the stock because it met the liquidity rules for S&P. Since BNI was leaving the S&P it made sense to replace BNI with Berkshire.

Index fund managers buying $24 billion in Berkshire shares on Friday had to sell $24 billion of the other 499 stocks in the S&P. I believe that has been a hidden reason for some of the negativity in the market over the last couple days. $24 billion is a lot of selling even when it is spread over 499 stocks. The next big milestone is the potential inclusion of BRK.B shares in the Russell indexes in June. With their new liquidity they would now qualify.

However, the Russell board has said they view Berkshire as a mutual fund of sorts. Berkshire owns 80+ companies, some of which are still traded and exist in the Russell Indexes. Russell does not put funds in their indexes. This is one more hurdle that Buffet may not be able to cross. The Russell indexes have over $4 trillion in fund investments benchmarked to them worldwide. An inclusion into the Russell would produce another huge round of buying.

When I started writing this commentary on Friday night I was still bearish. By the time I finished on Saturday morning I had changed to borderline bullish. As I research and write each topic I look at charts on each stock mentioned plus several hundred more that never make it into the commentary. Each commentary starts out with a central theme but that theme becomes diffused as each story thread unravels into a dozen sub-threads that are followed to see if there is an underlying relevance or a hidden reason for what happened to the story in that market day.

In my travels this weekend I saw a hundred charts that looked something like the SanDisk and Southern Copper charts below. Rising wedges and rounded double bottoms were everywhere. James and I have a market direction discussion late every Friday night. I pointed out my observations and he correctly reminded me that each one was actually just a bear market bounce until the overhead resistance actually broke.

SanDisk Chart

Southern Copper Chart

I tend to be early on turning point calls and I have paid dearly for that in the past. I have also been on the money and was rewarded handsomely. In considering the outlook for this week I kept coming back to two nagging points. The first is that there is no real reason to buy stocks right now with an entire list of negative points that I won't bother repeating here. Any one of them could tank our markets for several weeks without any warning.

The second point is the reverse of the first one. The market is fully aware of those pending problems and has failed to complete the sell off that started on January 20th. We are roughly four weeks into a decline and we quit declining. The last week the markets posted a gain was the week ended on Jan-8th. There were higher highs in the week ending on the 15th but the Thr/Fri decline took us negative for the week and that loss stretched for four weeks. This was the first week in five that the markets posted gains. They did it with negative economics, dozens of earnings misses and lower guidance, multiple sovereign debt problems, geopolitical concerns in Iran, etc. When the bad news bulls use these bullet points as stepping-stones it is time to pay attention for a possible change in market sentiment.

In the opening graphic you may have noticed I highlighted the Russell 2K, Dow Transports and the Semiconductor Index. All three are considered road signs for market health. If small caps are rising, mutual fund managers are confident the worst is over. If transports are climbing, investors are supposed to be confident about the economic future. Chip stocks are supposed to lead tech stocks out of any market weakness. All three indexes were top performers last week. The energy sector and oil services were also strong on renewed demand expectations prior to China's move on Friday.

A negative factor continues to be the financials. The banking sector was the only sector to post a loss last week. The prospect of debt defaults, new regulation and new taxes on banks is proving to be a strong headwind. Dow Jones reported that the largest U.S. banks have $176 billion in exposure to the four weakest European countries. According to Barclays Capital, 73 banks have $82 billion in exposure to Ireland, $68 billion to Spain, $18 billion to Greece and $8 billion to Portugal. Barclays said the actual risk was limited because the majority of the loans were low-risk collateralized transactions. JP Morgan has $18 billion exposure to Spain while Bank of New York has $2.32 billion exposure to Ireland.

Also weighing on the banks was a warning by Elizabeth Warren, the Chairman of the TARP oversight committee. She warned on Thursday that commercial real estate loans have the potential to wreck the U.S. economy unless regulators prepare now for the coming onslaught of defaults. The report said between 2010-2014 about $1.4 trillion in commercial real estate loans will reach the end of their terms and nearly half are currently underwater. If economic conditions and tighter lending standards mean that borrowers can't refinance, "hundreds" of banks could fail and the economy would suffer. The panel unanimously approved the report.

Warren told reporters on a conference call "There is a serious problem coming and it will hit an already weakened financial system." Small and midsized banks are going to bear the brunt of these loans. The panel found that nearly 3,000 banks have concentrations in commercial real estate loans, including 2,115 banks with only $100 million to $1 billion in total assets. The panel recommends more capital injections for small banks or another government fund to guarantee loans held by smaller banks as well as extending the TALF due to expire this year. The panel also said many small banks should be allowed to fail. "The panel is clear that government cannot and should not keep every bank afloat. Neither should it turn a blind eye to the dangers of unnecessary bank failures and the impact on communities."

I believe it will be hard for the markets to rally far with this cloud hanging over the economy. Unfortunately this is a long-term problem that can't be solved over the next several months. I am not sure investors are focused on the coming problem even though much has been written about it over the last year. I have touched on it a dozen times but it is kind of like peak oil. If you can't see it today and it is not impacting your wallet today then it is out of sight and out of mind.

The banking sector is trading sideways today because of the short-term problems. However, the farther we get into 2010 the closer the long-term problems will become. I believe investors are starting to be concerned even though they don't really understand all the problems.

For the market this is a cancer eating away at the foundations. The broader markets rarely rally for more than a few days if financials are not a part of the rally. In humans, cancers are not always evident on the surface and take a long time to grow into a problem large enough to be recognized and treated. Normally by the time that happens the treatment is far from pleasant and in some cases the cure is worse than the disease.

I believe the broader market wants to rally. Investors have shaken off negative events one after the other and they believe that all the bad news is priced in. Unfortunately I also believe the average investor really does not understand the implications of the current list of problems. They are just tired of hearing about them and they want to get on with the recovery. Traders are longing for the instant gratification of a V bottom recovery and they are ignoring the long-term implications of the worst recession in 80 years.

In the back of their mind they know the U6 unemployment is 17% or roughly 25 million Americans. They know it will take 2-3 years for jobs to return to normal even if we had a robust recovery underway. They know real estate prices could take years to recover. They know there are four million projected foreclosures in 2010. They know the option ARM reset in 2010-2011 is going to add another wave of housing problems. I could go on but you get the picture.

Instead of worrying about all the problems they look impatiently at Apple at $200 and wonder why it is not breaking out to new highs. They see Google flat lining a $530 and wonder why it is still trading $100 off its highs. Why is Goldman Sachs stuck at $150? They paid back the TARP, slashed their bonuses and have no exposure to sovereign debt or hometown commercial real estate. Everyone wants the instant gratification of a rally even when there is no justification for a rising market.

This is why I think the markets are refusing to go down any further. Is it enough to produce a lasting rally, I don't know? It seems like every day that passes brings some new problem that causes some volatility but the impact is temporary. Investors have a short memory and an even shorter amount of patience.

We are still in the "why buy" period between Q4 and Q1 earnings. Despite the early January rally domestic stock funds saw net inflows of only $2.7 billion for the entire month. There were heavy inflows early in the month but also heavy outflows late in the month. International equity funds took in $8.1 billion and the biggest inflows since December 2007. Bond funds were still the big winners with inflows of $28 billion.

Equity ETFs saw $16.7 billion withdrawn in January. That was a 4.8% drop from the December levels. The SPDR SPY ETF had $15.1 billion in outflows. All this data came from Morningstar on Friday.

What does it say for the health of the overall market when there was 10 times the amount of money put into bond funds than equity funds in January? That would appear to me that more than a few investors are worried about the direction of equities.

So where does all this conflicting information leave me this weekend? I think it is the classic confusion of human emotions. The charts look like they want to break through resistance and rally because our emotional bias is normally bullish. I want Goldman to break over the 200-day at $162 so I can buy the breakout but that is an emotional bias not a technical bias. I want SanDisk to break over the wedge resistance at $27 so I see it through my rose-colored chart reading glasses as about to happen. I want to switch to a bullish bias so I see potential bullish breakouts everywhere I look. If I had a bearish bias I would see a potential failure at resistance in every chart.

In times like these we seize on the points that fit our bias and ignore the points that conflict. I like the strong performance of the Russell, Transports and Semiconductors. Unfortunately they don't make up the entire market. They are leading indicators not hard confirmation of a reversal. For next week and probably the next several weeks we need to remain patient and let the market show us where it is going rather than try to pick a path for it. There is always time for an entry. We don't always have to be first in line.

Volume over the last three days has been flat at eight billion shares per day. Actually this was the first Thr/Fri in four weeks that did not see volume spike to 12 billion shares each day. Why? Is the selling over or was the news too confusing? Since it was Friday before expiration and before a long weekend you would have expected a substantial increase in volume. Given the rebound from -160 on the Dow I was actually shocked to see a volume of only 8 billion shares. Normally a strong rebound produces strong volume. That would suggest there were not as many shorts as in the prior weeks. There were fewer positions to be stopped out.

The Dow rallied back from the prior Friday dip to 9835 and settled into a 100-point range from 10,000-10,100. I told you on Tuesday I would still be cautious until the Dow moved back over 10,300 and we are not even close. Initial support is 10,000 and we are nearer to support than resistance making the Dow chart neutral to slightly bearish for direction but we do have four consecutive days of higher lows.

Dow Chart

The S&P-500 remains stuck below initial resistance at 1080 and well below strong resistance at 1100. The range narrowed as the week progressed and the S&P could be coiling for an option expiration breakout or the potential to be pinned to 1080 on expiration. Actually the max-pain strike is 1100. ($110 for the SPY) The difference in open interest between 1090-1110 was negligible so anywhere in that range would equate to the most options expiring worthless. If you move outside that 20-point range there are far more open interest in put options with strikes below 1080 than call options above 1120. This should provide a positive bias of sorts as we near expiration. Of course the impact of options at expiration is only material if there are no other news events slapping the market around.

S&P-500 Chart

The Nasdaq is being led higher by the chip sector and is approaching the resistance at 2195. The corresponding max pain point would be 2225 as calculated by using the option open interest on the QQQQ. Both 2195 and 2225 are strong resistance so a continued tech rally would have to clear both levels to confirm. Hewlett Packard and Dell both report next week and HPQ has a chance at moving the needle on the Nasdaq. Dell is no longer a major Nasdaq mover but their analysis of the 2010 PC market and guidance will still be relative. Initial support on the Nasdaq is 2140.

Nasdaq Composite Chart

QQQQ Chart

SOX Chart

The Russell 2000 is accelerating higher after its touch of the 10% correction level at 584 last week. The max-pain point on the Russell IWM ETF is $62 and you can see why when looking at this chart. Just over 620 is the resistance high from Sept/Oct at 623 as well as downtrend resistance from Oct-2007 (red) so this level will be critical. IF and that is a capital IF, the Russell breaks through the 620+ level the January resistance highs were 648. A breakout there could be a real fireworks show with 100 points of clear air until 755. A move over 620+ would trigger some serious short covering so I would suggest you be prepared with an IWM long "IF" that occurs.

Russell 2000 Chart

In summary it appears the markets are setting up for expiration with a slightly positive short-term bias but with longer-term problems. We could see a move higher next week but it may only be temporary.

In case you are unaware, Sunday, Feb. 14, is Chinese New Year's Day, the start of the new year of 4708. It is the Year of the Tiger. Monday & Tuesday are public holidays in Singapore as well as in Hong Kong and China. The closing of their markets will give U.S. markets nothing to key from until later in the week.

We are a long way from out of the woods from local problems and there are quite a few global challenges to provide distractions. I would be cautious and patient until we get confirmation of any rebound before loading up the truck.

Jim Brown

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