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Jul 7, 2008 - Issue #118

Energy Peaked?

(1) Pathetic rise in the price of crude oil, this week.

(2) Energy stocks, in my judgement, are demonstrating signs of peaking across the board.

(3) Airlines have grounded large portions of their fleets because of increased cost of fuel.

(4) Retail gasoline prices, for the first time in history, in response to decreased holiday travel has not increased at the pump.

(5) Consumer and investor confidence, apparently, 'sucks'.

Does that mean stocks are a 'buy'? Maybe. If your time horizon, as an investor is far enough out.

There has been so much damage to portfolios that, even if we were on 'bottom' (there is no evidence of that), it will take much time for that to sink in to the market participants psyche. This 'bear' may be just getting started.

Let's face it, the consumer is tapped out. Employment is down, according to the latest figures. Housing and credit are in chaos. More subprime 'toxic waste' write-offs are expected.

The political and taxation outlook is ominous. Democrats have admitted they plan to nationalize the oil industry à la Venezuela's Chavez. An Obama win will guarantee that future Supreme Court appointees will be activist 'liberal' judges, once again. National Health Care will cover all illegal immigrants thereby raising costs and decreasing service for legal citizens. Government bureaucrats will override our physicians à la Hillary Clinton.

Becareful what you wish for, America.

Dow score card for the week ending 7/3/08.

DJ-30: 11288.54 -57.97 -0.51%. The Real World (arithmetical) DJ-30: 46.22 -0.23 -0.51%.

UP: 12, Down: 18.

Trends (weekly charts): This is the subjective part.

Rising (Generally Higher Highs/Higher Lows) 1 (+1) 3%:

+*MRK.

Consolidating (Generally Lower Highs/Higher Lows) 11 (+6) 37%:

+*AXP, CVX, +*GE, +*JNJ, +*JPM, +*MCD, +*PFE, +*PG, +*VZ, WMT, XOM.

Declining (Generally Lower Highs/Lower Lows) 18 (-7) 60%:

AA, AIG, BA, BAC, C, CAT, DD, DIS, GM, HD, HPQ, IBM, INTC, KO, MMM, -*MSFT, T, UTX.

+/- denotes change of direction.

* denotes change of category.