Markets filled the gaps and closed at the highs with the DJIA higher by 2.5 at the close. The range, ugh, another tight one with a spread of 25 points between the high and the low. The SPX also tight with 5 between the best and worst.

Strongest sectors included internets led by GOOG, small cap growth, financials, trannies, utilities and airlines; leading lower were metals, biotechs, software, retail, gaming, reits and semis.

Market internals flipped to green on the NAZ with 370 more winners than losers and flat on the NYSE.

The OEX had about 45 winners while the NDX had a weak 40 in the green. The SPX also lagged with less than half closing in the green.

The VIX/VXO tandem are back at/under the 10 level which is not surprising in light of the 3 days of decay in the front view mirror.

The DJIA/IWM are now sitting with 2 day RSI's overbought trading in excess of the 90 level while the SPX/QQQQ trade at a more neutral 70 level.


A real snoozefest as markets continue to chop lower - Whoops, forgot the exciting news of GM possibly buying another former American auto maker. Just what they need, an investment in another company who also sells cars no one wants to buy.

Strongest sectors include internets and oils. Weakest are reits, biotech, brokers, metals, tech, retail, software, drugs, defense and small cap value.

Key stocks mainly down with the exception of GOOG NYX and RIMM.

As for Kramer's pins, look to $216 on GS, $136 on OIH and $44.65 on the QQQQ.

Market internals continue to be weak with a red 560 on NYSE and red 265 on NAZ.

Major index internals also weak with 170/330 on SPX; 35/65 on NDX and 30/70 on OEX.

Biggest winners include SIAL MRVL ADBE CPB GOOG MRK PEP and AIG while the biggest losers include PDCO VRTX NVDA CHKP and MSFT.

Volatility indexes lower on the heels of a three day price decay.


Markets are trading down on the heels of disappointing news from MSFT and some worse than expected housing news. In addition, its a Friday and we are trading near recent highs and we are overbought. Oh, and if you like brokers/xchange stocks, check the IAI, its been a terrific vehicle for one stop shopping in the sector.

Strongest sectors include airlines and banks, everything else pretty much lower. The weakest are homies, reits, silver, metals, brokers, biotechs, tech, retail, small cap value, oils and drugs.

Market internals are pretty crummy across the board with a net 900 red on NYSE and 660 red on NAZ.

The SPX is 150/350 up to down; OEX 28/72 and NDX about the same.

MSFT is leading the DJIA lower as it is responsible for about 5.5 of the 15 downside points. Ten of the DJIA are up and 20 down.

Key stocks all lower except for GOOG which was upgrades is trading +$3.5.

Cramer out with more great writings this morning on why the markets now are a buy. Here are the "salient" quotes:

"Another amazing week. Another week where it just seems that everything is falling into place.

Yet all I hear is caution. I keep getting the feeling from people that this market is simply too hot and overvalued, given the fundamentals.

I don't see it that way. It is confusing to people, for certain, that bad companies rally on bad news. The homebuilders are still strong despite nothing to make them strong. The tech companies that reported OK news are now nicely higher.

Still, when Microsoft (MSFT) said negative things last night, it was like the roof caved in. I got a dozen negative emails instantly.

It was a sign that underneath, lurking, is the bear inside of us who doesn't want to believe and wants to get out now but just feels dragged along.

Of course, that's the key to this whole move:

The non-believers keep jumping off, and there are many more non-believers than believers.
Which is why we are not done
going up!

I continue to marvel at how he loves to buy high and sell low. And he doesn't mention how he is the guy who was afraid when we were 200 DJIA points lower.


DJIA/SPX Futures flat with NDX futs down a bit on MSFT;

In the news:

PPI and Core PPI come in right at consensus of -.6% and +.2% as rates fall further to 4.666% on the 10 year;

Housing starts 1408k v 1600k consensus;

MSFT getting hit in overseas trading on the heels of some bearish comments by Ballmer MSFT gapping down 1.5%;

WSJ reporting possible criminal charges against execs at AAPL BRCM KLAC and MFE relating to options backdating.

C reiterates Buy on GOOG and $600 target- and number 1 long idea- firm views current valuation a very attractive risk reward;

B of A upgrades CL to buy with a target of $74; RL profiled in IBD; AAPL and CSCO extend IPHONE negotiations;

HON announces a New $3B share repurchase program;

PAAS - proven and probable reserves up 20% -35.4 Million ounces added;

Barron's Online with a nice review of RDEN;

Bernstein on $30 crude;

Hassan at SGP looking for acquisitions;


Cramer bearish on WMT ARNA BMC C;



Markets closed a bit higher on the heels of very boring testimony on the Hill from Big Ben. The DJIA was +24, NAZ +9 and SPX +1.5.

The midcaps continue to be the story of 2007 as the index is now plus 6.6% compared to about 2.5% for the DJIA and SPX.

Another small range day with the SPX varying a whole 4.5 points and the DJIA about 50 points. The usual range is about double today's action.

Strongest sectors were metals, semis, reits, homies, defense, tech, internets and gaming. Lagging were oil service, oils, utilities, trannies, drugs and large cap value.

Biggest winners included CAT BA UTX MEDI BUD and DELL with BHI COP EXC NSC SLB CVX among the big losers.

Market internals were ok on the NYSE with about 600 more winners than losers but flat on the NAZ.

The OEX/NDX both had a few more winners than losers while the SPX had about 3/2 up to down.

Most of the broker/exchange stocks were lower with the exception of ICE and MS, while AAPL and GOOG continue to trade heavy.

Volatility indexes did very little and are again finding a home in the "10" area.

I suspect tomorrow will bring another tight range day with probably more of a downward bias. I am however still keeping that "short" button on the computer on the ineligible list. And what happened to all the pundits who warned that February was a crummy month for the markets?


Did someone say chop for the day's trading? Yowza its boring, but we have Big Ben keeping us on our toes.

Philly Fed was weaker than expected and markets sold off a bit on the news.

They are mixed with the DJIA +19, NAZ +3 and SPX FLAT.

Winning sectors, homies, airlines, reits, biotech, small cap growth, internets and some tech. The losers- oil service, oils, utilities, trannies, software, drugs and large cap value.

Market internals remain failry flat with +260 on the NYSE and -200 on the NAZ.

The NDX and OEX have 45 winners each while the SPX has is about flat with 255 winners.

The DJIA also has about half its components green with CAT AA UTX WMT and BA doing the best with DIS GE JPM XOM IBM and HON trailing.

Volatility indexes haven't budged and the bank/brokers sectors are about as flat as they get.

Key stocks are mixed with ICE BOT CME MS IAI KLAC green and GS GOOG AAPL MA NYX BOT and MER red.

Bottom line, look for the chop to continue.


Markets open higher with the DJIA/NAZ leading the way. The R2K/IWM continues to lag and trade flat.

Strongest sectors include tech, semis, homies, brokers, large cap growth, financials, biotechs and airlines- Leading lower are oils, utilities, metals, drugs and trannies.

Market internals on the NYSE and NAZ are flat.

The NDX internals show 55 winners, OEX about the same and SPX about 270 in the green. So not much help there for direction.

Big winners today include MEDI NTAP QCOM BRCM BUD CAT ATI DELL and MS while the losers include BHI COP HAL WMB AA CKFR BIIB GENZ ERIC and MNST.

Volatility indexes aren't moving much and all of the above is suggesting that the market will probably chop around most of the day which is not unusual after two good trending days.



In the "you cant make this stuff up," Jimmy out now with his buy call. After selling lower Monday, here is what he offers after the close:

"They couldn't bring it in. Nothing occurred that could knock the market down, and the shorts are trapped like rats.

I don't know what I would do now if I were short. Maybe I would wait until tomorrow to see if the papers just decide to make up stuff about how Ben Bernanke wasn't signaling a cut. Or maybe you try to spin a story about how the expiration is leaning to the sell side. (Forget the fact that the 2:30 floor look -- the one that indicates how much there is to buy or sell on Friday -- showed much better to buy.)

Whatever the setup, the bet against the market setup hasn't happened; instead, we have even the worst quarter -- Accredited Home (LEND) -- moving the stock higher.

Last week when we were down big, the bears came out with the usual Cassandra catcalls.
I am sure they followed up by buying February puts.
Those are rip-ups or insurance against the long side.
And the market's not yet done going up.
Watch General Electric (GE) and Altria (MO) . If they can break out, you have another two good days. "

And the column from Monday about those unspeakable manipulators and snowstorms:

"Bulls should keep their powder dry this week. I have always hated February options expirations when I am long because they have been, at times, some of the worst.

That also means it's entirely likely that you could have a big down day this week that will give you a much better entry point than today.

Plus it's entirely possible that we catch a big snowstorm and the bulls just aren't there to counteract the downward forces and the manipulators with an axe to grind.

I know it's a hard time to sit still. You have a large number of stocks being hammered, and they seem like they're holding in.

To me, it's a come-on. You have to wait this one out.
It's just too risky to get in here."



The DJIA/SPX big cap group closed near their highs with the DJIA +85, SPX +11 and NAZ +28. The biggest surprise of the day, the small caps which lagged all day and closed flat.

In addition, market internals made their highs when Big Ben let the cat out of the bag and worsened throughout the day. A closing green 1,100 on the NYSE and + 470 on the NAZ after having 1,700/1,000 more winners than losers earlier. A big difference.

The internals on the NDX/OEX/SPX were very strong all day and hardly varied from the green
95/85/400 all day. So the major indexes appear to be much stronger than the average stock.

Strongest sectors included semis, brokers, trannies, internets, semis, tech, emerging markets, software, biotech and metals; laggards were the dollar, reits, oils and small caps.

The 2 day RSI on the DJIA/SPX has hit the overbought areas at 90/87 respectively and may be giving the "take some off the table" signal.

Volatility indexes, like the market internals, hit their lows early and steadily drifted higher. The VXO hit 9.03, about 4 basis points off the near all time low of 8.99 before closing about 10% higher near the 10 level. The same pattern in the VIX but not quite as extreme as it also closed at near the high of the day.

I suspect a pullback from here on the Big Caps as 190 points on the DJIA and 22 on the SPX is going to be a pretty good reason for traders to take some money off the table. The traders that bought Friday and Monday anyway.


High prices galore in the markets as the SPX/DJIA all clearly above recent highs. The NAZ and tech are acting the best and maybe another opportunity to sell those SMH's. My plan, STOPS.

Strongest sectors include brokers, emerging markets, semis, internets, tech, metals, software, airlines, trannies, biotech and homies while the dollar, reits and oils lag.

The second level of resistance on the YM DJIA Futures at the 12,760 area and I am watching closely as I have some to sell. Genrally, pretty tough for markets to exceed those levels, but its also unusual to have 93/80/400 winners on the NDX/OEX/SPX.

All the key stocks acting well with the exception of NYX. Small and mids also lagging but nothing to get excited about as I expect another SURGE into the end of the day.

Volatility indexes approaching the SELL signal area at 10% below the 10 day SMA. I have found the signal works better on the buy side so maybe they sit near these levels and we drift higher on the major indexes.

Great pick up by Adam on the latest and greatest from Kramer as he sees GS back at $215 for a pin where an option strike doesn't even exist. I guess homework is a thing of the past. He is also calling for a rate cut in May; how he knows is beyond me, but why argue with the best.


Markets moving up at 10:00 on the heels of Big Ben's inflation comments "subsiding". Just wish the ice storm in Chappaqua would subside.

DJIA +60, NAZ +24 and SPX +10.

The DJIA is at all time high as I type while the SPX is back at the recent top.

The 10 year Bond is off about 5 BPS on the news and the rate is down to 4.766%.

Every sector is green with internets, brokers, semis, gaming, banks and tech leading.

Market internals are very strong with a net 1,660 green on NYSE and 965 green on NAZ.

On the indexes, NDX has about 97 green (hmmmm), OEX 90 green and SPX about 445 green.

Fly in the ointment, the midcaps and small caps are lagging but it always something.

Key stocks, GS GOOG ICE MS IAI KLAC MER all solidly green while NYX lags.

Those semis even has some jig on the AMAT news and are leading the NAZ up 1.25%.

Volatility indexes crushed again with the VXO at what appears to be near a new low at 9.35 and VIX at 9.78. Those are levels where one probably doesn't want to do much buying.


The NDX has been the weakest of the major market indexes of late and I am just wondering if its time for the switch to be flipped. The NDX is trading a bit below its 21 and 50 day SMA, but, if the Biotechs and the Semis can find some traction, we may get the upside catch up. Curious to see the reaction to the AMAT numbers in the semi group. I suspect higher but those have been a difficult trade.

Yesterday, my favorite GODDESS (I think) asked about my key stocks and I might have left some off the list. Here goes, GS MER MS CME ICE BOT NYX MA BIDU OIH GOOG AAPL IAI SMH KLAC. In addition I keep close tabs on the following indexes: XBD BKX HGX RUT MID TRAN UTY RLX MSH EEM GLD SLV BTK SPX NDX INDU- and of course the Volatility indexes - VIX VXO VXD VXN-

My most important tell for daytrading is the strength of the internals; if the internals on the SPX NDX OEX INDU are strong meaning more than 60 green on the OEX and NDX and more than 300 green on the SPX, I will generally be buying pullbacks on the YM/ ES/ NQ to pivot points or anywhere else where I think money can be made.



The DJIA closed near the high (almost 1%) but the NAZ lagged after being up about .5% earlier and closed with a gain of 9 or about .3%.

Strongest sectors included metals, reits, gaming, oils, homies, emerging markets, trannies, internets, retail, large cap value and financials. Weakest were semis, biotech and drugs.

Market internals, not including the NAZ, were very strong all day with net of 1,400 winners on the NYSE and a green rate of 85/15 on the OEX. The SPX closed well with 400 up and 100 down. The NDX was much better than the NAZ with about 7o winners while the NAZ had a net of 550 winners.

The DJIA internals were great all day closing with 28 up and 2 down with the losers being IBM and JNJ. AA MMM GM DIS HPQ VZ XOM were the big winners in the big cap group.

Key stocks acted very well with GS MA ICE NYX BOT CME MER and MS all closing strong. AAPL KLAC and GOOG lagged. Tech and the NAZ were clearly laggards all day and I suspect a little rotation back into that sector before long.

The volatility indexes sold off, and the big 3, VIX VXO VXD, all closed down 10% or more and are now under their 10 day SMA's. The sell signal comes when they are stretched 10% below their 10 day SMA.

And speaking of Kramer, Adam has done a little homework on how his pinning. Its worked about as well as his call from yesterday afternoon when he said "NOT DONE WITH THE DOWNSIDE":

"What makes this market worrisome short-term? You have a couple of positives that are completely being overlooked. That shouldn't happen in a good tape, especially because we were weak at the tail end of last week.

First, we had more than our usual number of takeovers this weekend. There were some important bids, including the aluminum and oil service bids. These are very important takeovers -- but they had no impact whatsoever.

Second, you have oil down nicely. I was very concerned, if we blew back through $60, that the gasoline I paid $2.05 for this weekend would go higher. And that would have ruined my retail thesis.

That the market did not react well to these pieces of news means we aren't done yet with the downside. And the expiration will exacerbate the decline."

To cap it off, the DJIA is only 45 points away from the record of 12,700. I suspect it won't be long before that gets taken out again. And of course we get Big Ben tomorrow and the oil patch report.


Markets continue higher as the buy signals from Friday and yesterday were pretty good signals - the DJIA is +100, NAZ +10 AND SPX +9.8.

Put your Revshark's, Kramer's and other gurus aside and just look at what works. Yes, buying pullbacks in strong trends as defined by volatility/relative strength indexes. They have proven to be profitable over long periods.

Strongest sectors include oils, metals, gaming, homies, emerging markets, trannies, internets, financials, retail, defense and brokers (flipped); Weakest include biotech, drugs and semis.

Market internals (generally the best tell) are very strong with over 1,300 more winners than losers on the NYSE and net 500 green on the NAZ.

Major indexes also trade very green with 4/1 up to down on the SPX; 73/27 on the NDX and a whopping 85/15 on the OEX.

Volatility indexes are crushed as the VIX has dropped over 10% in slightly over 3 hours of trading while the VXO and VXD have dropped almost 11%.

All of my key stocks have turned green with ICE BOT CME MS acting best while AAPL GOOG and MER are green but lagging.

The semis are very bothersome as they refuse to participate in upside movement. A suggestion for any long - SELL on the next broker upgrade.


Markets open higher on the heels of short term oversold levels and rumors of a take out on a DJIA component. The DJIA is up 75, NAZ+13 and SPX +6.5.

Strongest sectors include metals, homies, gaming, oils, emerging markets, software, semis, airlines and tech. Weakest areas include reits, brokers and trannies.

Most of the key stocks I watch are higher with the exception of AAPL and MER.

Market internals are extremely strong with with winners beating losers on the NYSE by 1,200 and 900 on the NAZ.

The DJIA has 26 up and 4 down with AA MMM GM and HPQ leading and BA IBM JNJ and DD trailing.

The OEX has 80 out of 100 higher; NDX about 85 out of 100 higher; and over 400 of the 500 higher on the SPX.


Biggest losers include EXPD CHRW INFY MEDI VMED NTAP F BMY BA FDX and CPB.

The action in the brokers is a bit troublesome as the markets rarely go much higher without them. I suppose some of the sub prime jitters exist there but seem to me like it would be de minimus to their overall operations.

Volatility indexes have alreay dipped 5% and I suspect the sell signal comes in when the first VIX/VXO one reaches the 9.75 level.


DJIA Futures up 35 on the heels of the AA takeout rumors, the GM upgrade by MER and the big buyback announced by MMM.

The VXO has generated a buy signal with its close at greater than 110% of its 10 day SMA. A second buy signal of over 70 on a 5 period RSI also hit so it all may be lining up. Here is where I posted the testing on the volatility indexes a long long time ago.

We also have the buy signals on the 2 day RSI under 10 on the DJIA/SPX indexes and the buy signal of the TV gurus calling for a pullback as the markets are "generally" overbought having run far and fast.

In the news- BHP and RTP both supposedly eyeing AA; SNE to cut back substantially on chip spending; JEF upgrades RHT; DB upgrades LVLT; JPM upgrades MA; TEVA misses by 5 cents and guides in line for 2007; GS downgrades HANS to Neutral from Buy; WB upgrades BAM to outperform from market perform and says earnings potential of power operations business continue to be underappreciated; GRP upgraded to Buy at BofA and target raised to $57 from $49; MMC beats by 2 cents, revenues $3.1 vs $2.93 consensus; GM upgraded to Buy and F downgraded to sell at MER;


Cramer is bearish on ESLR HP NEW and JBLU.

This is what Bernie Schaeffer wrote yesterday about his expectation for this week:

"Judging by the market's past performance during option expiration week, stocks could be poised to make some gains this week. In columns prior to the January and December expirations, I touched on this trend in the Standard & Poor's Depositary Receipts (amex: SPY) to post positive results during expiration week.

I think one potential reason for the upside bias in expiration weeks is the unwinding of heavy out-of-the-money puts that accelerates during that week. As these out-of-the-money puts are bought back to capture what little time value is left, those who took the other half of the trade and sold the puts are able to buy back the SPY shares they sold as a hedge against the short put position. This unwinding action in turn helps to add buying pressure to the SPY during expiration week."

Since January 2006, the SPY finished only four expiration weeks in negative territory, while the average return during the week comes in at a gain of 0.55%."

And in the continuing call for the flip to large caps as they are far cheaper then any other category, eh no, as the SPX is +1.1%, DJIA +.07%, Small caps +2.3% and the Middies +4.7% as of yesterdays close.



The markets closed lower although not at their worst levels as the BIG CAPS finally showed their clout and lost less than their small/mid rivals.

The DJIA was down 26, NAZ -9 and SPX -4.4.

Best sectors included airlines, retail, banks and trannies while gaming, oil service, reits, brokers, oil, internets, semis and homies acting the worst.

NYSE internals were 700 more losers than winners and NAZ about 450 more down than up.

The OEX with about 35 winners, SPX with about 195 and NDX with about 30.

Key stocks never got bought cept for AAPL which closed up over a buck as GS GOOG MA ICE NYX BOT CME MER MS IAI all finished lower although well off their worst levels.

The rate on the 10 year bond crept higher for most of the day ending at the 4.804% level.

Jimmy Cramer with a column on why one should wait to buy; my guess, he will be telling us to buy at higher levels.

Volatility indexes, generally a pretty good tell, have moved to overbought levels and fired off buy signals with the "greater than 110% of the 10 day SMA. The 2 day RSI indicator also giving buy signals with very low readings on the SPX (4), DJIA (2) and QQQQ (10).

The 5 day SMA of the TRIN is also at an overbought level last seen around January 5, and that was a pretty good time to buy, so just maybe it is all coming together and we get turnaround Tuesday.

And how long before Maria plays herself out of her job?


Markets continue to trade lower but in a fairly tight range as the big caps continue to do less worse than the small/mid caps. The DJIA is -10, NAZ -8.5 and SPX -2.5.

The feather in the bulls cap is the action in the banks, which continue to trade in the green with JPM BAC and C all higher.

The bears have just about all the other sectors going there direction.

Airlines retail and banks act the best while gaming, oils, brokers, internets, biotech, semis and homies are leading lower.

The DJIA acts best among the big indexes evenly split between winners and losers with AA HD KO GE and MCD acting best while AXP DIS BA UTX INTC and AIG act worse.

The OEX/SPX combo have slightly more winners than losers with CI HIG KO AEP and WB acting best and BMY TXN MS AXP BHI LEH and GOOG acting worst.

The NDX has the worst internals with about 26 higher and 72 lower with NVDA ESRX AAPL ADBE and ISRG the best of the bunch and XMSR CMCSA BRCM EBAY SIRI and MRVL the worst.

Key stocks are all lower cept for AAPL which is still higher by a buck and change on the heels of an upgrade this AM. The worst of the brokers/xchange stocks include NYX MER MS CME BOT and ICE. GOOG and MSFT continue their recent losing streaks as GOOG IS nearing the $450 level and down another $6.

The Volatility indexes (VIX/VXO/VXD have given some buy signals as they rose to the 110% of the 10 day SMA's.

Bernie Schaeffer has an interesting article up on Forbes.com and is looking for a rally as he expects out of the money puts to be sold causing some index buying.


Markets continue to trade lower with the big caps outperforming the mids and the small caps. The DJIA is flat while the NAZ is -8 and the SPX is -2.

Strongest sectors include airlines, retail, metals, banks and homies while oils, gaming, reits, internets,brokers, biotech and semis lead lower.

Market internals are weak with 185 green on the SPX; 20 green on the NDX and 30 green on the OEX.

Strongest stocks on the indexes include HD AA ATI ROK HIG ESRX CDWC NVDA and AAPL while WYNN EBAY FLEX GRMN EXPE WFMI SBUX BMY SLB BHI GD and LTD are among the weakest.

Overall, about 700 net losers on the NYSE and 770 net losers on the NAZ.

CME NYX ICE GS GOOG MA MER MS all sizeable losers with AAPL up a buck and change.

The QQQQ has fallen under its 50 day SMA and trades at a 2 day RSI of 10 and at the bottom bollinger band. Recent lows are the $43.3 are and about 30 cents away.


Checking the technicals on the DJIA, the markets are short term oversold with the 2 day RSI under 5 and the index trading at its 21 day SMA. Needless to say, those spots have been pretty good buying areas in the past. Is it different this time? Could be, but the trend lines point higher and buying dips has been the winning trade for several years.

On the news front:

WSJ reporting that TRB to forego bids and go it alone; Saudi oil minister says market is balanced; UBS upgrades KFT to to Neutral from reduce; CIBC upgrades Q to sector perform; AG Edwards upgrades JWN to Buy from Hold; PRU defends MA and reiterates $130 target; AAPL upgraded to Buy from Hold at C with a $105 target; HOC beats by 1 cent, revenue rose by 15.5% to $938M v $793.2M consensus and raises the dividend 25%; London Times reporting the BMY SNY merger seems to be off; FS confirms it will be taken private at $82 per share cash;

Barron's positive on UNH and COST while Art Smith from John Herald was very bullish on certain oil companies like CHK CNQ APC APA ECA LINE and EVEP.

Here is some of what he said:

"According to our president, we are addicted to oil, but apparently we don't want to explore for it anymore.

All of the data we collect show the industry's capital investment in the upstream -- for exploration, anyway -- has been declining substantially from where it was five and 10 years ago.
It amounts to 15 cents on the dollar when it used to be 30 cents on the dollar.

Basically, the exploration model hasn't been working, so no one is funding it. The big oil companies have determined the best thing they can do is continue to buy in their own stock and pay dividends.

Our bottom line on this exploration paradox is that it will cause the large companies to review all the major players in the world, and those that have undeveloped reserves of significant magnitude but require capital will be the targets. Major oil companies have become bankers, rather than risk-takers.

I am amazed at how the market is influenced by very modest changes in estimates of natural gas inventories or estimated demand. We are talking about 85 million barrels a day of oil being consumed and the market will sell off on a change in estimates of 100,000 barrels a day or in gas inventories of 10 billion cubic feet, which is a rounding error. All the evidence suggests the market is tightening and reserve additions are disappointing, and we are back in the King Hubbert and peak-oil discussion.

The most undervalued on the basis of a reasonable price tag are the North American exploration and production companies. There are probably 50 companies, but among the ones that are most undervalued are Anadarko Petroleum [APC] and Chesapeake Energy [CHK] and Apache [APA].

We like some of the Canadian companies, EnCana and Canadian Natural Resources, which have tremendous resources in countries that are safe and where you can make a profit. In the case of Canadian Natural [CNQ], for instance, they have an enormous oil-sands investment whose substantial production and profit value is just becoming visible."