rally interupted

August 29th 2005

Hello,

With Katrina smashing into New Orleans, looks like I will have to put off my trip to the French quarter for another couple of months. Worse yet better batten down the hatches, September is by and large the worst month to own stocks historically. The historical data suggest that 30% of the time September is an up month, 70% of the time September is a down month. The average return is a loss of 1.31% making it the worst month of the year .Up months have produced an average return of 3.49% and losing moths have produced an average loss of about 4.69%. This makes September the worst month statistically, but as they say in baseball this could be one of the 3 in 10 that is actually up.

Taking a break from the, I told you so’s and blame game surrounding the after math of the hurricane, the, market looks more likely to continue its rally interrupted. By interrupted I refer to the summer rally that sprouted during the early days of June till the middle of July. If oil prices fall from there decade highs, and the FED decides enough is a enough two of the central features of the current environment that continue to put a lid on the markets at every attempt to rally will be subdued at lest temporarily.

What makes me optimistic is that the Semi conductors though unable to get going the last few weeks, continue to have their positive chart action intact. The Semi’s in the past have led the way to higher market highs. I am also very positive about the hurricane ,yes that’s right because in the past the after math of hurricanes have led a booming building trade and all the elements that feed the process. The negatives of coarse abound, the media and human nature have a tendency to view the world thru short term negatives, but long term the power will come back on, the rigs will start pumping. the ships will sail, the refineries will snap, crackle and pop and we might actually start to get some sensible energy policy once and for all.


James