Some have commented to me that my have comments though pertinent are sometimes too long so I will begin taking pieces from articles that I think are pertinent. If you want copies of the entire articles just reply to this e-mail and I will send the entire article.

The following comments from the Daily Reckoning publication I thought were timely.

Nobody loves a good deception more than investors...unless it is voters.

The Dow shot up more than a hundred points the day before yesterday.

And would you believe it? Consumer spending also shot up last month!

It seems the economic cycle is decidedly moving against the new Federal Reserve Chairman, Ben Bernanke. The economy only grew at a 1.1% rate last quarter. Unfortunately, those numbers are suspect (probably too high). Additionally, last month saw a steep drop in the sales of existing homes, down 5.7%. That means they have been falling at a 36% annual rate for the last three months. The backlog of unsold houses nationally is now 25% greater than it was a year ago. The local realtors tell me that the number of unsold houses is double what it was a year ago.  The median price for a house in America fell in December – 4% below its August peak. If consumers are going to keep on spending, the $64 question is: Where are they going to get the money?

This past week was generally not good for the stock market. The Dow, S&P500 and the NASDAQ are in intermediate down trends. Maybe this week’s poor market showing was in part due to the weakening economic situation. Of course there are a host of other problems: the debt situation, the trade deficit, energy, Iran, Iraq, etc. It has been said that a good market needs a “wall of worry” to climb. All I can say is, “climb away”, because the “wall” is clearly there.

Have you heard of the January Barometer? Devised by Yale Hersch in 1972, the January Barometer states that as the S&P goes in January, so goes the year. The indicator has registered only five major errors since 1950. That makes its accuracy an amazing 90.9%.

Following is the track record of the January Barometer. The red X’s by 1966, 1968, 1982, 2001 and 2003 identify the only years in which the January Barometer posted a major error. It will be interesting to see how 2006 turns out as the S&P 500 actually looks like January increased by over 2% ending today. That means if the January barometer holds, 2006 should turn out to be a positive year.