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Although recent market weakness has not yet resulted in any weekly net redemptions, weekly cash flow levels are becoming increasingly volatile…..perhaps reflecting the times.

In terms of attitudinal factors, this excessive optimism and risk-taking may be a sign of an overheated market and impending correction.

This month, we thought it may be interesting to revisit the Nanotechnology group, which has continued to attract a high level of interest from investors and speculators alike.

Small and Mid Caps stumbled hard in a brutal month of trading and the major indices didn’t do much better. In March, we noted the lack of strong sector trends among the best and worst performing groups. This definitely reversed in April.

There was a brief pause last month in our Health Care scores, and we were proceeding with caution. This month, our GS Score work regained some of that lost momentum.

GDP growth of 5.0% projected for 2004. But, fast growing U.S. budget deficit ($483 billion in 2004?) is a significant problem for bonds.

What might the Fed view as a neutral position? Assessing historical yardsticks for guidance.

There is a clear lack of attractive options in fixed income and we are increasingly skeptical about the REIT markets, as premiums and new offerings are at or near peak levels. Industrial Metals still offer outstanding opportunity.

Bull Market Part II. Early 2004 correction seems over, rally appears to be developing

Comparing the sector weights between the NASDAQ and the S&P 500.

ComparIng earnings growth and estimates from Q1 2004 to those at the end of 2003.

Recent job data re-enforces our belief the economy is rebounding nicely. Expect to see job picture continue to strengthen in coming months.

In last month’s “View From The North Country” Steve Leuthold outlined his case for a strong dollar. This issue, we just wanted to show the updated charts, and comment that the rally appears to have begun.

While investors appeared to be cooling on the stock market mid-month, the month end rally served to invigorate Main Street’s penchant for chasing performance.

We check in to review February’s trading data (month lag in data) in order to see what has changed since our last update.

Small and Mid Caps continued to outperform in March, with the S&P Small and Mid Cap both producing positive returns.

Since 2000, the Health Care sector has moved ahead with no help from the big drug stocks.

Don’t get drawn into the TIPs trap. Lack of attractive bond opportunities and prospects for higher inflation may draw investors to Treasury Inflation Protected Bonds. However, there is still risk of significantly higher interest rates, and the fact the inflation factor is tied to an unreliable CPI.

Falling dollar in recent years has helped drive commodity prices higher. See “Of Special Interest” for a discussion of our Euro Adjusted Commodity Diffusion Index. It is not as inflationary as the Traditional Commodity Diffusion Index, which is now at levels not seen since the late 1970s.

Investors reversed course from January with several of last month’s top performers becoming February’s worst performers.