I am sure you’ve probably had enough of lengthy speeches so I’ll keep this brief. And no, you will not have to endure needless clapping that interrupts every sentence.

Last week’s marginal improvement in the S&P 500 was not representative of the significant changes I saw in the HEDGEfolios universe. YES - for the first time in a long while, I can report that the state of the HEDGEfolios charts improved somewhat. Of course, much of that improvement was short-lived and I imagine that the charts have weakened due to Monday’s decline. Earnings season has been so-so and guidance has not been inspiring either. It’s still too early to evaluate a general theme with the actual numbers, but the market’s response has been pretty clearcut. Good news is being accepted but not applauded… average news is being panned and negative news is being punished. This is a noticeable change in market psychology but as I mentioned earlier, we have a long way to go and this sentiment can change rapidly.

Before Monday’s open, I wrote about the improvement in the energy sector and especially, oil and gas. Yet, I wasn’t expecting President Bush’s request to double the SPR and I wish it would not have happened. The cold weather forecasts for NY City are contributing to a more bullish tone and it looks like a trade is on. Some day I might share an aspect of my technical analysis that I call “Slope” but for now, I’ll just mention that I don’t like today’s move too much. I expect some backfilling here and a more gentle move towards resistance at $58.50 per barrel over the next few weeks. Unless there is a market shock before we get there, I am doubtful that we will break back into the $60’s the first time around. However, my bias has shifted to slightly bullish on oil and I’ll reevaluate as we move forward. As you would expect from an increase in oil, I expect the CRB to lift correspondingly and would not be surprised to see it approach the 310 to 320 range before we hit any roadblocks.

In early December, I gave an outlook for key market forces and expected that we would see ten-year Treasuries approach 4.80% and that has been achieved. However, there is significant resistance from here until 4.85%. If the economic data continues to show strength, I believe we will poke through 4.85% and start threatening the Goldilocks scenario (too hot!) I wonder how Jeff Lacker is feeling these days? Sadly, the hawks lost his vote and now Mr. Moskow is soon to retire. It seems that votes to raise rates are avoided through attrition, but I suspect that the next meeting and accompanying release of the notes will shake out the last rate cut optimists.

I see a bullish tone on gold and a bearish trade approaching on the dollar. Retesting 82.50 on the US Dollar index seems like a likely move and I have no idea what will suppress the continuing upward trend in gold.

That’s the end of my speech. There will be no rebuttal from the other side.