John Mugarian's Dynamic Growth

Over the past year, if you didn't own stocks in Metals, Mining , Coal or Oil companies, chances are your performance was not very good. Looking at the stock market cycle, all of the above mentioned groups perform at the peak of the stock market cycle. My analysis is telling me that we are at or near the end of this bull cycle.

Today, I am selling Anadarko Petroleum (APC) at a price of $80.53. We bought APC on Nov 4th at $68.50. The 12.03 point gain represents a 17.56% return in 3 months, annualized the gain is 70.24%.I will be looking for other opportunities to take profits in the oils as well as Consumer Cyclicals in the coming weeks.

Today, investors celebrated a better than expected employment report. The Dow Jones Industrial Average closed up 107.52 points, while the Nasdaq Composite Index rose 12.21 points. The distrubing part of the rally is the leadership. When leadership is driven by commodity related companies, that says the governments read on inflation is either way off, or we are being lied to. I'll side with the latter.

Oil ended higher, closing up 4.4 percent higher on the week to $53.78 a barrel. OPEC will reassure the world oil market Friday it won't cut output at current price levels. Oh isn't that nice of them. As much as each one of us likes to think we are in charge of our own lives, we find out differently when energy prices spike.

I really don't know who is calling the shots in our country, but whoever it is, has sold our economic souls to the Red Chinese. That's right, this is the same China that aided North Korea in the killing of thousands of American service men during the Korean War. This is the same China that aided the North Vietnamize in the killing of 60,000 American troops in the jungles of Vietnam.

Today, politicians and corporate executives are lining their pockets as they continue to sell off the United States piece by piece. Thousands of Americans have seen their jobs shipped off to cheap labor markets like China and India. Ok, I understand competition, and I don't have a problem with it. But lets get something crystal clear. These corporate executives do not give a flying flip about our country, our workers, or the future of our nation. They are in and out for the buck, and the hell with everyone else.

Another big bell weather company came out today and warned that business will be weak throughout 2005. This morning General Motors cut its earnings projections for the first quarter, and the year. GM cited lower North American sales, but the company stopped short of giving reason's for the drop in sales. Ok, I'll the give you the reason..HIGHER OIL PRICES.

General Motors and the rest of the big three have been incredibilty slow to recognize what the Japanize and the American consumer have realized for years. Simply, consumers want fuel efficiency and reliability. The Japanize can see this, why doesn't Detroit? Well, its too late now. You and I both know what follows lower earnings. That's right, production cuts and layoffs.

Are you ready for a big rally? Well one is coming. Higher oil prices have been putting a damper on the stock market along with fear of ongoing interest rate hikes. Short interest on the NYSE has reached a record level which adds to my conviction that a major rally is in the making for the second quarter. In fact, I believe the upcoming rally can extend into the beginning of the third quarter.

So, what will be the catalyst for the rally? Now that everyone is talking oil, and just about every investor has been coaxed into buying an oil stock, its time for a sell off. In fact, today we are going to take profits on one of our favorite oil stocks. We are selling Conoco-Phillips, ticker symbol COP. At today痴 price of $110.35, you will bank a cool 11.1% profit in 3 short months. We will continue holding our other two oil stocks, Chevron-Texaco (CVX) and Schlumberger (SLB).

I hope everyone had a nice Easter and spring break. I have been getting several questions about the market, and I wanted to pass along a few thoughts.

If you have been keeping tabs on my predictions, you can see that we have been pretty accurate in our assessment of the economy and the market. 15 months ago I warned about oil and the effects it would eventually have on the economy. For several months I have been telling you that we have inflation while the financial media has been reporting there was no inflation. Now the cats out of the bag as Alan Greenspan said the Fed is finally becoming concerned about inflation.

Since it does no good to use the "liar, liar pants on fire" saying when it comes to economic reports released by the government, we have to take defensive measures whenever situations warrant. As you browse through "John's Journal", you will see that we favor a reduction of cyclical stocks, and increased exposure of defensive stocks. We will also be raising cash positions to take advantage of higher interest rates over the next 6-12 months.