John Mugarian's Dynamic Growth

The Dow Jones Industrial Average rallied 221 points today on....hopes that...on better than expected...on news that the economy has...on news that oil prices have...on news that inflation is no longer...

Well, since the rally wasn't sparked by any of the news above, the rally must be due to General Motors filing for bankruptcy first thing this morning.

A market that refuses to go down, will eventually be met with short covering. This is part of what is going on. The other stuff you don't want to hear about. It's "24", Jack Bauer stuff that you'll never fully comprehend.

As the economies here in the U.S. around the world remain weak, higher oil prices, if sustained, will eventually drive a stake into the heart of any talks of an economic recovery. Since know one, other than the stock market is seeing improvement, higher oil and commodity prices will impede that improvement in short order.

Oh, and all this BULL about "green shoots" are only believed by people who are "green behind the ears". Do what I do when watching financial entertainment TV, keep the sound on "Mute".

I have been telling you for several months now that Obama and his so called "Green Movement" cannot set their alternative energy plans into motion unless oil prices go higher. Hybrid cars, Wind, Solar, and Natural Gas alternatives will not be in demand without higher oil prices. So, to get you jump on the "Green Movement" train, they will squeeze your wallet until you jump aboard.

And, no... the oil companies didn't do it.

If you want to bitch and blame someone, blame these guys- Click Here

So, with oil prices climbing we need to ask ourselves if this is a sucker rally that will eventually correct itself (do to less demand in a weak economy), or do prices stay firm and go higher?

Personally, I hope it's a suckers rally. If prices stay firm and go higher from here, we need to get out of the stock market as quickly as possible. Why? How well do you remember 1973-74?

If we are in a 1973-74 scenario, a weak economy coupled with high inflation, high oil prices, and higher interest rates is nothing more than a train wreck waiting to happen. If this is truly what is to be, we have not scene the lows for this stock market cycle.

Here are our Top 10 ETF's for the week of June 1st:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) IYF: iShares Dow Jones US Financial Sector
6) DDM: Ultra Dow 30 Proshares ETF
7) PGJ: PS Golden Dragon China Fund
8) SSO: ProShares Ultra S&P500 Trust
9) CASH
10) CASH

Here are our Top 10 Fidelity Sector Funds for June 2009

1) FSPTX: Technology Portfolio
2) FSRBX: Banking
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSCPX: Consumer Discretionary
6) FSCSX: Computers & Software
7) FSCHX: Chemicals
8) FNARX: Natural Resources
9) FSENX: Energy
10) CASH

I'll be out of the office for the better part of the week, so I'll be brief and to the point.

The market continues to be incredibly resilient. The rebound off the March lows now stands at an impressive 28% for the DJIA.

The massive amount of liquidity being thrown at the economy seems to be working, but the next trick will be how the Fed is going to handle a $2 trillion budget deficit adding to an already $13 trillion dollar debt. If they don't pull a rabbit out of a hat, it's clear that we will have to deal with much higher interest rates and much higher inflation.

Higher interest rates and higher inflation down the road will eventually lead to another catastrophe in the housing market. While loans make payments much more affordable now, down the road higher interest rates will have the opposite effect.

Here are our Top 10 ETF's for the week of June 9th:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) IYF: iShares Dow Jones US Financial Sector
6) DDM: Ultra Dow 30 Proshares ETF
7) PGJ: PS Golden Dragon China Fund
8) SSO: ProShares Ultra S&P500 Trust
9) CASH
10) CASH

Here are our Top 10 Fidelity Sector Funds for June 2009

1) FSPTX: Technology Portfolio
2) FSRBX: Banking
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSCPX: Consumer Discretionary
6) FSCSX: Computers & Software
7) FSCHX: Chemicals
8) FNARX: Natural Resources
9) FSENX: Energy
10) CASH

We need to exercise some caution when Wall Street and the financial media begin using new terms to describe the economy and the stock market.

A few years ago the buzz word for the economy was "Goldilocks", and now it is "Green Shoots".

I am optimistic that the economy has averted a depression like disaster, but a slower growth recovery may be in the cards until job news starts to look a little better.

The truth of the matter is the stock market has rebounded from depressionary levels- or at least close to it. The recent rally seems to be an adjustment into a recessionary environment instead of something much worse.

The stock market usually begins to recover about six months before the unemployment rate peaks.

The big worry is (and there always is one) of course is the U.S. dollar, and the impact a falling dollar will have on longer term interest rates. Foreign nations such as China and Russia said they would consider shifting assets to other safe havens like International Monetary Fund bonds.

The more worthless the U.S. currency becomes, more investors will become interested in valuable assets such as commodities, energy, and agriculture.

Here are our Top 10 ETF's for the week of June 16th:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) IYF: iShares Dow Jones US Financial Sector
6) DDM: Ultra Dow 30 Proshares ETF
7) PGJ: PS Golden Dragon China Fund
8) SSO: ProShares Ultra S&P500 Trust
9) CASH
10) CASH

Here are our Top 10 Fidelity Sector Funds for June 2009

1) FSPTX: Technology Portfolio
2) FSRBX: Banking
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSCPX: Consumer Discretionary
6) FSCSX: Computers & Software
7) FSCHX: Chemicals
8) FNARX: Natural Resources
9) FSENX: Energy
10) CASH

Clearly, the economy has sidestepped a prolonged economic disaster, but the strong recovery in the stock market has brought hopes that growth will return to historical norms. One day it may, but not for another year or more.

With energy prices and interest rates on the rise, nobody is accounting for the possibility of another decline in the economy and stock market in early 2010. The economic recovery will be sporadic and shallow at best. A robust turnaround cannot occur unless the unemployment rate reverses its current trend.

If the U.S. Dollar continues to decline, and inflation continues to rear its ugly head, there will be some selective places to hide. Energy, commodities, and precious metals are a good bet, but technology tends to do well when businesses are looking for a way to cut costs, and become more efficient. This week we are adding a technology ETF to our portfolio.

Here are our Top 10 ETF's for the week of June 22nd:

New Buys:

IYW: iShares DJ US Technology Sector Index Fund

New Sells:

SSO: ProShares Ultra S&P500 Trust

I am selling the double bull S&P 500 fund because I feel we will have better results with our new additions.

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) IYF: iShares Dow Jones US Financial Sector
6) DDM: Ultra Dow 30 Proshares ETF
7) PGJ: PS Golden Dragon China Fund
8) IYW: iShares DJ US Technology Sector Index Fund
9) CASH
10) CASH

Here are our Top 10 Fidelity Sector Funds for June 2009

1) FSPTX: Technology Portfolio
2) FSRBX: Banking
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSCPX: Consumer Discretionary
6) FSCSX: Computers & Software
7) FSCHX: Chemicals
8) FNARX: Natural Resources
9) FSENX: Energy
10) CASH

The Manure salesmen have been out in force using another new term from Wall Street to sucker investors into buying. That new word is..."Green Shoots".

Steve Leuthold from the Leuthold Group was interviewed on Bloomberg a few days ago, and while he is no longer a bear, Steve chuckled at the new "Green Shoots" euphemism, and said;

"Too much Fertilizer can kill a "Green Shoot".

Of course, Steve was referring to the aggressive stimulus being pumped into the economy, and how the results could kill off any chance of a sustainable recovery.

Warren Buffett was interviewed on CNBC yesterday, and was asked if he was "seeing any of those green shoots?" Buffett replied, "I looked. I wasn't seeing anything. I had a cataract operation on my left eye about a month ago and I thought maybe now I'll be able to see green shoots. We're not seeing them."

These comments were in direct opposition to the Fed chairman (Bernanke) was said that the "pace of economic contraction is slowing, and the conditions in financial markets have improved in recent months."

When trying to decide who to listen too, listen to the people who mock terms like "Green Shoots, Goldilocks Economy, Soft Landing, The Resilient Consumer, Points above new all-time high on your TV screen, and don't forget this one...Erin Burnett's, Economic Nirvana."

PART 1

Please pat attention to Larry Levin, of Secretsoftraders.com and CNBC's Rick Santelli as they agreed this morning that the markets have been propped up by the Obama administration- see video.

For years, investors who accused the interventionists of doing such things were chided as being conspiracy theorists. Those who make these accusations are either part of the gang, or just plain dumb.

When comes to the stock market, please understand it is a game of us versus them. Listen to the people who mock terms like "Green Shoots, Goldilocks Economy, Soft Landing, The Resilient Consumer, Points above new all-time high on your TV screen, and don't forget this one...Erin Burnett's, Economic Nirvana."

PART 2

I know it's been plastered all over the TV today, but Bernie Madoff was sentence to 150 years in prison for his 20 year, $65 billion fraud scheme.

Okay, that's all well and good. What are they going to do about the Wall Street investment banks that created, the so called toxic assets that almost bankrupted the nation. What about those people? What do you think will happen to them?

Here is how judges have reacted when Wall Street investment banks doing something wrong- Sgt Schultz of Hogan's Heros

Can anyone say- It's us against them?

Here are our Top 10 ETF's for the week of June 29th:

1) DBA: Powershares DB Agriculture Fund
2) EWZ: Brazil Index
3) DBE: PowerShares DB Energy
4) USO: U.S. Oil Fund
5) IYF: iShares Dow Jones US Financial Sector
6) DDM: Ultra Dow 30 Proshares ETF
7) PGJ: PS Golden Dragon China Fund
8) IYW: iShares DJ US Technology Sector Index Fund
9) CASH
10) CASH

Here are our Top 10 Fidelity Sector Funds for June 2009

1) FSPTX: Technology Portfolio
2) FSRBX: Banking
3) FSCGX: Industrial Equipment
4) FCYIX: Industrials
5) FSCPX: Consumer Discretionary
6) FSCSX: Computers & Software
7) FSCHX: Chemicals
8) FNARX: Natural Resources
9) FSENX: Energy
10) CASH