Friday Malaise...

Sorry that I am late with the recap for Friday...had to run around and get some things done So here it is:

Friday was a non event. The major market averages fluctuated around the unchanged line throughout the day and at the end closed with moderate losses. The Dow was down 62 points at the close (-0.75 %) and the broader based S&P finished with a loss of 10.19 points or - 1.14 %.

It was a typical consolidation day with a limited range and a lack of true directional activity. Option expiration for the May options took place this Friday which might have contributed to the lackluster day.

For only the second time in the last 54 years consumer prices actually declined year over year. The April number showed a decline of -0.7 % versus the prior year. The decline in the consumer price index was largely driven by a decline in energy prices. Excluding energy and food (the so called core CPI) prices went up by 0.3 %.

A decline in consumer prices (or a small appreciation) is generally not viewed as a good sign. This is because the lack of pricing power by the producer typically indicates to much slack (capacity) in the system...thereby pointing to additional reductions in the workforce.

Friday's number though does not necessarily indicate that this is happening right now. The reported decline was attributable to the decline of energy prices and the core number did show an increase.

The major averages all lost around 5 % this week...a rather hefty decline. It looks to me that additional losses are in the cards and I remain neutral stocks right with a negative bias.

For those of you who are holding puts...keep them. Additional losses are likely for next week.

Have a good weekend,

Steve Benger