MARKET NEEDS NASDAQ LEADERSHIP

NASDAQ VS. THE NYSE... Chart 1 plots a ratio of the Nasdaq Composite divided by the NYSE Index. The line has been rising since last October, reflecting better relative performance by the Nasdaq. That's usually a good sign for the market as a whole. Since the middle of March, however, the Nasdaq/NYSE ratio has been slipping. That's a cause for some concern if it continues. Our research suggests that it's easier to make money in the market (on the long side) when the Nasdaq is in the lead. We note, however, that the ratio line is in a potential support area along the January highs -- and is at the lower Bollinger Band. New leadership from the Nasdaq at this point could give the market a needed boost.

Chart 1

MONEY MANAGEMENT UPDATE... The Decision Model that we use at MurphyMorris Money Management rates the market environment as "positive". That has been the case for several weeks. When the market climate is positive, we employ a ranking system to choose equity mutual funds that we invest in, and we hold those funds until they fall below our "stoploss" point. We started adding new positions to our portfolios at the end of March. By week's end, we should have enough information to determine if the funds we're in are going to maintain their trends and positive rankings. One potential negative is the fact that the NYSE Composite Index has been showing better relative strength than the Nasdaq market for the past month. (See Chart 1). Historically, the market usually does better when the Nasdaq is leading. Last Monday, we showed a chart of one of the funds we currently hold. Here's another one of our current holdings plotted through Friday.

Chart 2