March 11, 2002; Fundamental Price Charts Encourage Stock Buys

Expected inflation has been above its two hundred day moving average consistently for almost a month and last week the average turned up as well (see Chart).

 Oil pierced the 200-day average on March 1, but the 200-day average is not yet rising (see Chart).

Natural gas pierced its 200-day average on February 26 (see Chart).  The 200-day trend has flattened and could turn up momentarily.  Earlier we had suggested that the daily price might pierce the 200-day average in May.  The sooner happening partly reflects a better definition of the averaging period from working days to calendar days.   The fact that such a technicality might affect the picture reminds us of the subjective nature of price judgments.

There is good news for refiners also.  The refining margin on New York Harbor gasoline and fuel oil has pierced the 200-day average (see Chart).  Though it is hard to detect visually, the 200-day average has also turned up.  The spring months in advance of the summer gasoline season have often been good for refining stocks like recommended MRO.