By Rick Glaze

The large cap indexes managed to gain slightly for the week largely on the back of a strong move higher in energy related issues. The IBD Oil and Gas-International Exploration industry group jumped 9 percent and the Oil and Gas-US rose by 6 percent for the week, bringing the S&P 500 up a meager 0.3 percent. Meanwhile the Nasdaq index lost 1 percent while the small-cap S&P 600 gave back only 0.1 percent marking two straight weeks of decline for these benchmarks. There were some earnings disappointments in the tech area, which contributed to the drop. The tech heavy Nasdaq rose nearly 8 percent since beginning a rally in April, but has given up almost a third of that gain recently. Some traders think a pull back is healthy.

Oil prices hit new highs last week with a barrel changing hands at $67.10 before retreating to $66.86 for the weekly close. For reference July 20 the price settled in at $56.72 per barrel. Crude has jumped 53 percent in 2005, a move that affected the stock market much less than predicted. Nevertheless, black gold would have to top $90 per barrel to exceed the inflation adjusted peak set in 1980. Limited refining capacity is blamed by some for a near buying frenzy in oil. U.S. refineries are reportedly running at 95 percent capacity and demand is at peak levels.

A market weighted index of REIT’s, real estate investment trusts, is down 7 percentage points over the last four weeks. The group is higher by 20 percent over the last 52 weeks. Last week the REIT index had a dividend yield of 4.75 percent, higher than the 10-year treasury yield of 4.24 percent as measured Friday. Despite the Fed raising short-term rates aggressively, the longer yields have uncharacteristically stayed low.

Rick Glaze is the president of Glaze Capital Management of Los Altos and is a registered representative of and offers securities through First Allied Securities, Inc.