By Rick Glaze

The stock market displayed its ability to gyrate in the second quarter, with April ahead full throttle and the brakes firmly engaged in May and June. The Dow Jones Industrial Average finished the quarter up a mere 0.33 percent, but on the positive side, 2.7 percent for the full year.

One method of evaluating your portfolio is to take the high (set around the end of April) and tally up the negatives. After all, if you had sold out, that is what you would have. But a more realistic approach is to take into account the natural volatility in this highly liquid market and make sure your portfolio is in the most productive position for your investment objective for the longer term.

Looking at the fundamentals of the market, S&P 500 companies with positive versus negative revenue surprises ran 2 to 1, which means that for every company that had lower-than-expected top-line growth, there were two that had higher-than-expected growth in the first quarter of the year.

Another measure of business health is profit margin - simply the amount of cash a company has left from its revenues after expenses. The profit margin for companies in the S&P 500 has nearly doubled since 2001, reaching a near-all-time high of more than 9 percent as measured in the first quarter of 2006.

As regular readers of this column know, other economic fundamentals are looking good and valuations remain at reasonable levels.

Rick Glaze is president of Glaze Capital Management of Los Altos, an investment management firm. For more information, call 934-0920.