Today, proliferating lay-offs, unemployment and earnings shortfalls pressure the U.S. economy. Downsizing the payroll (employment) in order to increase profits and productivity seems to be the strategic trend employed by corporations experiencing loss of earnings.

However, the danger is that an increased number of unemployed people augment the already declining consumer sentiment index. In addition, proliferating unemployment absorbs a family's disposable income. If deteriorating earnings and employee downsizing continue, the economy will continue to decline.

Currently, our nation has the lowest interest rates since the Eisenhower administration. Nevertheless, the dollar refuses to move lower. It appears that the so-called cure is contributing to the weakness of earnings. As lay-offs increase, bankruptcies and debt defaults mushroom. A shrinking of the money supply is a result of defaulting debt. The fewer the dollars in circulation means the greater the dollar value.

The latter statement assumes, of course, that there exists no other foremost negative variables affecting dollar value. The UN’s weapons inspections of Iraq, the War on Terrorism and the Homeland Security bill dominate the media. As for the economy, Congress is more inclined to punish Wall Street and corporate America for corruption, larceny, and deception instead of enacting legislation that could improve the current economic downfall.

Revenge is a debilitating impetus. In the end, it can be more destructive to the individual seeking revenge than the individual to whom revenge is sought after. Thus, revenge can backfire. Following the 1929 stock market crash, Congress, in an attempt to punish the affluent, raised taxes. The rest is history.

Following the Communist Revolution, the new nation emerged suffering a massive hangover because of excess. In order to commit revenge on the bourgeois for alleged gross neglect and mistreatment, the Communists executed intellectuals, teachers, medical personnel and technicians. As a result, the Communist state was forced to exist in a 20th century dark age.

For the most part, the Communists forced themselves to live in intellectual darkness for their short-lived existence. Revenge is too often indiscriminate because the innocent suffer with the guilty. Congress, supported by voter approval, has opted to spend its time, energy, and resources on pursuing revenge.

Few ever learn from others’ mistakes. If our government continues with vengeance against global terrorism as its primary prerogative, then we will eventually become the big losers.

Our national trade deficit, as well as the economy, will worsen. As investors, we realize centering on revenge will result in great costs. The economy is beginning to improve, but unless the government provides it with positive goals and the resources to implement those goals, its strength will most likely weaken.

Until the stock market recognizes the path Congress will take, it will continue to trend in a trading range bound between Dow 8000 and 9000.

This is not the time for gambling or wishful thinking. This is the time for caution. Place no more than 50% of your money into stocks. The rest should be committed to short-term T-notes. They are essentially cash investments because they can be sold quickly.

The market will break out of the current trading range to the upside once our government acts more responsive to our economy's needs. However, the market could plunge even lower if the government escalates the aforementioned wars. Money flow analysts will serve as early warning systems. STAY TUNED!