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BOTTOM LINE: Overall, last week's market performance was modestly positive. The advance/decline fell slightly, most sectors rose and volume was light. Small-caps, Cyclicals and Tech shares all underperformed for the week as worries over slowing economic growth continued. While I now believe there is a high probability that oil has seen its highs for the year, the fact that the Bloomberg Crude Oil % Bulls is only 24.0 likely means a retest of the highs is in the offing. Measures of investor anxiety were mostly lower, however the AAII % Bulls came in under 30.0 for the third consecutive week. The last time this happened was February 2003. The S&P 500 proceeded to gain around 40% over the following 12 months. On the positive side, long-term interest rates and the US dollar were stable on the week, Consumer stocks outperformed, commodity prices fell and mortgage rates declined. The ECRI Future Inflation Gauge fell for the second consecutive month in March and is still below levels in Feb. 2003 and March 2000. Moreover, the Weekly Growth Rate of the ECRI Future Inflation Gauge remains in the downtrend it began in Dec. of 2004. I continue to believe the markets' recent poor performance is not a result of worries over inflation. However, investors are concerned that high energy prices, slowing global growth, a substantial increase in corporate lawsuits/investigations, lingering overcapacity from the 90s and a hawkish Fed will result in significantly lower US economic growth. Considering the positives last week, the mediocre nature of this week's rally likely portends another bout of weakness during earnings season.