YOU CAN LEAD A HORSE TO WATER, BUT YOU CAN’T MAKE HIM DRINK

6/1/08 Sunday 7:17 PM CT

By Dave Harris

It was a pretty good week for the major indexes, but for the month the Dow lost almost 1 and a half percent. The broader S&P 500 and tech-heavy NAZ however, had monthly gains. Still I read everywhere reference to the old phrase, "sell in May". Tech companies faired pretty well because they rely less on energy resources, so high oil prices won’t impact them as much. I'm going to refer to another phrase here, "You can lead a horse to water, but you can’t make him drink." My point is the market is going to do what it does, regardless of past trends.

The economic data of late has been somewhat encouraging.  April inflation proved pretty tame with only a .1 percent rise at the core level. Income and spending have gone up moderately. So the consumer is still showing some strength here. I bet the big money managers weren't expecting that in these sour times for the economy. So what do you do in this tricky environment? You go with the trends and not fight it. Dow Chemical (DOW), for example, said they’d raise prices by about 20 percent this month. I think that will have a better than expected effect on future profitability. I would buy it here at its 13 multiple. The stock was down .23 Friday at 40.40 per share. I also have a buy on Duke (DUK). The yield is very attractive at 4.8 percent!

In the week ahead major economic data comes in the form of auto and truck sales Tuesday. The labor department's reading on first quarter productivity is due hump day. Friday it's the big employment report for last month. These reports will be the key in helping the market assess inflation risks. The oil prices will drive stocks one way or another, and what happens there is anyone’s guess.