In particular, the USD is extremely weak this morning, as seen by these charts (again, please ignore the time frame, which is GMT, not EDT).

In addition, the news of roadside bombs taking the lives of five American soldiers, the death of Saudi King Fahd, which will have security forces on full alert, and the U.S. Embassy terrorist alert in Kuwait, are likely to depress trader enthusiasm.

Still, at this point in the day, U.S. equity futures are up, and the summer rally is probably going to continue. I have to shake my head.

Sure corporate earnings growth has been positive; but the growth rate this quarter so far is just +8.6 pct versus being up over +21 pct last quarter, and even higher the quarter before that. So momentum in corporate performance is clearly slowing, showing the effects of higher commodity costs, higher interest rates, and so forth.

Gold is stronger this morning, up +1.60 to $437.40 (Dec-05 futures). It needs to get up to $444, and the XAU and TSX: XGD indexes need to rally, before I'll recognize a breakout in gold.

I had been forecasting a price of $450 before August (and today is August 1), so I have been too bullish on gold. But, at least the price of the gold trusts (GLD and IAU) is headed in my direction.

Maybe I have been too bearish on equities?

This weekend, I received a flood of mail that included positive reports from broker-dealer firms, calling for upside breakouts of the S&P500. I also note that more technical analysts have gone bullish.

No, don't count me among the Bulls yet. To me, the equity market picture in the U.S. is starting to look like 1Q2000.

Let's see how the week unfolds, and the U.S. Jobs Report that is to be released on Friday may have a few clues.

Today, there is an important economic report that will be released at 10:00am EDT. It's the ISM manufacturing index. Last month, this index reversed a string of 13 month's falling numbers, to be 53.8. July's number is estimated to be 54.5. Anything short of 53.8 will likely send the equity market into a sell-off.

Construction Spending (10am) and Motor Vehicle Sales (4pm) are also released today.

Tomorrow, it's Personal Income and Spending (8:30am), which is another very important economic report, and Factory Orders (10am).

All in all, it's a big week for economic data, plus the remainder of the corporate earnings releases. By the end of the week, I think, the U.S. equity market will likely give traders a much better indication of direction than last week.

As you know, I think there will be a topping out of the recent cyclic strength, and the key reasons are: Oil up; USD and bonds down", which is the storyboard for this morning.