Bill-

Here's the big news out of Friday's numbers in my estimation and something not reported by Ms. Tanier. This is from Haver:

"U.S. real GDP growth last quarter slowed to 2.5% (AR) from 3.7% during the prior four quarters and the figure fell short of Consensus expectations for a 3.0% advance.

· Much of the disappointment stemmed from a meager 2.7% advance in business investment. It reflected a 1.0% (+6.9% y/y) decline in spending on equipment & software as well as a 21.6% (-1.0% y/y) drop in spending on transportation equipment."

I thought strong CAPEX was supposed to rescue us, now that housing is falling off a cliff. I guess not. Why take the risk of investing if you can just "manage earnings" through stock buybacks and otherwise.

this is very tricky in here. chart wise, we are close to breaking out. even if the breakout fails and is meaningless, closes through that s&p 1282 area will push more cash from the sidelines. fear of underperformance is a powerful motivator for many managers.

i would think, however, that even if the market is going to complete this double bottom pattern and run off to glorious new highs, it runs into some pretty good selling before it does. my guess is that the selling comes in here pretty quickly.

also, daily stochastics might favor some more upside here but they are now closer to overbought. i have - gulp - gotten shorter and will keep close stops.

signed,
someone who was totally wrong about friday's tape.....and who will certainly be wrong again.

MarkM and mtzion, thanks for sharing your ideas with us. Ditto all the others. That's what makes this blog so much better.

alan, there are other blogs that i go through but i use them mostly to try and guage sentiment. without being cruel, most of them are filled with people who think you can read the wall street journal headlines and then go out and trade successfully. the truth is that this stuff is ten thousand times more difficult.

i read this blog and actually feel obligated to post once in awhile because i take a lot from this blog. i was kind of shocked when i first started reading this site and saw the the quality and the level of work that mr. cara was making available...for free no less.

and because posters here are pretty much polite and focused on the market, it's a much more productive place.

so you are welcome. hope you make a lot of money this month.

p.s. - take my predictions with a grain of salt - i can be wrong an awful lot.

Bill-

This was the other news from Friday's numbers I thought fascinating:

"From the annual revisions, average growth for 2003 through 2005 is now marginally lower - 3.2 percent versus the earlier 3.5 percent. The pattern of quarterly growth over the period is little-changed. Inflation, however, is a little higher over the period, averaging 3.0 percent, compared to 2.8 previously."

Just a little "Oh, by the way" for us from the government. Growth was smaller over a three year period than we previously reported to you. And inflation was higher. Thought you'd want to know...

True, these series are subject to a lot of revision. Friday's figures were highly preliminary BTW for those who don't follow regularly. But this is just a continuation of the trend I've been ranting about. Slower growth; higher inflation. Just a heads up.

Best.....

Random Thoughts:

1. Natural gas - not a lot of discussion on this site or elsewhere about the recent spike in NG prices (due to heat waves??). But this certainly has to be another negative with respect to consumer/economy.

2. August - I don't trust what the equity markets do in the low volume environment of August...IMHO, it tends to bring out the amateurish side of the markets until big money returns after Labor day.

Bill, don't think this can be mentioned enough times...you run a terrific site...keep up the excellent work!

Regarding treasuries auctions, last Friday Bloomberg reported buried within an article about the 10-year rates dropping (quote from Kenneth Taubes). Could any of the Pros comment? Doesn't this mean there is trouble is the rates don't go up?

Quote:

``In order to have successful auction given where yields are today, the market is going to demand higher yields'' with the Fed meeting Aug. 8, said Kenneth Taubes, who oversees $17 billion in Boston as director of fixed income at Pioneer Investment Management Inc. ``The market is going to be hesitant on Treasuries.'' "

short term they are not making this easy.

we consolidated today with decreasing volatility and the intraday index charts have formed a triangle from which we will either bang up or bang down from tomorrow.

again, we are right at key areas on the indices. it is one of those unique moments in the auction where short term and long term are running together. there is a lot more short covering and fresh cash buying to be done if we start breaking through S&P 1282.

however, if we do start rolling over from here, the june-july lows are not that far off. i'm going to lean toward owning puts with mental stops and bet that we used up a little too much gas getting to these resistance levels.