Bill-

I had been reading for two days that the UK inflation figures would be forcing their hand on rates. $USD has weakened but it looks like gold traders don't know what to do. I bet Fed futures are reacting as well. Yesterday's reading was somewhere around 36% chance of hike.

A couple of down days would relieve overbought conditions for the One and Done crowd to do their thing again on Tuesday.

GOOG CEO Eric Schmidt appears to have just sold ALL his GOOG stock. Also a Director, Shriram, has sold all his.
Check it out at: www.secform4.com
BTW this is a good free site to check on inside buys and sells.

Rigdon,

Amazing total isn' it? How about this "Shriram Kavitark Ram", sold something like $91M of GOOG stock on Jul 31. Mr. Schmidt's total is about $20M. Thanks for the link.

The currency market already factored the ECB increase as it was very transparent. The ECB has communicated this was coming. It would have really jumped if it was a 50 bp move. It will move further today only if the press conference following the announcement is very hawkish on future rates.

If tomorrow's U.S. employment report disappoints, the Euro will have a good move up and the dollar will go down. Anticpate gold and silver would then rise along with the falling dollar. JMHO.

USD$ bounced off and up off one of Bill's support levels just now i.e. $84.77. I have it going down to $87.75 and now at $84.85. Not quite ready to jump back in. Anybody else have a view?

BOE raises rates, Iran threatens $200/barrel oil, ME in fire, and the stocks are inching up? Can anyone explain please...?

The action of the indices reminds me of that of a few months ago where there was a gap open down, a bid under the Dow (Boeing announcement), the markets had a negative tilt all day then reversed and zoomed up. I wonder if we might see something like that again or if they took the market back up just to distribut a little more to The Little People.

no doubt. i don't know if this is statistically supportable but gap downs can prove to be pretty bullish. in that initial first hour of trading, they pull in another layer of shorts and bag them with a rally.

i have noticed this: when you gap down and repeated rally attempts fail, that turns out to be pretty bearish. it means larger money is getting risk averse and is insistent on getting out.

today is tough to handicap. transports showed some relative strength into this morning's weakness. two big events are coming right up. we're slightly below a resistance level which if overcome will complete a multi-month bottoming formation and set off a bunch of green lights and whistles for some sideline cash to jump in which would pressure some shorts to cover.

today looks like one of those days where they are just going to rearrange the deck chairs.

no doubt. i don't know if this is statistically supportable but gap downs can prove to be pretty bullish. in that initial first hour of trading, they pull in another layer of shorts and bag them with a rally.

i have noticed this: when you gap down and repeated rally attempts fail, that turns out to be pretty bearish. it means larger money is getting risk averse and is insistent on getting out.

today is tough to handicap. transports showed some relative strength into this morning's weakness. two big events are coming right up. we're slightly below a resistance level which if overcome will complete a multi-month bottoming formation and set off a bunch of green lights and whistles for some sideline cash to jump in which would pressure some shorts to cover.

today looks like one of those days where they are just going to rearrange the deck chairs.

On gap openings trade only after the first 30 minutes-let the market show it's hand. Use stops at the outerparameters and go with the trend once it penetrates those limits. Specialists love to trap us on these gaps, but the true trend will assert itself shortly after 10am eastern. This works well for day trading. For position traders I hope MarkM is right-I'd love to sell some spiders if they trap some shorts and run it into the close. They big boys may be distributing stocks and the guise of rising futures, but there are way too many accidents (today RIG, MDT, STJ, to go along with MMM,EBAY, YHOO, AMD, UPS, FDX, etc. the list is endless) happening on a daily basis. This DOES NOT occur in a healthy market so longs should be held only with tight stops.

SBUX

Weekly RSI (9) at 26.6. Looking back over the last 10 years <30 has been an opportunity. Now above O/R.

WFMI also now moving out of O/R.

Stocks to watch for long side exposure. JMHO.

Once upon a time, markets in Europe, Asia, and America did not move in unison. Those days are long over, I think. Does this mean that "international investing" no longer reduces volatility and no longer provides superior returns than one-country investing? A point to ponder.

I expected the HBs would sell off a bit on today's news, too. But after an early head fake, they marched back upward, continuing a rally that started after the last, dismal earnings report for this group was released.

Quite a few are actually getting into overbought territory on the daily. Priming themselves for the expected interest rate pause, I expected. So it's somewhat strange that today's news hasn't engendered more uncertainty.

Maybe everyone is hanging their hat on tomorrow's employment data to provide the final piece in the rate hike jigsaw puzzle?

This gold selloff is bs, IMO. Fundamentals are stronger, not weaker. Could be P. Lassonde's story of summer central bank sales (really loans to participants that sell the gold) and if that is the case, who knows how low it will go.

Regardless, I have buys in place all the way down that I will eventually sell around $730 ;-)

bgraham,

if anything, won't it usher in more volatility? it's not like a desk in chicago working with a desk in new york. these developing markets are in regions of the world where political stability is up for grabs. essentially, more capital is flowing into landscapes that are a lot less than AAA rated. i hope that they do develop because economic prosperity around the world would reduce the threat of something like a nuclear war but the road to that future would be a rocky one.

g034-

Just like my morning musing, this has to be Central Bankers prepping for Tuesday. If this gets a good whack ($25+) I will place my bet on a pause.

optionoracle-

I think the liftage last time happened around 2-2:30 so let's see if it plays out again.

BenG-

I think they'll uncouple again once all the liquidity is sopped up. I'm looking at after the near recession/recession.

stockman-

I hate to sound ignorant but what is O/R?

number2son,

i agree. homebuilders are looking very overbought. in fact, the dow and the s&p are looking maxed out here. they can gun this thing but i think the biggest part of this rally is behind us. i agree with optionoracle - short strength.

the more i look at this action, the more bearish i get. i hate getting stubborn in a position but unles we get a sea change of wildly unexpected good news, i think this resistance area is going to turn us back.

one more thing - it looks to me like bond and note yields are about done going down.

MarkM,

Can you actually able to tell who is doing all the buying? Is it institutions or little people?

Somebody mentioned here that the big guys could just be swapping stocks between them to keep the indices up. Is this actually possible? How long can they hold this market up?

Just can't imagine who'd be buying with the horrendous news out there on almost every front.

Thx.

markm

'Opening Range'. Some short term traders use 'opening range breakouts' to either go long or short.

I find it helpful to avoid jumping into either side until news can be disseminated and the stock settles in. In the current market I want to add long side exposure in stocks that are long term oversold by their own trdaing history. It may be that they see their absolute lows on a day of company specific news events. So if I can wait until they dissapoint, gap down, then settle and begin moving up off those lows I may be able to get a lower risk entry. In some cases I may buy in the afternoon once th stock holds it's O/R, but I'll usually wait if it fails to hold. Example today SBUX.

I often do the same thing on sell side when a stock is getting overbought, I want to reduce exposure so I wait to see if it fails to hold it's O/R. Today ABX and PAAS would be examples.

Notable stregth in tech relative to energy today...

The dollar took another big hit very well today, this time by the BOE, and it's still doing fine vis a vis the Euro, Yen, and Swissie. Have the worldwide banking gnomes agreed to bail out the world's all time greatest debtor and its housing bubble? But at a price? Like major increases in foreign direct investments in US infrastructure that pay daily and monthly returns starting after the elections, e.g., tollroads, utilities, housing, etc in lieu of purchasing mostly debt instruments? The bankers, retailers, shopping center owners are hoping this "global economy" continues, after all, they are the majority. Manufacturers represent less than 20% of this economy. Are we to be as Warren Buffet said, "a nation of sharecroppers"?

A classic short squeeze is underway in the HB sector this afternoon. Stocks that have only recently reported disappointing earnings and reduced guidance significantly are up on accelerating volume.

If this keeps up after the employment numbers, I'll be looking forward to shorting after the Fed announces its rate pause.

If the US gets drawn into the current Middle East conflict militarily - isn't this usually bullish for the US markets?

Could be one reason for the market to keep climbing.

Does anyone have an informed opinion on this?
Didn't this happen in 1990?

The situation is very similar - the current 4 year cycle is ending the end of August this year-as the cycle did in 1990.

In 1990 there were lots of economic headwinds - but the recession was delayed (by the Gulf War) -until 1992 when Bush Sr lost the election.

----

ALSO this is very important: As far as I know - there has NEVER been a recession following the bottoming of a 4 Yr cycle - maybe someone could check this.

If this is so, in either case - after some turbulence in the next few weeks - we would be heading up - if history repeats itself.

tradesman

Rocket ship took off at 1pm. Straight up for 30 pts on the Dow in 5 minutes. Nice.

The bulls are trying to keep ALL their gains and sit on a close at 1283 on the SP500. It is looking WAY overbought out there.

This market is absolutely convinced that the Greenspan Put lives on. Economic cycles are repealed. History will be rewritten. Shine on you crazy diamonds.

Just a clarification on my previous post...

Meant to say the recession in 1990 was "preempted" not delayed.

And, meant to say "there has NEVER been a recession IMMEDIATELY following the bottom of the 4 YR cycle".

2002, 1998, 1994, 1990, 1986, 1982, 1978, 1974 etc... market has been up almost Every single time after the 4 year cycle bottoms- in most cases substantially.

tradesman

ALOHA !!

Do not forget the Fed meeting next Tuesday 8/8/06(FOMC). Those in charge of market manipulation always take gold down and dollar up prior to these meetings. They will accomplish this by Fed Speak spin and paper gold selling as usual. Ben's dog and pony circus act comes first!

Ride the snake !!!

MarkM:

Re. "Economic cycles are repealed. History will be rewritten."

That reminded me of the tech bubble.

Nothing that happenned today makes any sense to me, I am about to give up.

Bill, or anyone else, if you can explain in simple terms how the markets did what they did today after all the bad news I'd be most thankful. Other than plain manipulation I don't know how it can be possible. But that'd need a lot, a lot of power. Doesn't seem possible.

Thank you.

ursus-

I see some strengthening in the market internals AND completion of the bottoming process per mtzion. So I wouldn't be surprised that we get a good rally here into the 8th AT LEAST. THs and Investment Houses are talking up this Pause Rally prettty hard so I am betting they will get one. How big? I don't know but market action tells me heavy resistance out there so they will need some more volume.

I remain committed to the Bear Camp for the fall.

I am not going to change a thing as my trading account hit its high for the year yet again today. Defensive longs hedged to the max and a bond position hedged by miner shares. Since utes, healthcare and staples are outperforming I am getting the alpha I thought I would. Lots of cash. Gold.

I am not knocking the ball out of the park but I sleep well at night. And if this thing starts selling off I STILL think I outperform.

we got really oversold.

there has been heavy put buying. at extremes, that's bullish.

we saw VIX spikes. at extremes, that's bullish.

some weeks ago, we saw for a few moments a TRIN that approached 4.00. that type of block selling is rare. it often indicates selling exhaustion.

we've seen breakdowns and gap downs in important groups and in important stocks. that can be bullish. when you're bottoming, the tape is always ugly. when you top, the good news is all around you.

there are small players out there who were once permabulls but now are actively shorting. remember the nyse odd lot short sales that meant so much years ago?

now we've rallied.

and we are at resistance. all the small and big players know it. we are in overbought territory and should start to roll over but sometimes overbought stays overbought for longer than we expect, longer than makes sense.

"the market can remain irrational longer than you can stay solvent."

a weak jobs number with weak inflation data tomorrow lets this thing rock on higher.

but if inflation continues to show up in the pipeline, the seas will change. we will move back toward the bottom of these ranges.

i just filled the truck up and paid $3.20 a gallon. what has changed?

anyway, i try never to be too dogmatic, never to get bogged down in what i expect to happen....but the short side feels like the only reasonable trade for the next few day. in a bad market, you can only sell extreme strength and get long extreme weakness.

we're about to find out what kind of market we have here. good luck to everyone.

Bill, mtzion, MarkM,

Thanks for all the posts. It doesn't look like whatever the news is will matter that much. If it is more jobs than expected = good economy; if it is fewer jobs: no need to raise rates. If the BOE raises rates and Iran threatens $200 oil barrels, the markets skyrocket... oh well.

Just one question: do you guys still think the DJIA will drop below 9000 by Q406 or Q107, give or take?

Thx.

Tom-

Larry Berman of CIBC World Markets and a heck of a technical analyst was on ROB TV yesterday. He reiterated that he thinks the TSX falls 20% by 4Q. If that happens, then SP500 falls at least that much, maybe more.

If the markets don't drop I will look foolish for having all this cash and so will some very smart people I know.

MarkM
No one has ever looked foolish for having cash.
Regardless of the direction, there will be a way to employ and you will, probably, be ahead of the rest of us.
In the mean time you will be sleeping like a baby.
Foolish?
I think not.
RIP

optionoracle:

Your system presented @11:31AM works quite well thank you. Used 8/4. Look at GLD around 1:30PM.

I'm not only walking, but chewing gum now toooo ;)