Market Soapbox 07/19/05

Resistance: DJIA 10625; SP500 1225; Nasdaq 2175; NDX 1575
Support: DJIA 10200 ; SP500 1210 ; Nasdaq 2100; NDX 1550

Kusadasi death toll 5, 12 injured. There has been a collapse of a 3 year ceasefire observed by the main Kurdish paramilitary organisation, the PKK or Kurdistan Workers party.

The PKK blames the government for failing to enter talks on Kurdish devolution and for refusing to grant adequate terms of amnesty to its fighters. Since the insurrection began in 1984, 37,000 people have died.

The PKK is alleged to have acquired explosives from Iraq and to have begun training suicide bombers. Two bombings a local resorts have occurred within the last week.

The ferocity of the killings is more reminiscent of al-Qaida. Coming so soon after the London bombings, some suspect the Kusadasi bombing could be part of a fresh wave of coordinated attacks by Islamists against UK and US interests.

European markets up & Asian markets down. Dollar up vs. Yen/Euro, oil, commodities & gold down, bonds up. Contra action: $ & bonds up, Oil & Precious Metals stocks up while underlying commodities were down.

Today's Soohey Pig Pig!! Award goes to me for letting the pig have a quiet day in its poke.

Today the markets rebounded nicely. Heathcare, Pharma, HMO's & Biotech did not participate in a broadbased rally. Internals were very positive in appearance. However 52 week hi/lo looks a bit tilted to the upside and could be due for a come-uppance.

Strong results from IBM have lifted the market, after the bell Intel & Yahoo report. Short covering lifted bonds today as the market awaits Uncle Al's comments over the next two days.

A curious divergence in oil & precious metals issues vs the underlying commodities has our undivided attention; as these indices XOI, XAU, MID & RUT have had a major divergence with the market over the last several days.

The RUT, MID and SOX screamed today as the dollar and bonds rallied. Oddly enough the AMEX composite (XAX) headed in the opposite direction and not in a small way.

We have noted this before, in March XAX divergence presaged a market downturn, two weeks ago it presaged a new market peak, withstanding some erratic behaviour and divergence. What will happen the third time?

We take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong.

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