Market Observations 07/25/06, Consumer Confidence, Existing Home Sales

In our top story tonight, the leader of al-Qaida in Iraq, Abu Musab al-Zarqawi, is STILL dead and someone else has taken his place.

July Consumer Confidence UP 106.5 vs prior 105.4. June Existing Home Sales DOWN 1.3% to 6.62M

Inside the number: Inventory of unsold homes UP to 3.7M, the largest supply since July 1997, YOY inventory +39%. YOY Median price +0.9%, the weakest price growth in 11 years.

Texas Instruments growing Q2 profits 27% YOY and SanDisk reported a 36% YOY rise in Q2 profits, The Philly Semiconductor SOXX was up 2% early, but gave half back, YTD SOXX -17%.

DuPont beat, Altria Group beat and upped its FY06 forecasts, AT&T beat, posting +81% YOY profit, stock up +3.5% to a 52 week high and McDonald's matched expectations. Lockheed Martin profit +26% boosting outlook, stock hitting a 52 week high.

3M missed and offered cautious guidance, hitting a 52 week low. UPS missed and issued downside Q3 guidance, stock punished 14% after morning downgrade, then another brokerage house upgraded the stock closing -11%.

UPS CFO saying he sees "a lot of signs" the U.S. economy is slowing and T. Boone Pickens predicts that oil will go to $100 in the next year. Transports were punished, tomorrow GM reports.

MSN's Jim Jubak agrees with one of our much earlier assessments: "In a train wreck, there comes the moment when it's no longer possible to avert disaster. I'm going to tell you why I think China's economy is headed for a train wreck." JJ thinks 2009, we say after the 2008 Summer Olympics.

Today, $7B in 20 year TIPS auctioned, bid to cover a strong 2.24, high yield 2.494%, indirect bidders a record high of 69%.

Bond yields are near six week lows, WEN $22B of 2 year notes, THU $14B of 5 year notes, these auctions could siphon off market liquidity and equities would suffer.

Today's followthrough was convictionless, look at 05/25 through 06/01 for clues to the pattern. This is starting to look like a major 3 DOWN which began 07/03.

Today, RUT 695 & 700 were hit for initial upside resistance, watch 700 support & 705 resistance closely tomorrow, a potential fall from grace?

Keep it tween da ditches, 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, this is The Nattering Naybob and your NOT!!!

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