Market Soapbox 07/03/06

Resistance: DJIA 11775; SP500 1335; Nasdaq 2380; NDX 1750
Support: DJIA 10650, SP500 1210, Nasdaq 2050; NDX 1500

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.

ISM slowing to 53.8 vs prior 54.4

Inside the Number: 2nd straight decline. Full Report New orders UP to 57.9 from 53.7, Employment DOWN from 52.9 to 48.7.

Backorders getting filled, new orders coming in, job cuts to increase margins as no new productivity gains can be had.

Construction spending declining -0.4% vs prior -0.2%

Inside the Number: the biggest drop in construction outlays since 09/04 and the 1st two month decline since February and March 03.

Outlays for private projects -0.6%, the biggest drop since 07/02. Government spending declined for the 1st time in 6 months. How much impact will this sector have on the economy?? Immense.

YIELD CURVE INVERSION: Bonds DOWN with the 30 yr yield rising @ 5.20%; 10 yr @ 5.15; 5 yr @ 5.11; 2yr @ 5.17; 6 mo @ 5.26.

Recent Inversions: 2yr above 10 yr 12/27 - 03/07 & 03/20 - 3/29. 2yr above 30 yr 02/09 - 03/07 & 03/21 - 3/29. 6mo above 10yr 06/02 -?; 2yr above 10yr 06/08 - ? 6mo & 2yr above 30yr 06/13 - 06/30

MON, half day on thin volume with pretty internals, DJIA +78. This week DJIA +78, since 09/19/05 DJIA +577.

Indexes UP: XAU, XOI, NYSE, OEX, DJUA DOWN: NONE.

Sectors UP: Gold Bugs, Telecom, Tech, Brokers, Energy, Transports, Utilities, Banking. DOWN: NONE.

Overseas: FTSE, CAC, DAX, Hang Seng & Nikkei 225 ALL UP.

We stand by our position that this is a head fake, until the market proves otherwise with additional conviction.

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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