Market Soapbox 07/07/06

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

YIELD CURVE INVERSION: Bonds UP with the 30 yr yield falling @ 5.17%; 10 yr @ 5.13; 5 yr @ 5.10; 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 & 2yr above 30yr 06/13 - 06/30.

6mo above 10yr 06/02 -?; 2yr above 10yr 06/08 - ? 6mo above 30yr 06/13 - ?

MON, half day on thin volume with pretty internals, DJIA +78.

TUE, Markets Closed Happy 4th of July.

WEN, DJIA -76, on higher - but average volume with ugly internals.

THU, DJIA +73 on average volume with midlin internals.

FRI, DJIA -135 a triple digit slapdown bleeding into the close on higher volume with ugly internals. This week DJIA -60, since 09/19/05 DJIA +439.

Indexes UP: XAU, DJUA. DOWN: All others beaten like cheap conga drums.

Sectors UP: Oil, Utilities. DOWN: All other clubbed down.

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

Dollar DOWN vs. Euro 1.2881 & vs. Yen 112.78, XAU UP +4% & gold DOWN @ 634.8, XOI & crude DOWN -1.4% @ 74.09, CRB commodities index DOWN -1.3% @ 348.05

Non Farm Payrolls @ 121K vs May revised up @ 92K, but hourly earnings +0.5%, YOY +3.9%, the biggest gain in 5 yrs. Intraday crude hitting a new all time high.

EIA Inventory: Crude -2.4M Barrels, Gasoline +0.7M, Distillate +1M. AMD & MMM giving lowered forward guidance. Quarterly earnings season kicks off Monday with Alcoa.

Until the market proves otherwise with additional conviction, our thumb is pointed down. FYI, options unwind next week.

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