Market Soapbox 07/21/06

Resistance: DJIA 11775; SP500 1335; Nasdaq 2380; NDX 1750
Support: DJIA 10650, SP500 1220, Nasdaq 2000; NDX 1450

YIELD CURVE INVERSION: Bonds DOWN with the 30 yr yield rising @ 5.10%; 10 yr @ 5.04; 5 yr @ 4.99; 2yr @ 5.07; 6 mo @ 5.24. 2yr below 30yr for 2nd day.

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

MON, a choppy split tape day DJIA +8 on lower volume with ugly internals.

TUE, a down day till 2PM, DJIA +52 on higher but average volume with midlin internals.

WEN, followthrough DJIA +212 on higher but average volume with pretty internals.

THU, a no confidence vote bleeding into the close, DJIA -83 on lower but average volume with ugly internals.

FRI, followthrough with conviction on yesterdays broadbased pullback, DJIA -60 on higher volume with ugly internals. This week DJIA +129, since 09/19/05 DJIA +286.

Indexes UP: DJUA DOWN: Everything else, DJTA, NDX, SOX -4.6%, MID -1.4%, RUT -1.6% & XAU all slapped BIG.

Sectors UP: Pharma, Utilities, some defensive Healthcare. DOWN: Everything else punked, Airlines, Gold Bugs, Tech, Oil, Brokers, Transports, Commodity, Cyclical all BIG.

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

Dollar DOWN vs. Euro 1.2737 & vs. Yen 115.26, XAU -2.9% & gold DOWN -1.9% @ 620.2, XOI DOWN & crude UP @ $74.43, CRB commodities index DOWN @ 339.6

Economic reports and more market observations in todays other posts. The larger inflection point of 06/30 which we mentioned 06/16 occured 2 trading days later and started this downswing.

Redux?? It has been 6 weeks plus one day since the beginning of the 3rd inversion - 2 above 10 on 06/08. In 2000, inversion started 01/26, 6 weeks later, kaput 03/10.

In 2000, 01/26 began the inversion, 17 weeks later 05/24 a headfake to the upside. Wen 07/26 it will be 17 weeks since the END of the 1st inversion 03/29.

In 2000, 03/10 started the slide, 11 weeks minus 2 days later, 05/24 started a headfake to the upside that lasted 8 weeks minus 2 days. Mon. 07/24 it will be 11 weeks since the downturn on 05/08.

We think a major inflection point is coming either Mon 24th or Mon 31st. Headfake ??? or an Israeli invasion and the bottom really drops out??? Let's see.

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