2:34pm .... Technical support held with S&P at 1,412.73 and signaled higher equity prices. 7:30am ... Usually the early days of January set the tone for the year and the market's action during the first week has disheartened most investors. The Standard & Poor's 500 index fell 0.61 percent to close at 1,409.71, with Friday's range of 1405.75 to 1418.34. The disturbing note is the small decline below 1,410.00, representing a major breakdown of technical support. Because of that event it is suggested that caution should be exercised until a clearer indication shows. As reported in Stocksmirf's 7 Prediction for '07, the Fed will keep interest rates unchanged at 5.25% for the entire year, while "hinting" to raise rates to insure the U.S. dollar doesn't collapse. Understanding the Fed's hidden agenda will serve you well during the year and prevent the current confusing to play on your mind and cloud your investment decisions. Right now investors are trying to understand the dynamics between a slowing economy with their hopes that it the economy doesn't cool too quickly, yet remains firm enough not to contract into a recession. Indeed, Wall Street wants growth to slow to force inflation lower and therefore draw the Fed into lowering short-term rates. Wishful and misplaced thinking for '07. Furthermore such a condition would not cause stocks to rise, but instead create a major imbalance in currency inflows into the U.S. which would set off a vicious cycle of inflation because the dollar would decline further in value against other major currencies. For now, the ramifications of projected Fed actions will keep the equity markets influx. .... Economic data for the week will definitely add further perplexity. Today the Fed will release its consumer credit report for November. No major concern since the volatile readings of consumer debt doesn't usually effect the equity market during the first calendar quarter. On Tuesday, the International Council of Shopping Centers, a trade group, will issue weekly chain-store sales. This number will be weak and hurt many retail issues. Weekly crude inventory data is due on Wednesday. Oil prices have fallen sharply since the start of the year as unseasonably high temperatures hurt demand for home heating oil. No concern here since crude oil prices should not decline further. However, the important report for Wednesday will be the Commerce Department's announcement on the November trade deficit. The international community will watch closely to project whether the U.S. dollar will firm or work lower. Thursday will offer jobless claims - an important report since last week, the equity market declined on a jobs report that showed hiring in December and that unemployment remained near a five-year low. Wall Street was concerned that a scarcity of workers would make the Fed less likely to lower interest rates. The central bank, which remains vigilant about inflation, cannot afford to lower rates. By Friday, Wall Street would be so confused the expected Commerce Department figures on import and export prices for December should give further evidence that the economy is stronger that most want to believe. Since the data help illustrate what consumers pay for foreign goods, which illustrates that if the dollar remains firm, buying power for imports goods improve. Like giant shinning wheel, the engine that keeps it going is the dollar. To conclude: The stronger the dollar the less risk of declining equities.

... Purpose of the arrows: - projecting that DJIA, Nasdaq and S&P barometers will close higher at the end of the day. - projected consolidating barometers with limited directional action. - projecting all three barometers declining for the days. .... Our Message Board and "Contact Us" elements are available at no cost to keep you up-to-date with timely information. Our Fantasy Hedge Fund gives you a concise overview of how investment ideas are executed. All transactions are posted on the Message Board