... 10:53am ... Macy's (M) suggested at $40.07 on 07.02.07, is 2.32 and trading at $42.04 with increased volume to confirm our belief that a takeoff is likely.

... 8:30 am ... Nothing happened yesterday to create problems for the upside direction of the S&P 500 index. Starting today at 1525.50, the 52-week high of 1540.56 is a mere few days away. Remain aggressive as the general market continues its rotation. ... As previously reported, the underlying strength to the equities markets can be directly traced to the ISM manufacturing index that rose in June to the highest level since April 2006. Both manufacturing and nonmanufacturing surveys point to the economy picking up momentum as the second quarter drew to a close - an encouraging sign for growth in the third quarter, and bodes well for the coming earnings session. ... New-orders index fell in June to 56.9% from 57.4% in May, and positive to maintain order growth going forward. .... A further plus for the economy was the employment index rose to 55% from 54.9% in May. .... Fourteen of 18 industries were growing in June, led by construction, real estate and entertainment. No industry was contracting.

... 8:35am ... The Labor Dept. showed that 132K jobs (Dartline 125K) were added in June while payroll figures for May and April were upwardly revised to account for a net gain of 75K new jobs. Hourly earnings rose 0.3%, matching economists' forecasts and bringing the year/year rate to 3.9%, while unemployment held steady at a low 4.5% rate for a third straight month. The futures market remains indecisive following the data, still indicating a slightly lower open for equities; but bonds are decidedly weakening in response as the yield on the 10-year note (-12/32) climbs to 5.19%. ... 7:30am ... The Labor Department reports its June job figures on Friday. Dartline expects that 125,000 non-farm jobs will be added to the nation's payrolls and that the unemployment rate to be steady at 4.5 percent - excellent to maintain upside momentum for equities.

July 5, 2007, 7:30am... Extending Monday's rally, the S&P 500 index closed at 1524.87 5.44 and within striking distance to test its 52-week high of 1540.56. Look for higher values with the start of the quarterly earnings. Excessive fund flows suggests that professional investors are making larger bets on further expectations of stronger-than-expected earnings results. ... Two factors require consideration going forward: (1) $80/bbl oil and (2) yield on 10-year Fed notes above 5.15% are probabilities within next three months - both conditions would deflate equity prices. For now, remain aggressive, but watchful.

July 3, 2007, 7:30am ... The S&P 500 index closing at 1519.43 16.08 (1.07%) will establish a test of the 1525 -1535 range. Look for higher equity prices if 1535 is breeched to the 1590 level as large capitalization stocks continue to extend their recent upside trend, while most small caps will find the going a bit ruff. Two key factors behind the bullish climate are: (1) Projected robust earnings for the current quarter and (2) The nation's factories, plants and utilities expanded at a faster pace in June, suggesting positive consumer spending is boosting confidence among manufacturers and investors even as prices for raw materials rise. The Institute for Supply Management said Monday that its manufacturing index rose to 56 in June. The reading marked the fifth consecutive month of growth for the manufacturing sector and the 68th consecutive month of growth for the overall economy. ... The fly in the mix remains inflation. Dartline is closely watching for a spike in the prices manufacturers paid for raw materials and believes that the biggest risk to the economy is if inflation fails to recede. Out-of-control inflation can eat away at paychecks, investments and standards of living. That could dampen spending by American consumers, which has been an engine for growth in the global economy and a robust domestic stock market. At this point a minor trend to the upside indicates that costs may give the Fed an excuse to rise interest rates. Such an event will be a major directional change to the market. For the moment, watch the action of the S&P 500 and "play" the momentum, since the Fed will not act until early '08.

July 2, 2007, 3:04 ... With the S&P 500 at 1516.69 13.37 the index has underlying support to test the 1525 range. Use this opportunity to add to existing positions, while taking profits on overbought issues. As the dollar falling to 26 year low against the British pound, and oil closing above $71 a barrel are factors the market cannot deny over the longer term. Yet, the S&P has pointed upside direction, and Dartline rarely questions the tape.

.. . 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.