... The S&P 500 rose 28.94, or 1.91 percent, to 1,547.70, above its record close of 1,539.18, set June 4, and a mere six points from its all time top. Dartline suggests you change near term support to 1520.47 and up top-side resistance to 1590. Consider both sides of the market, take profits, eliminating laggards and be watchful for earnings contraction candidates. ... The rally, which included the Dow's biggest one-day gain in more than four years, was perhaps surprising given that the fact that no extraordinary announcement or other catalyst usually seen with such a huge gain, and that it came before most companies have announced their second-quarter earnings. The rise also marked a sharp contrast to the start of the week, when stocks fell sharply amid concerns that some hedge funds could succumb from ill-placed bets on the housing sector. So what's the deal? ... Short covering on the S&P 500 index was evident during the day and accelerated before the close with at least $35 billion appeared to have been retired. Could it be that a few mainstream retailers, including Wal-Mart Stores Inc. (the world's largest retailer, which posted a better-than-expected 2.4 percent jump in sales at stores open at least a year), Target Corp. and J.C.Penney Co. Inc., offered upbeat sales outlooks for July? Consensus sighted optimism for back-to-school sales even in the face a softer economy. Yet, in general, retail sales appeared to be crimped by higher gasoline prices and a tepid housing market, as the outlook for the coming months would be difficult to ascertain. Then you have the Alcoa (AA) factor, which got outbid for Alcan by Anglo-Australia mining group Rio Tinto Ltd/Plc. Then, yesterday afternoon late Standard & Poor's corrected the volume of residential mortgage-backed securities it has placed under review for potential credit ratings downgrades on Tuesday to $7 billion from $12 billion, which gave a big pop to the oversold Financials. Take you pick or find a better idea. Don't go crazy for an answer, just go with the flow and focus on the technicals - S&P 500 index near term support at 1520.47 and up top-side resistance at 1590. Consider both sides of the market, take profits, eliminating laggards and be watchful for earnings contraction candidates as value traps. ... Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 5.13 percent from 5.09 percent late Wednesday. The dollar was generally lower against other major currencies, dropping to a new record low versus the euro and a 26-year low against the British pound. Gold prices rose.

.... July 12, 2007, 9:52am ...Clear breakout above 1527.45 in S&P 500 index confirms upside to test 52-week high of 1540.56 in near term sooner than moving below 1504.66. ... 7:30am ... Closing at 1518.76 within a trading range 1519.34 - 1506.76, while the advanced/decline was about even, the S&P 500 index bounced back from a sell-off in the previous session, as hopes for a strong second-quarter earnings season helped offset concerns that the meltdown in the subprime mortgage market will spill over to other areas. Android investors have been trained to buy on every dip and yesterday's action was no exception. Whether the gains hold is another story. For now, track the Dartline perimeters within the S&P range of 1504.66 - 1527.45 to justify near-term equity participation with limited risk ... Indeed, with no fresh bad news at hand, investors shopped for stocks and turned a cold shoulder toward Treasuries, which fell yesterday as investors took a breather from subprime mortgage market vibrations. Worries about the contagion from the subprime market remained in the forefront of investors' minds , but were offset by corporate profit optimism. Yet, the possibility that another shoe could drop on the subprime front limits how high bond yields can go and how far prices can drop. ... Fed Governor Warsh and Treasury undersecretary Steel stated the turmoil in subprime is not causing systemic risks. Philadelphia Fed President Plosser said most banks remain in "good shape'' to handle subprime losses. Typical spins to keep the bulls biting at the bit .The SEC's market regulation chief, meanwhile, said that Bear Stearns' (BSC 138.10 +0.14) troubled hedge funds should be able to "unwind in an orderly fashion." Could be true, if the big broker wants to "bury" the loss with a footnote. ... Although government officials downplaying any spillover of the subprime fallout helped improve overall sentiment, the remarks more notably sparked a much needed rebound in the S&P 500's most heavily weighted sector -- Financials. The rate-sensitive sector did not get any help whatsoever from bond yields, which closed at session highs. However, the pullback in Treasuries was due in part to an unwinding of the subprime risk premium that has recently been priced into bonds. The yield on the 10-year note (-15/32), which fell below the psychologically significant 5.00% level (to 4.98%) overnight, climbed to 5.08%. Look for yield to move above 5.25% in the mid-term.

... July 11, 2007, 7:30am ... Stocks went south yesterday as investors choked on what Stocksmirf said Monday that aluminum producer Alcoa Inc's (AA) second-quarter sales missed estimates. As predicted the reports dispirited investors who had been counting on AA's performance to give a boost to the overall stock market. Nervousness about upcoming earnings reports, sluggish housing market and soaring oil prices was the one-two-three punch to kick stock's off their high horse. ... The health of the consumer remains the stealth issue and will not be solved until buying patterns develop over the next three months. ... The tumbling U.S. dollar and oil prices spiking above $73 a barrel caused stressed investors to jump to the relative safety of Treasury bonds. .Add to the pessimism, the ratings agency Standard & Poor said it may lower the credit rating of more than $12 billion in bonds backed by risky home loans. Such loans are sold by some of the nation's largest banks and will materially affect their earnings going forward. Yet, all this was known for quite some time, why now, should the market react as if these revelations were brand new? ... The S&P 500 index fell 21.73, or 1.42 percent, to 1,510.12. The major number to watch is 1504.66 and if violated, 1484.18 (low 06.26.07) would signal a 10% correction to 1336 - a level last reached on 02.13.07. ... Bond prices soared, pushing down the 10-year Treasury note's yield to 5.03 percent from 5.16 percent late Monday. The plunge in yields failed to boost stocks, largely because the decrease was caused by worries about the housing market rather than confidence that inflation is easing. A speech by Federal Reserve Chairman Ben Bernanke in Cambridge, Mass., did not offer much insight into the central bank's next move, and instead focused on how the Fed makes its inflation-fighting decisions. Investors are curious whether the bank will raise interest rates later this year to rein in inflation, given soaring food and energy prices. Dartline continues to project that interest rates will remain at 5.25% for the foreseeable future. ... Investors found little relief in the Commerce Department's report that May wholesale inventories rose 0.5 percent, more than in April and slightly higher than expected. ... For now use the perimeters of the S&P index suggested by this column to gauge your investment decisions. Take profits on overbought issues, use the dynamics of shorting, remain defensive by eliminating laggards, while cautiously adding positions on special situations.

.. . 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.