... S&P 500 index was 3.20, or 0.21 percent, to 1,546.17, but did not compromise its underlying strength. While the Dow was down by as much as 134 points during the session, it closed off 53.33, or 0.38 percent, to 13,918.22. Yesterday's action underscore that investors must now how to handle volatility, manage emotions and remain focused to the near-term objectives. Indeed, with our market perimeters set within the range of 1590 to 1520, you can trade both sides of the market knowing in advance what to expect. ... Federal Reserve Chairman Ben Bernanke's comments on the economy and news that two Bear Stearns Cos. hedge funds were essentially worthless, causing only a moderate downturn in stocks. He spoke before the House Financial Services panel as part of the central bank's mid-year forecast, said that the economy should strengthen into 2008 and inflation risks remain the Fed's "predominant" concern, while "housing sector might get worse before it gets better" -- and remains a risk to consumer spending and overall economic growth. Nothing new! ... Bear Stearns' bad bets on subprime loans only shows that even the "experts" don't truly understand Wall Street dynamics, and are merely "spectators" to the forces of fear and greed. ... Corporate earnings reports continued in earnest. JP Morgan Chase & Co. posted better-than-expected numbers, but the bank said it increased reserves to cover mortgage losses. Also adding to investor concern, Intel Corp. reported lackluster profit margins for the second quarter, and Yahoo Inc. lowered its forecast. ... Bonds rose as fixed-income investors interpreted Bernanke's comments on housing as favorable; they're looking for interest rates to remain stable. The yield on the benchmark 10-year Treasury note fell to 5.03 percent from 5.07 percent late Tuesday. ... The Labor Department said its Consumer Price Index rose 0.2 percent in June following a big 0.7 percent jump in May. The reading was in line with market expectations and had little effect on index futures trading ... The dollar was flat against other major currencies, while gold prices rose. ... A barrel of light sweet crude rose $1.03 to $75.05 on the New York Mercantile Exchange, possibly from the U.S. Department of Energy report that gasoline stockpiles unexpectedly fell, despite a bigger-than-expected rise in refinery operations. ... The Commerce Department reported that home construction rose 2.3 percent in June following two consecutive months of declines. Wall Street was mildly surprised as consumer prices could help ease some concerns about inflation.

... Special Notice: July 18, 2007, 7:30am ... Private equity firm Kohlberg Kravis & Roberts is considering a bid for retailer Macy's Inc., according to the online edition of trade paper Women's Wear Daily .Sources cited by the magazine said KKR, which has filed for an initial public offering, was partnering with Goldman Sachs & Co. on an offer valued at $52 a share, or about $24 billion, and which may or may not exclude Macy's debt.

... As reported under Best Idea on July 2, 2007 , 10:14am . BUY Macy's Inc. (M) - last $40.07. . M trades at 12.75 forward earnings with potential takeover value at $52.50 suggests an excellent opportunity to participate in future growth with limited downside. BUY with near term target of $52.00. Check call options MKH.X at $3.30; MKV.X at $2.75 and MKI.X at $1.55 to leverage advantage of proposed T/O. ...

... Morning Commentary ... Off 0.15 (0.01%), the S&P 500 index closed at 1,549.37. Technically, nothing happened yesterday to change Dartline's trading range of 1520 to 1590. Continue to aggressively participate in U.S. equities with bias to the upside. ... Since late May '07 systematic increases in the market's short base has guaranteed its current robust posture, only to explode further late week that forced a "mini-panic" when many so called "experts" were forced to cover. Furthermore, new data released by the Commodity Futures Trading Commission (CFTC) confirmed short positions in S&P 500 futures have increased, along with S&P 500 E-Mini contracts. Thus, the experts are wrong again and betting on a major decline. Can they be right? Not for the foreseeable future. Near-record oil prices and the increasing inflationary pressures which they have created globally are causing the multinational players to buy U.S. equities because they are cheap and the best value overall. Besides gold, what else can give them a guaranteed hedge return against the quasi-debated U.S. currency? ... Just stay focused to how the S&P index reacts, and act accordingly by applying cautious optimism to your stock picks. ..Bernanke will present the Fed's latest economic forecast to congressional committees in a pair of appearances on Wednesday and Thursday. Nothing will happen but the same old - "inflation remains the biggest risk but we are watchful to the economic data and will respond in either direction regarding rate policy, if necessary." Indeed, the Fed doesn't want to say something that is going to cause the market to react violently and doesn't want to create a bubble of any sort. Look for Bernanke to be reasonably vague when describing U.S. economic activity. As Dartline declared since October 06, the Fed will retain its target interest rate at 5.25% for the rest of the year. For the first time consensus of Wall Street economists now sees the Fed on hold for at least the next 6-months.. Maybe, they're reading our pages? Remember, these same experts in JJanuary '07 had called for a decrease in rates to "stimulate the economy." ... Following the dramatic run up in Treasury bond yields last month, the financial markets and the Fed now appear to be on the same page, with both seeing moderate growth ahead. With the markets and the Fed have become more closely aligned, 5.25% rate will hold into mid-2008.

July 17, 2007, 7:30am ... The S&P 500 closed at 1,549.52 2.98 - 0.19% as the index consolidated last week's gains. While the current market conditions should be profitable for investors who can handle the volatility, managing emotions and remaining focused to the near-term objective cannot be executed unless you have a well defined plan. With our market perimeters set within the channel of 1590 to 1520, you can trade both sides of the market knowing in advance what to expect. Indeed, the bias favors the upside to commit more long assets, but you have a reasonable idea of how far to extend your stock positions. ... Even though Dartline features the broad S&P 500 index, a look at the stocks that pulled back in the second half of trading Monday, and the relationship of blue chips that helped the Dow mark a record high and its fourth straight up session, would be prudent. While U.S. stocks finished mixed Monday, the Dow Jones Industrial Average closing in record territory helped by take-over speculation over Verizon Corp., as the broad market fell ahead of key earnings later in the week. The rally continued from last week towards the key 14,000 level, as investors put money in multi-nationals that benefit from global growth and a weak dollar. Pushing a new milestone when a near term psychological barrier is about to be breached usually takes a few day to adjust to the event. Investor enthusiasm will pulls the general market higher. ... While investors park more money into equities, two jokers remain in the deck: (1) crude oil prices, and (2) sub-prime loans. ... (1) Crude-oil futures' benchmark contract closed above $74 a barrel Monday for the first time in 10 months, but finished below the day's peak as reformulated gasoline futures fell to their lowest level in a month. The oil market expects data due later this week to reflect a rise in U.S. refinery activity and an increase in motor gasoline supplies, prompting a decline of more than 4% in gasoline futures. However, continuing concern about oil production in the North Sea and recent predictions for growth in oil demand will keep crude prices high. The $75 level for oil is a near-term resistance level that will be jumped on its way to $80 within the next two months. Indeed, oil is undoubtedly bullish, especially when the recent run-up in price cannot really be tied to any one significant event, but a combination of forces that have moved the market. This has particularly frustrated bears who are throwing up their hands trying to figure out how they got things so wrong. Yet, the facts are clear: The bears underestimated demand and demand going forward will accelerate - a no brainier! ... (2) The sub-prime scenario has caused Financial shares to work lower ahead of key earnings from JP Morgan Chase (JPM ), which could reveal an impact from the meltdown in the subprime mortgage market. Expected earnings in two weeks to give us a better incite into the housing and sub-prime mess. While they will be poor, the revenues generated from the takeover activity should cushion the blow. In the same boat are Goldman Sachs (GS) , Lehman Brothers (LEH), Bear Stearns (BSC ) , which saw two of its hedge funds brought to near-collapse due to their exposure to subprime markets. If JPM, GS, LEH and BSC do reasonably well in this quarter, the general market will move up accordingly to thrust above 1590 in the S&P 500 index.

. .. . 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.