... 7:30am ... The Standard & Poor's 500 index 14.96, or 1.03 percent, to 1,473.91, as the market oscillated like a drunken sailor between positive and negative territory. Since the index is above 200-day moving average at 1450, the broader market has sufficient flexibility to establish a technical support base to built from. However, as stated on Friday morning, use 1456.38 as an important level, which the index must not violate. Keep that idea in mind as you plan to selective participate on both sides of the market. ... Greed and fear still rules, while the index recouped a sizable portion of Friday's loss as it finished the day with a 1% gain. All though yesterday's climb was the first day of an attempted rally, a series of follow-through day are necessary to confirm that the uptrend has sufficient buying power. Usually, a follow-through rally occurs after the fourth day and runs its course with successive volume increases to the underlying strength or one or more of the major sectors - oils and techs may be the leaders. For now, it's merely called a one day relief rally. ... Economic data due today , along with 102 companies reporting earnings numbers, will set the tone. Labor Department's Employment Cost Index, the index of the Chicago Purchasing Managers Association and the Conference Board's Consumer Confidence report are critical data to digest. Stay focus and allow the S&P 500 index to project the future direction for U.S. equities.

... July 30, 2007, 7:30am... The S&P 500 Index closed at 1,458.95 23.71 (1.6% ) plunged 5% for last week, 6.5% decline from the record highs set in mid-July.The S&P 500 fell within two points of near term technical support, creating a major test of the 200-day moving average at 1450. As stated on Friday morning, use 1456.38 as an important level, which the index must not violate. If on the other hand, the 200-day is compromised by more than 2%, 1374.12 (last achieved March 5, 2007) would be the next down leg. ... A key indicator to measure investor fear closed at its highest level in more than four years.The Chicago Board Options Exchange's volatility index, VIX jumped 16.54 percent to 24.17, surpassing its June 2006 closing high of 23.81, and finishing the week at its highest level since April 2003. Indeed,. the strong rise in the index suggests that investors are willing to pay higher premiums for options on the Standard & Poor's 500 index. ... On the brighter side, U.S. equities appear defensive, backed by our conclusion in October '06 that the Fed will not raise rates. Considering a busy week for earnings, including 99 reports from S&P 500 companies, the S&P 500. the stock market may have an excuse to advance. Be as it may, stay focused on 1450 for the S&P 500 index. ... Earnings and economic data this week will be telling on market direction. On Tuesday, Chicago purchasing manager's index -- a precursor to the Institute for Supply Management's national manufacturing index -- is expected to indicate slightly weaker growth in July than in June. Along with indicators of personal income and spending, the Commerce Department will release data on construction spending, and the Conference Board will report on consumer confidence. Dartline predicts that construction spending will be flat in June compared with May, and that consumer confidence rose in July compared with June. Also on Tuesday, look for the government's reading on core personal consumption expenditures, one of the Federal Reserve's preferred gauges of inflation. June's core PCE is projected to show a 2.0 percent year-over-year rise -- up from 1.9 percent a month earlier, and at the very top of the Fed's comfort zone of 1 percent to 2 percent. Wall Street's inflation worries have taken a back seat to concerns about credit but could re-emerge if the PCE figure is higher than expected. ... On Wednesday, the ISM releases its manufacturing index, which is anticipated to show that growth in July was marginally weaker than in June; the National Association of Realtors reports on June pending sales of existing homes -- which have fallen for three straight months -- while the nation's big automakers release their July sales figures. ...Thursday will bring the Commerce Department's June factory orders report, and on Friday the ISM releases its service sector index, which is expected to show slightly slower expansion in July than in June. ... Hedge-fund problems will remain in the spotlight as the subprime-mortgage financial sector continues to implode. The latest bout of jitters came last Thursday with news that a second Australian hedge fund, partly owned by Dutch financial-services giant ABN Amro ran into trouble because of its exposure to U.S. subprime mortgages. Un- confirmed rumors about German and Japanese funds may collapses from bad U.S. home loans will add more pressure to the financial sector. Such problems are creating a major credit contraction as investors refuse to provide Wall Street firms with cheap money to finance leveraged buyouts, a key source of support for the stock market over the past few years. Furthermore, tight credit conditions, weakness in the housing sector heightened by the subprime-mortgage crisis will spread into a contagion that might materially slow the broader economy. Add the loss of jobs, wages and equity price, while energy price continue to accelerate, would place new pressure on consumer spending. ... Commodities traders are confused with the recent run up energy prices. Crude futures climbed, with September crude closing at $77.02 a barrel, its highest level since mid-August of last year. The contract was up 2.8% for the session and 1.6% for the week as supply and demand concerns returned. Funds and speculators continue to buy crude into the rally, yet if perception begins to take hold that macroeconomic conditions rest on a shaky foundation, it will certainly impact energy demand expectations and effect oil prices to the downside.

. .. . 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.

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