... The S&P 500 Index closed at 1,467.67 34.61 to create stability after last week's huge losses. With the extreme volatility, change the trade range from 1435 to 1495, and use that zone to plan participation on both sides of the market. Apply patientce, take profits, reduce positions and conserve cash is the game plan since credit worries haven't disappear in a day. .. Wall Street's favorite barometer of investor fear, the Chicago Board Options Exchange Volatility Index (VIX) fell as U.S. stocks surged. The VIX closed at 22.94, down 8.82 percent after posting a 52-week high earlier in the session at 26.47, its highest level in four years. The index acted as if all of the financial worries over the past few months evaporated overnight.

... August 6, 2007, 7:30am ... The S&P 500 index closed at 1,433.06 39.14 on credit-market-related concerns and a weak jobs report. With technical support at 1450 long gone as confirmed by Dartline on 08.02.07 " ... Only a few point separates technical disaster from the index falling below its 200-day moving average at 1450, and therefore too much uncertainty for the market to trade up with conviction, " the next important test would be 1313.35 last hit on 09.05.06. The current action of the index suggests a recession starting in late 2007 and lasting through most of 2008 based on a 15% contraction on S&P 500 per share earnings to mimic a market decline of 12%-15% as during 1974-1975 and 1990-1991. Based on the anticipated scenario, the S&P 500 index could weaken to 1233, representing a 271 point decline from 1450. Before Dartline can test this forecast the index may find temporary support at 1313, and if it does occur would be a buyers' trap. ... It would be prudent to step back and assess from the perceptive of history - you know, the sum total of things that could have been avoided. You only need to review the positive things that have taken place over the past few years in the market, whether its private-equity, share buy-backs and earnings, such dynamics can be traced to an easy money environment. Thus, what companies are reporting now is less relevant than future guidance. Indeed, very few S&P 500 companies have issued forward earnings during the second quarter, which suggests a growing uncertainty about the near-term and mid-term prospects. A growing number of market strategists and economists are again suggesting that the slumping housing market, and now a possible credit crunch, have the potential to severely impact the U.S. economy, and even possibly tip it into recession - the new word for depression. ... Since global growth and liquidity are critical factors fueling U.S. multinationals, which has overcome domestic economic and credit woes, key data on second-quarter productivity and labor costs, both important gauges of inflation and growth, as well as June consumer credit data will be published on Tuesday. June wholesale trade figures will be released on Wednesday. ... Reduction in the prime interest rate? Problems in the subprime mortgage market have spread into other parts of the home loan market, causing the private and secondary mortgage market to freeze up, and limiting the availability of home loans. Contraction of leveraged-loan and high-yield debt markets, widening corporate credit spreads and derailing financing for leveraged buyouts may encourage the Federal Reserve to cut interest rates. Indeed, the central bank can alleviate the stress on equities and bailout the bulls. Don't bet on it! The Fed cannot move to lower rates and is forced by external circumstances to maintain it at 5.25%. Even a quarter point downward adjustment would further weaken the already troubled U.S. dollar and set off hyper-global inflation, while materially reducing U.S. exports, hiking values for commodities and imports into the U.S.

... August 4, 2007, 7:30am .... from a member

.. Stanley Inc. proved to be a good trade. What do you think of ... . YHOO @ 31.45, NYX @ 97.70, NMX @ 145.13, MSFT @ 30.65 and WMT @ 49.52. These stocks represents my largest positions and need your thoughts. I have a managed account with a major brokerage house and so far  this year I'm down almost 21%. I gave him a copy of your July 30 Dartline about the market going lower, he said the website was not known to him and I should rely on his judgment. This afternoon I asked him who was right. He still believe that the market looks good. From what I see he's dead wrong. 

... August 3, 2007, 7:30am .. The Standard & Poor's 500 Index finished at 1,472.20, 6.39 points as stocks rallied late based on strong profits that temporarily offsetting credit concerns. With the index at the top of 1450 to 1472 trading range, the market has sufficient momentum to test 1490, last hit on July 7th. Use the bullish enthusiasm by taking profits, eliminating laggards and accumulate cash. Stock lack the necessary dynamics for a sustained upside, nor is the economy sufficiently positioned to insure future corporate earnings growth for the next three quarters. ... With the U.S. stock market's advance, the dollar rose against the yen, which reduced pressure of the carry trade. The dollar must strengthen further to insure moderate liquidity in the international markets and keep oil prices from rising higher. ... The Reuters/University of Michigan's consumer sentiment index rose to 90.4 in July, down from the early-month reading of 92.4 but a big bounce from June's 10-month low of 85.3. Yet, there's more evidence that shoppers are tiring as consumer spending - the most important element of the economy - rose only 1.3% in the second quarter, down from a 3.7% in the first. Housing activity keeps falling as residential construction continues to drop, and reduce GDP growth by three percent. Right now the delicate balance between jobs, wages and equities are being offset by higher energy price and weakening consumer liquidity. Further weakness in consumer spending would make equities expensive and subject them to a deeper correction. Beware of the October winds.