... Watch for the bull trap as S&P 500 index at 1457.42 3.53 is not good enough after a day of positive spin from talking heads. Take profits, limit losses and eliminate laggards.

... 7:30am ... The S&P 500 index starts at 1453.64. Use 1338.09 in the index as a "must hold," while keeping an eye on 1,289.82, last visited on August 23, 2006. On the upside 1475 becomes resistance. Trading the market on a day to day basis appears the only conclusion, since anything you buy today will be worth less in 90 days. Don't fight the tape and don't spun by the talking heads. Think about - What events are most important to stocks? Earnings per share is the main reason why any stock has intrinsic value. E/P ratios going into '08 don't look good. So why would stock go up? ... More volatile this week, as investors weigh the interventions by global central banks to stabilize credit markets. Even as stocks inched back from steep losses, the Federal Reserve and other major central banks intervention doesn't mean the crisis in the credit market is over. The last time such action took place was the results of September 11, 2001 terrorist acts on the World Trade Center. Dartline believes the intervention underscores the problem and if it doesn't work in the near term, a liquidity crisis of unprecedented proportions with reduce global assets as the U.S. dollar would sell off by 25% to 35%, an event not seen since 1929-1934 period, an add to realignment of all currencies. ... The Chicago Board Options Exchange Volatility Index (VIX), Wall Street's main measure of investor fear, finished the last week at 28.30 after posting another four-year high of 29.84, marking the 12th straight session it has closed above a 20 reading. The VIX measures projected stock market volatility embedded in Standard & Poor's 500 index. The focus has been on the financial sector because of the fallout from structured credit woes, while technology companies exhibit less volatility. Since VIX typically runs opposite to the S&P index, it moves up when stocks fall, indicating participants have become more anxious and bid up the risk premium in options. Indeed, the market turmoil justifies a higher VIX and until the market can come to terms with the problems in the financial sector. Volatility has transformed a traditional a long term investment stock market into a short term trading arena. ... What about the economy card? Economic data this week, will tell another story. If the data shows high-than-expected inflation, the Fed will not cut rates, not withstanding what it would do to the dollar if it did. ... Watch U.S. retail sales data for July on Monday for clues on changes in consumer habits, as well as earnings updates from retailers Home Depot Inc (HD) and Wal-Mart Stores Inc (WMT), both due on Tuesday. The producer price index, also due on Tuesday, is expected to climb 0.2 percent. ... On Wednesday, the closely watched core CPI, which excludes volatile food and energy prices, is expected to rise 0.2 percent in July, matching June's gain. . At issue is the credit crunch and the public's inability to draw equity from their homes and spend it on junk equals consumer confidence ruled by fear. ... With the current focus on the housing sector, July housing starts on Thursday are likely to come under close scrutiny. The Dartline poll of economists showed that July housing starts are expected to decline to an annual rate of 1.561 million units from 1.467 million in June. Building permits for July also are likely to decline to an annual pace of 1.400 million units from 1.413 million the previous month. Thursday's economic numbers will include the weekly jobless claims and the Federal Reserve Bank of Philadelphia's index for August ... .Consumer confidence numbers will also be closely watched, with the Reuters/University of Michigan Consumer Surveys' preliminary August reading on the consumer sentiment index due on Friday. Economists surveyed by Dartline expect the consumer sentiment index to slip to 87.0 in August from July's 90.4

... August 110, 2007, 7:30am ... The Standard & Poor's 500 index 44.40 to 1,453.09, the second worst close so far this year. A critical test at 1338.09 in the index is a "must hold," or 1,289.82, last visited on August 23, 2006, remain the next major stop. In between the chaos, trading the market on a day to day basis appears the only conclusion, since anything you buy today will be worth less in 90 days. As predicted in this column, worldwide liquidity causes intangibles to contract - stocks are the biggest intangibles out there. A global liquidity crisis from lack of available credit seems probable, because the underlying collateral to support the debt is being revalued lower. ... Case in point: Hedge fund liquidations unnerved the credit market further to cause three central banks to intervene in an attempt to calm markets.The Federal Reserve added a larger-than-normal $24 billion in temporary reserves to the U.S. banking system. Questionable U.S. home loans packaged and sold to naive financial institutions overseas have made the subprime slime a global problem. The European Central Bank was forced to allocate 94.841 billion euros, or about $131 billion to add liquidity to the money markets, a step the ECB last made the day after September 11, 2001. The Bank of Canada added C$1.455 billion into the markets. ... Apparently, the Federal Open Market Committee doesn't have an idea of the evolving risks from the turmoil in the financial markets, and instead focused on "inflation pressures." Wrong agenda!... What's going on is a potential financial meltdown, which will cause a revaluation of assets. Since the underpinning of the loans on real estate were based on unrealistic inflationary values, the likelihood of more pain and realignment is probable and underscores the potential worldwide ramifications of substantially lower, across the board, equity values. Indeed, the old arguments appears to lack substance that the global economy can keep growing without easy credit. Without abundant credit nothing works. The ECB's injection of money into the system is an unprecedented move that highlights the interdependency of credit in cross-border markets. .... Since the first of August, Dartline suggested to reduce stock positions, take profits, eliminate laggards and conserve cash, yet our trading model continued to maintain a long bias. Mistake! Our technicals have turned negative to a level never before experienced. The last time global credit became an issue was the spike in oil prices in mid '70s as the stock market fell to level only experience in 1929. ...Retailers released July sales figures reported yesterday that were overall disappointing - another ripple effect from the housing collapse working its way through the economy. ...Unwinding of yen-carry trades led to a sharp surge in the yen, and lack of liquidity in the commodities market. Global credit worries prompted investors to reduce their exposure in risky trades financed by Japanese currency. Gold may be the next "big" casualty.