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Newsletter, Members Click HereAugust 31st: It was another nonevent for the markets. Volume did climb, up to the point of been considered a technical distribution day, but there wasn't the accompanying drop in the markets to suggest any real damage was done. Watch points are: [1] an upcoming 'sell' trigger in the MACD of the Dow and S&P; and [2] support of Wednesday's breakout in the semiconductor index holds. Have a good weekend.

Target hit: none

Stop hit: NSS featured to Subscribers on August 25th, but the stock failed to hold the 200-day MA. It closed for a 2% loss.

Newsletter, Members Click HereAugust 30th: The stealth rally continued for another day. The Russell 2000 led the way with its break of channel resistance and the 200-day MA. Of greater significance was the return of a typical bullish market alignment; small caps leading tech, leading large caps. With the stars aligned in favor of the bulls (so to speak), it will be interesting to see what happens next week when the real volume returns. Tech markets [NASDAQ and NASDAQ 100] did see an increase in volume, generating another accumulation day. The semiconductor index was also able to close at new near term highs, breaking through resistance in the process.

Market internals [$NASI, $NAA50 and $BPCOMPQ] all advanced. Soon it will be time to start top watching. The $NAA50 will likely be the first to issue a warning; at 1,205, it is some 500 points away from overbought levels. Luckily for bulls, the $NASI and $BPCOMPQ have plenty of room to rise before bumping into a ceiling of resistance. I suspect things will get a little hot in October.

Target hit: none

Stop hit: HEPH collapsed on profit taking. The stock featured as a Breakout for August 15th. The play closed for a 12% loss. TARO suffered its third day of losses in a row, to end the day below its 200-day MA. The stock ran into its August 25th stop price for a 9% loss. NTRI was a Subscriber pick for August 28th. The play ran a relatively tight stop to the 200-day MA, closing for a 5% loss.

Newsletter, Members Click HereAugust 29th: Step-by-step the market climbs. Volume climbed for a second day, to register another accumulation day. Since mid-July lows there have been six distribution days and ten accumulation days (based on the NASDAQ, it is 4/12 if you look at the S&P). However, given August is the month for vacation, it is difficult to say how this accumulation trend will hold once the serious money returns to the market.

The index to watch on Wednesday will be the Russell 2000. The index closed right up against combined (and significant) resistance of the 200-day MA and channel resistance connecting June and July highs. On a positive note, the Russell 2000 is outperforming the S&P in relative strength, a sign of an improving, bullish market. Short term traders will likely sell this off the open, but should the index start pushing intraday highs at 10am, it could be all hands on deck.

Although I haven't mentioned it in a while, the semiconductor index continues to put in some handy groundwork, and should have enough bullish momentum to generate a test of its 200-day MA. Market internals [$NASI, $NAA50 and $BPCOMPQ] advanced, while volatility consolidated.

Target hit: none

Stop hit: none

Newsletter, Members Click HereAugust 28th: There were some stirrings in the markets as large caps [Dow and S&P] and tech averages [NASDAQ and NASDAQ 100] started their rise from bull flags. Volume climbed from Friday (a weak accumulation day), but remained well below average. To play Devils Advocate on the breakouts, the MACD of both large indices (the Dow in particular), remains weak and could signal a false breakout. This risk can be easily mitigated by running a stop on a break of bull flag lows.

Of the market internals [$NASI, $NAA50 and $BPCOMPQ], the $NAA50 regained its 5-day EMA, to leave all three above their 5-day EMAs.

Target hit: none

Stop hit: BOT was a Subscriber pick for July 21st, but the stock was unable to push higher, retreating below its 50-day MA and down to its last reaction low. The play closed for a 10% loss.

Newsletter, Members Click HereAugust 27th: The market closed the week as it started it, quietly. Suffice to say, there was little change as to what had gone before. The only big change was the sharp drop in volatility, which ran in contrast to the small changes in the tech markets. For the nitpickers amongst you, there were some observations that should be monitored. In the Dow, on-balance-volume is back testing support of the 20-day MA - where before, it was long standing resistance. The index ended the week below 11,324 support, but held 11,285 support - I would consider this a broad, brush stroke of support and wouldn't sweat the small moves inside this range. The S&P wasn't as afflicted by its declines as the Dow, retaining the higher of its two support levels at 1,294. The Russell 2000 didn't produce the bounce off converged 20-day and 50-day MAs it looked ready to do, but neither did it close below these two averages, Monday is another day. The semiconductor index saw a drop in its CCI indicator, falling below the overbought '100' sell trigger line, but the MACD (in particular) and slow stochastics remain strong.

Target hit: none

Stop hit: RE took its sixth day of losses to close below the most recent reaction low. The July 26th Breakout play closed for a 2% loss. BGFV was a Subscriber pick for August 15th. The play dipped into its breakout gap (and hit the stop), but closed slightly above support, for a 4% loss. SPNC hit its tight stop by 1 cent, to close the Friday play for a 4% loss.

Newsletter, Members Click HereAugust 24th: Markets drifted down on light volume, but failed to change the underlying bullish note since markets bottomed in June/July. The NASDAQ and NASDAQ 100 held above former channel resistance (current support), aided by support of converged 20-day and 50-day MAs. The semiconductor index is behaving very well and still has room to fall, before testing the 50-day and/or 20-day MAs. The Dow closed the day below 11,324, but above the 20-day MA, part of a developing bullish flag in the index. A similar picture can be found in the S&P, although this index has been able to stay above 1,294 support. The Russell 2000 is best positioned to bounce over the near term (or at least, if it is not to break below the 20-day and 50-day MAs, it will have to rally soon!), but remains contained by the declining channel defined by May-August high/lows.

Of the market internals [$NASI, $NAA50 and $BPCOMPQ]; the Nasdaq Stocks Above 50 Day Moving Average ($NAA50) is trading below its 5-day EMA, but supporting technicals in the MACD, Ultimate Oscillator, and +DI, remain bullish. There was little change in the $NASI nor $BPCOMPQ. Volatility remains contained by triangle resistance. Four days of testing triangle resistance and the 20-day/50-day MAs has contained the original bounce in volatility from the 200-day MA. Therefore, low volatility should continue to influence the markets.

Lastly, index relative strength has seen an improvement in large caps over small caps (both of which lag tech indices). Increasing relative strength in large caps is bearish, but with tech markets leading overall, a bullish bias remains.

Target hit: none

Stop hit: SORC spent the best part of 3-months drifting in a sideways pattern. Thursday's break of near term support, and 200-day MA, knocked the June 12th stop price for a 13% loss. ZL was a Subscriber pick for August 15th, but the stock drifted out of its consolidation and into its stop price for a 5% loss.

August 21st: Although I have been absent from watching the markets for the last few days, the overall picture hasn't changed enough to suggest bears have re-taken control. The NASDAQ channel breakout remains in play. The semiconductor index is well clear of its former channel and 50-day MA. For the large caps, 1,294 holds as support in the S&P and 11,324 in the Dow, both can be considered breakouts. The morning gap down in the NASDAQ 100 didn't generate a strong wave of selling, but near term support at 1,557 is looking vulnerable (day traders will probably find the most action in this level gives way). Short traders will have loaded up on the test of the 200-day MA in the Russell 2000 and bulls will probably let them have a few points before stepping up to the plate on the convergence of the 20-day and 50-day MAs. Volatility closed just below the 20-day MA and the point of its convergence with former triangle support - a low volatility period should play out from here, which usually favors bulls.

Technicals haven't changed from the bullish stance for the Markets [NASDAQ, NASDAQ 100, S&P, Dow and Russell 2000] and market internals [$NASI, $NAA50 and $BPCOMPQ]. Bulls should be good for another couple of months.

Target hit: none

Stop hit: none

August 17th: Bulls just keep on rolling. Thursday's action was led by the break of dual channel resistance in the NASDAQ, to follow earlier breaks this week in the NASDAQ 100 and Dow. There was also a change in relative strength, as the Russell 2000 assumes leadership over the S&P {Tech Indices > Small Cap > Large cap}, shifting the money action in favor of more speculative issues - also bullish. Unlike previous attempts by market indices to rally, in which on-balance-volume has lagged, all the key indices trade above their 20-day EMA trigger. In addition, the NASDAQ 100 breached on-balance-volume resistance dating back to May

Market internals [$NASI, $NAA50 and $BPCOMPQ] all look very healthy as the $BPCOMPQ followed the $NASI with its break of 3-month declining resistance. The $NAA50 pulled off its own trick, with a break of rising channel resistance. Market internals are at their best configuration for a bottom in 3-months, given the breaks of resistance. There should be some follow through (2-3 months) before market internals approach levels typical of an overbought market (expect the $NAA50 to lead in this regard).

Target hit: none

Stop hit: RICK was a Breakout feature for July 31st. Intraday volatility was a step too far for the fixed stop as intraday lows whipped out the stop for a 17% loss (the stock was able to close above the 50-day MA). OPX was a Subscriber pick for July 3rd. The stock gapped below the 50-day and 200-day MAs to hit its stop price for a 7% loss. INDM suffered a volatile morning to knock out the August 16th stop for a 7%.

Newsletter, Members Click HereAugust 15th: It was all go for the markets. Leading the pack was the semiconductor index, closely followed by the NASDAQ 100. Even the laggard, Russell 2000, got a piece of the action. Much was made of the NASDAQ push above the 50-day MA and 2,100 level, but there is still a thick band of resistance at the two channel lines in the range 2,125-2,140. And, more importantly, still no bullish crossover of the 20-EMA of on-balance-volume. However, the NASDAQ did complete one important turn, and this was to assume leadership over large cap stocks [Dow and S&P]. One step ahead of the NASDAQ, was the NASDAQ 100. Unlike the broader composite, the NASDAQ 100 did register a break of channel resistance and a crossover in the 20-day EMA in on-balance-volume. The NASDAQ 100 has a clear run to the 200-day MA at 1,636. Helping to drive the gains in the NASDAQ 100 was the early August breakout in the semiconductor index. The semiconductor index finished the day on the 50-day MA, but confirmed its relative strength over the NASDAQ 100. Like the NASDAQ 100, the semiconductor index is well positioned to challenge the 200-day MA at 482.

The S&P held its late July breakout with a push over 1,280, but resistance at 1,294 is of greater significance. On-balance-volume still lags the 20-day EMA, but another higher volume day should do the trick. The Dow was able to close above Monday's highs on a slight increase in volume, but its break of resistance still has alternative resistance levels nearby to keep the lid on any enthusiasm. The Russell 2000 is not out of the woods yet. The index was able to break bluce channel resistance, but has a far more substantial resistance level at the black, hashed channel line (chart) and the 200-day MA to contend with next.

Another move of note came in the $NASI. The $NASI breached a resistance line dating back to June and helped maintain the bullish divergence in +DI. The $BPCOMPQ completed its bullish cross of the 5-day EMA, but has yet to break resistance from June. Bulls build up the pressure on the shorts, but this time, the rally may stick.

Target hit: none

Stop hit: none

Newsletter, Members Click HereAugust 14th: A low volume rally failed to break the status quo, as markets eased back to their Monday opening prices. Volume climbed, but remained below average, and typical of holiday trading. For indices like the Dow, early day gains reversed neatly off resistance. For other indices like the NASDAQ, daily swings occurred away from nearest support or resistance. The Russell 2000 remains the most vulnerable to a major break of support as channel resistance dominated the day's action. Of the market internals, the $NAA50 crossed above its 5-day EMA and helped push supporting indicators (+DI and Ultimate Oscillator) off tests of their support. There was little change in the $NASI and $BPCOMPQ. The only real change on the day was the loss of support in volatility. Drops in volatility tend to favor bullish periods in the markets, so watch for another run to Monday's highs (in tech markets, primarily) over the coming days.

Target hit: none

Stop hit: ARWR was a Subscriber pick for August 1st. The stock cut below the 50-day and 200-day MAs for a 13% loss. CRK quickly gave up tight support, reversing its breakout and cutting below its 200-day MA for a 5% loss. TRLG hit its stop before closing above its 50-day MA. The July 24th Subscriber play closed for a 5% loss.

Newsletter, Members Click HereAugust 13th: Markets remain in holding a pattern as London terror fears failed to break what had been a market struggling at the 50-day MAs (tech markets and small caps), or holding weak breakouts (large caps). Volume dropped for a second day, further weakening Friday's action.

The NASDAQ and NASDAQ 100 held the bullish divergences in the +DI and MACD lines. For these indices, the 20-day MA was firm resistance in May and June, false breakouts were posted in late June before succeeding in early August, and have held to this day. Price action remains inside the bounds of channel support and resistance and could easily move to test one, or the other, without changing the direction of the intermediate term trend - so don't look for any significant change in the NASDAQ and NASDAQ 100 soon. Of the indicators, on-balance-volume is the one to watch - it has held firm to its distribution trend since May and if its 20-day MA is crossed to the upside it will mark a switch in favor of accumulation. The semiconductor index also maitains its breakout, even as the parabolic SAR switched negative.

The Dow did give up its break of May-July resistance, but has held support of the 20-day and 50-day converged MAs, not to mention the 200-day MA nearby below. The S&P also held the 20-day and 50-day moving averages as support (but closed a shade below the 200-day MA), while it has held its break of May-July resistance. The 'sell' triggers in the MACD are a concern in both of these indices, not helped by weakening stochastics. The distribution trends of on-balance-volume hasn't changed either.

The Russell 2000 only has the 671 support to look forward too. The index is running out of options as the bullish divergences in +DI and MACD were broken by Friday's close. Only the bullish divergence in the CCI remains.

Of the market internals, the $NASI marked a picture perfect reversal off Jun-July resistance as it crossed below the 5-day EMA. It sits on the verge of a bearish crossover in the +DI/-DI, but there is still room in the MACD before it generates a 'sell' signal of its own. Volatility is back at support after it failed to test June-July resistance. Such action should follow with a loss of support and a move down to the 200-day MA. Lower volatility will likely be accompanied with upside action in the market indices. For the tech averages - look to a test of channel resistance in the NASDAQ and NASDAQ 100, and a possible upside break of the 50-day MA in the semiconductor index. For large caps - watch for a test of May highs in the Dow and 1,294 in the S&P. For the Russell 2000 it could generate a move to black channel resistance c720, but this would be a major move.

Target hit: none

Stop hit: CDE featured as a Breakout for August 10th and as a Subscriber pick for August 2nd. The former closed for a 5% loss and the latter a 2% gain. GRB featured as Breakouts for June 28th and July 20th. The former closed for a 6% gain and the latter an 8% loss. CFK featured as a Subscriber pick for August 10th. The small pennant broke to the downside, breaking through the 200-day and 50-day MAs. The play closed for a 3% loss. CNTY took its third hit in a row as it moved further away from its 20-day and 50-day MAs. The 200-day MA looks it next logical port of call. The June 6th Subscriber play closed for an 11% loss. USTR featured as a Subscriber pick for July 31st. A series of declines pushed the stock below its 50-day MA, to the stop price for a 7% loss.

Newsletter, Members Click HereAugust 9th: Spinning in a bubble. The day started brightly, but ended sour - the net effect of which was to leave little changed. The NASDAQ stuck around June low resistance, but is becoming increasingly influenced by the declining 50-day MA overhead. On-balance-volume made a decisive step down after weeks of sideways motion, re-igniting the distribution trend in the indicator. The NASDAQ 100 failed in its challenge of 1,515, marking a string of failed attempts to break above resistance. Bulls are running out of options; converged resistance of the declining channel, 1,515 and the 50-day MA mark a trifecta of bullish woe. The semiconductor index put up the best fight as it closed on a small gain. If the index can break its 50-day MA it would give the other tech indices something to fight for. Watch this index closely - it looks ready to rally.

The Dow was hardest hit by the day's selling as last week's breakout reversed, to leave behind a bull trap. Volume climbed to register the second distribution day in a row. As with the NASDAQ, on-balance-volume weakened in line with its prior distribution trend. The 50-day MA and 200-day MA are the bulls next battle ground. Yesterday's victim, the Russell 2000, was unable to climb off the floor as bears gave it another kick while on the ground; 671 has become key support for this index. A 'sell' in its MACD trigger line has threatened the underlying bullish divergence of this indicator. The S&P may, or may not, have lost its breakout. But the long upper shadows (the range from the open to the highs of the day) it has traded over the last few days are a marker for supply, and a likely indicator of further downside for the index. The 50-day MA and 200-day MA nearby should see some support.

Of the market internals [$NASI, $NAA50 and $BPCOMPQ], the $NASI is of greatest interest as it corrects off resistance set from June (and tested in July). Volatility tested support of what looks to be a large triangle; a prelude to a Crash perhaps? The projected target for the triangle is 35. I have adjusted my market risk accordingly (see page 1 of the newsletter [$]).

Target hit: none

Stop hit: HRZ closed just below its 50-day MA, as the early stages of a more protracted decline look to be in place. The stock featured to Subscribers on February 28th and as a Breakout for May 2nd and June 16th. The Subscriber pick closed for an 18% gain. The two Breakouts closed for a 10% gain and a less than 1% loss. ARRY was a Subscriber pick for July 25th. Wednesday's declines pushed the price through its 200-day MA and into the stop price for an 8% loss. BBD was a Subscriber pick for July 31st. The stock hit its tight stop for a 4% loss. CFC was a long standing Subscriber pick from April 3rd. The stock cut through its 200-day MA on heavy volume following weaker mortgage loan business. The play closed for a 4% loss. FTRS reversed its resistance breakout, but was able to find support at the 50-day MA, but not before hitting its stop price. The August 1st Subscriber pick closed for a 11% loss. PLMD held its 50-day, but not its stop price, the stock closed for a loss of 1% after one day.

Newsletter, Members Click HereAugust 8th: Markets greeted the Fed decision with a certain degree of skepticism as the initial flurry of buying, reversed sharply to selling. Overall volume climbed to register a day of (bearish) distribution, but remained below levels seen in July.

The NASDAQ loitered around 2,072 July support (now resistance) as the NASDAQ 100 pulled away from a challenge of 1,515. The technical picture of these indices was little changed. The semiconductor index held firm on its breakout but has yet to challenge the 50-day MA overhead at 430. Bullish divergences in the MACDs and CCIs remain in effect for the tech averages and these should keep the bears honest.

Large caps [Dow and S&P] were less impacted by the Fed as their respective price breakouts held. The only index to suffer was the small cap, Russell 2000. The index registered a breakdown of near term support, and lost a step in the pecking order, to lag behind the tech averages in terms of relative strength.

Market internals [$NASI, $NAA50 and $BPCOMPQ] lost some of their bullish momentum, with a cross below the 5-day EMA of the $BPCOMPQ, to follow Monday's bearish cross in the $NAA50. But 2-to-3-month bullish divergences in supporting technical indicators still dominate.

The market is braced for decline - but will early June and July action repeat? Buying demand is increasing, but short term shocks - especially for small cap stocks - cannot be excluded.

Target hit: none

Stop hit: ALO featured as a Breakout for August 2nd. The stock lost its breakout of declining resistance and cut below the 50-day MA. The play closed for a 12% loss. BTRX suffered a similar fate as the stock was thumped on earnings. The July 31st Breakout play closed for a 13% loss.

Newsletter, Members Click HereAugust 7th: All eyes are on tomorrow's Fed decision but whether Ben goes with another rate hike or not, it won't change an improving bullish dynamic in market internals [$NASI, $NAA50 and $BPCOMPQ] as marked by the various bullish divergences in supporting indicators (MACD, CCI and +DI). There was a bearish cross of the 5-day EMA in the $NAA50. But given this index is prone to whipsaw signals and the remaining two tech market internals are bullish. it will take somewhat more to negate the net bullish picture of the market internals.

Individual indices held the lows of Thursday's higher volume buying surge, and with the exception of the NASDAQ 100, the volume action over the last couple of days of declines has eased in favor of the bulls too. Across the board, I would like to see a bullish cross in the 20-day MAs of on-balance-volume, which would suggest a switch to prolonged accumulation and negate the firm distribution trend running in this indicator in the NASDAQ, NASDAQ 100, Dow and S&P.

None of this changes the firm downtrends running through the indices, but every little small step helps. If the relative position of the market internals are an indication as to what tomorrow's Fed decision will do to the markets (the financial media will rationalize the market action after the fact, not before), then the bulls should be the ones to benefit over the coming weeks.

Target hit: none

Stop hit: AHS was a Breakout play for July 18th. The stock pushed a positive test of the 50-day MA, but it knocked out the original stop for a 7% loss. PTP also managed a test of the 50-day MA. but this unfortunately coincided with the original stop price. The July 27th Breakout play closed for a 6% loss. WPS undercut its bullish flag lows, and reversed its break of the 200-day MA, for a 2% loss.

August 5th: The modest rally in the tech averages [NASDAQ and NASDAQ 100] ran into their next challenge of the 50-day MAs. It was a step too far for the indices, but subsequent retreats were able to hold the bulk of Thursday's gains. Friday's action was the ideal short entry for traders selling resistance, so a break of Friday's highs should see plenty of upward momentum as shorts are forced to cover. The semiconductor index reversed just shy of its 50-day MA, bumping off what had been a reaction low in June. Downtrends are still in effect for the tech indices.

The breakout in the Russell 2000 was followed with a volatile Friday, but the relatively flat close was enough to maintain the breakout (even if prices got pegged back by the 200-day MA overhead). Large caps ran into troubles of their own. The Dow stalled at 11,324 resistance, but this is part of a larger band of supply running between 11,285 and 11,325. The S&P faced off against its more traditional resistance foe of 1,294. Resistance came out the winner in its first bout. However, there is some decent relative strength in this index as measured by new reaction highs in the MACD and Stochastics, but others could view Friday's doji as a (bearish) shooting star given it is coming at a convergence of overbought levels (see both short [14,3] and intermediate [39,1] term stochatics). The highs and lows of Friday are the battle ground for bulls and bears.

Market internals continued to push their bullish divergences. The Nasdaq composite bullish percent index [$BPCOMPQ] rose as its MACD forced a new reaction high, as the declining ADX measured a weakening bearish trend. The bullish crossover in +DI/-DI switched the net technical picture to green, and ended the bearish decline from early May - an important signal, marking a confirmed 'buy' for this indicator and a market bottom at July lows. This followed a similar such signal for the Nasdaq stocks above the 50-day MA [$NAA50] in late July, and the Nasdaq Summation Index from Thursday [$NASI]. All the ducks are now lined up and ready to go (onwards and upwards!).

Target hit: none

Stop hit: LNT fell back from its pennant breakout to knock out its stop after the company released earnings. The June 1st breakout closed for a 4% gain. ALJ reached into a confirmed test of $36.07 support, but dipped low enough intraday to hit its stop. The August 1st Breakout play closed for a 7% loss, while the July 17th Subscriber play closed for a 7% gain. NGPS also featured as a Subscriber pick for July 28th and a Breakout for August 1st. The former play closed for at breakeven, while the latter play closed for a 9% loss. TAP found support at the 200-day MA, but not before hitting its original stop price. The July 10th play closed for a 5% loss.

Newsletter, Members Click HereAugust 3rd: Higher volume accumulation worked through the NASDAQ, NASDAQ 100 and S&P, but interestingly, not the Dow. The S&P holds its title of lead index as it made its second positive test of former channel resistance (now support). Lead breakouts in the MACD and slow stochastics should favor a continuation in the S&P breakout. All eyes should be tuned to on-balance-volume of each of the indices. The S&P, Dow, NASDAQ 100 and NASDAQ are very close to bullish crosses in the 20-day MA trigger line of on-balance-volume - this would turn the most stubborn of the technical indicators in the bulls favor. The Dow reaffirmed its break of resistance, even if volume did not. While the Russell 2000 did enough to register a break of channel resistance, but bears will consider the 200-day MA at 710 an additional stumbling block for the index.

In other news, the semiconductor index now leads the NASDAQ 100 in terms of relative strength and confirmed its break of channel resistance. While, the $NASI followed the $NAA50 in its net bullish stance with all technical indicators in the green. Bulls continue their baby steps but probability favors long positions over short positions.

Target hit: none

Stop hit: CLK spent the last two months in decline, breaking $12.07 support at the start of the month to knock the April 25th free Breakout play out for a 13% loss. RVI crashed through its stop and the 50-day MA on higher volume. The April 17th Subscriber pick closed for a 5% gain, while the July 25th Breakout play closed for an 8% loss.

Newsletter, Members Click HereAugust 2nd: It was looking good for the bulls, until some late afternoon selling pushed the indices closer towards their lows. Volume climbed across the board, considered a technical accumulation day, but this needs to be viewed within the context of vacation month trading.

Of individual indices; the semiconductor index wasn't prepared to give up Monday's breakout too easily and rallied to break resistance for a second time; the Dow wasn't able to replicate the semiconductor index in breaking above 11,200, but the index has found some measure of support at 11,100; and the Russell 2000 posted a gain of 1.00%, but the index remains trapped under converged moving average resistance, and declining channel resistance.

For a sustainable bull rally, buyers will need to pump money into more speculative (not necessarily poor fundamentally) issues - if this is to happen the Russell 2000 (home of speculation) will have to break from its fearful malaise. Large caps, the S&P in particular, remain the focus of the bulk of the buying.

Target hit: none

Stop hit: none

Newsletter, Members Click HereAugust 1st: Yesterday's stall at moving average resistance as bulls failed to push their advantage was just the ticket the bears needed to push the markets back. The indices to lose out were the semiconductor index and Dow; the semiconductor index retreated back inside the downward channel, while the Dow negated its break of 2-month resistance. The S&P clings to its breakout and maintains its roll as leader. But no tech average escaped the down draft; the NASDAQ lost 1.4% and the NASDAQ 100 1.6% as the 20-day MA turned in another resistance performance. The Russell 2000 looks the most vulnerable to further losses given its proximity to resistance and its failure to break through converged resistance of the 20-day and 50-day MAs.

Of the market internals [$NASI, $NAA50 and $BPCOMPQ], the $NAA50 crossed below its 5-day EMA but this did not impact on the various bullish divergences in the technical indicators of the $NAA50.

It has been a raggy last few months for Breakout stocks. The longest 'dry spell' for Breakouts was 11 days from October 5th to October 24th 2005, but the current spell is on its 43rd day from when leadership stumbled on May 16th 2006. Up to this point, a cross in the MACD trigger line had been a good cue to switch to leadership stocks, but since mid-May, the tech averages [NASDAQ, NASDAQ 100] are on their third cross of this indicator. The one indicator which has yet to turn is on-balance-volume, and this may be the one to watch before increasing market exposure in tech. The good news has come from the various bullish divergencs in technical indicators from each of the various market indices. Things will improve - I called a top 3-months early in February (which in hindsight worked well). I called a bottom prematurely in May, and if I am 3-months early on this call then August should be a good 'hindsight' buy.

Target hit: none

Stop hit: CTLM, a Subscriber pick, didn't make it past a day. It closed for a 9% loss. ZQK, another Subscriber pick, reversed a break of resistance to cut below its 50-day and 200-day MAs. The July 27th Subscriber pick closed for a 6% loss.

Model portfolio [$] : TIII sold.

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