An Important Week Ahead for Markets

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An Important Week Ahead for Markets

Posted on 09/25/2006 16:40:43 | Link | Post Comment

0920 EDT Monday July 10 2006

Good Morning: The week ahead could define trends in a number of markets for the remainder of July and well into August ~ September. On the back of a stunning recovery in stock prices that began leading up to the end of June, that was exactly the kind of surprising upside action we were looking for, upon the completion of a depiction of near perfect ABC formations, not only in the US, but across the World that was quite unlike anything previously experienced and is the kind of reaction one expects to unfold without warning, following a wipeout correction that temporarily drained the over-excessive positive sentiment out of a roaring bull market, which had been the case in terms of the emerging markets, along with precious and base metals. We did however warn in a recent report to be prepared for more problems with Iran and the Middle East in general and also mentioned North Korea, which a week ago put a cap on the markets at least for the short term. So now it is a case of seeing how well the market can hold up under these new developments and there is a reasonable chance that this could occur over the coming days, although we have to be prepared for anything given the markets Friday correction on weaker jobs numbers. The GDP for the second quarter may also be telling of how much the Fed's continuing rate hikes are affecting economic growth. What may be the big surprise, might be how resilient the economy remains in the face of continuing rate hikes. A 2% pullback in growth would still mean an acceptable GDP number by most historic measures of the past few decades and if the Fed has truly succeeded in engineering a mid-decade slowdown, it will stand out historically as being somewhat of the slowdown you have, when you're not having a slowdown and if the economy can do a repeat of the late nineties and continue in a kind of Goldilocks economic mode, then stock prices will likely continue to move higher later this year going into 2007, which given the likelihood of a Fed pause or even easing of rates, could initiate a formidable bull run that could take us well into the latter part of this decade and would fit our longer term outlook almost perfectly. We mentioned a while back how we thought 060606 might be a harbinger of positive forebodings for the restart of our MODAR service given the success of MODAR's predecessor's debut on 090999 and sure enough, thus far MODAR has booked around $100,000 in gains since then. We are gradually increasing our coverage of all markets with MODAR and hope to be covering all the major US markets fairly soon.. Trade Well From the Desk of Savant

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