FRIDAY -- TECHNICALLY ALL IS WELL, BUT WE WATCH THE MARKET WINDS

Yesterday the major indices were relatively unchanged – and some folks were looking at defensive names. Hmmmm. Anyway, in looking at the charts, there is no real evidence of the market rolling over, and the S&P500 is technically okay.

We have been calling for consolidation – some of that gentle churning action. And, indeed, the market has been churning this week which is a good thing. But we still believe that there needs to be further consolidation for the market to make any significant move higher.

And, quite honestly, having said all of that, we still cannot get from the back of our minds that those nagging economic problems are not all solved – and eventually such things at some point always seem to come back to haunt. It is our belief that the picture is not as rosy as some folks would like us to believe.

Once again, it seems that the right thing is to take advantage of opportunities when we see them.

And it seems the right thing is to keep an eye out there always sweeping, looking for the moment when folks start to worry significantly that the market winds will shift.

THURSDAY -- LAST LAZY DAYS OF SUMMER

While the market has been getting some pretty decent news this week, but hasn’t soared off the news – that does not necessarily mean that the Bulls are losing control. Players are still searching for trades, and the trend remains with the Bulls.

However, having said that, we still believe that there are plenty of critical economic problems remaining to be solved – and, in the end, unless they do get quickly solved, at some point they will be a focus again.

The market is acting a bit tired – which makes sense. But some sectors have still been attracting attention and action, such as the biotechs.

At the moment, we are enjoying summer days – and will be on heightened alert for signals of which way the wind is going to blow. It is hard to sit on hands and, while we believe some rare good set-ups can still be found, we are not eager to be doing anything too gingerly. There will be opportunities – and, quite frankly, we want prices to come to us.

PROTECTING GAINS IS ALWAYS A GOOD THING

The reappointment of Ben Bernanke as Fed Chairman and a better-than-expected consumer confidence report prompted folks to move the major Indices to the highest levels of the year – before later giving up some of the gains. However, the action was decent – and the dip-buyers once again were hanging around.

Thus far the market seems in decent shape – and the Bulls are still in control.
However, we believe in keeping a sharp eye out there – and think it prudent to tighten stops and be rather ambitious in protecting gains.

THE TREND IS YOUR FRIEND

The US markets moved higher in early morning trading yesterday, but the gains slowly disappeared when traders decided that it was time to take some of their profits off the table.

Ben Bernanke will have a second term as Chairman of the Federal Reserve, and the market, of course, always likes continuity. This plays into the hands of the Bulls who have already been having a lovely time lately.

Stocks are extended, in need of some consolidation – so it seems wise to take some profits and enjoy some of these last days of summer. It is difficult to put too much money to work when we believe both that the nation’s economic problems are not all solved – and the market is extended to the upside.

But the trend is your friend until it is not, and currently the trend is with the Bulls. So the winning hand has been to stay with the trend – remembering that the market can continue in a direction much longer than anyone expects. Folks who have stayed on the sidelines have been left out of the “trend is your friend” rally.

Our view, as we seem to say daily, is to look for good chart set-ups, making small moves and taking profits along the way. There seems no reason to stay entirely out of this market. But it will pay to not get cocky – to remain vigilant. While it might not happen quickly, at some point the tide will turn, and it is never fun to watch profits go away. And the number one rule has always been to protect profits.

THE BULLS STILL HAVE IT THEIR WAY

The market closed out the week rocketing to fresh new yearly highs after a better-than-expected existing home sales report. This was a big win for the Bulls! It certainly felt great, but, of course, now we are faced with the problem of finding new set-ups.

So we will be looking for those set-ups while remaining vigilant over recent gains. Despite believing that a correction will come, not not knowing exactly when that will happen -- our thought is to take advantage of the good set-ups and to contine to take gains along the way. Jumping out of positions a bit too early is far better than staying in them too long.

Some notables: Traders have been selling the China and India US-traded ETFs -- and the market is at levels where, if it does not churn for a bit, traders might begin to take some profits. And, as we have been saying for quite some time, the $USD remains a real key and it will be prudent to keep a sharp eye on it!

WEEKEND READING

WHITE HOUSE TO BOOST 10-YEAR DEFICIT FORECAST TO $9 TRILLION

WHEN THE RICH GET POORER, LOOK OUT BELOW

SMALL INVESTORS FACE BIG HIT IN ETF PUSH

EX-UBS BANKER GETS MORE THAN 3 YEARS IN PRISON

TOYOTA COROLLA STILL CASH FOR CLUNKERS TOP SELLER



GADDAFI EMBRACES LOCKERBIE BOMBER AND THANKS HIS 'COURAGEOUS FRIEND' GORDON BROWN FOR RELEASING HIM

U.K. SAYS AL-MAGRAHI RELEASE NOT LINKED TO TRADE PACK

OBAMA UNDERWRITES OFFSHORE DRILLING. TOO BAD IT'S NOT IN U.S. WATERS

CHINA TRAIN MAKER WINS APPROVAL FOR SHANGHAI IPO

RIO'S SORE SPOT, LOWER SPOT PRICES FOR IRON ORE HIT THE COMPANY'S REVENUE IN THE FIRSDT HALF. WHAT WILL TOMORROW BRING?

WOES ARE INCREASING, THE LOCKDOWN OF CONTINENTAL FLIGHT 2816

FRIDAY -- EYEING PRECIOUS METALS AND MINERS

On Thursday the S&P500 closed at its third highest level of the year – and the Nasdaq posted solid gains. The gains actually took the U.S. market ahead for the week despite what was a pretty ugly Monday.

For the past half-year now, buying pull-backs and dips has paid off and it appears that it will take some unexpected bad news and/or perhaps some failed bounces to change this market mode. Of course, though, our readers know that we believe that economic problems are not all solved – so that there is always the potential for some bad news to emerge.

But right now the Bulls remain in control, seem pretty happy and can claim that trend that is your friend -- so we will continue to look for chart set-ups and be involved in small ways, with a particularly watchful eye on those overhead resistance levels. We are eyeing some precious metals and miners.

THURSDAY -- BULLS STILL IN CONTROL FOR THE MOMENT

At the closing on Wednesday major indices had made solid gains that, together with the prior day's gains, took the market back to about flat for the week. Dip buyers were doing their thing, and the Bulls showed that at least for the moment they remain in control. Most sectors were higher, with greatest gains in energy, health care and basic materials.

We still suspect that there will be more of a correction before too long, but for now the Bulls have control and that must be acknowledged and respected. The trend is your friend until it is not. And we are keeping a watch for such things as lower highs.

In the meantime, we continue to look at charts for set-ups -- and among those that we are looking at are INFY, JNPR and BCRX.

WEDNESDAY

Yesterday the market experienced a decent bounce after two days of poor action. Deere announced lower revenue and profit, but, of course, the numbers beat estimates. That's just the sort of thing that has been happening lately. Volume was not surprisingly light, and while gains did not make up for the ground that had been lost, the dip buyers showed that they are still around.

To speak up on the Bulls side, the S&P 500 has thus far held above 975. The dip buyers are still around and wanting to participate. So far the best that the Bears have been able to pull off have been a couple of down days in a row. And the analysts continue to move the market higher with upgrades of some general favorites.

So until the wind switches direction, it makes sense to look for opportunities -- good set-ups -- and try to take advantage of those opportunities. But until we develop greater confidence, our moves are small and we take some profits along the way.

TUESDAY -- WATCHING FOR SIGNALS

Major indices and sectors other than health care providers ended yesterday miserably. Financials, precious metals and resources suffered the most as folks shifted their interest to more defensive sectors.

While market action never reached a panic, this time the dip buyers were absent, either vacationing, asleep or simply refusing to participate. Of course, we have been expecting this for a while. It was due.

For now, it seems prudent to watch for real signals as to which way the wind is going to blow from here. We will watch to see whether upward action draws sellers taking profits – or whether this ends up being viewed as a buying opportunity. But, as we have said, there is still room to the downside before any real technical damage is done.

WHAT WILL THE DIP-BUYERS DO HERE? WE ARE WATCHING.

Recently we have issued frequent reminders that the market would likely offer better set-ups and better opportunities down the road – which seems to be coming to fruition.

Traders took some gains on Friday, though the market finished off the worst levels of the day.

Today, though, traders were met with some pretty atrocious action in the international markets. And folks are talking about recent weak US economic data.
But the market had recently soared and was, in our humble opinion, in need of a pull-back. And even with some recent churning action, we have felt that the market was overbought, extended to the upside.

It will pay to watch what the dip-buyers do here, but this is just the kind of action that we need to bring sanity back into the markets and provide those decent set-ups that we have been speaking about.

WEEKEND READING -- DIFFERENT THIS TIME

The weekend reading is slightly different from usual -- less about news; more about some people's thoughts -- some things to ponder whether you agree or not.

Are Markets Being Manipulated, Green Faucet

Collapse in the Wake of the Fed’s Wall Street Bubble?

The Rich Get Richer And The Poor Get…Fired by Henry Blodgett

No Such Thing as Riskless Venture Capital, The Wall Street Journal

What’s Chinese for .limitedgovernment?, Wall Street Journal

Why Today’s Stock Markets Are All About Confidence and Gullibility, J. S. Kim, Seeking Alpha

U.S. and China: Dollar Dumping Is Not the Real Worry, Simon Johnson, Seeking Alpha

Recession Is Over: Long Live Depression, Seeking Alpha

FRIDAY -- PERRY COMO STANCE STILL IN EFFECT

Once again, on Thursday the major indices finished the day near the session highs. Volume was light, but the dip buyers were right there doing their thing several times throughout the day. Cyclical sectors had some particular strength -- includding materials and financials.

The market has been seemingly building a base near highs as the trading range of the last two weeks remains. And while many folks argue that the market is extended and in need of a pull-back, the market seldom does what people expect. And a case can be made that recent churning action near the highs could actually set up for a move still higher. Time will tell.

There are no changes in our stance – the Perry Como approach, easy does it.

Be careful out there.

And don't forget about the Weekend Reading tomorrow.

THURSDAY -- THE BULLS STILL IN CONTROL

Yesterday the Bulls had complete control. The dip buyers proved that they are neither sleeping nor on vacation -- not quietly going away. Stocks were bid from the open, and after the Fed announcement the market moved higher, although closing under the highs of the day. But the major indices were more than 1 percent higher after two consecutive down days -- and recent churning action, of course, has allowed the S&P500 to at least work off some of the overbought conditions.

As we all know, the trend is your friend until it is not. And the trend so far remains as it has been – with the Bulls.

But the Bulls should not get cocky. The economic problems have, unfortunately, not all gone away.

We will continue to look for charts, making small moves and taking profits along the way. We believe that this is not a time to be jumping into the market with both feet, trusting whatever the talking heads on tv say. It seems a time to study charts, make small moves where charts look right – and continue to take some profits to be prepared for another day.

WEDNESDAY

Yesterday’s trading session stood out because the sellers were in control and the dip buyers seemed either taking a snooze or having left for vacation. Easily the biggest losing sector was the Financials.

While yesterday's action was negative, things can turn on a dime and the action does not necessarily mean that the dip buyers are now giving up.

But we have been saying that the market needs to digest gains and work off overbought conditions. And, quite honestly, the market can move lower without seeing any real technical damage.

The FOMC news may give the market more action today – but whatever the market reaction, we would wait for things to settle before taking the move too seriously. Be careful out there.

HILL AND STREET NEWS' STANCE

Yesterday was what we have been talking about – a bit of a pause. Some consolidation is just what the market needs. And while the week was off to a slightly negative start, dip buyers once again showed their confidence – or fearlessness – and stepped forward during the final hour, preventing the market from finishing at the worst levels of the day.

There is not a whole lot to say that we have not already said before, but reminders seem in order given that we have some new readers.

Yes, the market has been in need of a pause. But to think that a pause is all that we believe that we need to confidently jump into the market with both feet is not correct. Our large belief is that many of the critical economic problems have not gone away. They are not yet solved. And until we feel greater confidence that solutions are in place and working, we will remain particularly vigilant.

Based on the above, our own belief is that shorter-term trading is more in order – with profits definitely taken before they go away.

Our eyes are focused everywhere – on the news, action in the global markets, the $USD, etc. Pretty much everything has a cause and an effect -- and we are keeping that in our minds.

AMERICAN IDOL AND PAULA ABDUL, CKX AND 19 ENTERTAINMENT

With a family that has enjoyed watching several seasons of American Idol, we took a fun adventure into announcements of connections of the popular television show, keeping in mind some of the drama taking place lately regarding Paula Abdul's departure from the show.
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American Idol creator Simon Fuller’s company 19 Entertainment announced the acquisition of a 51 percent stake in UK-based Storm Model Management Ltd, the agency that’s roster includes models Kate Moss, Jourdan Dunn, Lily Cole, Cindy Crawford, Eva Herzigova, Carla Bruni and Emma Watson.

Of course, this announcement comes just weeks after 19 Entertainment and its parent CKX agreed to a $45 million deal with Ryan Seacrest that keeps him as host of its popular American Idol television show and apparently working on other projects. And it comes just weeks after the Idol executives and Idol judge Paula Abdul agreed that she would leave Idol – reportedly because an agreement could not be reached on a salary for Abdul.

Apparently Fuller and Storm’s owners have spent more than a year working the deal expected to “create new joint entertainment platforms for its talent, as well as developing the Storm brand in new and exciting directions.”

“With 19 moving more into the world of fashion and style, the opportunity to join forces with Storm … was irresistible,” commented Fuller. “Together we can push the boundaries, blur the lines and redefine what a model agency should be in this fast-moving world where fashion is playing an increasingly important role in setting and reflecting culture and tastes.”

19 Entertainment also revealed that its growing fashion portfolio includes a joint venture with Fashionair.com, Victoria Beckham’s critically acclaimed dress collection which sits alongside her denim and sunglasses lines, a multimillion-dollar fragrance partnership with Coty, and a joint venture with designer Roland Mouret.

CKX reported that the “deal is a continuation of (its) mission to form partnerships with high-value entertainment companies or individuals” – and lists among its current roster Muhammad Ali Enterprises, Elvis Presley Enterprises, David Beckham, Victoria Beckham, “American Idol” and “many others.”

Also, in a separate financial announcement today, CKX chairman and CEO Robert Sillerman said, “I am pleased at where the company sits at this time.”

SKX, for the six months ended June 30, 2009, saw revenue increase to $161.0 million from $153.7 million for the comparable period in 2008, according to the report. Operating income is listed as having declined from $45.3 million in 2008 to $34.8 million. And the 2009 results were said to include a “non-cash swing of $6.0 million in foreign exchange losses, as well as %5.8 million in unusual one-time costs.”

However, skipping to comments on American Idol, the report reads, “Revenue was flat at 19 Entertainment as new television programming offset declines in American Idol. The decrease in revenue attributable to American Idol was due to reduced foreign syndication revenue, lower ratings bonuses and weaker on and off air sponsorship revenue resulting from the global recession.”

“The predictability of our core business permitted us to more than double our development budget for 2009,” commented Sillerman. “With American Idol increasing its lead among the key demographics to unprecedented heights, with So You Think You Can Dance beginning an additional season in September of this year, with attendance at Graceland running ahead of last year in this quarter and with the Las Vegas-based Cirque du Soleil show on track to open at the end of this year, the base of our business continues to be solid. With others cutting back on development, we anticipate greater opportunities in both Television and Internet opportunities.”

19 Entertainment CEO Simon Fuller said, “I could not be more excited by the diversity and quality of our forthcoming projects. With the decision to invest more time and resource into a strong development programme, this initiative is now beginning to bear fruit. We are negotiating new TV shows in reality, comedy, drama and music, including an intriguing multimedia show that will push the boundaries of television, the Internet and live events. With our Sport, Fashion, Music and online presence also growing, 19 and CKX have more new initiatives than ever before.”

19 Entertainment, a wholly owned subsidiary of CKX, Inc., has relationships and partnerships with “some of the biggest names in sports, music and fashion, including David Beckham, Victoria Beckham, Carrie Underwood, Kelly Clarkson, Daughtry, Claudia Schiffer, Roland Mouret and world tennis No. 3, Andy Murray.”

MONDAY MORNING

The bulls have been in control – unrelentingly so it seems. Stocks have made tremendous moves to the upside, and there has been little or no time to digest gains and consolidate. Just ahead of the jobs report, it appeared that there might be some of the needed digestion, but all that disappeared once the report was released. And although a number of charts are now looking technically improved and presenting better set-ups, we still feel the need for some consolidation. But, of course, the trend is your friend until it is not – and the trend has favored the Bulls.

Perhaps with this being summer and some of the earnings season hoopla behind us, things will quiet down – perhaps until just before Labor Day. Typically summer is quiet, but more volatility comes into the market in September and October. And while the G-20 meeting is more than a month away, it is still there in the back of our minds.

Our thoughts are that gold can go a bit higher, but we are not trusting financials – and expect that we will soon see weakness in energy and basic materials.

WEEKEND READING

YOU WILL NOT WANT TO MISS THESE

The Credit Crisis: The Largest Outlay in American History, Barry Ritholtz

Despite Bailouts, Business as Usual at Goldman, The New York Times

Man vs Mutt, WSJ

Lawmakers' Global-Warming Trip Hit Tourist Hot Spots, WSJ

Todd Harrison's Memoirs of a Minyan, MarketWatch

CHINA/INDIA

More access to press 'legacy of Games', China Daily

Monetary policy to remain unchanged, China Daily

Shanghai Stock Exchange prepares for foreign listings in 2010, theaustralian, WSJ

Lenovo cuts Q1 loss on China growth; outlook cautious

US distributors deny Chinese tires disrupted market, China daily

Coal India: Need to Hike Domestic Prices, WSJ, India

JOB LOSS RATE DROPS TO 9.4%

Yesterday the S&P500 hit a high for this year shortly after the open and then continued to sell off and eventually close in the red. Sectors remain overbought, but we still have yet to see any real technical damage – simply a bit of caution about consumer spending and the upcoming jobs report that will garner headlines and attention. Folks were expecting job losses of about 275,000 – 300,000 with unemployment rate rising to 9.7 percent.

US nonfarm payrolls declined by 247,000 in July (after 443,000 loss in June) the Labor Department reported today -- and the unemployment rate surprisingly fell from 9.5 percent to 9.4 percent. Once the numbers were released, the market immediately reacted positively seeing it as a turning point in the recession.

As always we remain on the lookout for great looking charts, but still feel that the market needs to at least churn for a bit to work off recent gains before moving higher.

Web Log Directory

WATCHING AND WAITING

The major indices once again are pointing to a higher market open.

Financials and materials were the winners yesterday. Industries that were weakest were the very ones that generally take the market higher including oil services and biotechs. And breadth was slightly negative – with the large volume early indicating that possibly players might be thinking about taking some profits. Retail investors seemed uneasy – perhaps worried that consumers, once again in July, were in “cutting back” mode.

The $USD gave back the prior day’s gain, but while the $USD may continue to slide to a new cycle low, our expectation it will not move significantly lower.

So far, though, the trend has continued to be “friend,” and we continue to look for charts with good set-ups, watching and waiting. A few that we are watching are GROW, PAAS, FSUMF, KONG and SIGA.

WATCHING AND WAITING

How many times have we stressed that our eyes are glued on the $USD? – which we believe will probably not fall too much further from here.

The $USD, in our minds, has been and remains a key! And thus far, our stance on $USD/precious metals action has been spot on.

The Bulls have continued to maintain their control – and, as we have frequently said, the trend is your friend until it is not. And buyers have stepped up to take advantage of dips.

But an ever increasing number of charts have moved into further and further into overbought territory – with risk escalating while the number of decent chart set-ups has been diminishing. Definitely it seems prudent to keep an eye focused on market direction, especially following the first hour of trading – to keep another eye on the international markets.

For the most part, we are sitting on our hands. The risk/reward is not what we want here – and, other than quick trades, it seems best to wait for set-ups that we believe in that will likely occur down the road.

FUTURES INDICATE LOWER OPEN

Futures are indicating a lower open – not unexpected by any means. Personal incomes in the U.S. have reportedly decreased by 1.3 percent, the largest decline in four years.

But yesterday – what an amazing day! The ole Bulls had themselves a big one, thanks to a plunge in the $USD, escalation of international equity indexes and a better than expected reading on the US ISM index. And a Ford Motor sales increase helped too. Each of the major indices, in the end, closed at new intermediate highs.

But the underinvested Bulls and the Bears who invested short have been feeling pretty darn ill as they have day after day watched this market soar. And one after another the pain has felt heavy and huge, and they have been jumping aboard the momentum train speeding further and further into overbought territory, hoping to collect at least some quick trading profits before the train ride is over. Of course, the number of charts with decent entry points have become fewer and fewer, making it ever more difficult to find ways to participate.

We at Hill and Street News have participated in the market for quite some time, felt no need to jump into high-risk moves – and are growing ever more concerned as the need for consolidation continues to escalate. We are, as probably are most folks, keeping an eye on the late 2008 resistance level. And, too, we are not forgetting that all of the problems that drove the market lower have not gone away – and even most companies that reported better than expected earnings did so largely based on lowered expectations.

****KEEPING A SHARP EYE ON $USD****

We wanted to make certain to mention that we are keeping a sharp eye on the $USD since it is a real key!

Although we have mentioned the importance of following the $USD over and over again, especially with respect to commodities, it seemed worth repeating again here!

BACK IN THE SADDLE AGAIN

The past week flew by, as all vacations tend to do, but it also feels good to get back to business again.

Without a doubt, the market has been strongly in Bull mode – and as we have said many times, the trend is your friend until it no longer is. And when the trend is as strong as we have seen recently, fundamentals matter less than the trend. There is little doubt that the market is extended and in need of some consolidation, but there has been little to show that the momentum is slowing. Putting money to work has been more and more difficult because, simply, there have not been pullbacks and consolidation.

But we do believe that the market is increasingly becoming more vulnerable. We are not trusting, and will continue our stance of making tiny moves to the upside – taking some profits as they occur in order to protect profits. While it is possible that the excesses can be worked off over time, our sense is that there will come a time of the kind of entry points that we look for.

Some of our other thoughts are that there may still be some room to the upside in precious metals. But, should gold move to $1,000 an ounce, we will, at least for a brief time, become sellers.

It is good to be back at our desks, and we will spend today getting caught up on reading.