market outlook: last week of july 06

Market Outlook:

• Earnings will create a boom/bust response adding to volatility but already a negative start but heavily stock specific.
• Markets are becoming oversold making shorts here not as timely....but macro effects here can create distracting noise.
  
• Rather trade in near-term here than making investments....use pending strength to trim out of long positions.

CBH: a short worth revisiting following a recovery around 200 day mva. Overall, short on any strength despite oversold levels.

AFL/AIG: appear to be a similar theme like HMO's where attempted recovery from weakness YTD: performance.

AFL reporting on tuesday- oversold here to be shorted heavily but a negative bias market is a tough call here.



The defensive themes:

DJ: decline back to 35 level, monthly key support worth taking a shot.Still awaiting to consider the value bet in traditional media names.

PPH - worth a revisit and run all names in the index. Again BMY/SGP of interst here before earnings. Plenty of pharma names.

utilities strength continues along with staples as the defensive relative leadership remains in tact. Not convinced to jump on this train as a long idea. But curious on pharma as the defensive theme.

10 year yield: correcting in the near-term while weekly suggest further downside....perhaps around 5%.
Gold: appears to be extended in the near-tem, further downside potntial with support around 600 level.
DXY: attempting to bottom
Crude: looking for correction closer to 70 level. following recent highs of 77. momentum suggesting

currency notes and things to watch for:

The upside risks to inflation are clear but at the same time, so are the risks that the economy faces. The next FOMC meeting is scheduled for August 8th, which is only 2.5 weeks away. This means that the short list of economic releases between now and then will not only be even more important for traders to watch, but could also bring about more volatility. This includes the personal consumption expenditures index and the Q2 employment cost index, which will shed more light on the inflation outlook along with consumer confidence, durable goods, advance Q2 GDP, ISM and Non-Farm payrolls.