One question:

One question:

A. Mkt rally starts now and continues further into labor day.
B. Mkt rally fails now and then recovers in 2.5 weeks
C. Mkt rally works now and then fails 2.5 weeks later.
D. Sideways...sideways....up/down...sideways.- just sideways.
E. None of the above too volatile.
F. I don't care leave me the F*** alone.

Strategy Summary:

Expect continued market volatility as the rest of earnings and FOMC meeting 2.5 weeks from now

Near-term momentum becoming oversold creating a high-risk trading opportunity of higher beta names—(with a cautious approach to news sensitive names).
OSX , HUI and XBD- areas to explore.

Shelter for uncertainty: Attempt to accumulate defensive leadership stocks on any near-term pullbacks.

AES, AYE, TXU, OKE, PPL, FE, CVS, KR, SWY, CBP, AZN, MRK, SGP, BMY, INTU, CMI and UTX--- few names to watch for on pullbacks.

Looking beyond two weeks: Position out of speculative trading names and take a defensive / cash stance on portfolio especially ahead of FOMC meeting.

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.

week ahead : last week of July 06

There are several economic reports of note and a number of significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - None of note

Tues. - Consumer Confidence, Existing Home Sales, Richmond Fed Index

Wed. - Fed’s Beige Book

Thur. - Durable Goods Orders, Initial Jobless Claims, New Home Sales

Fri. - Advance 2Q GDP, Advance 2Q GDP Price Index, Advance 2Q Personal Consumption, Advance 2Q PCE Core, 2Q Employment Cost Index, Univ. of Mich. Consumer Confidence

Some of the more noteworthy companies that release quarterly earnings this week are:

Mon. - Alcon(ACL), Altera Corp.(ALTR), American Express(AXP), Avaya(AV), BellSouth(BLS), Hasbro(HAS), Kraft Foods(KFT), Merck(MRK), Pitney Bowes(PBI), Quest Diagnostics(DGX), SanDisk(SNDK), Schering-Plough(SGP), Texas Instuments(TXN), 3M Co.(MMM)

Tues. - Aflac Inc.(AFL), Altria Group(MO), Amazon.com(AMZN), AmerisourceBergen(ABC), AT&T(T), BJ Services(BJS), Boyd Gaming(BYD), Burlington Northern(BNI), Chicago Merc(CME), Chubb Corp.(CB), Colgate-Palmolive(CL), Corning Inc.(GLW), Countrywide Financial(CFC), Diebold(DBD), Energen(EGN), ENSCO(ESV), Flextronics(FLEX), Legg Mason(LM), Lexmark(LXK), Lincare(LNCR), Liner Tech(LLTC), Lockheed Martin(LMT), McDonald’s(MCD), Nabors Industries(NBR), Murphy Oil(MUR), Omnicom Group(OMC), Panera Bread(PNRA), QLogic(QLGC), Smith Intl.(SII), Stanley Works(SWK), United Parcel(UPS), Weyerhaeuser(WY), Whirlpool(WHR), Xilinx(XLNX)

Wed. - Allegheny Tech(ATI), Anheuser-Busch(BUD), Baidu.com(BIDU), Biogen Idec(BIIB), Black & Decker(BDK), Boeing(BA), Cadence Design(CDN), ConocoPhillips(COP), Diamond Offshore(DO), Express Scripts(ESRX), General Motors(GM), Intuitive Surgical(ISRG), Kimberly-Clark(KMB), Lucent Tech(LU), Norfolk Southern(NSC), PF Chang’s(PFCB), Phelps Dodge(PD), Pulte Homes(PHM), Ruth’s Chris(RUTH), Symantec(SYMC), Terex Corp.(TEX), Under Armour(UARM), Wellpoint(WLP), Zimmer Holdings(ZMH)

Thur. - Aetna(AET), American Power(APCC), Andarko Petroleum(APC), Apache Corp.(APA), Beazer Homes(BZH), Boston Scientific(BSX), Bowater(BOW), Bristol-Myers(BMY), CB Richard Ellis(CBG), Celgene(CELG), Chesapeake Energy(CHK), Cleveland-Cliffs(CLF), Comcast(CMCSA), Cummins(CMI), Deckers Outdoor(DECK), Dow Chemical(DOW), Ethan Allen(ETH), Exxon Mobil(XOM), F5 Networks(FFIV), Fortune Brands(FO), Garmin Ltd.(GRMN), Harrah’s(HET), Kellogg(K), Kerr-McGee(KMG), L-3 Communications(LLL), Lear Corp.(LEA), Massey Energy(MEE), MBIA Inc.(MBI), McAfee(MFE), McKesson Corp.(MCK), Monster Worldwide(MNST), Newmont Mining(NEM), Northrop Grumman(NOC), OfficeMax(OMX), OSI Pharma(OSIP), Rackable Systems(RACK), Raytheon(RTN), Royal Caribbean(RCL), Sohu.com(SOHU), Starwood Hotels(HOT), THQ Inc.(THQI), Tidewater(TDW), XM Satellite(XMSR)

Fri. - American Tower(AMT), Baker Hughes(BHI), Centex(CTX), Chevron(CVX), Dolby Labs(DLB), Ingersoll-Rand(IR), Ingram Micro(IM), Multimedia Games(MGAM), Office Depot, Western Digital(WDC), Whole Foods(WFMI)

Other events that have market-moving potential this week include:

Mon. - None of note

Tue. - None of note

Wed. - None of note

Thur. - None of note

Fri. - None of note