“McClellan Oscillator” fell to +32 - after only one day bounce from near Zero on Thurs

 “McClellan Summation Index” rose a small step - 20th day up

% Stocks Above 200 Day PMA”  rose to 89.20 % - a new high -- slightly - The numbers are close now -- BO200 vs BDn200 on NYSE

“%1 Chan Above 200 Avg.” and “% 2 Chan Above 200 Avg”  fell a bit.

DJIA had an Inside Down day --

Today was signif weak -- after strong Friday-- with 3 to 1 Pos Breadth on Friday.

But- FRiday had steady PT from mid-day - and a wave down in last half hour.

The hammer Friday-- with Close gave it a good chance for Up close today -- Within Friday's Upper Wick

Tomorrow is the Productivity report -- it is expected to be very positive.

That helped today - in the last two hours recovery. But the disappointment stands out -- Breadth ended Neg -- and the big Avgs ended Neg.

DJIA closed at 9320-25 -- one positive note.

SP500 was also Inside Down - with Increased volume

The REIT and financial ETFs were also Inside Down

TLT up big -- after the retest Low on Friday -- with squat hammer

LQD up

JNK - inside down -- like most avgs

TNX--X 37.71 -.83 -- down near Friday's Open

DBA up .16

Oil up .21 70.72 - after small DBD

USO +.06 - low volume

UNG down

OIH XLE - Inside up

DXY0 - US DOllar - DBO - after big up Friday

GLD - gap down under sma20 -- but low volume

GDX -- also gap down under sma20 -- low vol

VIX--X 24.99 +.23

Tomorrow ---

830ET - Q2 Productivity - Prel -- est +5.5% vs 1.6% in Q1

830ET - Q2 Unit Labor costs - est -2.5% vs +3.0% in Q1

1000ET - Wholesale Inventories - June -- est -.9% vs -.8% in May

The FOMC meeting begins -- goes 2 days -- Decision on Wed 1415ET

The only early report Wed is Trade Balance - June --

The inside down on many avgs and stocks is disappointing -- but no damage so far

On DJIA - a Close Under 9256 would be a DDBD sell sig

That was the down close on THurs, 8/6/09

The ST trend is still Up -- It's hard to believe that the "shallow UTLine" is going to stop the Uptrend

Green DTLine=9490 tomorrow - approx

UBB was 9564 today -- est 9550 on Tues

9438 was HOD on Friday

ECRI reports -WLI Growth Soars Into Double-Digits
Reuters - Aug. 7, 2009 -- Friday
The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 121.8 in the week ended July 31 from a downwardly revised 119.5 the week prior, which was originally reported at 119.6.

The index's annualized growth rate reached a fresh five-year high of 10.5 percent from 8.8 percent the previous week.
It was the highest yearly growth reading since the week ended March 19, 2004, when it stood at 11.0 percent.

"With WLI growth soaring into the double-digit range, prospects for U.S. economic growth have brightened significantly," said ECRI Managing Director Lakshman Achuthan.

Achuthan told Reuters last week that the recovery is poised to be "stronger than many expect."

> >>> The only thing new - is even stronger forward - looking numbers.

ECRI also reported USFIG on Friday - once a month report a gauge of U.S. inflation pressures continued to rise in July to a seven-month high, indicating that deflation is unlikely under current economic conditions, a research group said on Friday.

The Economic Cycle Research Institute's U.S. Future Inflation Gauge(USFIG), designed to anticipate cyclical swings in the rate of inflation, rose to 84.6 in July from a downwardly revised 81.7 in June, which the group originally reported at 81.9.

The index has now risen from a 51-year low in March to a seven month high, due to "somewhat pronounced, pervasive and persistent advances in the USFIG and its components," said Lakshman Achuthan, managing director at ECRI. "Thus, deflation is clearly becoming much less of a danger for the U.S. economy."

"The implication, if the FIG keeps rising, is that the Fed's exit strategy may come into play sooner rather than later," Achuthan said.
The July USFIG annualized growth rate, which smooths out monthly fluctuations, leaped higher to negative 8.6 percent from negative 18.9 percent in June, which was revised higher from negative 18.5 percent.

Reuters - Aug 7, 2009

>>> So - Deflation threat is nearly over. Now we watch USFIG for signs of Inflation to come. The numbers are not yet high enough to worry about Inflation.

AAII Sentiment Survey for 8/5/09 ---

Bullish%=50.00% vs 47.67% last week

Bearish%=35.16% vs 31.40%

Neutral%=14.84% vs 20.93%

>>> Five months off the bottom- Bullish% has finally reached 50%

Note the response to the higher Stock prices was increase in both Bullish% and Bearish% - out of Neutral.

There are still traders out there just waiting for "the top" so they can win big on Shorting the "Bear Mkt Rally" again.

There will probably be a Bull Mkt Correction soon - Sharp Short Scary. Some will decide that is the beginning of the next leg down - end of Bear Mkt Rally. Others will use it as an entry opp.

The numbers from ECRI suggest the future - next year or so - is up in the economy. Unless that changes, I'll be one of the dip buyers.

Bullish% will likely get to 55% - 60% by Jan / Feb 2010. That would be a concern.

LIBOR 3month .46 vs .54 a month ago - this is a new Low

Credit conditions continue improving.

BDI 2772 vs 3350 last week - a setback for shipping. That says World commerce is not ramping up as yet.

Initial Claims fell to 550K last week - vs est 580K and vs 588K the prior week

The trend is moving down - but we've not yet seen the big drop to near 400k

This brought down the 4-wk avg to 555,250 from 560,000.

Continuing claims rose 69K to 6.31 mln. The 4-wk avg fell to 6.28 mln from 6.43 mln.

The July Jobs report had some good news - slowing of job losses-- and increase in hourly wages by .2%.

The dip in Unemployment Rate got headlines - but was due to a Decrease in the Civilian Labor Force -- people giving up on job search.

That fell -422K in July

Jobs were -267K in July.

Retail lost 44K jobs in July - highest in 3 months. The Retail industry had to trim down - with the de-leveraging that has been underway in the economy for over a year. Back to School - then Holiday Season -- will likely halt the slide in Retail jobs til after end of the year.

Education/Healthcare gained 17K -- after 37K in June and 40k in May. State budgets continue being cut. Watch Education jobs after back to school.

Leisure/Hospitality +9K

Govt +7K

All other categories had job losses - most smaller than in June.

The economy is in transition now -- from Recession to Recovery. The numbers on jobs will be erratic til next year.

Good trading!

Marco