Winners Circle

[stockpup]

Market Update Modest follow through on continued meager volume - but closes well off intraday highs

by Chief Technical Analyst, Third Millennium Technologies, Inc. (

A peppy open quickly faded and closed well off the morning highs - still positive, but uninspiring. Not much more to add right now - still waiting to see how things play out vis a vis the already discussed scenario (see below).

As noted already - Our initial downside targets that were laid out a couple weeks ago have all been hit (9765-9850/DJIA, 1060-1075/SPX, 1300-1340/NDX) and we were anticipating a probable oversold bounce. The question how much real momentum there is left after today's upward surge given the morning impulse ran out of gas and stalled into a trading range the rest of the day. If there's enough momentum to carry into tomorrow, upside targets for this phase are 1100-1115/SPX, 1388-1432/NDX, and 10000-10240/DJIA.

However, right now, the probabilities lean toward another cyclic phase after that probably going still lower by about the September 7-13 time window with initial targets of 1020-1030/SPX, 1200-1250/NDX, and 9200-9375/DJIA.


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Volume was only modestly higher - 1.27 billion vs. 1.18 billion on the NYSE and 1.39 billion vs. 1.26 billion on the Nasdaq.

Currencies - dollars got swung around today, closing mildly positive and above their DS

Gold - gold contracts continued higher on the uncertainty in the dollar, still below target resistance - 406-414 geometric area is resistance target to watch - geometric support @ 382-391 initially

Oil - crude contracts blasted higher from 10am and moved back toward the $47 zone, helping to blunt the opening positive move in equities - fear premium remains a substantial component of pricing - current geometric resistance area @ 46.88-50.00

Treasuries - treasuries also moved higher again, toward our preliminary target zone - good chance of seeing 113-114/ZN and 112^16-113^9/ZB before this is over - 112'160-114'020/ZNU is geometric resistance area - 109'120 is initial geometric support

VIX/VXN - Major resistance initially at 20.31/VIX with 22-25/VIX the next tier. Support @ 14-15.625/VIX then 12.50/VIX.


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In the news - Home Depot beat Street earnings expectations by 6 cents/share - I have no doubt that a large part of that was all the stuff I've bought from them this last quarter as part of a bunch of home renovation projects.

What's Google going to do with $2 billion in cash after the IPO? They don't know. The founders are on record that the real reason they took the company public is so they, investors, and employees could cash out for some BIG dough. Wow, that's just the kind of strategic thinking you want to hear from the guys running a company you're paying triple digits per share for (at a triple digit PE), right!!?? Of course, the opportunity to personally realize some cash out is always a factor behind IPOs. But usually, at least the good ones, insiders have to wait a while before cashing out huge like this and they have some strategy about what they plan to do with the cash they raise.

Unfortunately, there have been loads of crap IPOs in recent history that did indeed have the sole purpose of helping insiders take cash out of would-be investor pockets and immediately stuffing it into their own that maybe that's why individual investors aren't balking at the size of the personal upfront cash out in the Google IPO (although institutions and hedge funds have been balking at it - as well as the per share pricing and the resulting market valuation).

It would be sad to think that Google might ultimately end up falling into that "crap IPO" category along with so many scams of the late '90s bubble while Larry and Sergey end up lying on a beach somewhere sipping Pina Coladas and counting their moola. If so, the definition for the now popular verb-form of the company's name - as in "Hey Jim, could you google up the population and land area of New York City for me" could ultimately turn out to be more appropriately "...well officer, it was a bunch of bikers, they just bent me over the hood of the car and googled me...". Only time will tell.