To succeed in the markets, it is essential to make your own decisions. Numerous traders cited listening to others as their worst blunder. — Jack Schwager

As noted in the previous week, the major indexes encountered resistance at the 200-SMA (S&P500 between 1,060 and 1,100).

1. California faced a $19.1 billion state deficit and with no budget in place — Gov. Arnold Schwarzenegger reinstated furloughs for state workers in an executive order declaring a fiscal emergency Wednesday
2. Moody’s warns U.S. needs debt plan to maintain its triple-A credit rating — The U.S. government needs to lay out a credible plan to address its rising debt.
3. Beige Book shows economic fragility — U.S. economic activity continued to be “weak” in June and into July, the Federal Reserve said in its Beige Book report.
4. GDP 2Q slows to 2.4% — below the average 4.4% increase over the last six months.
5. U.S. consumer sentiment fell to 67.8 in late July from 76 in late June.
6. European Banks Stress Test — only 7 out of 91 banks needed to raise a total of €3.5 billion in additional capital; As a sign of easing risk concerns, the Markit iTraxx Senior Financials Index, which measures the cost of insuring debt issued by 25 European financial firms against default, has narrowed. The index was at 118 basis points Friday, according to Markit, down from 131 basis points at the end of last week

AAII and Investor’s Intelligence — Bullish sentiment is slowly making a comeback

The week ahead — earnings season continue:
1. 8/2 — Construction Spending; ISM Manuf Index
2. 8/3 — Factory Orders
3. 8/5 — Export Sales
4. 8/6 — Consumer Installment Credit

Buy when others are despondently selling and sell when others are greedily buying. — Mark Mobius

The major indexes remained trapped between the trading range (S&P500 between 1,060 and 1,100).
1. Europe Banks Stress Test — results will be disclosed after market close 7/23/2010
2. President Obama signed Financial Overhaul Regulations into law
3. Germany Business Sentiment rose sharply in July — improving outlook for Europe ‘s largest economy
4. Ratings agencies S&P, Moody’s and Fitch are refusing to let bond issuers use their ratings — new financial reform laws create too much risk for them; SEC will allow a six-month exemption
5. Obama signed a six-month extension of emergency jobless benefits — restores aid to nearly 3M people whose checks had been cut off since the program expired in early June
6. Hungary shuns IMF, ratings agencies poise to downgrade — Hungary’s prime minister Viktor Orban indicated he won’t renew a safety net with the IMF and will back out of a commitment to cut the budget deficit to EU-prescribed levels next year

Below are the daily charts of the major indexes.

Nasdaq — Daily Chart

Dow Jones — Daily Chart

S&P500 — Daily Chart

The week ahead — earnings season continue:
1. 7/26 — New Home Sales
2. 7/27 — Consumer Confidence; Adv Durable Goods
3. 7/29 — Export Sales
4. 7/20 — GDP Q2; Emp. Cost Index;

The major indices dropped sharply on Option Expiration Week and encountered resistance at the 200-SMA. Below are the major events which occurred this week.
1. BP temporarily sealed oil leak –BP reported a pay out of nearly $4 bil in claims.
2. Moody downgraded Ireland — noted Ireland ‘s government’s ongoing loss of financial strength and the country’s weakened growth prospects
3. IMF and EU withdrew $21bil from Hungary — Hungary must cut their budget
4. Citi Bank (C), Bank of America (BAC) — beat profit views on lower credit losses — shares fell on the banks inability to expand revenue.
5. GE recorded profit — revenue fell 4.3% to $37.4 bil, missing est of $38.4 bil
6. China cuts Treasury holdings by $32.5 bil in May to $867.7 bil; Japan also cuts 1.1% to $786.7 bil.
7. Elizabeth Warren (law professor) is candidate to lead the consumer watch-dog position — position created by the Financial overhaul legislation.

The week ahead — 2Q earnings season continue:
1. Farnborough Internation Airshow — Europe collects to see the latest in airline production, including the Boeing 787.
2. IMF seeks another $250 bil to boost its lending capacity from $750 bil
3. 7/20 — Building permits; Housing Starts;
4. 7/22 — Existing home sales; Leading indicators;
5. 7/20 — EU Stress Test; Greece 1.5Bil Euro aunction

“A good trader has to accept three things: a chronic inability to accept things at face value, to feel continuously unsettled, and to have humility” Michael Steinhardt

The major indices bounced from 2010 lows after a 2-week sell-off. Below are the major events which occurred this week.
1. Central banks swap gold to IBS (Intl Bank Settlement) — 349 metric tons of gold and hope to buy back at a later date.
2. Europe’s bank stress test — schedule for this coming week.
3. Spain sold 8bil Euro in 10-year debt at the rate of 4.874% — 140 bps higher than Jan 2010.
4. China looks to tax resource companies (Coal, Oil and Gas) in Western China area.
5. Retail Sales so-so in June
6. Consumer credit fell sharply in May — 4th straight decline in borrowing
7. AAII shows the lowest decline in Bulls since march 9th, 2009 bottom in stocks. Below is the chart from AAII percent in Bulls.

The week ahead — official 2Q earnings season start:
1. Mon – 7/12 –> Alcoa (AA)
2. Tues – 7/13 –> Intel (INTC), Yum
3. Wed — 7/14 –> Retail Sales; Texas Inst (TXN)
4. Thurs — 7/15 –> PPI; Export Sales; Capacity Utilization; JP Morgan (JPM); Google (GOOG)
5. Fri — 7/16 –> CPI; Ford (F); Bank of America (BAC); CitiBank (C); GE

Doug Kass calls the market bottom on CNBC on July 7th, 2009.

Mr. Kass is a noted short-seller from SeaBreeze Partners and correctly called the market bottom on March 2009. However, he called the market top too soon (Sept 2009) as the market continued to move up to Feb 2009.

Here is the link to Yahoo – Interview with Doug Kass.
Yahoo – Doug Kass Interview

Here is the video of Mr. Kass courtesy from CNBC.
Doug Kass calls market bottom (7/7/2010)

Try to surround yourself with people who can give you a little happiness. Because you can only pass through this life once, Jack. You don’t come back for an encore”. Elvis Presley

The major indices continued to sell-off. Below are the major events which occurred this week.
1. European banks lobbied the ECB to cushion the impact of expiration of the 442 bil Euro ($543 bil) in 1-year loan. This represents approximately 50% of ECB’s liquidity operation. On June 29, the ECB allotted 131.9 bil EUR ($160.9 bil) in funds for a 90-day at a fix rate of 1% to 171 banks.
2. VIX (6/29) hits 34. Below the high of 48 (May 20).
3. China Conference Board cuts its forecast to 0.3% from 1.7%; Fear of China growth rate slowing.
4. China ‘s Manufacturing down in June to 52.1 from May 53.9; China’s factories reduced output prices the first time in 2010;
5. Automakers sales for June slipped from May; Ford down 13%; Toyota down 14%; General Motors down 13% and Chrysler down 12%;
6. Unemployment rate down to 9.5%; 600,000 unemployed workers gave up looking for work;
7. The SPX, DOW & NASDAQ slipped further from the 50-SMA AND 200-SMA;

Below are the charts of the major indices (S&P500, Dow Jones & Nasdaq)

NASDAQ — slipped furthur under the 200-SMA

S&P500 — slipped furthur under the 200-SMA

Dow Jones 30 — slipped furthur under the 200-SMA