30 day stock market range contraction looking to break soon. Beware initial move as false break head fake. Bear market still macro theme, not withstanding short term seasonal /polititcal "rally" mischief. Oil potential buy set-up along with other select commodity related sectors/futures markets, DIG,XLE,XLB,USO,UGA,UNG,GLD,GDX etc: looking attractive but not all will rise together as strong as previously. Repeat: SELECTIVE Commodities trade begining early line up.

Reduced short indices exposure for a profit and in anticipation of "potential" small long exposure for seasonal & "election bounce". Don't want too much size on either way within a chopsaw range such as present.
Buy levels lined out although again still within the structure of a longer term bear market.

"Election Bounce" (not rally) still in tact somewhat although massive intervention by "PPT/Working Group" creates artificial lows that are not market reliable. Commodity secular bull market at intermeadiatte cyclical buy levels although risk management requires smaller positions for Rydex EOD contsraints. Emerging Markets and MSCI/EFA are bigger selling opportunities while S&P provide very little upside offset spread potential .

Stock Market "Break out Fever" and the death of the commodities and oil bull market chimes the media flaps... give me a tissue, please! Started scaling into the energy and other "stuffs" lightly at these levels, although anemic move higher by general stock may also be inclded as well into the election. Previous estimate of range test down to 1220 on the S&P may not materialize and require smaller straight/net long exposure to indices, NDX and R2K still suspicious.

Commodities, Energy , Precious Metals , Materials etc: sell-off looking to set up for the floor to new range. Like mentioned earlier in client newsletter report, Stock Market Choke Points for 2008, "When the financial media starts flapping about the top in commodities and the bottom being in for financials, start looking to get long the commodity trade again". Well... start looking! Certainly not a hard line buy just yet but... clue = XOM STAY TUNED!!!

Stock Market Choke Points for 2008 part 7B
By TimingStrategies.com

The month of July brought the largest recent shock of volatility in the stock market since March and the fact that the market for the month of July, was being touted by the financial media as a breakeven event on Weds July 30th with such “oh boy… great news” type cheer, is humorous at best! My thoughts on that media driven blather is the fact that the stock market is also pretty much breakeven since 1998, basically a lost decade! Japan’s stock market peaked out in 1989 at close to 40,000 on the Nikkei and today stands at about 13,000, pretty much a lost generation! If you take inflation adjustment into consideration of any true real return for either Japan’s or the U.S. stock market, it reveals itself as to the true nature of what wall street/government and central bank monetary policy is capable of doing to its own people! Be aware of how buy and hold investment advocacy plays into this trap.
S&P via SPY
At this point the question of the next direction for the stock market via the S&P is answered in its recent range between approximately 1280 -1290 on the lid, down to 1220 – 1200’s recent floor. Range bound markets are temporarily stable markets and are usually the norm before a break and run of instability resumes higher or lower. The recent price action on the NASDAQ 100 via the QQQQ, have been very helpful in providing a clue or tell to the rest of the market via its 3-5 day cycle rhythms in conjunction with the local range for itself and the S&P. Therefore my current estimation for the next 5-20 days of price action is premised on a second test of the 1220 - 1200 recent floor to as deep as a 1175-1165 “stab and grab” secondary low. Should this first premise play out as estimated over a 3-5 day time period, before any further price expansion above the 1285 – 1290 local maximum high occur, then any subsequent daily closing price recovery back above 1265, should set the temporary low for the 3rd to 4th quarter of year into the election.

With that said, the July 15th. low, was a satisfactory enough low for the market to still move higher into the election cycle without much further down side testing, albeit again, another Treasury/Federal Reserve and now SEC induced artificial low. This is to say that every temporary low seen in the markets for the last 12 months, (and since 2003 really) have been caused by manipulation/intervention and now collusion by those financially most benefited by such, and so far, they have all been just that, temporary and have failed. The fact that Merrill Lynch (as most all other major financial institututions) recently went out of their way to announce their strong balance sheet condition with no further capital raises required, only to pull that little stunt on Tuesday like they did, along with the recent SEC “No Short List” of selective financials, should be enough for anyone to conclude the obvious of the true nature for the banking/brokerage and overall stock market long term.

Everyone or anyone that makes hard line financial predictions about the stock market may get it right once or twice but are invariably the “Fool’s Fool” in the end from my experience. I will not attempt to make any such “predictions” as to the ultimate end game for the market. All thoughts and opinions in this client update are exactly that… an opinion and will be wrong sometimes and right others. Managing money requires managing risk as well as expectations within the context of near term price volatility while using the long term big picture as a sort of compass or like flight instrument gauges.