July 13, 2010

Market opened strong and stayed strong all day. Volume modest. Intel blew out earnings. Market is overbought and running into resistance but wants to go up into earnings and probably will. Not quite complacent enough to shock on the downside so too early to short this rally. “Max pain” would be for the market to run up through near resistance and trigger stops and short covering — and then hit air pockets next week. Breadth is still rather poor as time is what is needed for a sustainable bottom upon which to recover. International markets look far better – but they are all watching us for cues.

Short-term: 2 green, 2 yellow – tending yellow
Intermediate-term: 1 green, 2 yellow, 1 red – tending yellow
Stock targets: 12% swimming, 18% treading water, 70% sinking

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