Market Update

Market Close, July 13, 2006

We will make this short and sweet tonight.

We had a chance at an upside break out yesterday, which failed miserably. Now, today, we had a breakdown that took us out of any concept of rally.

The highest probability is that we will go down to Dow 10,700 area and re-test the June lows. If we cannot hold there, our thinking is that we would then be in a primary downtrend. We won't use the "B" word just yet but that's what it means.

If we are to get a tradable rally off the metal and energy stock earnings which begin next week, we have to hope for a miracle in the Mideast. The geo-political pressures on oil will keep the market depressed if there is no cease fire, or peaceful solution of that issue.

A slowing economy is all but inevitable now. One of the best indicators of that is the number or retail jobs lost in the last three months. A large spike in that sector generally suggests a slowdown just ahead.

Our suggestion remains cash, short term Treasuries, and utilities.

We will update over the week-end as we see events developing.

Good Trading,

Joe