Market Update

Market Close, July 5, 2006

Global tensions. Better than expected factory orders, and a very upbeat projection on the Friday jobs report. The net result: markets in the tank.

Monday, we had the first signals of positive market reversal, and some indications that we could see the tradable rally we spoke of a couple of weekds ago. Our planning did not include one dictator in North Korea, and his merry band of long range rocket scientists. The current effort lasted 40 seconds and crashed into the sea. Not just any sea either. The Sea of Japan. So the Tokyo market tanked early and often, soon followed by the remainder of the Pacific Rim.

Then there was the ADP macro analysis that forecast twice the number of new jobs to be announced Friday by the Labor Department. Then Factory Orders rose 0.7% for May, much higher than the expected 0.1%

So, now that the Fed has said they would be data driven, the steering wheel seems pointed higher for more than one meeting.

So, we still suggest the more conservative approach in cash, short term Treasury bond funds, and utilities, until we can get a confirmation of Monday's signals. We can't do anything about Mr. Ill in Korea, but that shouldn't last to much longer. So better safer for a bit longer.

Good Trading,

Joe