07.19.2011 -- Clear for 20 at least

Key Levels;

Upside 1339-1343 and low 1350s

Downside 1324, 1316, and 1312

All major indicies and most sectors are back above moving averages this afternoon, with 2 notable exceptions. The Financials and Semiconductors, they both appear to be in confirmed bear markets. The financials can probably be left behind for some minor new highs,.. say 1385 or so, but I think the market will need a run from the SOX to put in a new 52 week high.

SPX Daily;

Todays candle took out both the 50/100 and the mid-bollingers. We are overbought short term, so some consolidation may happen, but a touch of at least the 1339-1343 area is likely. After that, it could go either way, the pattern inside of this large flag/pennant definitely looks incomplete and a trip back to the top in the low 1350's will just make it look like we have another trip to the bottom coming. We only look about half way done with this flag/wedge/pennant, whatever you want to call it. The head and shoulders is still potentially there, but unlikely at this point unless we were to get a big reversal down in the next 2 days.

SPX hourly;

The hourlies show us the resistance in the low 1340's and why we are likley to get there as there's really nothing stopping us from doing so barring a total market reversal tomorrow, which with Apple tonight is also unlikely.

I would play it like we are going to bang the top and bottom of that big flag on the daily probably 3 more times until something of signifcance happens. That flag could drag out into the fall.

The mid-day pop today was from the reports on the debt ceiling deal. I read the paper which is really just a bunch of suggestions/wishes. I'm curious to see if this deal still sounds so close to done when the details of exactly how you're going to cut 4 trillion over 10 years comes out. The news also whacked gold. In reality, it was nothing more than me writing a list on a piece of paper of what I'd like to do. Say;

* Build a space shuttle
* Walk on mars
* Create World Peace
* Become NFL player

And have zero details about how they will be done. That's all they did. Of course they all agreed, because there's no details to argue over. I suppose we'll see how that pans out here over the next couple weeks, but by no means do I think that issue is over.

For now, the global government debt boom continues to fuel the large multi-nationals, while others with mostly domestic revenue will continue to do poorly. The question is where the market is with IBM at 350$ and BAC at 2$. Before the government debt bubble blows. Are we at 1370 or 1600 when it happens?

GL

CJ