We’re at the halfway point of the trading day and the market still has a good chance of holding/staging a breakout today.  Currently the S&P is sitting in breakout territory above the 1290 area and will need to hold above that level into the close.  The Dow has some work to do and needs another 50 points before I’d be calling a break out in the Dow.  Volume levels are once again a bit of a concern today, particularly in the S&P and the Dow.  Volume is actually quite good in the Nasdaq.  Here’s the breakdown:

Nasdaq: up 1.08% today with volume currently tracking 10% GREATER than 50 day average
Nasdaq ETF (QQQQ): up 1.35%, volume 6% GREATER than average
Dow: up .58%, volume 18% BELOW 50 day average
Dow ETF (DIA): up .70%, volume 31% BELOW the 50 day average
S&P ETF (SPY): up .67%, volume 25% BELOW the 50 day average
Russell Small Cap ETF (IWM): up 1.04%, volume currently tracking 25% BELOW 50 average

Leading stocks that make up the SelfInvestors Breakout Tracker database are fairing well in terms of price movement, but once again there is no volume behind the move which is even lighter than yesterday.

*Advancers are outpacing Decliners 282 to 85.
*Advancers are up 1.49% today but volume is tracking 15% BELOW the 50 day average at this point in the trading day
*Decliners are down 1.13%, but the good news is that volume is very light on the down moves as well.  Volume is currently tracking 19% BELOW the average at this point in the trading day.
* The total SI Leading Stocks Index is up .88% today with volume 16% below the average

Remember, it’s all about the close.  Let’s see if we can add to the gains with greater volume to finish the day.. my bet is that we end the day near flat.  I feel that the inflation data gains have about run their course, but we’ll see. 

The anticlimactic end to rate hikes came to an end last week as most everyone expected. It didn’t take long for traders to "sell the news".. Remember, the market looks several months into the future and had already priced in the end to rate hikes.  Now the market turns to more important things such as the actual data that this data dependent Fed is basing its decisions on. Kicking it off on Tuesday and Wednesday is the all important  PPI and CPI inflation data which will give us another clue as to just how fast inflation is rising.  This data has the potential to be a real market mover, so be prepared one way or the other.  I still think there is more risk to the downside than potential to the upside.  We’ll probably see a pop Monday morning on news of a cease fire agreement in the Middle East, but I would expect that to be short lived.  The market has been flashing warning signs and put together another 2 days of distribution (institutional selling) last week following the Fed decision.  When the market speaks, it pays to listen.  Be careful out there.

It was another  busy and profitable week in the Model Portfolio.  Two short positions were covered – one for a quick 3 day gain of 23% in Grupo Simec (SIM), the other for a 7% loss in Business Objects (BOBJ).  These were replaced by 2 new short positions on Tuesday which I continue to hold for gains.  Only one long trade was attempted in Dril Quip (DRQ) and promptly sold for a 3% loss as the stock reversed course.  Currently, the portfolio allocation is roughly 30% short, 10% long and 60% cash.  The portfolio gained 1.5% for the week and is sitting on a gain of 14.5% year to date.

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Would you like a database of stocks all ranked according to fundamentals and technicals, complete with pivot points, earnings date, % change from breakout and moving averages, future earnings estimates and relative strength rating?  How about Stock Watch reports highlighting long and short opportunities for the coming week?

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** Best/Worst Performers **

– Top 10 Performing Industries For the Week –

1. Office Supplies                            6.60%
2. Networking & Comm Devices      6.55%
3. Multimedia & Graphics Software 4.40%
4. Drugs – Generic                           4.10%
5. Personal Serivces                        2.80%
6. Catalog & Mail Order Houses       2.80%
7. Nonmetallic Mineral & Mining         2.35%
8. Specialized Health Services         2.35%
9. Hospitals                                       2.15%
10. Publishing – Periodicals               1.85%

– Top 10 Worst Performing Industries For the Week –

1. Music & Video Stores                  -14.85%
2. Trucks & Other Vehicles             -11.35%
3. Rental & Leasing Services          -10.20%
4. Major Airlines                                -8.90%
5. Residential Construction               -8.15%
6. Farm & Construction Machinery   -7.65%
7. Drug Delivery                                -7.50%
8. Manufactured Housing                 -6.90%
9. Sporting Activities                        -6.70%
10. Movie Production                        -6.20%

– Top 5 Best Performing ETFs For the Week –
 
1. Turkish Invest Fd (TKF)                     6.00%
2.Chile Fund (CH)                                  6.00%
3. Russia & E. Europe (TRF)                 4.15%
4. Morgan Stanley India (IIF)                  3.10%
5. Templeton Dragon Fund (TDF)          3.10%

– Worst 5 Performing ETF’s –

1.SPDR Homebuilders (XHB)                 -8.15%
2. Dow Jones Transportation (IYT)      -4.05%
3. PowerShares Clean Energy (PBW) -3.70%
4. Gold Miners (GDX)                           -3.60%
5. Commodity Index (DBC)                    -3.50%

**  IPO’s worth watching for the coming week **

1. InnerWorkings (INWK): provides printing solutions.  The company believes its unique technology enables it to obtain favorable pricing, deliver high quality products and services to its clients.  During the first quarter, the company reported strong growth from the year ago period.  Trading is set to start Wednesday.

2. GNC (GNC): This is a carryover from last week and no trading date has been set.  Specialty retailer of nutritional products, including vitamins, herbs, minerals and supplements with over 5800 locations worldwide.  Earnings and sales are growing quickly. 

** Upcoming Economic Reports (8/14/06- 8/18/06) **

Monday:        No Events
Tuesday:       PPI, Treasure Capital Inflows, NY Manufacturing Index, Retail Sales
Wednesday:  CPI, Industrial Production, Real Earnings, Housing Starts, Petroleum Status
                       Mortgage Applications
Thursday:      Money Supply, Philly Fed Survey, Leading Indicators, Jobless Claims
Friday:           Consumer Sentiment (Prelim)

** Latest Blog Entries – In Case You Missed Them!**

– SelfInvestors Blog –

1. Today’s Notable Earnings Movers (NCTY, ECLG) (Aug 10)
http://investing.typepad.com/tradingstocks/2006/08/todays_notable__4.html

2. Yahoo Demos New Ad Platform (Aug 8)
http://investing.typepad.com/tradingstocks/2006/08/yahoo_demos_new.html

3. Today’s Notable Earnings Mover’s (VTIV, JOBS) (Aug 7)
http://investing.typepad.com/tradingstocks/2006/08/todays_notable__3.html

In last week’s report I mentioned it would be a difficult tight rope for the market to walk in the coming months as traders look for "goldilocks" numbers.  Traders want indication of a slowing economy, but not too slow… all while keeping inflation in check so the Fed will ease up on rate hikes.  Before the jobs report was released, fed funds futures were pricing in a 44% chance of an August 8th rate hike.  That number dropped to just 19% after the number was released and the market surged as a result, taking out key resistance points in both the Dow and S&P (the Nasdaq hit resistance of its 50 day moving average) .  However, it took just a few hours for traders to hit the sell button ahead of the weekend, leaving both the Dow and S&P with failed breakouts.  Clearly, there is still a considerable amount of skittishness.   Should the Fed pause on Tuesday, I would be very surprised to see this market catapult for a breakout move.   I think the move we’ve seen off the bottom over the past several weeks is a pricing in of the pause in rate hikes.  From now on, it will be all about the economy and inflation numbers.  These numbers will be the drivers of the market, not the Fed decision.

It was a busy week in the Model Portfolio as I began to place short term bets on the short side.  At the beginning of the week I closed a long position in my lone oil play Veritas (VTS) for a quick 6% gain due to a lack of buy volume at the breakout and in days following.  Over the course of the week, premium members were alerted to a flurry of small short positions (currently 6 in all) which now represent around 35% of the portfolio.  The rest of the portfolio is 10% on the long side and 55% cash.  Considering the market continues to meander higher, the shorts are in solid shape and are up 1% collectively for the week.  With the market a bit overbought up here and a lack of volume behind recent moves higher, playing the short side with a few small positions currently makes more sense.
_______________________________________________________________

Want to take your membership to the next level?  Premium members who have been following along with buy and sell alerts in the Model Portfolio are smashing average returns with a 13% YTD performance.  In addition to alerting you to the best opportunities on the long side, short opportunities are used to make money during a downturn.  That’s just one of many premium features….

Would you like a database of stocks all ranked according to fundamentals and technicals, complete with pivot points, earnings date, % change from breakout and moving averages, future earnings estimates and relative strength rating?  How about Stock Watch reports highlighting long and short opportunities for the coming week?

Try it out for yourself for 30 days!  Sign in to your account here: http://www.selfinvestors.com/amember/member.php and take advantage of the no risk trial.

______________________