The long term weekly chart of the Russell 2000 ETF indicates it’s on the brink of a meltdown.  Currrently it is right at support of a long term 3 year trend line with much momentum behind it to the downside (as indicated by that big volume spike).  It looks to me like it’s just a matter of time before that trend line is broken and that does not bode well for this market.  The bulls have removed the party hats with one foot out the door.  If big buying doesn’t come in soon, it could be lights out.

 ::: Model Portfolio Update :::

In an email to premium members this week I expressed my displeasure with the performance of the Model Portfolio in the last few months and felt that I had become too hesitant and conservative which has hurt my performance.  The performance hasn’t been awful (a bit below the S&P), but certainly not anywhere close to my yearly goal of doubling to tripling the performance of the S&P.  I mentioned that from here on out, members would begin to see the portfolio traded in a way that mimicked how I trade my personal accounts… with no hesitation. .. trading what I see and acting immediately.  It’s not always easy to take on the risk necessary for success, particularly when you’re detailing your performance each and every week for all the world to see.  In this business you’re only as good as how you’ve performed over the previous few months.. Very few care about your long term success, they want to get rich and they want it now.  This is the most likely the result of conditioning from late night infomercials, spam mail claiming riches, and ridiculous claims of producing overnight millionaires from the multitudes of "pretender" advisory services out there.  This misinformation and lack of integrity is one of the main reasons I got into this business in the first place.  I’ll gladly trade a few extra members seeking overnight riches for a service of integrity made up of long term members who are genuinely interested in achieving sustained long term profits year after year. 

On Tuesday, the market dropped big.  No big deal on the surface.. heck we’ve seen drops like this on a few occasions this year only to see the market come roaring back to new all time highs.  It was differrent this time.  The subprime and housing issues that had largely been ignored due to the Fed minimizing their impact (which they continue to do) were for the first time a real concern for the market.  On that day, my entire database of leading stocks dropped by over 3%, the first time I have seen a drop over 3% in this index since I put it together.  The character of the market had changed and I was going to act with no hesitation.  On Wednesday, the market gapped up and provided the perfect short entry opportunity.  Itook it and continued to close long positions and initiate several short positions to shift the portfolio from one that was biased on the long side to one that was biased on the short side.  In all, 6 long positions were closed, replaced with 4 short positions.  This time around the strategy paid off big, resulting in a gain when the major indices dropped 4 – 5%.  In just two days, the Model Portfolio went from lagging the S&P by 3% to more than doubling the performance year to date.  I don’t highlight this to boast, I highlight this to remind those trading your own accounts that there will be difficult time when you question your abilities.  Stay focused, stay positive, trust yourself, trade what you see and don’t hesitate.  If you do those things you will emerge from the peaks and valleys of this difficult business and emerge with great success over the long term. 

::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Diagnostic Substances: 10.90%
2. Catalog & Mail Order Houses: 1.95%
3. Security Software & Services: .85%
4. Medical Equipment Wholesale: .40%
5. Research Service: .35%
6. Personal Products: .05%
7. Aerospace/Defense:  0%
8. Biotechnology: -.08%
9. Specialized Health Services: -.45%
10. Water Utilities: -.95%

– Top 10 Worst Performing Industries For the Week –

1. Rubber & Plastics: -13.85%
2. Trucks & Other Vehicles: -13.60%
3. Toy & Hobby Stores: -12.50%
4. REIT – Hotel/Motel: -11.20%
5. Gold: -11.20%
6. REIT – Healthcare Facilities: -11.15%
7. REIT – Office: -10.50%
8. Silver: -10.50%
9. Industrial Metals & Minerals: -10.22%
10. Residential Construction: -10.15%

– Top 5 Best Performing ETFs For the Week –
 
1. Indonesia (IF)  23.00%
2. Gold Miners (GDX) 4.20%
3. Turkish Investment Fund (TKF) 4.20%
4. HLDRS Internet Architecture (IAH) 2.85%
5. Ishares Oil Equipment & Services (IEZ) 2.80%

– Worst 5 Performing ETF’s –

1. HLDRS Internet Infrastructure (IIH)  -11.90%
2. SPDR Metals & Mining (XME) -11.30%
3. Ishares Home Construction (ITB) -11.15%
4. SPDR Homebuilders (XHB) -10.40%
5. Powershares Energy Exploration (PXE) -9.70%

:::  IPO’s Worth Watching for This Week :::

1. Virtusa (VRTU): the company provides a variety of software development and information technology services, including software engineering, application development, training, maintenance, systems design, and legacy migration. Virtusa’s customers come from industries such as financial services, telecommunications, manufacturing, and retail, including BT Group, Thomson Healthcare, and Vignette. It boasts operations in the US, UK, India, and Sri Lanka.Trading set to begin on Friday.

2.  Concho Resources (CXO): Concho Resources explores and develops properties, located primarily in the Permian Basin region of eastern New Mexico and the western area of Texas, for the production of oil and gas. It also owns properties in North Dakota and Arkansas. More than half of the company’s 467 billion cu. ft. in proven reserves is made up of crude oil while the rest consists of natural gas. Concho Resources gets two-thirds of its sales from crude oil. Customers include such energy marketers as Navajo Refining Company (53% of sales) and DCP Midstream (18%). The company has over 80 producing wells in operation.   Trading set to begin on Thursday.

3.  Genpact Limited (G):  The company got its start in 1997 as the India-based business process services operation for GE Capital, GE’s financial services unit. Today it manages business processes (sales & marketing analytics; financial services core operations & collections; and supply chain, finance & accounting, information technology, and enterprise application services) for companies worldwide. Since 2005 (when Genpact became an independent company), it has inked contracts with over 35 clients in industries such as banking and finance, insurance, manufacturing, transportation, and healthcare. GE continues to account for the majority (74%) of Genpact’s revenue.   Trading set to begin on Thursday.

4. Sucampo Pharma  (SCMP): Sucampo works with a group of compounds derived from functional fatty acids, called prostones; it uses prostones in the development of therapies for the treatment of age-related gastrointestinal, vascular, and central nervous system diseases and disorders. Its main hope, AMITIZA (lubiprostone), was approved in 2006 for the treatment of chronic idiopathic constipation; other applications for AMITIZA, including treatment of irritable bowel syndrome, are in the works. Trading set to begin on Thursday.

::: Upcoming Economic Reports (7/30/07 – 8/3/07) :::

Monday:         None
Tuesday:       Personal Income / Spending, PCE Inflation, Chicago PMI, Construction Spending, Consumer Confidence
Wednesday:  ISM Index, Pending Home Sales, Crude Inventories, Auto & Truck Sales
Thursday:      Initial Claims, Factory Orders
Friday:            Nonfarm Payrolls, Unemployment Rate, Hourly Earnings, Average Workweek, ISM Services

::: Notable Upcoming Earnings Reports I’ll Be Watching This Week :::

Monday:

Superior Energy Services (SPN), DXP Enterprises (DXPE), ValueClick (VCLK), Silicon Motion Technology (SIMO), Vulcan Materials (VMC), Monster Worldwide (MNST), CB Richard Ellis Group (CBG), CTC Media (CTCM), Manitowac (MTW), Actuate (ACTU), Interactive Intelligence (ININ)

Tuesday:

First Solar  (FSLR), Companhia Vale do Rio Doce (RIO), Buffalo Wild Wings (BWLD), BE Aerospace (BEAV), Hologic (HOLX), Chipotle Mexican Grill (CMG), Trimble Navigation (TRMB), NYMEX Holdings (NMX), United Therapeutics (UTHR), Cameron Intl (CAM), Ritchie Bros Auctioneers (RBA), General Cable (BGC), Coach (COH), Vistaprint (VPRT), Under Armour (UA)

Wednesday: 

Oceaneering Intl (OII), Globalsantafe (GSF), Dolby Laboratories (DLB), Liquidity Services (LQDT), Central European Distribution (CEDC), Houston Wire & Cable (HWCC), NATCO Group (NTG), Garmin (GRMN), Transocean (RIG), Mastercard (MA), Noble Energy (NBL), Helmerich & Payne (HP), Gmarket (GMKT)
                 
Thursday:

Pride International (PDE), Bucyrus International (BUCY), Cbeyond (CBEY), Morningstar (MORN), Green Mountain Coffee (GMCR), Visual Sciences (VSCN), Radiation Therapy Services (RTSX), Diodes (DIOD), Jones Soda (JSDA), DealerTrack (TRAK), Techwell (TWLL), Rowan Companies (RDC), Tower Group (TWGP), Gildan Activewear (GIL), GFI Group (GFIG), CommVault Systems (CVLT), WellCare Health Plans (WCG), Flotek Industries (FTK), Rio Tinto (RTP)

Friday:

Silver Wheaton (SLW), Tenaris (TS), Hercules Offshore (HERO)

::: In Case You Missed It – SelfInvestors Blog Entries of the Past Week :::

1. Leading Stocks Take Earnings Hit – New Oriental (EDU), Millicom (MICC), Atheros (ATHR)

2. LBO Mania Done, A Great Depression for Housing?

3. Earnings Movers – Ladish (LDSH) & SeaBright Insurance (SEAB) Breakout to All Time Highs

4. Relief Rally

5. Stericycle (SRCL) & Crocs (CROX) New All Time Highs; Netgear (NTGR) Crushed