The much anticipated 2nd quarter GDP report was just released, and was that GDP grew 2.4% in Q2, missing the consensus forecast of 2.5% by only a fraction. And GDP for the first quarter was revised up from the previously reported 2.7% to 3.7%.

So it was a mixed report that could be viewed as not that bad.

However, we need to look at the trend of the first half of this year to see the real story.

A few months ago the forecasts were for the economy to grow 4% in the 2nd quarter, which would have been an improvement over the 1st quarter. A month or so ago, as indications became clear that the economy was slowing sooner and faster than had been expected, the consensus forecast was revised down to 3% growth. And in the last week or two, as economic reports worsened further, the consensus forecast was revised down again, to just 2.5% growth. And the growth even missed that sharply lowered forecast.

So, the trend of the steady downward revisions of the Q2 forecasts; 4%, 3%, 2.5%, and then the report at 2.4%, confirms that the economy is slowing even faster than economists are able to revise their expectations downward.

The actual report numbers also show the trend, 5.6% in the December quarter, a now revised 3.7% in the March quarter, and now 2.4% in the June quarter.

And all along, the forecasts, not only from economists but from the Fed, have been that although the economy was originally expected to have improved to 4% growth in the 2nd quarter, it would slow in the second half of the year.

That the 2nd quarter did not show an improvement over the 1st quarter, as originally expected, and forecasts had to be lowered so significantly during the quarter, and still the growth came in lower, does not bode well for the extent of the expected second half slowdown.

Wall Street will be pushing the idea that Q2 growth only missed the consensus forecast by a fraction. But we believe the downward trend of the actual reports so far this year, and even more importantly how the Q2 forecasts had to be revised lower so rapidly as the quarter progressed, is the real story from the numbers.

Yesterday in the U.S. Market.

Volatility returned. The Dow spiked up 87 points in the first half hour, then plunged 197 points from that high until it was down 110 points. Then clawed its way back to being down only 30 points, or 0.3%.

Yesterday’s Intraday Chart.

The Dow closed down 30 points, or 0.3%. The S&P 500 closed down 0.4%. The NYSE Composite closed down 0.1%. The Nasdaq closed down 0.6%. The Russell 2000 closed down 0.1%. The DJ Transportation Avg. closed down 0.1%.

The dollar etf UUP closed down 0.7%. The treasury bond etf TLT closed down 0.1%. The gold etf GLD closed up 0.4%, bouncing back fractionally after its big plunge so far this week..

Yesterday in European Markets.

European markets also gave up earlier gains to close down. The London FTSE closed down 0.1%. The German DAX closed down 0.7%, and the France CAC closed down 0.5%.

Asian Markets Were Down Last Night.

Among individual markets:

Australia closed down 0.6%. China closed down 0.4%. Hong Kong closed down 0.3%. India closed down 0.7%. Indonesia closed down 0.9%. Japan closed down 1.6%. Malaysia closed up 0.1% New Zealand closed up 0.1%. Singapore closed down 0.3%. South Korea closed down 0.7%. Taiwan closed down 0.5%.

Markets This Morning.

European markets are also down this morning. At the moment London is down 0.9%. Germany is down 0.8%, and France is down 1.1%.

Oil is down $1.24 a barrel at 77.12.

Gold is up $3 an ounce at $1,171.

Markets In the U.S.

This fairly heavy week for potential market-moving economic reports continues, the reports including more related to the important housing industry; New Home Sales, and the Home Price Index, and Durable Goods Orders, Consumer Confidence, and the first estimate of 2nd quarter GDP. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Monday it was new home sales in June, which rose more than forecasts, but were still the 2nd lowest monthly level ever recorded. Tuesday it was the Housing Price Index, which showed home prices rose an average of 1.3% in May. But the Conference Board’s Consumer Confidence report was a big disappointment, declining further in July to 50.4 from 54.3 in June, which followed the big drop of 10 points from 62.7 in May. Wednesday it was that Durable Goods Orders unexpectedly fell 1.0% in June, the second straight monthly decline. And the Fed’s ‘Beige Book’ report tanked the market saying economic growth is “sluggish”. Yesterday’s only report was that new unemployment claims fell by 11,000 to 457,000 workers filing last week.

This morning it was the first estimate of economic growth in the 2nd quarter, which was that Q2 GDP grew 2.4%. slightly worse than the forecasts. It has weakened the pre-open indicators.

Pre-Open Indicators.

Our pre-open indicators are pointing to the Dow being down 90 points or so in the early going.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($12 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

Gold mining stocks (XAU); Gold bullion; S&P 500, short-term and intermediate-term; And the next weekly seasonal market pattern.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my newspaper column from last week ‘Europe is Jumping the Gun by Removing Stimulus’ click here! It will be replaced with this weekend’s later today.

NOTE: Although tomorrow is Saturday and markets are closed, I will be back in the morning with a wrap-up of today’s actions and the week’s, and an outlook for Monday and next week.

Subscribers: There is an in-depth intermediate-term signals and recommendations report on your website from Wednesday! The next issue of the newsletter will be out next Wednesday.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

Why should you care about what I might say about the market’s seasonality?

My research firm, Asset Management Research Corp., has been engaged in extensive research on the market’s seasonality for more than two decades. In 1999 I wrote a book Riding the Bear – How to Prosper in the Coming Bear Market. At a time when the popular book, and belief, was ‘Dow 36,000’, I predicted the worst bear market since the 1930’s was just around the corner. The strategy I recommended to “prosper in the coming bear market” was a strategy based on the market’s seasonality. There was no “lost decade” for those who followed the strategy. It made gains throughout the severe 2000-2002 bear market, and has significantly out-performed the market over the last 11 years.

So what is the current situation with seasonality?

The market’s normal seasonal pattern of experiencing most of its gains each year in its favorable winter seasons and suffering most of its corrections in its unfavorable summer seasons was overwhelmed last year by the massive $trillions of stimulus and extra liquidity poured into the system to rescue it from total collapse. There was no correction in the unfavorable season last year. In fact there was an impressive continuing rally.

However, the normal pattern has returned this year. The market experienced a correction in February, which historically is the weakest month within the favorable season. It then rallied back in March and April to a new high for the year. It then topped out on April 23, just five trading days before the historical Sell in May and Go Away seasonal maxim of selling on May 1. The S&P 500 then experienced a correction of 16% to its low on July 2.

The next normal seasonal effect was a rally in July, which is historically the strongest month within the unfavorable season.

If seasonality is to continue, investors need to be aware that with July ending this week, the next pattern is that we are entering the three-month period of August, September, and October, which over the long-term tends to be the weakest period of the year.

Of the individual months, August tends to be a month when the trend reverses. September tends to have the most consistent declines. October tends to be the most volatile (for instance has seen the most crashes and mini-crashes), but also most often sees the upside reversal into the next favorable season (by which time investors are so disgusted with the decline that they want nothing to do with the market).

To read the details about seasonality and how to harness its power, click here. Seasonal Timing.

Hey, Goldman Sachs Is Reforming.

Goldman Sachs finally sees the light on the need for reform in the financial industry. It has announced that its employees will no longer be able to use profanity in internal e-mails.

Headlines Elsewhere:

Associated Press: “Foreclosure Activity Up Across Most U.S. Metro Areas. Households across a majority of large U.S. cities received more foreclosure warnings in the first six months of this year than in the first half of 2009, new data shows. The trend is the latest sign that the nation’s foreclosure crisis is worsening as homeowners battling high unemployment, slow job growth, and an uneven rebound in home prices continue to fall behind on their mortgage payments. . . . The latest figures show the threat of foreclosures is spreading well beyond the top tier of metropolitan areas located in California, Florida, Nevada, and Arizona, which had borne the brunt of the fallout from the housing crisis in 2009.”

Associated Press: “A Bleaker Outlook For Economy Into 2011. The U.S. economy will remain slow deep into next year, held back by shoppers reluctant to spend and employers hesitant to hire, according to an Associated Press survey of leading economists, The latest quarterly AP Economy Survey shows economists have turned gloomier in the past three months. . . Yet despite their expectation of slower growth the majority believe the economy can avoid falling back into a “double-dip” recession.”

Subscribers: There is an in-depth intermediate-term signals and recommendations report on your website from yesterday!

Yesterday in the U.S. Market.

The market was down in the early going on the unexpectedly negative Durable Goods Orders report, recovered, declined again, recovered partially, forming a potential head and shoulder top and then declined sharply on release of the Fed’s Beige book report on the economy, before recovering some in the final hour.

Volume was again light, only 1 billion shares traded on the NYSE. Breadth was negative with more than twice as many stocks down as up on both the NYSE and the Nasdaq.

Yesterday’s Intraday Chart.

The Dow closed down 40 points, or 0.4%. The S&P 500 closed down 0.7%. The NYSE Composite closed down 0.7%. The Nasdaq closed down 1.0%. The Russell 2000 closed down 1.7%. The DJ Transportation Avg. closed down 0.1%.

The dollar etf UUP closed down 0.1%. The treasury bond etf TLT closed up 0.3%. The gold etf GLD closed up 0.2%.

Yesterday in European Markets.

European markets closed mostly down. The London FTSE closed down 0.9%. The German DAX closed down 0.5%, and the France CAC closed up 0.1%.

Asian Markets Were Mixed Last Night In Small Moves.

Among individual markets:

Australia closed down 0.1%. China closed up 0.5%. Hong Kong closed unchanged. India closed up 0.2%. Indonesia closed up 1.3%. Japan closed down 0.6%. Malaysia closed up 0.2% New Zealand closed up 0.4%. Singapore closed up 0.4%. South Korea closed down 0.2%. Taiwan closed up 0.2%.

Markets This Morning.

European markets are up this morning. At the moment London is up 0.7%. Germany is up 0.6%, and France is up 0.7%.

Oil is down $.20 a barrel at 76.78.

Gold is up $1 an ounce at $1,161, but down 2.3% for the week so far.

Markets In the U.S.

This fairly heavy week for potential market-moving economic reports continues, the reports including more related to the important housing industry; New Home Sales, and the Home Price Index, and Durable Goods Orders, Consumer Confidence, and the first estimate of 2nd quarter GDP. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Monday it was new home sales in June, which rose more than forecasts, but were still the 2nd lowest monthly level ever recorded. Tuesday it was the Housing Price Index, which showed home prices rose an average of 1.3% in May. But the Conference Board’s Consumer Confidence report was a big disappointment, declining further in July to 50.4 from 54.3 in June, which followed the big drop of 10 points from 62.7 in May. It’s a disappointment since consumer spending accounts for 70% of the economy. Yesterday it was that Durable Goods Orders unexpectedly fell 1.0% in June, the second straight monthly decline. And the Fed’s ‘Beige Book’ report tanked the market saying economic growth is “sluggish”.

This morning it was that new unemployment claims fell by 11,000 to 457,000 workers filing last week. Continuing claims rose by 81,000 to 4.57 million. The report has no effect on the pre-open indicators which were already positive after yesterday’s minor pullback.

Pre-Open Indicators.

Our pre-open indicators are pointing to the Dow being up 50 points or so in the early going.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($12 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

The latest AAII Investor Sentiment numbers; an up to the minute look at the short-term overbought/oversold condition of the S&P 500, NYSE Composite, and Nasdaq. And the next weekly seasonal market pattern.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘Europe is Jumping the Gun by Removing Stimulus’ click here!

Subscribers: There is an in-depth intermediate-term signals and recommendations report on your website from yesterday!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

After a couple of weeks of impressive earnings gains by the big Dow firms that report earlier in the reporting period, earnings reports are more mixed this morning, with several disappointments.

One of the bigger disappointments, in that it is counter to hopes for increasing demand for consumer tech, LG Electronics (LGLD), one of the largest global manufacturers of consumer electronics, and the world’s third largest maker of flat screen TV’s and mobile phones, reported its Q2 earnings plunged 33% on a 0.7% decline in sales.

Comcast (CMCSA), the country’s largest cable TV company, reported its 2nd quarter earnings fell 8.6%.  CVS Caremark (CVS) reported its 2nd quarter earnings fell 7%, to 60 cents a share, missing Wall Street’s estimate of 68 cents. Boeing (BA) reported its Q2 earnings fell 21% on sales declines in both its commercial and defense aircraft divisions, and that delivery of its 747-8 plane may be delayed into 2011. Sprint Nextel (S) reported its losses doubled to 25 cents a share in the 2nd quarter, worse than estimates of a 19 cent a share loss. International Paper (IP) reported its 2nd quarter earnings fell to 21 cents a share from 32 cents in Q2 last year, missing Wall Street’s estimate of 40 cents a share by a wide margin.

But there continued to be impressive reports also. Hess Oil (HES) reported its Q2 earnings nearly quadrupled, but from last year’s depressed levels, reporting $1.15 a share, beating estimates of $1.14 by a penny. Coca Cola Enterprises (CCE) reported a 14% increase in its 2nd quarter earnings. Corning (GLW) reported a 49% Q2 earnings increase to 58 cents a share, compared to estimates of 52 cents.

Durable Goods Orders Declined Again in June.

In another indication that the economic recovery began to stall in May and June (and into July based on the decline in consumer confidence reported yesterday), the Commerce Department reported this morning that Durable goods Orders declined 1.0% in June, much worse than the consensus forecast that they would be up 1.1%.

It was the second month in a row of declines.

Gold at important juncture.

Gold’s decline has it exactly at our initial target for its correction, at the potential support at its 30-week m.a. Concerns about inflation have faded away, replaced with growing concerns about deflation, which may have gold breaking below the potential support, as it did in 2008.

But our technical reversal indicators should catch the next buying opportunity whether it breaks below the support to still lower levels or not.

Headlines Elsewhere:

Financial Times: “Future Generations Will Curse Us For Cutting In a Slump. Stripped of its jargon, the president of the European Central Bank’s argument last Friday is that fiscal retrenchment is needed to “consolidate recovery”. That has become the standard European – although not American – line. “Failure to address the deficit is the greatest danger we face,” said UK Treasury minister Lord Sassoon in the House of Lords on Monday, faithfully echoing the words of his master, chancellor George Osborne. But beyond vaguely referring to the need to “restore confidence” none of the cutters can explain how reducing government spending when private spending is so depressed will “restore confidence” or “consolidate recovery”.

Subscribers: There is an important hotline update on your website from Monday evening, and an in-depth intermediate-term signals and recommendations report will be on your website later today!

Yesterday in the U.S. Market.

The market was up out of the gate yesterday on more impressive 2nd quarter earnings, but then plunged on the consumer confidence report for July.

Volume was again light, only 1.1 billion shares traded on the NYSE.

Yesterday’s Intraday Chart.

The Dow closed up 12 points, or 0.1%. The S&P 500 closed down 0.1%. The NYSE Composite closed unchanged. The Nasdaq closed down 0.4%. The Russell 2000 closed down 0.5%. The DJ Transportation Avg. closed down 1.3%.

The dollar etf UUP closed up 0.2%. The treasury bond etf TLT closed down 1.0%. The gold etf GLD closed down 1.7%.

Yesterday in European Markets.

European markets closed well off their earlier highs but closed up on the day. The London FTSE closed up 0.3%. The German DAX closed up 0.2%, and the France CAC closed up 0.8%.

Asian Markets Were Up Last Night.

Among individual markets:

Australia closed up 0.6%. China closed up 2.3%. Hong Kong closed up 0.6%. India closed down 0.6%. Indonesia closed up 0.5%. Japan closed up 2.7%. Malaysia closed up 0.3% New Zealand closed up 0.5%. Singapore closed up 0.2%. South Korea closed up 0.3%. Taiwan closed up 0.5%.

Markets This Morning.

European markets are down this morning. At the moment London is down 0.6%. Germany is down 0.5%, and France is down 0.1%.

Oil is down $.61 a barrel at 76.89.

Gold is up $1 an ounce at $1,159 after its big plunge of yesterday.

Markets In the U.S.

This fairly heavy week for potential market-moving economic reports continues, the reports including more related to the important housing industry; New Home Sales, and the Home Price Index, and Durable Goods Orders, Consumer Confidence, and the first estimate of 2nd quarter GDP. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Monday it was new home sales in June, which rose more than forecasts, but were still the 2nd lowest monthly level ever recorded. Yesterday it was the Housing Price Index, which showed home prices rose an average of 1.3% in May. But the Conference Board’s Consumer Confidence report was a big disappointment, declining further in July to 50.4 from 54.3 in June, which followed the big drop of 10 points from 62.7 in May. It’s a disappointment since consumer spending accounts for 70% of the economy.

This morning it was reported that Durable Goods Orders unexpectedly fell 1.0% in June, the second straight monthly decline.

Still to come is the Fed’s ‘Beige Book’ at 2 p.m., which provides the latest assessment of the economy by Federal Reserve banks in various parts of the country.

Pre-Open Indicators.

Our pre-open indicators are pointing to the Dow being down 30 points or so in the early going.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($12 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

U.S. dollar. Nasdaq intermediate-term signal. And this week’s weekly market pattern.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘Europe is Jumping the Gun by Removing Stimulus’ click here!

Subscribers: There is an important hotline update on your website from Monday evening, and an in-depth intermediate-term signals and recommendations report will be on your website later today!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

The stock market took yesterday’s report that new home sales came in at 330,000 units in June as a positive.

However, May sales, which were originally reported a month ago to have plunged a huge 32.7% to the worst level ever recorded since the record-keeping began in 1963, were revised downward to an even worse 36.7% decline, at only 267,000.

So the June sales were a 23.6% increase over that record low, which was the headline news.

But sales were only 6.1% above the consensus forecast of a bounce to 311,000 units after the big plunge in May, and at 330,000 June experienced the 2nd lowest monthly sales ever recorded. The two month average of 298,500 homes sold was the lowest two-month level ever recorded.

Sales of new homes are at 47 year lows, down 80% from the number being sold in 2004, and a wave of foreclosed homes will be hitting the market over coming months, giving new home sales even more competition. Foreclosures on mortgages backed by Fannie Mae and Freddie Mac increased 21% in June from May.

A turnaround in housing? I don’t think so.

Earnings Continue to Impress.

Second quarter earnings continue to impress and Wall Street is doing a better job of getting mileage out of them than they did from the impressive 4th quarter and 1st quarter earnings reporting period, when market corrections began as the better than expected reports were released.

Perhaps this would be a good time to quote from the Stock Traders Almanac; “Beware ‘Summer Rally’ Hype. Historically the Weakest Rally of All Seasons.”

However, FedEx (FDX) helped propel the market rally yesterday, reporting 2nd quarter earnings that beat estimates, but more importantly upgraded its outlook, saying it expects its express deliveries to grow more than 20% this quarter (depending on the economy continuing to recover).  This morning, chemical maker Dupont (DD) reported earnings of $1.17 a share, which handily beat estimates of 93 cents, and the company raised its estimates for the full year. [Of course the full year would be higher than previous estimates if the 2nd quarter was 24 cents above estimates]. Lockheed Martin (LMT) reported its Q2 earnings were up 12% over the 2nd quarter last year, and raised its previous estimates for the full year. Cummins Inc. (CMI) reported earnings of $1.25 a share versus estimates of 91 cents.

Headlines Elsewhere:

Financial Times: “Home Help. Up close a jumping frog is spectacular indeed, but you won’t get very far riding the amphibian. June’s rebound in new home sales should be viewed in the same way. – data released from the Commerce Department yesterday showed a 24% leap in new home sales from May to June. Step back though and the US housing market is still croaking.”

“In absolute terms, June was the second worst month for new home sales since the data series began in 1963. The bounce is only because the annual rate of sales in May, the worst month  on record, was revised downward to 267,000 units – just 20% of the sales rate at the peak in 2004. Yet demand remains extremely depressed. Even though US households can borrow for 30 years at a fixed mortgage rate of 4.59%, an all-time record low, mortgage applications for home purchases continue to trend downwards. . . . If the market is struggling now it’s hard to picture it thriving when interest rates return to normal. Meanwhile, there are too many homes on the market to suggest price stabilization.”

Subscribers: There is an important hotline update on your website from last evening!

Yesterday in the U.S. Market.

The market was up right out of the gate, moved sideways for the rest of the day, with a final hour further burst to close on its high, with the Dow up 100 points, exactly at the previous resistance at its 20-week m.a. that halted its last two short-term rallies since the April peak.

Volume was again light, only 1 billion shares traded on the NYSE, indicating it’s still only the same daily traders creating the rally, with sideline money not being enticed in.

Yesterday’s Intraday Chart.

The Dow closed up 100 points, or 1.0%. The S&P 500 closed up 1.2%. The NYSE Composite closed up 1.2%. The Nasdaq closed up 1.2%. The Russell 2000 closed up 2.2% The DJ Transportation Avg. up 2.6%.

The dollar etf UUP closed down 0.5%. The treasury bond etf TLT closed down 0.2%. The gold etf GLD closed down 0.5%.

Yesterday in European Markets.

European markets also closed up. The London FTSE closed up 0.7%. The German DAX closed up 0.5%, and the France CAC closed up 0.8%.

Asian Markets Were Mixed With Very Small Moves Last Night.

Among individual markets:

Australia closed up 0.6%. China closed down 0.5%. Hong Kong closed down 0.1%. India closed up 0.1%. Indonesia closed up 1.1%. Japan closed up 0.1%. Malaysia closed down 0.1% New Zealand closed down 0.4%. Singapore closed up 0.4%. South Korea closed down 0.1%. Taiwan closed down 0.3%.

Markets This Morning.

European markets are up this morning. At the moment London is up 0.8%. Germany is up 0.7%, and France is up 1.4%.

Oil is up $.42 a barrel at 79.40.

Gold is down $6 an ounce at $1,177.

Markets In the U.S.

This week will be another fairly heavy week for potential market-moving economic reports including more related to the important housing industry; New Home Sales, and the Home Price Index, and Durable Goods Orders, Consumer Confidence, and the first estimate of 2nd quarter GDP. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Yesterday it was new home sales in June, which rose more than forecasts, but were the 2nd lowest monthly level ever recorded.

This morning the Housing Price Index showed home prices rose an average of 1.3% in May. It was the second increase after six straight months of decline. The chairman of the index committee at Standard & Poor’s said the positive May report is a bit misleading. But the market liked it, with pre-open indicators becoming more positive after the report.

Still to come this morning is Consumer Confidence, which will be released at 10 a.m.

The 2nd quarter earnings reporting season also continues, and seems to be the market driver.

Pre-Open Indicators.

Our pre-open indicators are pointing to the Dow being up 50 points or so in the early going.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($12 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

Energy commodities crude oil and natural gas. And this week’s weekly market pattern.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘Europe is Jumping the Gun by Removing Stimulus’ click here!

Subscribers: There is an important hotline update on your website from last evening!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

Fed Chairman Bernanke’s crystal ball has not been of the greatest value to investors since he took office, not that his predecessor was much better. Neither Bernanke nor Alan Greenspan foresaw the housing bubble as it was forming, or recognized it after it had formed. Greenspan has said since that he does not believe it’s possible to discern a bubble market. He sure missed recognizing the dotcom bubble,the 1999 tech stock bubble, and the real estate bubble, pouring even more liquidity and easy money into the system until they burst.

Bernanke said in 2005 in response to analysts and economists pointing out the bubble forming in real estate that a real estate bubble was a “pretty unlikely possibility.” In 2007, after the bubble had burst and collapsed the sub-prime mortgage market, he said that the Fed “does not expect significant spillover from the sub-prime market into the general economy.” 

Two years later, after the worst recession since the 1930’s, as the massive amounts of government spending, bank rescue efforts, economic stimulus, and consumer rebate plans finally got the economy recovering off its 2009 lows, the Fed has become increasingly positive. Its announcement after its March meeting noted that “economic activity has continued to strengthen and the labor market is stabilizing. Household spending is expanding at a moderate rate. . . . . Business spending on equipment and software has risen significantly. . . Although the pace of economic recovery is likely to be moderate for a time the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability.” 

The Fed felt so sure of the sustainability of the recovery that it decided to halt its year long program of buying mortgage-backed securities, and signaled that it would probably begin draining excess reserves from the financial system sometime very soon.

The very next month the stock market rolled over into a correction, and a month after that the surprising negative economic reports began to pile in for May and June, and now into July, including dismal monthly employment reports, plunges in home sales, unexpected declines in retail sales, auto sales, manufacturing, and consumer sentiment.

And now the Fed has turned gloomy, lowering its forecast of economic growth, Bernanke talking of “unusual uncertainties” in the economy, and saying the Fed is prepared to return to stimulus actions if the economy appears to be sliding back into recession.

Given Bernanke’s record of optimism each time others were warning of approaching problems, should his current gloomier outlook be taken as sign that things are going to get really bad, or as a positive sign since the direction of the economy has so often been opposite to his expectations?

Headlines Elsewhere:

MarketWatch: “Second Quarter Gets No Respect. Only a few weeks ago the second quarter was strutting along the beach. Now even economists are kicking sand in its face. The main focus on the data this week will be the first estimate of 2nd quarter growth. Economists now say 2nd quarter growth probably came in at an annual rate of just 2.5%, down from 2.7% in the first quarter. Just a few weeks ago economists were looking for a growth rate closer to 3%, and a month before that were predicting a number close to 4%. But since then most economic reports have surprised to the downside. . . . .”

Financial Times: “A Test Cynically Calibrated to Fix the Result. Ignoring a possible Greek default is like a car crash tester failing to consider the possibility of an oncoming vehicle. If you tried to test the safety of cars or children’s toys using the same method the European Union applied to its stress test of banks you would end up in jail. How so? Simply because the testing mechanism was calibrated to fix the result. The purpose of the exercise was to ensure that the only banks that failed the test were those that would have had to be restructured anyway. At the same time, the supposedly clever idea was to demonstrate to the outside world that the rest of the banking system remained sound. The purpose of this cynical exercise was to pretend that the EU was solving the problem when in fact it was not.”

Asian Markets Were Mixed Last Night.

The DJ Asia-Pacific Index closed up 0.6%.

Among individual markets:

Australia closed up 0.6%. China closed up 0.6%. Hong Kong closed up 0.1%. India closed down 0.6%. Indonesia closed down 0.6%. Japan closed up 0.8%. Malaysia closed up 0.4% New Zealand closed up 0.9%. Singapore closed down 0.2%. South Korea closed up 0.6%.

Markets This Morning.

European markets have reversed earlier gains and are now down. At the moment London is down 0.1%. Germany is down 0.5%, and France is down 0.4%. No bounce from the EU bank stress tests results.

Oil is down $.71 a barrel at 78.27.

Gold is up $.50 an ounce at $1,188.

Markets In the U.S.

This week will be another fairly heavy week for potential market-moving economic reports including more related to the important housing industry; New Home Sales, and the Home Price Index, and Durable Goods Orders, Consumer Confidence, and the first estimate of 2nd quarter GDP. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

This morning it will be new home sales in June, which will be released at 10 a.m. After their huge 33% plunge in May, the consensus forecast is for a 5% increase in June. I wouldn’t be surprised to also see the May number revised to show a smaller plunge in sales.

The 2nd quarter earnings reporting season will also continue of course.

The U.S. market, the only market still open when the EU released the results of its bank stress tests at noon on Friday, spurted up on the results. But European markets this morning are less than impressed with the tests.

Pre-Open Indicators.

Our pre-open indicators are pointing to the Dow being down 15 points or so in the early going, not meaningful for market direction.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($10 a month) is the equivalent of one cup of coffee a week.

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In the premium content area today:

Charts and technical indicators of U.S. dollar, and gold, short-term and intermediate-term. And this week’s weekly market pattern.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘Europe is Jumping the Gun by Removing Stimulus’ click here!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

Global stock markets surged upward over the last few days, after some economic reports from Germany and the U.K. showed improvement in manufacturing and consumer confidence in July, and U.S. companies mostly continued to report second quarter earnings that beat Wall Street’s estimates.

The combination served to raise hope that the global economic recovery, which seemed to stumble quite seriously in May and June, is back on track. But it was scant evidence.

And the hopes were at odds with the confidence and outlook of central banks in the United Kingdom, and in the U.S.

In the United Kingdom, the Bank of England revealed it is concerned about the stalled economic growth in the U.K. to such a degree that it is considering the potential need to pump more liquidity into its economy.

In the U.S., the recent release of minutes of the Fed’s June FOMC meeting revealed the Fed has considerably more concern about the sustainability of the U.S. economic recovery than it revealed in its announcement after the meeting. And in remarks a few weeks ago Fed Chairman Bernanke expressed concerns about the austerity measures being undertaken in European countries, worried that they would have a negative effect on European economies going forward and affect the global recovery. He urged Congress to have an exit plan for stimulus measures and tackling the budget deficit in mind, but to refrain from implementing them until there is evidence that the U.S. economy can continue to recover on its own.

And in his semi-annual testimony before Congressional banking committees this week, after a continuing string of deteriorating economic reports for June and into July, Bernanke in unusually downbeat terms during such testimony warned that there are “unusual uncertainties” in the economy, and that the Fed is ready to provide more stimulus and liquidity into the system if needed to halt a potential slide back into recession.

Analysts believe that need for another round of quantitative easing would significantly unsettle markets and have investors facing another roller-coaster ride of volatility.

So let’s hope the U.K. and U.S. central banks have it wrong, and investor optimism of the last few days has it right.

Seven More Banks Fail.

The FDIC announced the failure of 7 more banks last week, bringing the total for the year so far to 103.

The 7 banks were pretty much in a cross section of the country; Oregon, Minnesota, Nevada, Kansas, Georgia, Florida, and South Carolina.

The pace of failures this year is well ahead of last year when a total of 140 banks failed, and when they were mostly in the states most affected by the real estate bubble, and in the auto plant states, primarily Michigan.

Depositors money up to $250,000 per account is safe since the insurance cap, raised from $100,000 per account when depositors panicked during the financial crisis, is now permanent. Banks are pre-paying $45 billion in premiums through 2012 to replenish the FDIC insurance fund, which fell into the red last year, and was still $20.7 billion in the red at the end of March.

Headlines Elsewhere:

Financial Times: “Slapped Wrist for Goldman and It’s Straight Back to Business. Now that it has settled its fraud case against Goldman Sachs, the Securities and Exchange Commission should move its Washington headquarters from F street to the banks of the Potomac. The proximity to the water would enable the federal watchdogs to indulge their most recent hobby: catch-and-release fishing.”

And the next one, at a time when G-20 nations (which includes the U.S.) have agreed to cut their budget deficits 50% over the next three years, and separately, European nations have adopted serious austerity measures to cut their budget deficits:

Wall Street Journal Online: “Forecast for 2011 Deficit Raised to $1.4 Trillion. The White House raised its forecast Friday for the fiscal 2011 budget deficit to $1.4%, or 9.2% of the economy, adding new fuel to the political battle over how to tame the flood of red ink.

Barron’s: “Treasuries at Odds With Stocks! As stocks posted gains, short-term Treasury-note yields touched a record low, suggesting at best sluggish economic growth ahead.”

Yesterday in the U.S. Market.

A second straight triple-digit gain, easily overcoming the triple-digit decline on Wednesday.

Volume was again light at 1.1 billion shares traded on the NYSE.

Yesterday’s intraday chart:

The Dow closed up 102 points, or 1.0%. The S&P 500 closed up 0.8%. The NYSE Composite closed up 0.9%. The Nasdaq closed up 1.0%. The Russell 2000 closed up 2.4%. The DJ Transportation Avg. up 1.5%.

The U.S. dollar etf UUP closed down 0.2%. The Treasury bond etf TLT closed down 1.1%. Gold closed down $5 an ounce, at $1,189.

Yesterday in European Markets.

European markets gave up earlier gains to close virtually unchanged. The London FTSE closed down 0.1%. The German DAX closed up 0.4%, and the France CAC closed down 0.1%.

Global markets for the week.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($10 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

Charts and technical indicators of probable rally resistance levels for DJIA, S&P 500, Nasdaq, and Russell 2000. And next weekly market pattern.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

Next week’s Economic Reports:

Next week will be another fairly heavy week for potential market-moving economic reports including more related to the important housing industry; New Home Sales, and the Home Price Index, and Durable Goods Orders, Consumer Confidence, and the first estimate of 2nd quarter GDP. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

The 2nd quarter earnings reporting season will also continue of course.

To read my weekend newspaper column ‘Europe is Jumping the Gun by Removing Stimulus’ click here!

I’ll be back Monday morning with an update on the action of Asian markets Sunday night, and the early reaction of European markets to the results of the stress tests on European banks that were released after European markets closed yesterday, and the outlook for the U.S. market for the week.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

So much for the planned global synchronization of exit plans from the massive stimulus efforts that rescued global economies from the worst recession since the 1930’s.

Last winter, global central banks were in agreement, assuring markets that stimulative policies would remain in place until a durable global recovery is secured, that “pre-mature withdrawal of stimulus would be avoided, and when the time arrived the withdrawal would be in a globally co-operative and co-ordinated way.”

Sounded easy. But it’s turning out to be difficult, if not impossible.

The president of the European Central Bank said in an interview yesterday that government spending needs to be cut now, and tax increases imposed immediately, in global industrial nations. He warns that central banks that want to prolong the stimulus efforts are wrong.

Economic reports this week gave some support to that view, showing that manufacturing output in Europe in July picked up, and consumer confidence rose in Europe in July. Possibly also affecting the demands are worries over the government debt crisis in Europe.

However, in the U.S, the country’s central bank, the Federal Reserve, faces different circumstances and has a different opinion regarding stimulus efforts.

The U.S. housing market has been collapsing again since April. Manufacturing, consumer confidence, and retail sales were unexpectedly down in June and July. Having been projecting slower U.S. economic growth in the second half of the year anyway, economists, and even the Fed itself, are cutting estimates of 2nd half U.S. economic growth even further.

No wonder then that the U.S. Federal Reserve has views and planned tactics that are completely opposite to those of the Euro-zone central bank.

Fed chairman Bernanke said in testimony before Congressinal banking committees this week that the U.S. economy faces “unusual uncertainties” and needs fiscal support and stimulus to remain in place. Going further he said the Fed will be willing to take measures to expand liquidity further if the U.S. recovery stumbles more than expected.

I guess we can forget about co-ordinated global economic cooperation.

No More Too Big To Fail – Sure.

Remember how the U.S. auto-makers had to be bailed out along with the major banks? It wasn’t just that their cars weren’t selling. It was that they were also heavily involved in the financial system, through their finance divisions. General Motor’s GMAC Finance division had $billions in loans out, not just auto loans, but real estate loans, including sub-prime mortgages.

GM sold controlling interest in GMAC to private-equity group Cerberus Capital Management to raise cash in 2006. In 2008 the Federal Reserve accepted GMAC’s application to become a bank holding company so it could have access to billions of dollars of government aid. The U.S. Treasury then invested $5 billion in GMAC from its TARP bank rescue program. GMAC renamed itself Ally Financial in 2009. And in 2009 the U.S. Treasury announced it would invest another $7.5 billion in GMAC, which gave the U.S. government the controlling stake.

It had to be done. You know. GMAC, and by default GM, were in the financial system and were too big to fail.

But it won’t happen again.

Two interesting developments though. In a last minute compromise, auto-dealers’ activities in making loans to car-buyers were exempted from the new consumer protection sections of the financial reform bill.

And yesterday it was announced that General Motors has agreed to buy Americredit, a vehicle finance company, for $3.5 billion. Too big to fail coming back so soon?

Subscribers to Street Smart Report: There is a mid-week ‘Market Signals and Recommendations’ report on the website for you from Wednesday, a hotline from Wednesday evening, and a ‘Gold, Dollar, Bonds’ update from yesterday.

Yesterday in the U.S. Market.

No intraday reversal this time. The market was up right out of the gate, moved sideways at the high level for the rest of the day, and sold off only a bit in the final half hour.

Volume was light for such a big move, only 1.2 billion shares traded on the NYSE. Market breadth was very positive with 2,678 stocks up and only 407 down on the NYSE, and 2,234 up and only 446 down on the Nasdaq.

Yesterday’s intraday chart:

The Dow closed up 201 points, or 2.0%. The S&P 500 closed up 2.2%. The NYSE Composite closed up 2.5%. The Nasdaq closed up 2.7%. The Russell 2000 closed up 3.7% The DJ Transportation Avg. up 3.8%.

Yesterday in European Markets.

European markets also closed up strongly. The London FTSE closed up 1.9%. The German DAX closed up 2.5%, and the France CAC closed up 3.1%.

Asian Markets Were Up Last Night.

The DJ Asia-Pacific Index closed up 1.5%.

Among individual markets:

Australia closed up 1.8%. China closed up 0.4%. Hong Kong closed up 1.1%. India closed up 0.1%. Indonesia closed up 1.1%. New Zealand closed up 0.4%. Singapore closed up 0.6%. South Korea closed up 1.3%. Taiwan closed up 1.2%.

Markets This Morning.

European markets are mixed this morning. London is down 0.3%. Germany is down 0.4%, and France is up 0.3%.

Oil is down $.37 a barrel at 78.93.

Gold is up $2 an ounce at $1,197.

Markets In the U.S.

This week had a fairly heavy schedule of potential market-moving economic reports including those related to the important housing industry; the Housing Market Index, Housing Starts, Mortgage Purchase Applications, and Existing Home Sales. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Monday it was that the Housing Market Index, measuring home-builder confidence, plunged in July to its lowest level in a year. Tuesday it was that new housing starts fell 5% in June, worse than consensus estimate of a 3% decline. Wednesday it was Ben Bernanke making remarks in his testimony to Congress that there is “considerable uncertainty” in the economy. Yesterday, it was that Unemployment Claims unexpectedly jumped by 37,000 last week, and that existing home sales fell 5.1% in June, after May’s huge plunge, while inventories of unsold homes rose 2.5%, and the Leading Economic Indicators fell 0.2% in June.

But the market is now apparently not macro-focused on the economy going forward, but micro-focused on 2nd quarter earnings and how impressively they are exceeding Wall Street’s estimates.

The results of the European bank stress tests will be released at noon-time and may also be a market mover. European regulators are deliberately releasing the report after European banks are closed for the day, but U.S. market will be open.

Pre-Open Indicators.

Our pre-open indicators are pointing to the Dow being up 25 points or so in the early going, not meaningful for market direction.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($10 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

Technical indicators on the Dow, short-term and intermediate-term; the latest weekly AAII investor sentiment numbers; and the market pattern for this week.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my newspaper column from last weekend ‘Is the Economic Recovery Just An Illusion?’ click here! It will be replaced with the new one late today or tomorrow.

NOTE: Although tomorrow is Saturday and markets are closed I will be back in the morning (but later than on week-days, probably about 10:30 a.m.) with a wrap-up of today’s market action, and the week’s, and an outlook for Monday and next week.

Subscribers to Street Smart Report: There is a mid-week ‘Market Signals and Recommendations’ report on the website for you from Wednesday, a hotline from Wednesday evening, and a ‘Gold, Dollar, Bonds’ update from yesterday.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

The market staged an impressive intraday upside reversal on Tuesday on a rumor that the Federal Reserve was about to announce some changes that would encourage banks to lend more freely, especially to small businesses that create the majority of new jobs in the U.S.

But Fed Chairman Bernanke gave his semi-annual testimony before the Senate Banking Committee yesterday, and the market began tanking, giving back all of Tuesday’s gain and more almost as soon as he began speaking, as he made it clear that the Fed doesn’t have any better feel for the economy than anyone else.

His clearest statement was that the U.S. economy faces “unusual uncertainty”.

He revealed further indications that the Fed does not have any idea which way the economy is going to go, by testifying that on the one hand the Fed has an exit strategy for removing more of the punch bowl if the recovery improves, but on the other hand it is willing to take measures to expand liquidity further if the recovery stumbles too much. Meanwhile, it will keep its fed-funds target rate at close to zero (and hope?).

Meanwhile, more negative economic news this morning. New unemployment claims unexpectedly jumped by 37,000 last week.

But pre-open indicators are soaring in response to 2nd quarter earnings reports this morning that beat estimates.

Interesting Juncture.

Not that short-term gyrations are of much importance, but the up and down volatility this week has the U.S. market at an interesting short-term juncture.

The short-term rally of the previous 10 days seemed to end last week, continuing the pattern of lower highs on the rally attempts (and lower lows on the pullbacks) that has been in place since the peak in April. Then it rallied Monday and Tuesday. Then it declined yesterday but only down to the potential short-term support at its 21-day m.a., with early-morning indicators pointing to a very positive start to the day today.

Subscribers to Street Smart Report: There is a mid-week ‘Market Signals and Recommendations’ report on the website for you from yesterday, and a hotline from last evening. There will be an in-depth ‘Gold, Dollar, Bonds’ report on later today.

Yesterday in the U.S. Market.

A downside reversal this time. These reversals in both directions are coming fast and furious and don’t seem to mean much anymore. The Dow was up 35 points at its high, moved sideways until Fed Chairman Bernanke began his semi-annual  testimony before Congress, and then plunged to close down 109 points, and is now only up 23 points for the week so far.

Volume picked up some to 1.2 billion shares on the NYSE. Market breadth was negative, with only 951 stocks up and 2,074 down on the NYSE, and only 672 up and 1,976 down on the Nasdaq.

Yesterday’s intraday chart:

The Dow closed down 109 points, or 1.1%. The S&P 500 closed down 1.3%. The NYSE Composite closed down 1.3%. The Nasdaq closed down 1.6%. The Russell 2000 closed down 1.9% The DJ Transportation Avg. down 1.4%.

Yesterday in European Markets.

European markets closed up, closing before the U.S. market plunged in the afternoon. The London FTSE closed up 1.5%. The German DAX closed up 0.4%, and the France CAC closed up 0.85%.

Asian Markets Were Mixed Last Night.

The DJ Asia-Pacific Index closed virtually flat, up just 0.03%.

Among individual markets:

Australia closed down 0.82%. China closed up 1.1%. Hong Kong closed up 0.5%. India closed up 0.8%. Indonesia closed down 0.1%. New Zealand closed down 0.8%. Singapore closed up 1.0%. South Korea closed down 0.8%. Taiwan closed down 0.5%.

Markets This Morning.

European markets are up very strongly again this morning. London is up 1.1%. Germany is up 1.7%, and France is up 1.9%.

Oil is up $1.14 a barrel at 77.70.

Gold is down $6 an ounce at $1,186.

Markets In the U.S.

This week has a fairly heavy schedule of potential market-moving economic reports including those related to the important housing industry; the Housing Market Index, Housing Starts, Mortgage Purchase Applications, and Existing Home Sales. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Monday it was that the Housing Market Index, measuring home-builder confidence, plunged in July to its lowest level in 1 year. Tuesday it was that new housing starts fell 5% in June, worse than consensus estimate of a 3% decline. Yesterday it was Ben Bernanke’s remarks in his testimony to Congress that there is “considerable uncertainty” in the economy.

This morning it was the report that Unemployment Claims unexpectedly jumped by 37,000 last week.

Still to come are existing home sales, and the Leading Economic Indicators Report, which will be released at 10 a.m.

Pre-Open Indicators.

Our pre-open indicators are pointing to the Dow being up 110 points or so in the early going.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($10 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

Gold becoming interesting?; and the potentially important market pattern for this week.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘Is the Economic Recovery Just An Illusion?’ you can either scroll down to Saturday’s post, or click here!

Subscribers to Street Smart Report: There is a mid-week ‘Market Signals and Recommendations’ report on the website for you from yesterday, and a hotline from last evening. There will be an in-depth ‘Gold, Dollar, Bonds’ report on later today.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****