July was a great month in stocks & perhaps August will be better!

Bear Trap!!

August should prove to be the month of the macro turn in the stock market. The market has low interest rates, no inflation and a slow basing U.S. economy. The economy in the global world already based and had been slow for over the year. The stock markets in China bottomed in December of 2008 and the United States bottomed in March of 2009. That is the key, understanding if China indeed does have the lead. Copper, the lead commodity to economic growth, acts brilliantly and is in a solid up trend. Macro forces are well positioned globally. On balance economy activity has continue to increase in the United States.

The market continues to point higher and the new month has begun a bullish period. Next week the ISM manufacturing index comes Monday morning at 10est. It may provide a very nice boost to the market after last Friday's Chicago PMI data. The Jobs report comes next Friday. At this point, the unemployment rate may not be the best indicator of labor strength as workers leaving the job market have artificially deflated the number. Instead, we should concentrate on private payroll growth. Once private payrolls stabilize above 100,000, we should start to see improvement in the labor sector. The look of the market is still under short term pressure and consolidation over the past week.

The market did make new weekly highs for the move higher at 1118.75 last week. The ES futures 200/60 currently sits at 1095.04. The market did an excellent job last week of staying together and working off the overbought situation. Overall, economic news mostly was not as bad as expected while earnings generally topped analysts projections. Europe may be moving beyond the sovereign debt crisis and the Fed was still hopeful about the recovery continuing. With housing coming off special tax credits, the economy is looking soft at the end of the second quarter. Who doesn't know this? 

August sets up to move higher with targets at 1113.00, 1115.75, 1118.75, 1129.50, 1159.50 & 1174.75. These numbers are all well within reach. If the down side shows up targets are 1083.50, 1061.25 and 1050.75. The 1050.00 area has proved to be very large support. The down side is the least likely probability at this time. The IWM or Russell 2000 is up 4.0% year to date and is the strongest group. The airline sector, believe it or not, is the best group of the year. 1129.50 is the key, a close at the end of August above that level and we will have Macro buys!!