Something is Up

July typically closes well, but can end poorly if a bear market is in progress.

*Bernanke is not planning to turn the spigot off at the Central Bank, that interest rates would stay low. So following this World Bank Chief Economist Just Lin says that a “surge in excess capacity world wide could lead to a global 'deflationary downward spiral.'"

Japan is forecasting two years of price declines, which showed us how to mess up back in the 1990’s when they had a blowup in the banking sector and a collapse in the real estate market.

I see deflation, not inflation, as the enemy. Unless the economic engine in the U.S., and now over the world, can get cranking, with money being spent, deflation could keep occurring.

-OXBHM OEX.X AUG 2009 465.0000 CALL was our recommendation for Friday. This was a hard position to trade. Some day traders were able to buy to near the lows at 4.30 area, and sell to 5.90 near day end, while others paid up to 5.00, to sell by day end for up to .90 profits. Calls won again.

The market is at a turning point beyond discussion. It's vastly overbought, and the argument "a true bull market" or the "greatest new bubble, ready to burst" proliferate conversation.

Study the economic calendar and earnings reports out for the week. Watch for "news triggers" that will burst overbought conditions, or take the market to new highs.

We now see potential stopping points on any consolidation at perhaps only 8750, but see the potential for downturn to 8376 on any bad news. Yet again, we believe, the market has moved up too quickly.

The market held above 9000 Friday. That is a market statement. The bull/bear battle is in full gear. Lots of shorting going on in the market, lots of puts players, and the masses have now become the masses, both ways.

Something is up.