09/15/06 Market Update

Stocks:

Stocks had successful week after Monday. The price on the S&P 500 surged back to the upper boundary or mid-point resistance for the current range (magenta trend line). This mid point line has acted as support and resistance in the past. The daily oscillator is over-bought as is the weekly. However, the weekly oscillator is just poking its head above the over-bought threshold line. There is energy potential available to continue the rally.

S&P 500 -- Daily

Another view of the market, from a cycles stand point indicates we are reaching a cluster of important cycle dates over the next two weeks. The alternate 9-month cycle is due on 9/21/06 and the short term 27-trading day cycle is due on Monday. While cycles typically measure low to low, they can occasionally point to high turning points as well. The market is also with in the early windows for the 55-week cycle and the ideal date of the major business or 48-month cycle. Where much of the street has expected the 48-month or 4-year cycle low in this September, October period, as I have written about within these updates over the last few months, we could see the market rally into the ideal cycle dates and peak then declining into an extended cycle low in April of next year. If this is the scenario, then we are dangerously close to this peak now.

S&P 500 Cycle Matrix

	S&P 500
Date	Cycles
9/17/2006

NYSE				Proj High @
Cycle Length	d/w/m	Last date	Expected date	0.5
27 T-Days	27	8/11/2006	09/18/06	08/30/06
39 T-day	41	8/11/2006	10/07/06	08/30/06
54 T-day	53	8/11/2006	10/25/06	9/17/2006
8.9weeks #1	67	9/7/2006	11/12/06	10/10/2006
13 weeks	83	9/7/2006	11/28/06	10/18/2006
108 Calendar Day	109	8/23/2006	12/10/06	10/16/2006
19 weeks (1) 95TDs	21	7/18/2006	12/10/06	9/28/2006
9 months (.5) 39weeks	38	7/3/2006	03/24/07	11/12/2006
9 months (.5) 39weeks	38	12/30/2005	9/21/2006	5/11/2006
55 weeks	56	7/7/2005	08/03/06	1/19/2006
55 weeks Alt2	53	10/13/2005	10/21/06	4/17/2006
78 weeks (18 month)	77	2/7/2006	08/06/07	11/6/2006
24 Month	23	10/13/2005	09/06/07	9/24/2006
41 month	41	10/25/2004	01/09/08	6/2/2006
48 month	49	10/10/2002	09/04/06	9/21/2004

Look for the signs of the topping process with fewer and fewer stock participating and a gradual increase in the number of stocks making new low on each subsequent decline.

Bonds

The bond market continues the expectation of a Federal Reserve pause and pricing proves some investors are expecting the future language of an interest rate cut. I believe they will be sorely disappointed this week and bond prices will reflex the markets over enthusiasm.

Indecision dominated the trading last week and should remain the same this week into the Fed’s meeting. The light green rising trend line supports the current rally. We should slowly inch along it until the Fed announcement is released. If broken, the short term trader should exit this market to reenter one or two weeks later when prices begin to anticipate the next Fed. move.

30-Year U.S. Treasury Bond Price --Daily

Gold

Last week I mention the rarity of a Gold system “Short Signal”. When issued it usually signifies a serious divergence within this market. The XAU obliged the signal by plummeting through the rising Gann grid line dropping all the way to the lower channel. The daily oscillator is now over-sold but the weekly oscillator is in neutral territory with a downward slope. As the daily oscillator’s condition is relieved, we may see some bounce activity but mostly just volatility. The previous triangle pattern still suggest more intermediate term decline to come.

XAU -- Daily

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