Inter-Market Relationships Will Lead Short-Term Equity Reflex

from the 07/29 current rally high of 10,718 from the 04/20/05 10,000 low. The

bull cycle high so far is 10,984 on 03/08/05. The SPX
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1223.13 yesterday, has retraced three days from the 1245.86 high last Wednesday,

Aug. 3, going into the 08/05 time date. The
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the 40.14 high on 08/02, closing yesterday at 39.19, -0.6%. Crude oil hit new

highs again, closing at 63.94, +2.6%, and this made energy the leading primary

sector yesterday with the
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yesterday to 91.49 and has declined six of the past seven days. The short-term

shorts were covered, as the intraday low was 91.44, and there is sequence

confluence with the .618 retracement to 87.53 from 97 at 91.14, which is also

about the lower channel level drawn from the 05/13/04 78.29 low, in addition to

the 200-day EMA at 90.71. This current TLT decline is from the 1,2,3 DTs (double

tops) of 97 (06/13/05) and 96.81 (06/27/05). The five-day RSI is below 30 at

24.7, so a reflex from this zone to the 93 – 94 level would not surprise me and

is good reason to take the chips off the table for a short-term trade (see

chart). The leading red sectors were the HGX (housing index), -2.2%, the XLU

(utilities) -2.0% and the HUI (gold index) -1.4%. Following them was the

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firm deal news. The five major brokerage firms were net minus with
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the oversold zone. NYSE volume yesterday was 1.35 billion shares with the volume

ratio 42 and 4 MA now 35. Breadth was -849 with the 4 MA -984 and five-day RSI

at 30. This is in conjunction with crude oil, overbought at 63.94, and Tuesday

is the 13th day of the current advance, which is about +13% so far. The TLT is

short-term oversold, and the US Dollar has declined from about 90.75 to 87.98

yesterday. Gold has a five-day RSI of 84.3 and has advanced +5.2% from the 418

zone (cash gold) and is now near the high end of an upper channel line. Net net,

on a short-term basis a quick equity reflex up some time this week should not

surprise anyone, so let’s take a look at current focus levels for the major

past two days which was between 10,718 – 10,573, hitting an intraday low

yesterday of 10,525 and closing at 10,537. The 50-day EMA is 10,535, the 89-day

EMA 10,500 and 200-day EMA 10,451. The 5 RSI is 30.5. Any early weakness on

Tuesday to 10,500  – 10,440 will probably bring in buyers. The .50

retracement to the last swing point low of 10,175 is 10,447, in confluence with

support at 1219.55 and the 50-day EMA at 1215.43. The .50 retracement to the

last swing point low of 1183.55 is 1214.70. On the upside is the 20-day EMA at

1228.80 and the previous magnet high at 1229.11. The QQQQ closed at 39.19 after

declining four days to the 20-day EMA, which is now 39.21. The 50-day EMA is

crude oil, gold and interest rates, along with the down US Dollar, so any equity

reflexes will feed off that movement. The last SPX price move to 1245.86 was

rather anemic and not confirmed by momentum or other internals like breadth and