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MARKET INTERNALS LOSING STRENGTH

Our market internals are losing strength, indicating a weakening in the position of bulls. We have three gauges to try to judge the internal strength of markets generally.

Our first indicator, CharMeter Asp, is the trading indicator, moving more than the others. We have watched our bullish strength fall from 56% in early July to 40.23%.

The T11D Sunmarry indicator, which is a slower mover, holding to trends longer, is now 53.52% bullish, after having apparently topped at 55.27% on July 7.

We've added a third inciator, M4 Sum, which is an even slower (often 'late') indicator, which is also in a downtrend, bullish issues having dropped from 335 to 324.

These three indicators count issues we follow at bullish and bearish readings to get a picture of the market's strength.

Below we show these indicators in the ETF OIL, which is attempting to change trends from negative to positive. T11D Sunmarry has become positive, as has M4 Sum, but the ChartMeter ASP is resisting at zero.

ChartMeter ASP 512      
Date PLUS Zero Minus % Long
2-Jul 284 51 177 55.47%
3-Jul 290 52 170 56.64%
5-Jul 292 47 173 57.03%
6-Jul 257 77 178 50.20%
9-Jul 242 94 176 47.27%
10-Jul 214 119 179 41.80%
11-Jul 206 128 178 40.23%
         
T11 SUNMARRY 512      
Date PLUS Moving Minus % Long
2-Jul 255 41 216 49.80%
3-Jul 256 39 217 50.00%
5-Jul 278 44 190 54.30%
6-Jul 282 44 186 55.08%
7-Jul 283 42 187 55.27%
10-Jul 280 39 193 54.69%
11-Jul 274 39 199 53.52%
         
         
M4 SUM 512      
Date PLUS Moving Minus % Long
10-Jul 335 0 177 65.43%
11-Jul 324 0 188 63.28%

Our view on this market rally is quite cautious. With internal indicators decaying, and the price of the US Dollar rallying, we don't see any way that stocks will rally at this point, without some outside intervention by the Fed, which seems unlikely at the moment.

This, too, makes us suspicious of the rally in OIL. We think it might not have much kick to the attempted rally.

Michael J. Clark

Hanoi, Vietnam