Fiend's SuperBear Market Report

 
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            *                       FIEND'S SUPERBEAR MARKET REPORT                     *

            *                                July 27, 2010                              *

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            *                       e-mail: fiendbear@fiendbear.com                     *

            *                    web address: http://www.fiendbear.com                  *

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                                           Fiend Commentary                             

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            Three days of triple digit gains totaling over 400 points pushed the Dow

            back above its 50 and 200 DMAs to a two month high. Not much news out to

            drive the rally but it came just as the Dow's long term trend was starting

            to head south. To start the month the Dow bottomed out below 9,700 and now

            near the end of the month the index has battled back above 10,500.

 

            Now with the rally we will likely see once glum folks start to get optimistic

            again even as nothing much has changed. Talk of Dow 11,000 will start again

            amid the belief that rock bottom rates into 2012 is somehow a positive. The

            recovery is so weak that instead of rate hikes this year they have been

            pushed out a couple of years. Unemployment which was supposed to be dropping

            is now looking like it will stay high throughout the so-called recovery.

 

            It is déjà vu all over again with talk of deflation. I seem to remember the

            same talk back in 2003 which was the precursor of the Fed allowing the giant

            real estate bubble to develop and subsequently bust. Of course that is all the

            Fed knows how to do...at least for the past several decades. When times are

            tough turn on the spigots and hope for the best.

 

            Looking at the current action I suspect the Dow rally will run out of steam

            as suddenly as it began. Resistance is going to be in the 10,750 area but

            from there it is not too much of a hop back to the old highs for the year

            above 11,200. That would set up a perfect scenario for the Bears going into

            late summer. Right now the weak economy is not seen as that bad since it

            has the consolation that the Fed is on indefinite hold. However, if there

            are concrete signs of another slide towards recession that would warrant

            a move to new lows.

 

            Momentum indicators remain mixed although the short term trend is obviously

            positive. Intermediate term is slightly negative while the long term trend

            is slightly positive.

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