DJI              11,447           +207         +1.85%         NASDAQ      2312               +27       +1.20%       SP-500          1260               +15        +1.20%                            Yahoo financial news today

TigerSoft NIGHTLY HOTLINE                                                      7/17/2008                                    -----------------------------------------------------------------------    See also:                       Running Daily Comments on A Specific Stock - SSRI    2/22/2008 - Parabolic Food Commodities and TigerSoft    2/21/2008 - Gold and The Best Stock for Predicting A Bear Market.    2/15/2008 - Lessons from Friday's Biggest Gainers and Losers    2/14/2008 - Dirty Gold: Newmont Mining    2/10/2008        Silver Breaches $17.  Third Wave Surge!    2/8/2008          DJI Chart: 1900-2008    2/4/2008          The Limits of Monetary Policy:                             Will The "Stagflation" of The 1970s Reappear?    2/3/2008  The Best Earlier Example of A Rapid Big Drop in The Discount Rate: 1957-1958       Stock Markets in Presidential Election Years: 1940-2008.    1/26/2008 http://tigersoft.com/Tiger-Blogs/Jan-27-2008/index.html     See more Comments on bear market rallies...          Additional Studies of Presidential Election Years.

             Note To Readers: blue or green means the text is new tonight
                                            black means previously written.
              =======================================

                                                        HOW ARTIFICIAL WAS THIS DECLINE?
                                                              WAS THIS ALL A "BEAR RAID"?

                                      With the financial stocks up sharply for  a second day in a row since the SEC
                            banned naked short sales in leading financial stocks, one has to wonder how much
                            of the size of the decline owed to hedge fund naked shorting of these stocks
                            and why, if the SEC is at all concerned about excessive market volatility owing to
                            bear raids, it does not ban naked short sales in all securities and enforce this
                            rule with stiff penalties.  The answer is, of course,  the SEC is the client of Wall
                            Street insiders, not the investing public.  I might not have said that, but for
                            way at the end of June 2007 the SEC cleared the way for a bear market by
                            suddenly, capriciously, illegally allowing short sales on down-ticks.  We should
                            watch the SEC.  They want financials to rally now.  I have to mention their
                            hypocrisy.   They are supposed to police insider trading.  But it is clear from
                            the high volume of trading before the announcement, that they let favored
                            insiders know in advance. 

                                     Given their heavy weighting in the DJI - BAC, C and JPM, I would think
                            the DJI will move higher and reach the point of breakdown, 11700.  A 50%
                            retracement would take the DJI up to 12000.

                                     More evidence that we have just seen a bear raid which the SEC
                            is controlling, perhaps unknowingly, is the fact that the very weakest Fidelity
                            groups for the prior month , as of two days ago,  were those that rose that most
                            these last two days.   I have learned that when the media says the rally was due
                            to "short-covering", it is usually a good idea to do just that.  The Shorts have been
                            pretty smart of late.  It would be an error, I think,  to dismiss their covering as based
                            on poor judgement or emotionalism.  A Summer Rally in a bear market often begins
                            after the second week of July.  See the tables near the bottom.

                                     Despite the rally, we have no major Peerless Buy.  So, the odds favor the
                             rally being short-lived, unless you are accept the Bear Raid hypothesis, which
                             would suggest that the DJI has along way to rally, now that insiders have accumulated
                             so much stock at the bottom.   Looking back to 1965, there are few "V" bottoms
                             and still fewer boittoma without major Peerless Buys.  Three quarters
                             of the time, bottoms require at least another test.   Last August  there were 4 straight
                             days with more than 2000 NYSE advances.   But more recently we have only seen two
                             days in a row.  The DJI is now at the declining 21-day ma.  In bear markets, this
                             and the upper band around 11750 typically act as resistance.  But when the DJI rises
                             too fast, the DJI can keep advancing past the upper band.

                                           ------------------------ 1949 ----------------------

                                          Sometimes, there was no timely major Peerless Buy signal at the bottom. 
                             But the P-Indicator turned very positive and the NYSE A/D Line had shown a Non-Confirmation
                             on the final low.  This was also true at the bottom in early 1942.   If it is a true bottom,
                             there is usually some type of non-confirmation like this.  Otherwise, the
                             probabilities are high that in a few months, the market will be making more
                             new lows. 

                                    Brea



                                     Note the red price bars indicate unusually high volume.

                   -----------------------      Big Rally for Financial Stocks   ------------------------------



                          Wells Fargo and Fannie Mai Rose More Than 40% In Two Days



                                                             FNM Up 30% Today.
              

                                   -------------------------------   JPMorgan -------------------------------


                                                                 How Good A Rally  Will This Be?

                                               The market rallied despite news that the inflation rate rose 1.1%
                                  just in June and 5% in the last 12 months, officially.  The reality is much
                                   worse.  The Labor Department labors very hard to find methods for
                                  minimizing the rate of inflation.    Adjusting for inflation, weekly wages fell 0.9
                                  percent in June, the third  straight monthly decline and the biggest drop in almost
                                  four years.  The July Jobs report for June showed 62,000 fewer jobs were
                                  created than a year ago.   Make no mistake about it, it we are heading into
                                  recession.  The core economic problems are not being addressed. 

                                                                    
                                                                               Middle East Peace?

                                              Another important reason the market rose today was the announcement
                                this morning that the Bush Administration will send a senior envoy to Switzewrland to
                                talk with Iran.  The talks are said by the White House to be  a "one-time deal,"
                                designed to demonstrate a serious desire to resolve the impasse over Tehran's
                                nuclear ambitions.  This is a "significant departure from longstanding policy."
                                Crude Oil is now back to its 50-day ma.  Watch what happens here and whether
                                 the margin requirements for crude oil trading are raised from 5% to 50% like
                                 stocks.   It certainly has that volatility.  Speculative bubbles can be reduced by raising
                                 margin requirements.  It may not work immediately, but it will stop the bubble.
                                 This is what the SEC did in 1968.  It raised margin requirements from 40% to 50%
                                 to cool off the low-priced stock bubble then.

                                              Until there is a new major Peerless Buy signal  other than a Buy B2 (which is
                                  considered a trading range signal), we may wish simply to stay loosely short stocks
                                  whose Accumulation Index is below its 21-day ma (TISI) and hold some high
                                  accumulation stocks that are above their 50-day ma.                                                                        
                              
                                                          Huge Rallies in Finance Stocks

                                             -------------     2-day rate of change -------------
                                                         Freddie Mac                 +58% 
                                                         Fannie Mac                   +54% 
                                                         MGIC Investm Corp   +50%         
                                                         Lehman Bro                  +48%  
                                                         Washington Mutual      +38%
                                                         Bank of America            +37% in DJI 30
                                                         Wells Fargo                    +34%   
                                                         JPMorgan                      +31% in DJI-30
                                                         ....
                                                         Citigroup                        +23%   in DJI-30

                                        
                                             Housing prices moved up more today.  As long as the index does not make
                              new lows, we can hope that the worse is over.  But if housing stocks breakdown
                              the situation for banks could worsen.   Falling housing prices mean more mortgage defaults and
                              walk-aways.   It is possible we will see another leg down for the homebuilding and therefore
                              the home finance and banking sectors.   This would be enormously stressful for the market
                              and for the US Dollar because of the guarantees that the Federal Government is undertaking
                              in this area.  The current US deficit is $9 trillion.  It could  rise by another $5-$7
                              trillion more if housing prices decline for another year and the war in Iraq continues
                              or is expanded to Iran.  More bank failures seem likely, given this scenario.  So more
                              market weakness seems likely. 
              
                                                                 Unfinished   Downside Business

                                              Keep in mind that the DJI rose from a low of 1900 in 1988, twenty years ago,
                             to a high of 14,000.  That is a gain of 600%.   By any standards that is a steep advance.
                             From 1946 to 1966, the DJI rose from 165 to 990.  That is a 500% gain.  Bear markets
                             are worth examining now.  From 1966 to 1970, the DJI fell 46% from its highs.  A
                             comparable move down here from the peak of 14000 would bring another test of 7500. 
                             I think a decline like that is very probable over the next four years.  This projection may
                             serve some strategic planning purposes, though between now and then, we will likely
                             get lots of Peerless Buys and Sells.

                                              Expect more weakness from the Dollar.  Watch (below) to see if it falls below 70.   
                              I would look to Gold, Silver, the Japanese Yen, the British Pound and the Euro as ways
                              to hedge against the new weakness expected in the Dollar as it breaks to new lows.
                              See - http://www.tigersoft.com/Tiger-Blogs/index.htm

                                                                   DJI In Bear Markets: 1915-2008

                                          There have been 29 earlier cases since 1915 when the DJI fell 20% or more
                                 in less than a year.  Graphs are posted at  the bottom of the 7/13/2008 Blog.
                                      http://www.tigersoftware.com/TigerBlogs/July-12-2008/index.html

                                           In this Blog I show lines on these charts at  the point where the DJI falls more
                                 than 20%.   The regular Peerless rules cannot be applied before 1942.  There
                                 is no data on advances and declines or up and down volume.  

                                            You will see that Peerless Buy B2s (as opposed to Index B2s)  never
                                  reversed a decline that had taken the DJI down more than 20%.  (B13s is a
                                  signal to expect a year-end Santa Claus rally, nothing more.  Trends are considered
                                 changed by the Index Buy B1 and Buy B2 when the 65-day ma changes direction).   
                                 There are two cases of bottoms in July (1932 and 1934).  Of the 24 cases in which
                                 the bear market lasted past June,  twenty had bottoms between  October to December.
                                 The late summer months tend to not bring  market bottoms.         

          -------------------------------------------------------------------------------------------------------------------------
                                         ----------------------- DJIA ---7/16/2008------------------------------------------------







                                           
                   --------------------- Tiger Index of Home-Building Stocks ---------------------------
                    

                                                                     
    -------------------------------------------------------------------------------------------------------------------------------------------            
                                                                                                                                                                                                    
                                            QQQQ Is Still Stronger Than DJI or SPY
                                             Weak Closing Power is a Bearish Warning...
                    
                    
                      
                                                                                                
                 ==================================================================                                                            
                                                      
                                           The Weekly DJI Shows some support at 11,000, the point of breakout in 2006,
                        after two years of backing and filling beneath that.  Remember that broken
                        resistance becomes support on the next decline (usually!?).  The next support level
                        is 10,000.   Gold and silver have broken out.  I would expect the Dollar to start another
                        decline.   Confidence in US banks fits in with weakness in the Dollar.  That will mean
                        higher oil prices, more inflation and layoffs.  All this translates into a 1970s style
                        bear market, and there were lots of them. Resistance for a rally will come in at 11750
                        and 12000.

              


                                                   A Break by The Dollar below 70 Would Be Trouble.

                                     Watch the Dollar this coming week.  It is at a key support level.   If it breaks
                               down, the FED will be much more limited in what it can do to stimulate the economy
                              or bail out banks.   If the Dollar holds, the FED still has some maneuvering room to prop
                              up the the stock market (and economy) until after the Presidential Election.    History
                              shows that is what the Fed will try to do.  The latest during a Presidential Election
                              Year that the Fed has moved to lower  interest interest rates was on August 30, 1968.
                               (See my study)
                  

                                                       Summer Bounces in Bear Markets.

                                67% of the time the period from July 4th through Labor Day (early August) shows
                        a rise in the DJI, according to Arthur Merrill.  However,  this June saw the biggest
                        percentage DJI decline since 1930.   In  on-going bear markets, it is most often better
                        to wait for a buying short-term buying opportunity between July 9th and July 24th.  
                        Bear market rallies are brief and dangerous to trust. 

                               On-Going Bear Markets and The Results of Early July Buying: 1966-2008

                                     1966 - There was a shallow rally from 7/1 to 7/11.
                                     1969 - There was a shallow rally from 7/1 to 7/7
                                     1973 - The DJI declined until 7/9 and then rallied to 7/26.
                                     1974 - The DJI declined until 7/12 and then rallied to 7/25.
                                     1977 - The DJI declined until 7/13 and then rallied to 7/22.
                                     1981 - The DJI declined until 7/24 and then rallied to 8/6.
                                     2001 - The DJI declined until 7/12 and then rallied to 7/17.
                                     2002 - The DJI declined until 7/24 and then rallied to 8/22.