MARKET RAP!

Friday ended the week with a whimper. A stalemate for traders. But within a flat close was some volatility.

Heavy profit taking swept through the tanker sector, not so much the energy group in particular. Next week will be pivotal for that group (TK,NAT,SFL and TOPT are some).

I think the market is ripe for a decline of some kind, this last rally has not had a 3% correction as yet. It is getting overextended, and the internals are weakening. Breadth has been weaker, lower number of new highs.

The market was not able to BUILD on Thursdays reversal from RED to BLACK, and Friday gave us CHEAPER OIL and a RISE in Consumer Sentiment.

Yet it also gave us a larger than expected RISE in PPI. INflation guages are flashing warning signs, I think the data will keep the FED in a tightening mode (raising short term rates)

10 YR treasuries held at 50 SMA, MUST move higher now or would question direction of rates, perhaps the move down from 4.40% already has.

Bullish readings are still near or ABOVE any previous bull market readings, it doesn't take much understanding of emotion and nature to deduce we are MUCH closer to an important TOP in the market, not an extended bull market, IMHO.

TRansports came witin 16 points of surpassing its ALL TIME high, yet turned down very next day, surely it still might surpass it.

News has changed from tentative and nagative to positive and sure with BUSH in office, less news from IRAQ, and falling OIL!

Considering how much STIMULUS and FED action has been in favor of the market liquidity melt up, why then has DOW failed to take out its OLD HIGHS? let alone the high set in 2004?

Japan economy slowing, Europe slow, it's down to China and the US!

COmmodities have been PLUNGING.....is demand slowing?

Total credit market debt in the US as % of GDP is at all time highs. The US borrows 80% of the world's savings to consume, because we have near ZERO SAVINGS RATE!

Additional debt issuance by the US should put pressure for higher rates.....but it realy hasn't yet.

P and F charts shows 7% the upside target for the 10 YR.

Put call ratios have been the lowest in years, the VIX registers NO FEAR.

I do not know how this gets resolved. I just know the scene is set for dissapointment, when it arrives is another kettle of fish.

The EASY money has been made with 48% gains since lows, now.......will these gains be held?

Duratek