comments and outlook for 08-01-2011

As I type this the S&P futures are up around 16 points.  All based on the lame stream media reporting congress is close to a debt ceiling deal.  Are they?  Well, as I understand Senate rules it can take 2 days to get the final vote on any "deal" and they need 60 yea votes.  Then any "deal" is by no means assured of passage in the House without changes when it goes to the House.  So it seems to me you are looking at late August 2 or early August 3 before any "deal" is a "done deal" and possibly later than that.

Did you see that several large companies have been announcing cut backs.  I think you will see the weekly unemployment #s move back up.  I would not be surprised to see a 500K claim # within the next 2 months.  So all this market weakness is about more than the Kabuki theater in DC.  There is the problems in Europe, the GDP reports, and weakening employment situation.  See my weekly and monthly outlooks for additional comments.

Our cycle charts is showing Monday down.  How much?  Hard to say - may depend on how hard CNBC pushes the "deal" is done topic.  Still I believe we could test prior lows near 1260 within the first 2 days of the week as you have multiple cycles bottoming Tuesday (If I have the charts right).

Here is a visual:

GL traders.  Do your own analysis.  Yeah - futures are up big - but it is still 13+ hours until the market opens.