Economy Fannie Mae and Euro took a dive

Ten-year notes and 30-year bonds were little changed on the week after the government sold a combined $27 billion of the securities in quarterly auctions. U.S. mortgage lenders Fannie Mae and Freddie Mac posted bigger-than-expected losses this week, adding to speculation that the Treasury will have to sell more debt if it decides to provide the companies with capital. Traders now see a 33 percent chance that U.S. policy makers will raise interest rates by year-end, compared with a 65 percent likelihood a week ago. Oil touched a three-month low of $117 today, easing concern that inflation will accelerate.

In Europe, speculation also eased that the European Central Bank, whose sole mandate is to control inflation, will raise interest rates as the economy slows. The ECB held its benchmark rate at 4.25 percent yesterday. Its president, Jean-Claude Trichet, said expansion will be ``particularly weak'' in the second and third quarters. U.S. stocks rose, helping the Standard & Poor's 500 Index post the first back-to-back weekly gain since May, as retailers and airlines rallied on speculation lower commodity prices will boost earnings.

Home Depot Inc., Macy's Inc. and Gap Inc. climbed as the dollar's biggest advance against the euro in four years pushed crude oil to a three-month low. General Motors Corp. rallied, while United Airlines parent UAL Corp. jumped almost 10 percent. Fannie Mae dropped after joining Freddie Mac in posting a bigger- than-estimated loss and slashing its dividend.

Aug 7 hourly with levels and targets S&P 500

Looks like the market is following the trend, 92 will be the key.

Levels are posted. Could we be getting the spring to take out the previosly posted open gap at 1335. We shall see.

For all the news that hit the market today the reaction was quite mild.

Aug 6 S&P 500 showing gaps and S&R futures emini

This is a longer term chart showing a 50 % retracement target to 1335, this is exactly where we have an open gap that has not been filled.

We also have some downside open gaps that have not been filled.

1340 is the 200 MA on the monthly chart also.

we have opportunities in both direction.

This chart is showing a few open Gaps. The one that is changing my perspecitve is at 1335 area.[9:35:53 AM] Brightstone (Joel) says: This looks to me as a set up for an investor trap. Considering this is pre election, and with the movements in currency dollar strength, Oil price decreases and the smoothing over of the subprime crisis and bank failures, this new target seems completely reasonable to me. This is sort of a bull trap. I noticed that my short bias has influenced my trading and was searching for a way to leverage sentiment and this was staring me in the face. The 50% retracement is also at the 1335 area. The pattern is an ascending triangle with accumulation. The aggressive buyers outnumbering sellers since the temporary bottom has been put in.

If it completed to 35, we would have an ascending wedge.....I will be watching volume too. I can't imagine a 3 million volume upmove day like 7 - 16 to push us through.