Market Vane (Market Letter Survey) post cycle highs at a 65% BULLISH. *

Following the Bond Markets $ Trillions – The BARRON's Confidence Index is at new cycle highs of 82.6. **

Ok, let's first of not think about such depressing items such as the global debt bomb, looming Chinese inflation, increasing interest rates, crises in Ireland, Portugal, Spain, and Greece, the global cooling or warming (depending), zooming commodity prices with crude oil at near cycle highs, talk of bankruptcies and defaults in US states and municipalities, a still horrible employment picture and maybe lower lows in housing and whatever else there is out there to keep us up nights; indeed, it's a mess out there.

The good news is that the key advance / decline line chugs higher and my favorite overbought / oversold indicator, theMcClellan Oscillatorremains in neutral at a minus 89 and is keeping me (and have kept me for awhile now) bullish shorter term. Importantly, market internals like above estimate earnings in the S&P 500, dividend increases and the corporate cash hoard put a floor beneath the market, but whenever one of those ugly "items" mentioned above raise their head the market will temporarily gasp and retreat. The overriding fact that trillions in cash is freeing up from money market funds looks to keep the tide coming in as estimates in GDP are now being raised to near 4%. If there ever was a schizophrenic market mindset in the investor psyche certainly, now is the time.

Last week's stock markets roared to new cycle highs on Tuesday, but reversed hard on Wednesday largely due to a sharp Nasdaq reversal because of Steve Jobs resignation at Apple AAPL [recurring illness?] (AAPL) shed 6% and is 20% of the weighting of the Nasdaq the index closed very near the lows of the week, off 76 points from Tuesdays high.

The 50-day moving average support is at 1238. 200-day moving average support in the S&P 500 (SPX) is 1153. Key “price” support and former major resistance in the (SPX) is at 1146 / 1150.

Short term “price resistance is at Tuesday's high of (SPX) 1296The next major resistance (SPX) 1313 (neck line bounce highs on August 8, 2008)

Of Note:

Wow of the Week - Man Invents Simple Machine to Convert Plastic into Oil:http://www.flixxy.com/convert-plastic-to-oil.htm

Key indicators and metrics

·              Friday's McClellan Oscillator is in neutral @ minus 89

·              The Treasury 10-year 3.330

·              3-month $ LIBOR at 0.303

·              CBOE Put / Call Volume Ratio – 0.79

·              Euro – 1.351

·              VIX – 18.47

·              US Dollar Index – 78.37

·              Copper – 4.30

Key WEEKLY SENTIMENT (i.e. CONTRARY INDICATOR) data points:

* Consensus Bullish Investor Sentiment Overview retreats from cycle highs, but the Market Vane (Market Letter Survey) ticked 65% BULLISH readings that were the cycle highs of the move to date.  Bullishness measured byMarket Vane has not seen this level since late 2007 when the survey registered Bullishness above 70%. Taken in sum the growing consensus bullishness is a major concern.  (High BULLISH readings in the Investor Sentiment Readings usually are signs of Market tops; low ones, market bottoms.) 

·        The Consensus IndexBULLISH investor sentiment peeled back to 69% from last week's recovery cycle highs of 73%. The multi-year highs in Bullish sentiment of 76% were reached in the first week of May 2007 just prior to the huge down-leg. 

·        The Market Vane(Market Letter Survey) ticked 65% bullish readings that were the cycle highs of the move.  Bullishness has not seen this level since late 2007 when the Market Vane survey Bullishness  was above 70%.

·       The American Association of Individual Investors [AAII] Investor Sentiment Survey BULLISH was 50.8% 52.3% down from last week's 52.3%. Five weeks ago it ticked new cycle highs of 63.3%. The low of the May selloff cycle at was at 30.1% [The lows registered on March 9^th 2009 were an historic low posting of 18.9% only BULLISH.] 

·       The AAII Investor Survey of BEARISH sentiment jumped up preceptably to 29.1% from last week's 23.4%. Five -weeks ago it posted cyclic Bearish lows at 16.4% that were lows not seen since 2005. The highest Bearishness occurred 6 months ago when it ticked the summer “market retreat” high at 57.1%. In August 1987 it ticked the lowest low ever recorded at 6% BEARISH – Remember what happened on October 19, 1987...

·       The Citygroup C “Panic / Euphoria” Model slid slightly to 0.28 from the prior weeks cycle highs at plus 0.32. The posting is near the high part of the “neutral” zone, and closing in on the “euphoria” (DANGER) levels.

** Following the Markets $ Trillions – The BARRON's Confidence Index is at new cycle highs of 82.6, up from last week's post of 81.The recent numbers are at levels not seen since the fall of 2007. The Confidence Index is the premier measure of how the bond markets trillions (total global is around $91 trillion and US is 39% of that) are allocated: (The bond market is twice the size of the stock market.) The ability of this key indicator of market health to post new highs bodes well for the economic recovery and for stocks to continue forward.