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As we noted on August 6th, all of our market indicators are like a 3rd base coach waving us home for the game winning run. Friday’s rally only made his arms wave faster, but obviously our indicators can’t account for ex- KGB agents who are out to prove a point.

Politics, war and peace will most likely be the driving factor for the market’s direction early in the week. If the situation settles down relatively quickly in Georgia, then stocks will have yet another reason to rally, a wider war averted. If Russia and Putin are up to no good are using the current situation as a land and oil grab,

Our market leadership model has stayed in the green and our momentum model is one decent up day away from turning bullish. The combination of both indicators producing buy signals usually means the indexes are going higher. If we finish up today, we recommend opening up positions in QQQ or for twice the bang of the NASDAQ 100 with ProShares Ultra QQQ (QLD).

S&P 500 Technical Analysis:

That being said, there are a few things in the S&P chart that concern us. As you will see in the chart below, we have rising price with falling volume. This is called a divergence, usually meaning the trend is n

Please find our reading of the technicals of this chart and many, many others at our public listing at stockcharts.com. You may use the following link to access the same:

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID1676634

Regards,

Purely Technical aka TheMarketMessenger ...