Pre Market - July 30th 2007

Good Morning to all...

This will be a big week for the markets. This week will give us some insight into where we are going. Just about all of the major indices are sitting at or near support levels. Will the anticipated bounce be a healthy one or will it be the last gasp of air before death?

As I said yesterday there will likely be a bounce in the markets but bounces can be a trap. As swing traders we can't view a bounce as the worst is over scenario. Instead we have to view the technicals of the bounce carefully to read the greed/fear levels. Does the fear over power the greed of investors looking for bargains or does the greed trump the fear and the worst is over? Good questions, but they can't be answered until we see what happens today and over the coming week.

Am I a buyer here at these support levels? Not today. As tempting as it may seem to jump on board to a stock that is beaten down I have learned over time that doing that is not always the smart thing to do for swing traders. As swing traders we need the markets to be displaying a healthy uptrend and then play the swings of individual stocks within the broad market. But when the broad market itself is questionable then all swing trades are questionable as well. I have some good stocks that I am going to be posting for swing trade ideas but the market has to show her cards and tell us if she will keep playing or if she will fold before we put our chips on the table.

The biggest news of the day so far is the events that took place this morning with American Home Mortgage (AHM). The company announced this morning that they have significantly lowered the value of their portfolio and also announced they are delaying the payment of their quarterly dividend. This is being seen as another knife in the back of the financial sector this morning. AHM has lost 50% of it's stock price in pre market trading! Watch for this news to spread today into other mortgage companies and maybe even extend into big banks as well.

ValueClick (VCLK) released earnings this morning and they missed. They also lowered guidance going forward. ValueClick has been a market darling as far as many had expected them to do well. Their miss may be viewed by large money as a softening of the internet sector and in turn could work their way into companies like Yahoo and Google. If ad revenue is declining I won't be surprised to see Google and Yahoo be impacted by the news.

The big market moving events this week:

• Monday: Nothing of note to report today
• Tuesday: Personal Income,Personal Spending,Core PCE inflation, Chicago PMI
• Wednesday: MBA mortgage application data, ADP employment data, ISM index, pending home sales, EIA petroleum inventory data
• Thursday: Initial claims, Factory orders
• Friday: Non farm payrolls, unemployment rate, ISM services

Futures are improving as the morning has been getting closer to the market open. A head fake? We'll see how any move up is handled. Watch for advances in various stocks to be sold off towards the end of the day, if that happens then the fear we saw on Thursday and Friday is still in place.