No Lift for Market on Markups 9-29-05

Good Morning

Overseas markets were up very strong in Asia but European markets were weak. On the economic front Initial Jobless claims came in much better than expected at 356k versus 420k expected. Final GDP for Q2 came in right in line at +3.3% while the Price Deflator was slightly hotter then expected coming in at +2.6% versus +2.4% expected. This mornings economic news does nothing to help the Fed Dove's who are hoping for Greenie to ease off of the peddle. Oil and Gold continue to march higher which is pressuring stocks.

Our largest concern is how surprisingly bad the stock market has been acting in this quarter end week. Usually a market that is oversold, as this one is, would have a bid that actually WORKED in the final week of a quarter. Apparently there is true distribution taking place in this market under the surface. As we mentioned in yesterdays post the credible selling seems to be at least matching the artificial quarter end buying. The market has been choppy with a downward drift and we harbor concerns about its near-term prospects. The fact that the NASDAQ has taken out the 2109 level this morning also does not bode well for its near-term stability. Our back of the envelop analysis tells us that a likely retest of 2095 is in the cards over the next week or two. We also would not be surprised to see a capitulatory sell-off below that level to 2077ish.

We are currently a Bearish 20% net long.

C.Y.A.

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