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[TTHQ Staff]

Gene Inger's Daily Briefing. . . . for Thursday, August 4, 2005: Good Evening; Interim fizzles . . . were forecast to frazzle, with renewed upward action forthcoming in Wed.'s late going (per intraday comments), and that related less to lower oil prices (though that didn't hurt), and more to technical action to keep the momentum going. Of course you know our thoughts on that subject; that the market is extended just on a short-term basis, so even if September S&P's rebound to surpass (noted highs) in the short-run, it doesn't suggest that to be the most bullish alternative. Thus the most bullish would, in our way of thinking, be for the market to digest recent forecast gains with either some rest or sideways activity, or a short-term decline (extent reserved for our ingerletter.com members), and then resume upward price behavior (as outlined). The least bullish would, by our suspicions, be an extension of this move beyond the mid-1250's right now, without first having more of a pause to refresh by major big-cap stocks, including cyclicals and so on found in the Dow Jones Industrial Average. If that happens, it's a market equivalent of stretching an unrelaxed rubber-band, and for sure doesn't mean it's parabolic enough to invite an accident, but then the market will become (we suspect) actually more sensitive to any shaky news that comes along. If we can contract the short-term enthusiasm a bit --brought-on somewhat by pundits and cheerleaders who often were skeptical curmudgeons or outright bears, partially by virtue of what they miraculously (and almost three years belatedly) perceived as a 'bulletproof' market that couldn't stay down as London was attacked (the idea being if that couldn't break it, what would)--if we can temper that optimism for a few days or a few weeks, that would probably enhance prospects (balance reserved for members). Daily action . . . certainly doesn't require this formula for step-by-step progression. Back in 2003 we barely allowed for pullbacks because we thought accidents would be on the upside, and that 'the boys' (and a few gals) weren't about to let those who missed our 2002 bottom in 'on the cheap'. (Balance including Oil remark; reserved.) MarketCasts (intraday audio-emails) were correctly biased to the long-side of activity in the September S&P, again on Wednesday, and though there were a couple tries at knocking the market off-kilter, we thought those efforts would flai, and actually did revise our earlier thought of a late fade into a specific call for a final hour rally (that in fact worked like a charm). Good net gains both on the earlier and later long efforts. And yes, the S&P managed to close almost at a new recovery high, but daily-basis (we have a different idea for the next few days). We adhere to our view that the rally could evolve into a series of potential 'wobbles', relating more to how the further-out pattern may evolve (as outlined to ingerletter.com members). We think that's even a logical daily assumption given key Employment numbers on Friday (as we outlined). As we've noted recently, pundits were squawking about how Dow Jones increases in July signaled explosive upward extensions in August, which we disputed at least in an immediate basis, while realizing that the general area of S&P 1245-1255 could at the moment be a sufficient barrier (technically as outlined), but be in perfect lockstep with expectations (barring exogenous shocks to the economy or to society overall) for considerably higher prices later (per general timelines outlined to members). We've indicated that selected small-cap stocks may do 'their own thing' while the big-cap Averages tend to (adjust). You may even get tentative pausing in some Nasdaq 100 (NDX) and Semiconductor Index (SOX) stocks, though as suspected these have been generally relatively impervious to decline vs. blue-chips such as deep cyclicals. So we remain bullish for the longer-run, doubted newly converted bulls were right as relates to 'immediate' rip-roaring upside extensions; in that at least we'd get a choppy (rest) after cheerleading sessions incredibly ongoing, before we try the upside anew in earnest. The expectation this week for softness early; then a better market as was correct, but we suspected this preceded some disappointment not yet recognized by markets. The exception to this will of course be reaction to the Employment Report. Basically we've suspected August will become more a market of stocks, than a stock market. That, in our view means focusing on individual issue activity (as outlined), more than trying for 'all encompassing' interpretations of markets here, which makes relatively little sense to us. (Projections on Oil, the Dollar and T-Bond reserved.) We renew mentioning that the new 'Energy Bill' has a provision for increasing U.S. 'Strategic Petroleum Reserves' (implications of this, and when, is also addressed). As an aside, there are increased terror risk 'worries' over the weekend, as you know; including a tendency of the al Qaeda gangsters to focus on historical event dates for some previous attacks on the civilized world; so we've focused a little bit on regarding the first half of August too. Recall Sec'y. of Homeland Security Michael Chertoff made a remark last week, while visiting California's Lawrence Livermore Laboratory. By saying "the foremost concern for the Nation's security now is the threat of a larger chemical, biological or nuclear attack", he joins similar officials, already including the President, VP, and retired FBI agents we've spoken of, who've firmly hinted nuclear terrorism has moved center stage as the No. 1 security threat facing the U.S. Surely there are the more conventional threat matrix concerns remaining in Europe as well. He said speaking of London: "We can't let what happened two or three weeks ago beguile our concerns about what could happen in the future." While not wanting to alarm anyone we hardly find any way to interpret such remarks other than suggesting that something far worse than the London bombing may be in al Qaeda's game-plan. We've thought for awhile now (reserved). So we suggest our suspicion the market's tepid enthusiasm, despite verbal pundit cheering, isn't related to economic problems, as much as simply extended market levels (in a short term way) at a time when the apprehension level has ratcheted up a bit, particularly in August's next week or so. Hopefully markets will just be climbing a 'worry wall' and then (progress as outlined). Not to be cute worrying about explosions being other than the upside in the market, we concur with repeated remarks by Metropolitan Police in London; that tensions or risks are not reduced by the arrest of perpetrators of the July 7th attacks, even though the captures are of phenomenal importance in many aspects. During the week more suspects were apprehended in the South of England, netting a total of 26 rounded-up just since the 2nd failed and foiled bombing assaults (the several failed, and another was foiled by discovery of the bomb, and possibly Rome or even the Vatican itself avoided a potential barbaric atrocity by virtue of the work of the British police, and the smart sensibilities of the Italian security people in following rather than apprehending the suspect as he crossed into Italy). America's intelligence apparatus, from what we suggested (further implied by here-and-then-disappeared 'Battle Directives' from 2 USAF bases; one in Oklahoma and the other in Utah), ratcheted higher than typically reported. Of course everyone knows about subway screenings (balance reserved). Later this year we think stock markets will actually accelerate if (discussion of what may occur; focus on 'balancing of assets' between financial and property holdings). Bits & Bytes . . . envisions an emerging favorable sequence of events, resulting at least initially due to JIN, for Ionatron (IOTN) as explored in detail tonight. (Technical patterns, risk to bears, and ingerletter.com perspectives of the potential progression of events is outlined to members; an example of how we follow varying influences via a combination of fundamental, technical, psychological, and even military factors.) Other stocks noted: InkSure (INKS) consolidating following the earnings report and first-ever 'conference call' reviewed thoroughly last night. Action in various issues, like Texas Instruments (TXN) or the action of Motorola (MOT), or of Intel (INTC) of course noted. Little Cano Petroleum (CFW); mentioned in prior Sunday L.A. Times, interestingly. Implications of a fairly revealing pattern by Essex (KEYW) is explored. Members please note: we have no association with IOTN or any other publicly traded firm (never have had), other than as shareholders of course. Yours truly remains an Ionatron shareholder throughout coverage timeframes, as regularly noted. Comments are interpretative speculative postulations, provided 'as is with all faults', and all risks, with no assurance about future performance of anything, in any way, whatsoever. In summary . . events continue reminding us of risks Allied fighting forces face, given continued attacks on free peoples, by elements including organized terrorist armies in Iraq. A world awakening to terror and nuclear threats grows, as domestic concerns retreat from absorbing us. Remember; 7th Century al Quaeda monsters threaten most all Europeans, unless they evacuate entirely from Iraq & Afghanistan within 2 weeks. Obviously that won't occur (yes, the French and Germans have more backbone than lots of folks perceive, especially given the situation now). Recently, they threatened Rome; even Italy's Prime Minister personally. The Vatican worries; most mainstream Islamic groups are protesting terror, but not with vigor or active participation adequate to exorcise demons, as one might expect when detecting a cancer within one's body. So we have to be increasingly prepared for further terrorist attacks, and a heightened alert profile (almost worldwide) as we move through the latter portion of this Summer. We don't want to be very alarming (more). We continue trading, with some realization that for big-caps (more so than tech or better Homeland Security beneficiaries) and at least some deep cyclical multinationals, a move to higher highs was likely to cool-off. Though few generally concurred for three years, our consistent view has been slow but persistent American growth isn't negative, allowing the protracted gradual growth without ancillary significantly high interest rate pressures. There's no truly-restrictive monetary policy; nor is there likely to be one, irrespective of oil-induced inflationary pressures. This is a continuing saga, which finds a few too many curious converts to the bullish side of the ledger just most recently. However, that in itself doesn't mean it (the market) tops-out beyond a short-term, as that's the history of markets (where in this dynamic pattern we are is a topic reserved for ingerletter.com members). McClellan Oscillator finds NY 'Mac' oscillating slightly currently +15 today; NASDAQ eases; presently +6. Issues continue including oil, terror; of course Iraq; and Europe moving to less-hostile stances vis-à-vis the United States. (Reserved) we'd not expect too much more in the very short-run, even if the market moves up substantially higher in the fullness of time (as outlined). Any dips in weeks ahead (absent real disaster) will likely be used by investors for filling-out (as noted); not for evacuating the markets for any grand strategy change (most of them weren't sufficiently bullish to have captured what's been a sometimes struggling, significant '05 advance). S&P futures this evening up a couple ticks. Enjoy the evening! Gene Gene Inger, Publisher