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[TTHQ Staff]

Dallas, TX September 10, 2007, 08:00 EST Dr. Joe Duarte's Market I.Q.

The Internet's Intelligence Digest Intelligence, Market Timing, And Trading Strategy For Traders and Investors Report: Terror Threat Home Grown In U.K.. Oil & Commodities: Ball In OPEC's Court. Stocks: Two Bad Days.

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What's Hot Today:

Traders are likely to be careful ahead of tomorrow's employment report. Today's Economic Calendar: 3:00p.m. July Consumer Credit. Previous: +$13.1B. The Wall Street Journal and Marketwatch.com. News For Thought Title insurance claims are on the rise. This is a signal of further stress on the real estate markets, as title insurance claims also cover commercial real estate. U.S. set to build a military base near the Iran Iraq border. The purpose is to stem the tide of Iranian weapons to Shiite militants, the Wall Street Journal reported. Pakistan former leader Benazir Bhutto announced her return to Pakistan within the next few weeks and will enter a power sharing agreement with current President Gen. Pervez Musharraf, according to a report from International News. Recently captured fugitive Norman Hsu was involved with at least $24.500 in donations to the Obama campaign, says the Washington Post, citing Federal Election Commission records.

U.K.: Homegrown Terror On The Rise

Majority Stake

Despite the mainstream view that the U.K.'s terror problems are imported, new evidence suggests that the threat is home grown, and hatched by U.K. born imams inside the country's vast mosque network, a network whose ideology gave rise to the Taliban. According to the U.K.'s Times Online: 'Almost half of Britain’s mosques are under the control of a hardline Islamic sect whose leading preacher loathes Western values and has called on Muslims to “shed blood” for Allah." Citing an investigation that included first hand inspection of police documents, the paper added: "Riyadh ul Haq, who supports armed jihad and preaches contempt for Jews, Christians and Hindus, is in line to become the spiritual leader of the Deobandi sect in Britain. The ultra-conservative movement, which gave birth to the Taleban in Afghanistan, now runs more than 600 of Britain’s 1,350 mosques, according to a police report seen by The Times." Aside from the interesting revelation, the Times took a shot at the U.K. goverment's public stance on where the terrorism threat inside Britain has arisen, by noting: 'The Times investigation casts serious doubts on government statements that foreign preachers are to blame for spreading the creed of radical Islam in Britain’s mosques and its policy of enouraging the recruitment of more “home-grown” preachers.' More interesting is the following revelation by the Times: 'Mr ul Haq, 36, was educated and trained at an Islamic seminary in Britain and is part of a new generation of British imams who share a similar radical agenda. He heaps scorn on any Muslims who say they are “proud to be British” and argues that friendship with a Jew or a Christian makes “a mockery of Allah’s religion”.' Indeed, the Deobandi sect seems to be central to the situation, according to the Times, as it runs "Seventeen of Britain’s 26 Islamic seminaries," and "they produce 80 per cent of home-trained Muslim clerics." In fact, the U.K. seems to be footing the bill for the cleric's education, at least in part, as many clerics, have had "their studies funded by local education authority grants. The sect, which has significant representation on the Muslim Council of Britain, is at its strongest in the towns and cities of the Midlands and northern England." According to the article: "The Times has gained access to numerous talks and sermons delivered in recent years by Mr ul Haq and other graduates of Britain’s most influential Deobandi seminary near Bury, Greater Manchester. These "talks and sermons" have been "Intended for a Muslim-only audience." Yet, according to the Times 'they reveal a deep-rooted hatred of Western society, admiration for the Taleban and a passionate zeal for martyrdom “in the way of Allah”.' According to the Times, there is explicit anti-Western rhetoric in ul Haq's sermons, where he warns his listeners 'to protect their faith by distancing themselves from the “evil influence” of their non-Muslim British neighbours," and where he describes Muslims in England as being in a "dangerous position," since Muslims in the U.K. "live amongst the kuffar (Ed.: non-mulims), we work with them, we associate with them, we mix with them and we begin to pick up their habits.” The Times also describes a situation in which the Deobandis have "wrestled control of the mosques" away from the more moderate group that used to be in control, the Barelwi faction. External opinion is also quite informative. According to the Times: 'A commentator on religious radicalism in Pakistan, where Deobandis wield significant political influence, told The Times that “blind ignorance” on the part of the Government in Britain had allowed the Deobandis to become the dominant voice of Islam in Britain’s mosques. Khaled Ahmed said: “The UK has been ruined by the puritanism of the Deobandis. You’ve allowed the takeover of the mosques. You can’t run multiculturalism like that, because that’s a way of destroying yourself. In Britain, the Deobandi message has become even more extreme than it is in Pakistan. It’s mind-boggling.”' t Conclusion This is indeed an interesting article that is worth perusing. To be sure, these are significant allegations, and they may be proven to be correct or otherwise in the future. What we know is that a credible newspaper has published an intriguing article, that when placed in the context of the ongoing global war against terrorism, which includes radical factions of Islam, is thought provoking. It is worthwhile to visit the web site for the article, and to read the reader's comments section before forming a fully informed opinion. Here it is: Link

Oil And Commodity Summary: OPEC To Stand Pat Oil prices were slippig in overnight trading as speculation on OPEC's next move starts to build. The cartel meets this week, with expectations leaning toward no change in production. The market is now weighing a quartet of potential influences, the potential for an economic slowing and decreasing demand for crude, the potential for a damaging storm to the Gulf of Mexico in the late stages of hurricane season, refinery capacity problems, and the action that OPEC will take on production limits. Of course, there is little that is predictabel about any of these major issues, thus the likelihood of some volatility is to be expected. More than anything, we're entering that transitional period in the weather pattern where summer heat tends to cool off and lower energy demand somewhat, creating a general drift in prices. Our overall expectation remains for crude prices to remain above $70, while natural gas builds a base. Once the market starts to get a handle on winter weather, we can start to see some kind of rally likely to develop. Prices for energy stocks and commodities had been gaining strength prior to last Friday's selling, though, so it's important to keep an eye on the overall marekt trend and consider the potential for buying on dips, although there is no hurry to do so. Crude remained above $75 per barrel and prices held up overnight, while natural gas prices have stabilized. Oil and oil service stocks have continued to remain near the top of the leader board in the overall scheme of the stock market. Chart Courtesy of StockCharts.com The Wilderhill Clean Energy Index had joined the rally but ran into resistance at the 50 day moving average near 228 on 9-7. Chart Courtesy of StockCharts.com Crude oil prices remained above $75, and could move toward 80 in the near future. Chart Courtesy of StockCharts.com The Philadelphia Oil Service Index (OSX) is within reach of is all time high near 290 but did weaken some with the marekt on Friday. Still, this is the area of the most strength in the oil sector for now. Chart Courtesy of StockCharts.com The Amex Oil Index (XOI) is still below 1400 but remains in a rising trend. Disclosure: Dr. Duarte has open positions in oil and natural gas stocks and exchange traded mutual funds.

Technical Summary: <!------ start Technical Summary text only ------> And Then There Were Two Stocks fell in heavy volume on September 7th, just after they fell on heavy volume on September 5. That's two days of heavy selling, and that means that it's time to be careful. What we know thus far is that the market seems to have made a bottom. Wether it is the bottom, or just a bottom along the way to something else is what remains to be figured out. In the stock market, the only hindsight that is 20/20, is of course hindsight, which means that we won't really know what's happened until it's occurred. And that means that what we have is an uncompleted situation. Yet, if history is a guide, the building blocks of a significant rally are in place, although that is not a guarantee that any such rally will actually come to be. That, in essence, is the nature of speculating. You look at the data, you look at historical trends, you make decisions, and you then make provisions to protect yourself if you made the wrong decision. For now, things are back to neutral. What we don't want to see is a three or four day stint of the same kind of action, with the market making a new low, as that would be the sign that the rally has failed. If the market falls, and volume drops, it would be a sign that the big money players are not big sellers, and that would be a sign that adding to positions at lower prices is a good idea. So, if we get three a couple of more days of this kind of weakness, and the market breaks to a new low, we might be faced with a failed rally. For now, we are focusing on the momentum thrust delivered on 8-31, where the ratio of up volume to down volume on the NYSE was 10 to 1. This came very close to the 23 to 1 ratio of up volume to down volume on 8-29, and qualifies as a double barrel buy signal. We are also in a more bullish interest rate environment, with a Discount rate cut already in the bag, and the potential for more interest rate cuts if the economic data continues to show weakness in the U.S. economy. What would strengthen this market further? From a technical standpoint, it would be great to see the NYSE deliver a 2-1 advance decline ratio over two weeks, further confirming the positive tone. As we've said before, there is no guarantee that these indicators will be flawless. But the fact that they have come in the third year of a Presidential Election cycle, does add some credibility to their occurrence. Still, the S&P 500 is again testing its 200-day moving average, so this has not been completely settled as of 9-7. So, for the next few days, there is no reason to rush into making major buys, unless the market can right itself. Seasonality traders should be out of the market and back into money market funds. Our long term forecast, over the next 12 months remains upbeat, unless the major indexes fall convincingly below their 200 day moving averages. What To Do Now Use the seasonality strategy to bolster returns and reduce risk. If we're wrong, the exposure to risk will be limited. Otherwise, look to move back into the market, while remaining aware of the fact that we might be early, and that we could be wrong. Take care of your portfolio by monitoring the positions frequently and don't hesitate to take at least partial profits where you have them. Stay patient, and vigilant. At some point, we'll be putting more cash to work. Visit all our individual sections, both our ETF and individual stock picks daily for new ideas, and changes to open positions. Check all our sections daily. See tech, biotech, Fallen Angels, and timing systems for the latest adjustments. Our ETF trading systems for energy, Spyders, Small Caps, and technology have also been updated. Chart Courtesy of StockCharts.com Chart Courtesy of StockCharts.com

Sentiment Summary: Bullish Sentiment Remains In Place Put/call ratios have remained at bullish levels. The CBOE Put/Call ratio closed at 1.19. At some point, if the current type of numbers continue, the odds tilt toward a bottom forming. The CBOE P/C ratio for indexes checked in at 1.79. Numbers above 2.0 as the market sells off, often lead to rallies. Readings below 0.9 suggest too much bullish sentiment, just as readings above 2 are usually required to mark major bottoms. The VIX and VXN had readings of 26.23 and 29.22. A fall near or below 20 on VIX and 30-40 on VXN is considered negative, a fact that is usually confirmed when the volatility indexes begin to rise. Readings above 40 and 50, respectively, are often signs that a bottom may be close to developing. NYSE specialists were aggressive buyers on the week of 8-24-07. This is the second consecutive week of buying, and it has coincided with the bottoming action in the markets and supports the notion that at least some kind of trading bottom is in. This may be a bullish development, since this group of investors began selling aggressively since Memorial Day, and only slowed the selling in late July. This pattern of activity clearly predicted the recent selloff in stocks, so a reversal, if it comes, could be a bullish development for stocks later this year, as it takes some time before specialist behavior reflects the performance of the markets. Market Vane's Bullish Consensus was at 59% on September 7. This indicator has not reached oversold levels, having remained above the 40% that often marks meaningful market bottoms. The UBS sentiment index fell to 73 in August from 87 in July, showing a moderate decrease in bullish sentiment. This is a moderate positive.

Market Moves Intel Tests Top Of Trading Range Intel (Nasdaq: INTC) is on the verge of a major break out. Chart Courtesy of StockCharts.com Intel has been quietly gathering some fans. The stock is up 45% since April, and is testing the top of its recent consolidation pattern near 26. To be sure, there is little in the news for this rally, which makes it even better, as it shows that long term value players have been snapping up shares cheap. That sets up the potential for the next, and more exciting up wave, as momentum players start to notice and jump on the wagon. If that's what lies ahead for the stock, we'll know soon enough, as the volume picks up and the stock starts to move aggressively above 26. The stock's five year high came in late 2004, near 33, giving this rally the potential to still deliver some excellent results.

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