The Weekly Report for August 13th - August 17th, 2007

1) MARKET SUMMARY
2) INDEX CHARTS (DJIA, S&P, NASDAQ and RUSSELL)

Market Summary
The problems in the mortgage and corporate lending sectors continued to be the primary driver of market sentiment last week. Thursday's announcement that BNP Paribas (one of Europe's largest banks) was suspending the operations of three hedge funds, all of which are invested in the U.S. subprime market, caused many investors to fear that the problem is getting more wide spread than originally anticipated. As you can see from the charts below, volatility levels remain high and we believe this may cause the markets to continue trading in a choppy manner until investors get a better idea of how the credit problems will affect the longer-term direction.

As we noted last week, the Russell's relatively low RSI value is currently suggesting that the index may start to experience some buying pressure as the bulls look to enter at a spot that gives them a favorable risk/reward ratio. Given the nearby support of an ascending trendline, we believe that traders will keep a bullish outlook on this index. The mid-week bounce off the support suggests that this trendline will likely play a key role in the market's direction.