The Weekly Report for July 21st - July 25th, 2008

July 20, 2008- Market Summary
In our previous report, we mentioned that the broad market indexes were sent lower as market participants focused their concerns on tensions in the Middle East and the effects that record-high oil prices are having on the economy. The major indexes rebounded last week and they are in the process of testing influential levels of resistance. Many traders are starting to question whether the recent rally will be able to continue.

Charts of specific interest this week are the S&P 500 and the Dow because they seem to have notched a short-term bottom. As you can see from the charts below, the indexes are now in the process of testing the resistance of their March lows, 11,700 and 1270 respectively. A failed move above these levels will result in the bears taking control of the longer-term direction, which is why many investors will continue to wait on the sidelines in the hope that the volatility will return to normal. The best bet may be to wait on the sidelines until the remainder of the major companies release their earnings.

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