Review U.S. stocks fell, ending the Dow Jones Industrial Average’s longest winning streak in two months, following worse-than-estimated sales at Bank of America Corp., Citigroup Inc. and General Electric Co. and consumer confidence that sank to the lowest level in a year. Bank of America and Citigroup dragged finan-cial companies in the S&P 500 Index to a 2.9 percent loss, the most among 10 industries. Goldman Sachs Group Inc. rallied 5.9 percent on its $550 million settlement of the federal government’s fraud lawsuit. The Standard & Poor’s 500 Index lost 0.8 percent to 1,063.25 this past week. Strategy Our strategy for today is neutral as the market reflects a confluence of forces and we may need to wait until we see a re-turn to calmer waters before continuing our long strategy. So far earnings have been positive but disappointment has come on the revenue side. We are waiting for some improvements at macro levels in order to restore some confidence in the markets. In the short term however, this is unlikely to happen as the main eco-nomic data for this week are related to the very fragile housing market. So expect a day without clear direction and only look for our long entry levels should the housing data not disappoint. Alternative Scenario Negative US and Euro zone fundamental news flow could lead to a break-out of the 23.60% Fib Level at 1,052.00 opening the way for a more aggressive move to S2 at 1,036.50. Review The dollar fell the most against the euro in 14 months and dropped to the lowest level this year versus the yen as economic reports added to evidence that the U.S. recovery is losing momentum. The green-back touched a level weaker than $1.30 versus the shared currency as minutes of the Federal Reserve meet-ing last month indicated policy makers trimmed their forecasts for growth. The euro rallied for a third straight week against the dollar before partial results of stress tests on the region’s banking system due on July 23. The dollar declined 2.24 percent this past week to $1.2930 per euro, from $1.2641 on July 9. It touched $1.3007 on Friday, the weakest level since May 10. Strategy Looking ahead we are expecting a continuation of this month’s uptrend for the euro, extending its positive momentum. We think this move higher in euro is a result of a weak dollar and a slightly better investor sentiment about the Euro-zone situation ahead of the stress test results due at the end of this week. Our view is that a robust earnings season may not be enough to reverse this negative momentum for the dollar and we may need to wait until we have evidence of stable job creation before we see a return to dollar strength. Alternative Scenario Negative Euro zone fundamental news flow could lead to a break-out of S2 at 1.2825 opening the way for a more aggressive move to S3 at 1.2761. Review Crude oil fell for a third day in New York on speculation that the U.S. economic recovery is slow-ing, reducing fuel demand in the world’s biggest energy- consuming country. Oil slipped 0.8 percent and eq-uities tumbled after a preliminary index of consumer sentiment declined to the lowest level since August. Prices retreated on Friday as manufacturing in New York and Pennsylvania dropped, part of a nationwide decline in factory production of 0.4 percent in June. Crude oil for August delivery slipped 61 cents to settle at $76.01 a barrel on the New York Mercantile Exchange. Strategy Looking ahead we are expecting oil to stay in last Fri-day’s range. Crude oil has been stuck in a $70-to-$80 range in the last few weeks and we may need to wait for stronger signals in order to see a break-out. Oil has tested and failed to break above the 200-day moving average on Wednesday, which stands at $77.48 and it may point to the 50-day moving average of $74.33 if the US macro data continue to disappoint. Our strategy is neutral for today, with a slight long basis as the recent weakness in the dollar and encourag-ing company earnings may provide a bit of support for oil.

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