With extreme efforts, the central banks have managed to prop up

equity markets despite dismal fundamentals. They have augmented

their efforts by hijacking the media and pronouncing the worst of

the credit crisis is over, even though it is just starting. As shown in

the 3 charts below, major indexes are at or just above major

resistance levels. We will see if some investors fall for the smoke and

mirrors show this week and participate in the central bank

printarama. If the manipulation plan fails though, the central bank

options will be limited at best by now as they are almost exhausted

in their efforts. This will just ensure another bear trap for the

unlucky ones.

Over the last three weeks volumes on the NYSE have remained

below average while the indexes have moved higher. That is

inherently bearish. Rallies occurring without strong volume are

suspect because it means that there is a lack of commitment from

buyers. The Nasdaq shows a similar pattern over the last three

weeks. Analysts and pundits may be talking the market up but there

has yet to be any evidence that investors and traders are buying it in

significant numbers.

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With this being a U.S. election year, who knows what Wall Street

will have up its sleeves. There is some economic data to be released

this week but nothing that will have major impact on the markets.

-

Regards - VHF

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Chart 1: Dow Jones Potential Break-Out

Chart 2: S&P Potential Break-Out

Chart 3: FTSE Potential Break-Out