As the S&P 500 and Dow Jones Industrial Average are just under multi-year highs, we are going to talk briefly about patience tonight. All market timing systems are designed with the understanding that there will often be corrections against the current signal. Sometimes the corrections are expected, such as occasional 10% pullbacks in a long-term uptrend, and othertimes the corrections go further than the designer may have thought, leading the signal to change due to a stop loss or other late-defense that was put into the system. We only had a few subscribers leave during the recent correction, but the few that left cancelled right near the June bottom. Assuming these people sold their long positions at this time, their portfolios have missed an average move of over 10%. Remember that long-term market timing requires patience and that corrections are to be expected in every system. The most recent decline was just a correction and there was no reason for us to trigger a sell signal. Our system is designed to find tops and bottoms and it is now clear that a top was not formed in May of 2006.

As the S&P 500 and Dow Jones Industrial Average are just under multi-year highs, we are going to talk briefly about patience tonight. All market timing systems are designed with the understanding that there will often be corrections against the current signal. Sometimes the corrections are expected, such as occasional 10% pullbacks in a long-term uptrend, and othertimes the corrections go further than the designer may have thought, leading the signal to change due to a stop loss or other late-defense that was put into the system. We only had a few subscribers leave during the recent correction, but the few that left cancelled right near the June bottom. Assuming these people sold their long positions at this time, their portfolios have missed an average move of over 10%. Remember that long-term market timing requires patience and that corrections are to be expected in every system. The most recent decline was just a correction and there was no reason for us to trigger a sell signal. Our system is designed to find tops and bottoms and it is now clear that a top was not formed in May of 2006.

The first chart below is of the S&P 500. You can see how the index closed right below its May high today. As we have run into major resistance, we would expect a decline from this point. Support is in the 1295-1300 area and we feel that the S&P 500 will most likely not break below this point during the decline. We still have an upside target of 1380-1400.

The next chart is of the Dow Jones Industrial Average. This index is right below all-time highs. We feel a pullback should bring us to the 11400 area. Our upside target for the Dow is 12500.

The NASDAQ Composite's resistance is weaker than the other indices, but we still feel that the NASDAQ is ready for a pullback as well. A possible pullback target is 2190-2200. The next upside target for the NASDAQ is 2006 highs.

The Russell 2000 is at strong resistance. A pullback should bring the index to the 710 area. The next upside target for the Russell 2000 is 2006 highs.

As many of the major indices are at very strong resistance levels, we do expect a pullback here. As the indices are so far extended, any pullback should not even come close to interfering with powerful support levels.