The weekly newsletter briefing was posted to the website yesterday. The DJIA continues to break into new high territory, and is closing in on the 14,000 level. A combination of better-than-expected profits from Coca-Cola and Merrill Lynch, and questionable inflation data are helping to drive the markets higher.

Source: Stockcharts.com

We are expecting the Dow to re-test the 13,800-13,600 level sometime soon. A break below these levels could carry the Dow to 13,400-13,200.

It appears that the SPX is headed for a retest of its respective record high of 1,552.87 set on March 3, 2000. We would not be surprised to see a blow-off rally carry the index to even more euphoric levels (1600-1650??).

In a blow-off rally anything is possible. The markets continue to climb a wall of worry. Even with a rapid deceleration in earnings growth, consumer credit card debt of $2.44 trillion, slowing retail sales, foreclosures mounting, and hedge funds at risk with collateral debt obligation (CDO) bonds, the markets continue to rally.

Energy Markets

Crude oil futures were trading up this morning on continued supply concerns.

According to Bloomberg, consensus estimates for inventories for the week ending 07/13/07 indicate a significant draw in crude and significant builds in gasoline and heating oil stocks.

The International Energy Agency said Friday that tightness in the global oil market could ease marginally in 2008 as new supply capacity and refining upgrades come on stream. They also said that demand for oil through the second half of 2007 could see the market "oscillate uncomfortably" given the sharp draws in consumer inventories, and restrain production from OPEC.

On Monday, OPEC said that world oil demand will grow moderately in 2008, and the crude supply is enough to meet current demand.

Geopolitical problems could cause energy prices to spike as tensions continue to excalate over Iran's nuclear development program.

According to the IRNA news agency, Iran has asked Japan to make payments for oil purchases in yen instead of US dollars to avoid a possible seizure of its assets by the US government amid tensions over Iran's nuclear development program.

The latest CFTC Futures & Options Report showed that large speculators increased their net long positions in crude and RBOB gasoline. On the flip side, large speculators increased their net short positions for natural gas.