SILVER WHEATON (SLW) BLASTED THROUGH OUR PROFIT TRIGGER AND REVERSED--AUTOMATICALLY EJECTING US FOR A SWEET EIGHT-DAY SEVENTY-SIX PERCENT PROFIT!

This past week the market continued its climb to the upside adding value to our new bullish plays…

SILVER WHEATON (SLW) BLASTED THROUGH OUR PROFIT TRIGGER AND REVERSED--AUTOMATICALLY EJECTING US FOR A SWEET EIGHT-DAY SEVENTY-SIX PERCENT PROFIT!

PLUS GOLDMAN SACHS (GS) DROPPED LAST TUESDAY GETTING US IN AT A ROCK BOTTOM PRICE ONLY TO LAUNCH THE REST OF THE WEEK FOR A ONE-HUNDRED-TEN PERCENT OPEN GAIN!

And the beauty of our GS play is that it’s still open so we’ll likely bag even MORE profit as the ‘king of the financials’ continues to rise.

Our recent plays have been going great—but we’ve still got a portfolio of bearish positions that are NOT doing so great. To find out what’s in store for them and where the profits may be found now let’s take a good look at…

WHICH WAY THIS MARKET IS HEADED

The SP-500 kept rising this past to hit up against its downtrend resistance line from May. From a technical standpoint it would not be surprising to see a roll-over right here. If it does continue to climb there is further resistance at 1120 and 1130. This is dangerous territory for the bulls as a roll-over could come at any time and from these levels it would likely be fast and furious. This next week should tell the tale as volume is likely to finally increase.

Even though the Nasdaq finally moved over initial resistance at 2225 it is now up against downtrend resistance and could roll-over right here. If it breaks through it has strong horizontal resistance at 2300. It is actually amazing the Nasdaq has done so well with almost daily warnings coming out of the chip sector. The overall chart of the Nasdaq still looks bearish in spite of the past few weeks uptrend—it would be smart to tread cautiously here.

The big influence on the Nasdaq is the semis which were knocked for a loss on Friday after Texas Instruments (TXN) and National Semi (NSM) both lowered their forecasts on Thursday. Silicon Labs (SLAB) also warned on Wednesday. Texas Instruments reduced their top end estimates but remained in the range analysts were expecting. After a steep intraday loss shares recovered to end flat.

National Semi had a more sober outlook. The NSM CEO warned, "We'd all like to believe that consumer spending is onward and upward but I don't think it is." Both companies said weak demand for personal computers was a problem and consumers were not spending the big bucks on other electronics purchases. Ron Slamaker of TXN said consumers appear to be buying fewer TVs this quarter.

If the CEOs of these companies are bearish we should pay attention because they have every incentive to be cheerleaders—plus few are in a better position to know what is really going on than the folks at the top of the companies that actually lead the chip industry.

These warnings are congruent with a new survey from Isupply which reported a glut of LCD-TVs in Q2 with 36% excess inventory, up from 25% in Q1. This over-supply is pushing prices down at an accelerated rate. Prices are already down -24% in 2010 compared to a -30% drop in all of 2009. Another analyst said the deflation in prices would probably continue through this holiday season as retailers dump inventory in an industry where technology is constantly making older product obsolete.

This weekly bad news in the chip sector is holding back the Nasdaq but it’s not nearly as bad as you would think--the SOX is still somehow holding above a 10-month low set in August.

Overall last week was light for economic reports with the Beige Book the only major event. However, we did see a sharp drop in new Jobless Claims of -21,000 to 451,000 and the lowest level since July 10th—a report that had a bullish effect on the markets.

However there are still more than 10 million people receiving unemployment insurance payments and several million more whose benefits have expired. That 21,000 drop was nice but keep in mind there were still 451,000 newly unemployed—so the ‘drop’ was really a ‘drop in the bucket’.

Wednesday's Fed Beige Book reported they were expecting continued growth but were also seeing “widespread deceleration" through the end of August. Of the 12 Fed regions five banks reported "economic growth at a moderate pace." Two Fed banks saw "positive developments" but the remaining five banks said conditions were "mixed or decelerating."

Frankly that’s not a very bullish Beige Book report. Economists are now predicting that GDP will fall back to just over +1.0% growth compared to the 3% estimates at the beginning of July definitely marking a "widespread deceleration."

Even though traders are bidding the markets higher the majority of consumers believe we are about to hit a double dip. A survey just released by StrategyOne claims consumers are becoming more bearish than ever.

The StrategyOne Survey discovered that 65% of Americans not only believe a double dip is about to occur but 44% believe the second dip will be worse than the first and 21% believing it will be "much more severe."

Only 21% believe the economy will recover by the end of 2011, but another 23% don't believe the economy will EVER fully recover.

Meanwhile 71% believe that America is fundamentally broken and not working. Since the American consumer is characteristically optimistic and resilient this marks a significant and somewhat alarming departure. Confidence has been materially damaged and real doubts are emerging about the economic future of the country. High unemployment and extreme government debt is proving to be very tough on sentiment.

For example 41% of those surveyed are planning to cut back on their spending over the next 3–4 months, compared with 8% who plan to increase it.

And 35% say they will plan to cut back their online spending over the next to 3–4 months, compared with 12% who plan to increase it.

A whopping 79% say they are planning to spend less money for Christmas this year while 87% say they do not plan to make a big-ticket purchase--such as a house or car--in the next 3–4 months.

Meanwhile 49% have already delayed making a big-ticket purchase during the past few months and 26% of Americans don't expect their personal finances to fully recover from the downturn until after 2011, and just as many--26%--think their personal finances won't ever fully recover.

Of course that could all change if house prices started to rise and folks started going back to work—but even the most optimistic economists don’t expect that to happen until the end of NEXT year at the earliest. It has been 34 months since this recession began and normally it would already be over by now—which is an indication in itself how extreme the economic imbalances are that need to be worked out.

So in the face of all this negativity why are stocks going up?

For one thing the closer we get to the elections—and the higher likelihood of a more balanced Congress with its resulting gridlock--the more positive the markets are likely to be.

Plus there is some good news the bulls are grabbing on to--wholesale inventories rose +1.3% for the biggest gain in two years. The trade deficit on Thursday was better than expected and jobless claims fell by -21,000. Corporate cash is at extremely high levels and companies are starting to announce stock buybacks again. Mergers and acquisitions are at a pace not seen in three years and corporations are selling debt at a record pace to lock in cheap rates---and at some point they will have to put that money to work. Q3 earnings are expected to rise +25% or more at a time when there is zero inflation. And finally the nonfarm payrolls showed private hiring was slow but still positive.

Granted the gains over the last two weeks have come on extremely low volume but they are still gains. Friday's 5.6 billion shares was the lowest volume in two weeks and volume for September month to date is -31% below 2009 levels.

However volume should increase this week--traders will be back at work and funds will have to make decisions on quarter end and year-end positioning. Will they start selling in anticipation of a September decline or position for a slow grind higher into the elections? With conflicting data and a stubbornly climbing market the real question is…

HOW DO WE MAKE MONEY ON IT?

With the markets buck up against resistance it could go either way—which makes it more important than ever to pick stocks bound to go in their respective directions no matter which way the market decides to head—fortunately we’ve got two such picks lined up for this week.

Our first play is bullish and it’s on a stock that just got a huge cloud removed from its future prospects—plus it’s trading at a ridiculously low multiple and investors are looking for a reason to climb on board which should drive our brand new calls through the roof!

Our next play is bearish and just got downgraded Thursday--and for good reason! This one is pointing straight down and should easily run through our trigger point very soon for some stellar downside profits.

We’ve got two outstanding new plays lined up on a market ready to move so let’s get going…

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