The up trends were tested and held for the seventh time in the last 90 days. Utilities made a new high last week and the Transportation index has joined the party by making a new high as well. Bonds are no longer trending lower and are now in an up trend. There is very little selling pressure and the only red flags remain the Commitment of Traders, concern over how the housing market plays out, and various overbought sentiment readings.

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Posted by Michael Chapman at 9:06 PM PST

A Trend in Motion stays in motion (until it is derailed). Strong trends sway the populace to focus on news that feeds the direction of the trend. Witness last weeks apparent excitement over the Fed’s comments on the economy verses the market participants completely ignoring the ISM manufacturing report.

The ISM LEADS the GDP (think economy) and the fact that it has been in a steady down trend since 2003 and dipped below 50 last week suggest a weaker U.S. economy in the months ahead.

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Posted by Michael Chapman at 12:39 PM PST