Now that the June expiry is out of the way we can speculate on what next.

 As I mentioned last weekend 4500 has developed into a very strong resistance level.  This can be seen clearly on the chart.  In this last week the September futures (now the current series) dropped 85.5 points on the FTSE, 25 points on the S&P500 and 262 points on the DJIA.

With the end of quarter only a week and half away it will be interesting to see if there is a rally, and if so how high can they push it? 

Meanwhile Thursday’s initial unemployed remained above 600,000 though supposedly continuing claims have dropped. (Or have people just run out of their continuing claim entitlement?)  One headline claimed that housing prices had bottomed and that there was a slight rinse in the value of houses.  Another article explained that the rise in value was due to an easing in the credit that allowed more expensive houses to be bought - amazing what one can do with a bit of smoke and mirrors.

This week the government will try to sell $40 billion of 2 year Treasuries on Tuesday, $37 billion of 5 year notes on Wednesday and $27 billion of 7 year notes on Thursday.  Who will be daft enough to buy?  If  Japan and China are reducing their purchases then who is left?  The FED says they will not monetize debt, but what if the banks they now “control” buy the debt?  Same thing, different method.  Lets see what happens.

Indicators of what is really happening will be seen in the US$ exchange rate, price of Gold and oil. The old saying goes “You can fool some of the people some of the time, but you can’t fool all of the people all of the time.”