Mideast, BP Oil, and foiled terrorist plot dominate headlines as stocks head lower.

August, known as an extremely slow month proved to be so this past week. Volume continues to dry up, stocks keep seesawing without much direction. For the week, S&P500 -.7%, Nasdaq -.7%, NYSE -.9%. Leadership is severely lacking coupled with the seasonality the markets will continue to prove being in cash is the best place. This is not the time to go long in the market, timing the bottom has already proven costly for most investors the past attempted rallies. Moral to this story is that cash is the place to be.

Oil markets continue to get bombarded by the crisis in the mid-east along with BP’s pipeline shut down failed to push Oil past July 14th exhaustion gap high. A true supply shock, 8% of US production, 3% of total crude supply shut down and oil can’t break into new high territory. Jesse Livermore looked for these types of moves, the exhaustion gap has proved to be the topping point in the crude oil markets. If the hurricane season proves to be an inactive one, oil could slide further into consolidation.

As I’ve noted before, the mid-term elections should be watched carefully. Senator Joe Lieberman was ousted in the democratic primary and is looking to run as an independent. It’ll be interesting to see if Democrats try to hammer home negativity in the markets. This will be crucial to investor sentiment, especially heading into September historically being the worse month for stock returns.

Be an observer of these markets! No Trading! See you at Investors Paradise

MktSpec