In the last two weeks, we have gone from a bearish head and shoulders breakdown to a new relative high. The market has rallied almost 10% in that time and the momentum is very strong.

Rising interest rates put the brakes on June’s rally and investors were concerned that the continuous supply of new bonds would put upward pressure on yields. The Treasury has to finance a $2 trillion deficit and huge bond auctions will be held every other week. In its statement, the FOMC said that they will not be buying Treasuries after the September deadline. This was a sign that the Fed is less accommodative and stocks drifted lower. To the surprise of many, the bond auctions over the last few weeks have gone much better than expected and interest rates started to decline. This paved the way for a big rebound.

Technicians could easily see the head and shoulders formation and the neck line at SPY 89. That level also represented the 200-day moving average. When it was breached, bears piled in. The large short interest also provided a catalyst for the rally when shorts had to cover.

Goldman Sachs blew earnings estimates away and financial stocks surged higher last week. That rally got the ball rolling. The next day, Intel beat estimates by a huge margin and they provided strong guidance. This rally sparked a huge round of short covering and Asset Managers that were under allocated scrambled to place money. Since that initial run, the XLF (financial sector ETF) and the SOX (semiconductor index) have been relatively flat indicating that good news is priced into these sectors.

This has been a very busy week and a flood of earnings have hit the market. One general observation is that cyclical stocks are rallying even though the top line growth and the guidance have been weak. Companies have done a great job controlling costs and the bottom line is beating estimates. However, the rally in economically sensitive stocks is all based on the promise of a recovery. I’m also seeing short covering in many of the laggards and they are rebounding after posting weak results. My conclusion is that the market is getting ahead of itself.

The market has been able to hang on to its recent gains and that is a positive sign. Tuesday and Wednesday profit takers were did not spark a round of selling and both days the market recovered quickly. The bid is strong and today the SPY broke to a new relative high not seen since last November. This latest action should spark another round of short covering–however once that impetus runs its course, the market should fall back below SPY 96.

Call us skeptical, but the recent breakdown below SPY 89 did not hold and I don’t believe this breakout above SPY 96 will hold either. The market is searching for direction and these light volume moves will fool as many traders as possible. Good results are already priced into the market and valuations are getting stretched.

Analysts keep talking about a rebound, but that is not being reflected in energy or transportation. If global economies were truly rebounding, we would see oil prices move higher. Production and exploration has been cut and any uptick in demand would deplete inventories. Crude supplies are still running high. Railroads and truckers are posting weak numbers and they are providing dismal guidance. This morning, UPS missed its number by a large margin and it is often considered an economic barometer. Until we see these conditions change, it might not be wise to get too invested in the current recovery theory.

Earnings releases will be heavy next week along with a slew of economic reports including new home sales, consumer confidence, durable goods, the beige book, GDP and Chicago PMI. While this news should generally be positive, a stiff head wind will return. Next week, approximately $110 billion in longer-term Treasuries will be auctioned and there is every reason to believe interest rates will start moving higher.

In summary, the market is likely to break out and then fall back into its trading range the rest of the summer with some surprising breakdowns. The greatest risk right now is to the upside. The best approach now is to use the Live Update page to play the best performing stocks on the upside using tight stops–while keeping a list of bearish plays automatically keyed up for any breakdown.

To your success!

Andy Huang

The following list is a very subjective view of the most important social networking websites. These aren’t necessarily the most popular websites for social networking or the oldest websites for social networking, but they are 15 of the most important websites, particularly for people running self improvement, business- or health-related sites.

1) Facebook.com: Was initially intended for college students — it branched out, and now allows everyone membership. 150 million members.

2) MySpace.com: 191 million members. This site is massive, boasting the largest membership of any social networking site on the Internet.

3) Linkedin.com: 12.5 million members — a powerful tool for business networking.

4) Friendster.com: 29 million members. Friendster was considered the top online social networking service until around April 2004, when it was overtaken by MySpace. Demographic studies indicate users are from 17 to 30 years old.

5) Stumbleupon.com: Boasting 2.75 million users, StumbleUpon is a web browser plugin that allows its users to discover and rate webpages, photos, videos, and news articles. A great way to get website promotion. Bought by eBay for $75 million in May 2007.

6) del.icio.us: The website del.icio.us (pronounced as “delicious”) is a social bookmarking web service for storing, sharing, and discovering web bookmarks. The site was founded by Joshua Schachter in late 2003, and is now part of Yahoo!.

7) digg.com: Digg is a website made for people to discover and share content from anywhere on the Internet, by submitting links and stories, and voting and commenting on submitted links and stories, in a social and democratic spirit.

Orkut.com: Orkut is an Internet social networking service run by Google and named after its creator, Google employee Orkut Büyükkökten. It claims to be designed to help users meet new friends and maintain existing relationships. Now has a membership of 57 million.

9) Twitter.com: A free social networking service that allows users to send “updates” (text-based posts that are up to 140 characters long) via SMS, instant messaging, email, the Twitter website, or an application such as Twitterrific. The site has become very popular in only a few months — a lot of people are watching it.

10) Classmates.com: 40 million members. One of the oldest social networking sites around, Classmates was kicked off in 1995, and has proven to be a great way for members to to connect with old friends and acquaintances from throughout their lives.

11) Meetup.com: 2 million members. Meetup.com is an online social networking portal that facilitates offline group meetings in various localities around the world. Meetup allows members to find and join groups unified by a common interest, such as politics, books, games, movies, health, pets, careers or hobbies.

12) Yahoo! 360° (a.k.a Yahoo! Days) is a personal communication portal similar to orkut  and MySpace — it is currently in the beta-testing phase. It integrates features of social networking, blogging and photo sharing sites.

13) Xanga.com: 40 million members. Xanga is a free Web-based service that hosts weblogs, photoblogs, videoblogs, audioblogs, and social networking profiles.

14) Care2.com: 7.2 million members. Care2 is a social networking  website that was founded to help connect activists from around the world.

15) Ryze.com: .25 million members. Ryze.com is a free social networking website designed to link business professionals.

In all, there are over 100 social networking sites on the Internet. Some of the other social networking sites that I have not included in the list above are:

Bebo, BlackPlanet.com, Flickr.com, Reunion.com, aSmallWorld, Bebo, BlackPlanet.com, Blue Dot, Bolt, Broadcaster.com, Buzznet, CarDomain, Consumating, Couchsurfing, Cyworld, Dandelife, DeadJournal, DontStayIn, Doostang, Ecademy, eSPIN, Faceparty, Flickr, Flirtomatic, Fotki, Friends Reunited, Gaia Online, Geni.com, GoPets, Graduates.com, Grono.net, Hyves, imeem, Infield Parking, IRC-Galleria, iWiW, Joga, Bonito, Last.fm, LibraryThing, LiveJournal, LunarStorm, MEETin, MiGente.com, Mixi, MOG, Multiply, My Opera Community, myYearbook, Netlog, Nexopia, OUTeverywhere, Passado, Piczo, Playahead, ProfileHeaven, Pownce, RateItAll, Reunion.com, Searchles, Sconex, Shelfari, Soundpedia, Sportsvite, Studivz, TagWorld, TakingITGlobal, The Doll Palace, The Student Center, Threadless, TravBuddy.com, Travellerspoint, Tribe.net, Vampire Freaks, Vox, WAYN, WebBiographies, Windows Live Spaces, Woophy, XING, Xuqa, Yelp, Zaadz, Zooomr

Happy friending everyone.

Last week, the market dropped below major support when the Unemployment Report was much worse than expected. Job losses were 100,000 more than analysts had expected and bulls finally threw in the towel. Since March, they have denounced the Unemployment Report claiming that it is a lagging piece of information.

Month-after-month, the news continued to disappoint and the unemployment rate has jumped in a parabolic manner. Weekly jobless claims have not subsided and traders have hawked the number each week in hopes of improvement. This morning, initial jobless claims dropped by 52,000 and it came in at 565,000. That is well below expectations of 605,000. Before we get too excited about this number, keep in mind that it spanned a holiday. Often, people will postpone filing for unemployment until after they return from vacation. Continuing claims increased by 159,000 to its highest level ever (6.88 million).

This morning, retailers posted weaker than expected monthly sales. Wet weather and rising gasoline prices contributed to the decline. People are concerned about their employment situation and they have cut back spending.

Next week, earnings season will begin. We will get a big dose of earnings from financial institutions during the next two weeks. The spread between the borrowing and lending rate has never been higher and banks are hanging on to toxic assets. Profits should be good since they aren’t taking write downs. However, I’m not expecting a big rally from this sector. Banks have issued a lot of stock and it will take many quarters of stellar performance to work off that supply. Toxic assets, commercial real estate loans and high credit card default rates will keep a lid on any financial sector rally.

The market will have to find strength from other sectors. Although 70% of all companies beat Q1 expectations, the market has rallied 40% off of its low and good results are priced in. We will see if companies can “beat” by a big enough margin to spark a rally.

Traders are carefully watching interest rates. This week, the Treasury issued $75 billion in longer-term bonds and the auctions were very well received. That has kept the market treading water.

A head and shoulders pattern has formed and early this week the neckline was broken when we traded below SPY 89. That price level also represents the 200-day moving average. As that support level gave way, the selling pressure increased and it looked like we could have a major decline this week. After the 10-year bond auction results were released Wednesday afternoon, the market rebounded. That rally has continued today. The Treasury has to finance its $2 trillion budget deficit and it will keep issuing new bonds every other week. That means bulls will continuously be dodging the interest rate bullet.

The tone for next week will be set Tuesday when Goldman Sachs, Johnson & Johnson and Intel release results. By comparison, economic releases are very light and the market will take its direction from corporate earnings. Interest rates have stabilized and earnings will determine the market’s direction. If the market declines, option expiration could have a negative influence since we are trading near a one-month low.

We are teetering on a breakdown and great results are all that can keep us from falling. I believe the market will drift lower during the rest of the summer, but I am not looking for a meltdown. Leverage has been removed from the market and we will not see anything close to the panic selling we witnessed last fall. The market should be able to find support around SPY 80-83.

This is the perfect time to trade relative strength and weakness. The market may not go anywhere, but individual stocks will be making considerable moves.

Just saw my friend Rosalind Gardner shared the AffiliateBenchmarks affiliate marketing survey on her blog. I took a look at it and it’s a very well-constructed survey to determine 2009 affiliate practices. I want to share this with you as well.

All affiliates who participate and complete this survey will receive a free copy.

Here’s the press release:

New York, NY (PRWEB) July 8, 2009 — AffiliateBenchmarks, a research division of outsourced affiliate management agency NETexponent, has released an affiliate marketing survey to be completed by affiliates and website publishers by July 31st 2009. The survey results will gather best practices for several aspects of affiliate marketing, including how best to communicate with affiliates, what advertisers can do to optimize affiliate relationships, what tools and information affiliates crave, and what challenges they face. Results will be analyzed and used to identify marketing trends and projected changes. Affiliates who complete the survey will receive a free copy of the results and others will have the option to buy a copy once released.

We were very proud of last years effort and the industry’s response but knew we had room for improvement This year survey is not only bigger and better but it also has the support of major affiliate networks like Commission Junction, Google Affiliate Network, LinkShare, PepperJam, Shareasale, and Media Trust. Thanks to the support of these major networks we have been able to optimize our study and significantly increase the number of respondents.
AffiliateBenchmarks produced their first study in 2008 and the research report was met with an extremely positive response from the online marketing community. The positive response from last years research report and continued need for industry benchmarks prompted AffiliateBenchmarks to produce the 2009 survey. This year the AffiliateBenchmarks survey has been significantly expanded and improved based on the knowledge and feedback from the industry leaders. The 2009 survey includes a wide range of questions about topics such as affiliates’ experiences with different types of ad performance, site visitor demographics, technology and communication preferences, motivations for joining an affiliate program, experiences with emerging technology, and more.

“We were very proud of last years effort and the industry’s response but knew we had room for improvement,” said Peter Figueredo, CEO & Co-Founder of NETexponent. “This year survey is not only bigger and better but it also has the support of major affiliate networks like Commission Junction, Google Affiliate Network, LinkShare, PepperJam, Shareasale, and Media Trust. Thanks to the support of these major networks we have been able to optimize our study and significantly increase the number of respondents.”

If you are an affiliate/publisher and are interested in benchmarking your success by completing this survey, we will send you a copy of the results. Your time and input is greatly appreciated. Be sure to complete the survey before July 31, 2009. Affiliate Benchmarks respects the privacy of affiliates and only aggregate information will be shared.

AffiliateBenchmarks is the affiliate research division of NETexponent. AffiliateBenchmarks designs and executes affiliate marketing research with the purpose of increasing industry education and providing useful data and statistics to the affiliate community. We focus on the benefit of the affiliate marketing industry as a whole, and strive to provide reliable information that is interesting and useful to a wide range of people involved with affiliate marketing. Follow us on Twitter @AffBenchmarks.

NETexponent is an online performance based marketing agency located in New York that specializes in outsourced affiliate and search marketing management, growth, and optimization. Founded in January of 2001, the metrics-driven firm leverages nearly a decade of management experience in structuring win-win, performance based deals with its clients. The agency focuses on efficiently acquiring the most valuable customers for each advertiser they work with, while always delivering the highest level of client service. NETexponent is committed to being the industry’s leading performance online marketing agency, continually evolving to address changing market conditions and client needs. Follow us on Twitter @NETexponent.

Take the survey.

To your continual success!

Andy