Different people will look at last week’s actions in different ways. I noticed that those with a bearish predisposition looked at the rally that broke out above the 200-day moving average and froze as a sign of having run out of gas or momentum. Those that want the market to fall are saying that you can not break those 200-day average or you’re in trouble. Those levels are at Dow 10,335, S & P 1110, and NASDAQ 2256. However, that’s not the way I would look at it. Breaking above the 200-day moving average was certainly a solid short-term achievement, especially since it was fairly coincident with the early June high before testing the recent low. If we slip back through it, it is all part of the consolidation effort ahead of earnings season. The 200-day MA is NOT a line in the sand. It is a mistake to take this one indicator and give it such importance. We are entering a seasonally solid timeframe, earnings season. The market has discounted tremendous bad news since April. In recent weeks, bad news hits the market early, but then it recovers. The group rotation has improved dramatically. Risk is coming back in vogue. This earnings season will be more selective. We need to be cautious about companies with significant export exposure, both small and large. Drilling is still plagued by BP. Basic Materials are still struggling with the Euro. Finally, Housing is still a negative for Construction and REITS. With the Yuan floating higher, it is bullish globally, as it would spur Chinese domestic consumption.