As we alluded to last week, we believe that the major stock Indices have now put in at least a short-term bottom and could be poised for a multi-week rally. However, we cannot be certain at this point whether the recent low reached on July 15/08 will mark the end of this Bear Market or if the rally will be a relatively short lived respite from more pronounced selling.

We wish you the best of luck with your investments in the future.

Sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
http://www.timingequity.com

The S&P 500 Index continues to make fresh new closing lows on a weekly basis confirming our contention that the US equity markets are mired in a Bear Market. However, "the street" is alive with dire predictions for the economy and stock market. Therefore, from a contrarian standpoint we would not be at all surprised if the US stock Indices begin a counter trend Bull rally over the short-term within the context of an ongoing primary Bear Market.

We wish you the best of luck with your investments in the future.

Sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
www.timingequity.com

The decrease in the strength of our TE Index last week was almost entirely due to a decline in our Primary Trend Indicators. This was coupled with slightly lower investor Sentiment readings. These were partially offset by marginally lower long-term interest rates and improved Valuation readings. In conclusion, we believe that the fresh new closing low in the S&P 500 Index for 2008 at 1261.53 pts underscores that a Bear Market in US stocks is the immediate problem at hand.

We wish you continued good luck with your investments in the future.

Sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
www.timingequity.com

Last week witnessed more stock market weakness as the Nasdaq 100 Index fell 1.23%, the Russell 2000 slipped 0.95% and the S&P 500 Index got nipped by 0.06%.

However, all three of the losses for the week would have been much larger had the stock market not rallied significantly on Friday. Friday's rally was apparently in response to a "in line" core consumer price inflation report of 0.20% for the month of May 2008.

We would argue that the stock market had become oversold, highlighted by a smattering of heightened investor anxiety readings as witnessed by our investor Sentiment Indicators.

Also, of note is the fact that the yield on the US 30-year Government Bond climbed to a level of 4.80% on Friday. We would like to see the yield climb another half a percent or more before we anticipate the stock market would have significant trouble digesting the higher interest rates.

We wish you continued good luck with your investments in the future.

Sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
www.timingequity.com

We note that the Nasdaq 100 Index continues to act with outsized bullish vigor. This is not surprising given that this is the Index where excessive investor confidence, usually following a lengthy rally, is most prone to be pronounced. Very often this is a warning sign that the stock market is in a bit of a blow off phase where a subsequent decline develops.

We wish you the best of luck with your investments in the future.

Sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
www.timingequity.com

We would suggest that if last weeks closing prices marked a "high water point" for the current stock market rally, then the excessive investor enthusiasm that was signaled by the very heavy flow of funds into the Rydex group of Mutual Funds Bull Funds, did a very good job of warning us of trouble ahead for the major indices. However, having said this, there is a bias for the stock market to behave itself in the period following the Memorial Day long weekend and into the first part of June. Thereafter, we would expect the indices to run into significant trouble and recommence their decline.

As always, we wish you the best of luck with your investments in the future.

Yours sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
www.timingequity.com

The TE Index stubbornly refuses to confirm that the bear market has indeed ended. Importantly, while stocks continue to gather strength, small investors are slowly but surely beginning to take on more risk. While this risk taking has not yet reached an extreme, it is still significant enough to warn that the current rally could be closer to culminating then one would normally expect. Hence, this rally has every opportunity to be, in hindsight, a bear market trap.

We wish you the best of luck with your investments in the future.

Sincerely,

Anthony Waller
President
http://www.timingequity.com

Our best wishes right now are for the markets to put in a bottom fairly soon, then begin a rally. At the same time, we would love long-term interest rates to behave themselves and, in fact, begin a new short-term rally themselves. In this scenario, the TE Index would, in all likely-hood, begin to improve day the day and then after about a month of the final bottom issue a new buy signal to usher in the next bull market.

We wish you continued good luck with your investments in the future.

Sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
http://www.timingequity.com

Our TE Index is well off from issuing a bullish signal. The main reason for this is that our Primary Trend Indicator issued a Bear Market warning in mid January 2008 from which the S&P 500 Index has not materially improved upon. While the major US Stock Indices can meander up and down from week to week we will need to see the S&P 500 Index improve noticeably from current levels and for a sustained period of time before we can hope that the Bear Market, by our definition, is over.

Sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
http://www.timingequity.com

Given the relative position of our TE Index Indicators we would expect more choppiness in the couple of weeks ahead. The primary argument for such a position is the relative weakness in the US 30 year bond. In fact, the yield on the long bond has climbed from a low of around 4.10% to a recent high of close to 4.70%. This is a rather demonstrative move higher and would issue a warning that Asset Allocation managers may begin to allocate more funds to the relative safety of the US Government Bond Market then risk it in a fragile US Equity Market. Countering this, however, is the extreme pessimism amongst Investment Advisors in some of the published reports we follow such as "Investors Intelligence". In the vast majority of cases, when investment counselors get as bearish as they are now the stock markets tend to rally over at least the short to medium term. However, after a descent rally, they often change their positions quickly and become more bullish, which sets the market up for more retrenchment in the weeks following.

Sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
www.timingequity.com

The major US stock Indices rallied hard this week as the projected 50 basis point cut in the Federal Funds and Discount Rates were greeted with enthusiasm by stock traders and investors alike. Not even a surprise decline in non-farm payrolls on Friday could knock the market down. This is something that should come as no surprise as the combined 1.25% drop in interest rates over the past week and a half has fully lubricated the financial markets. A test of sorts will come next week as, by most measures, the stock Indices are overbought on at least a short-term basis and are prime for some profit taking.

Sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
http://www.timingequity.com

The US equity markets continue to grovel for, at least, a short-term bottom around current levels. With the US Federal Reserve expected to cut the Fed Funds and Discount Rates by an additional 50 basis points this coming Wednesday, the stock markets will have been fully lubricated with 125 basis points of easing in just over one week. This amplitude of liquidity into the financial system cannot be easily ignored. We would suggest that the Fed’s main impetus for such a dramatic lowering of interest rates is in an attempt to allow the yield curve to quickly steepen. This would allow the major lending institutions to begin making significant amounts of money by borrowing short and lending long once again. However, as the yield curve steepens, stock valuations come in to question, as the yield on long-term bonds then become an attractive investment alternative for Asset Allocation managers at the expense of investing in the stock market.

Sincerely,

Anthony Waller
President
Teabull Asset Timer Ltd
http://www.timingequity.com