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July was a very big month for the popular averages, with the DJIA up 9.0% and the S&P 500 up 8.8%. The big action was in big cap issues, with high quality growth issues featured (especially drugs).

Last month Dean Witter announced they were getting out of the program trading business. Maybe some other big retail oriented brokerage firms will follow suit. A blowout day on the downside may be all that is needed.

An increasing number of brokers and institutions are focusing on “Ecology Technology”. On a global basis, environmental problems are being recognized and increasing amounts of public money is being dedicated to addressing these problems.

Clients are asking how much more is in this market? Herein we will attempt to provide an answer to this question, without the aid of charts, astrology, or Evel Knutson. Rather, we will employ over 60 years of historical valuation facts.

The bond market marked time for the first three weeks of July, but came on strong in the last five trading days. July gains in bonds did not keep pace with stocks, but most bonds were up a point or so for the month.

The Early Warning Work: Have We Found The Keys To The Kingdom?....The Wisdom Of Paul Miller....New Zealand and Australia Updates

The bull market is still healthy according to our Major Trend Index. The current weakness amounts to nothing more than an intermediate correction, the correction our Early Warning work anticipated when it provided a sell signal back on June 6th and reaffirmed on June 27th.

New highs for the market are still expected in 1989. But I think it is quite likely that the 1987 high will, for a while at least, be a significant resistance zone.

A performance run down for our equity market sectors ranked by June performance.

The consensus way to play the “Graying of America” has been via health care related stocks. But the “Graying of America” is not just a play on health care for the aged.

A preview of our new U.S. inflation histograms, soon to be regular features of our quarterly Benchmarks publication.

In June, the bond market appeared to be unstoppable. After a pause mid-month, prices came roaring back edging into new high ground at month end.

Aussie Bonds Attractive Once Again...MTA Seminar...Copper Update...The Age Wave Consumer...Bullish? Gold Charts

One of our clients recently said, “I suppose you guys will turn bearish now that we have all come to agree with you.” Well, not yet. The majority can be right for a while. Sometimes it pays to be with the crowd. Our work tells us this is one of those times.

The Major Trend (cyclical bull market) is still healthy, but chances of an intermediate correction have increased.

A performance run down for our equity market sectors ranked by May performance.

The following chart and commentary regularly appear in the appendix. Since we are adding a new growth component to the equity model this issue we thought this work deserved a place “up front”.

With Aussie Commonwealth bond yields again up around 14% and the Aussie dollar down to $0.75 U.S., we are moving part of the fixed income portion from both the asset allocation models back into the Aussie bond market.

Aussie bonds appear to be a very attractive investment. But what effect will a falling (or rising) Australian dollar in a variety of interest rate environments have on U.S. investors who buy Australian bonds?

For quite some time this publication has had a pretty good feel for the bond market. But May surprised me. My expectation was a stronger market early in the May followed by a correction.