"I'm still expecting the U.S. stock markets to have a good rally by the end of the year. History shows that the markets have a rough patch before the Fed increases rates, then they rally after the first increase or two. Stocks decline after further rate increases or when the economy slows sharply. Don't expect a late 1990s-style bull market. I believe we are in a long-term period when stocks will be re-valued. We'll gradually see today's high price-to-earnings ratios decline to lower levels. . . . A steep stock decline isn't needed to accomplish this. Rising earnings and stagnant stock prices, such as we've already seen in 2004, would do the job."

Bob Carlson's Retirement Watch

Annandale

"Stocks appear poised to make an important bottom Aug. 24-25, with perhaps an echo Sept. 3-8. The proximity of that time frame to the Republican presidential nominating convention dates of Aug. 30 to Sept. 2 is more than a little bit interesting. We do not see a similar cluster near the Democratic convention dates of July 26-29. Given the fact that we have additional bottom signals into September, and that September is historically the weakest month, we would not want to bet now that the important August bottom will be the end of the story."

Tom McClellan

The McClellan Market Report

www.mcoscillator.com