On Thursday, July 31, 2008 Motorola (MOT) reported their second quarter earnings. I was able to inform my New World Investor subscribers the good news the very day the company reported in their weekly Radar Report, keeping them informed right in time to invest in a very hot cellular stock.

Let me fill you in on how they did. Motorola sold more phones than expected in North America, keeping its #3 worldwide ranking behind Nokia and Samsung, and posted a small profit for the June quarter. Sales fell 7% to $8.1 billion, but that was well above the consensus expectation for $7.7 billion. They earned two cents a share pro forma, again soundly beating expectations for a three cent loss. Management said the September quarter would be breakeven to plus two cents even on seasonally slightly lower revenues, and then the December period will be better on the top and bottom line. They forecast six to eight cents profit for the year; Wall Street was at three cents.

MOT shipped 28.1 million phones in the quarter, above the consensus for 26.6 million. On the conference call, management said they will launch 50 new phones this year, including "advanced handsets," a code word for Apple iPhone competitors. Half of their phone portfolio in 2009 will be high-speed phones, up from 15% this year.

Wall Street like the news and bid the stock up 13% on Thursday. The company still plans to spin off the mobile phone business in the September 2009 quarter, and they are going to get the division straightened out before they do it.

It's a rodeo market-if you can stay on the bull more than eight seconds, you win. Rodeo bulls are experienced, tricky animals that twist, jump and drop in explosive ways to unseat their riders as quickly as possible. Sound familiar? Beginning bull markets do the same thing, chasing everyone to the sidelines before they start their big up-move.

Bear markets, in contrast, are like a lazy summer day by a sweet-smelling river, lulling everyone to sleep just before the flash flood comes roaring down to wipe everything out before anyone can get to high ground. A market this frustrating and dangerous almost has to resolve to the upside.

Falling oil prices should continue to help, especially if issues in the Middle East continue to sort themselves out.

But the market doesn't care what I think and predict, so let's check in with the S&P 500 to see what it is telling us. On March 17, right on the expected turn date, the S&P spiked down to an intraday low at 1257, before recovering and heading up for two months to 1440. From that energy level, which I identified to my subscribers well in advance, the S&P slid all the way down to a spike low of 1200 on July 15, with a close at 1215. While this was an undercut of the March 17 low due to the extraordinary amount of bad news in the financial sector that day, in retrospect it was a double bottom. Since then we have seen a successful test on July 28 that found buyers at 1234, followed by a steady march up to Wednesday's close at 1289. Then Thursday developed into another bronco ride back down to successfully test the 1260 level from above.

While there is a lot of energy stored up to move this market higher this week--further indicated by Friday's 300 point upswing--the next couple of days are likely to show a necessary short-term consolidation. I think we will break through the 50 day moving average at 1302 this week, as our old friend 1326, a key attractor/repeller level going either up or down, pulls the market up. If there's as much energy available as I think, after a bit of consolidation around 1326 we should see the S&P climb above its 200-day moving average at 1377 and move pretty quickly back to the 1440 level than stopped it on May 19. From there, we will find out if the next stop is new highs and a possible parabolic leg up, or a very serious leg down in an ongoing bear market.

We'll have to wait and see...Until next time, take care!

The stream of headlines and economic data pouring out of Wall Street--from the Russia-Georgia conflict to falling oil prices to a shrinking deficit to more writedowns--has shaken up investors.

And the market is responding. Here's what I expect to happen:

• Are we through the bad times? No, there is still a lot of bad news set to hit next year. I think it's important to name these market ogres now, recognize that they are on their way and then plan to profit around them. Here's the primary issue that will likely impact U.S. markets over the next year: The Alt-A mortgages based on stated income ("liar's loans") will reset--a problem 5X the size of the subprime mess.
• The Option ARMs that allowed people to make a minimum payment less than the interest due will blow up in a big way in 2009 and 2010, sinking big banks like Washington Mutual and Wachovia.
• Banks are tightening credit requirements that squeeze their customers--this could lead consumers to cut spending or even stop paying back debt.
• A whole generation is losing its FICO scores for the next 3-7 seven years, so the credit economy is history.
• And I expect General Motors, the quintessential U.S. manufacturing company, to declare bankruptcy before the end of this year.

Please note that the above problems will hit sometime in 2009, but I think we could see a big bear market as early as next April. What we need to focus on is that the next 9 months won't likely get much worse for the economy. That means the stock market should continue its relief rally and offer truly fantastic wealth-building opportunities for smart investors. But stay alert--the market's job right now is to shake off all the bulls so it can shoot up and kill all the bears.