Your Economy (No Politics)

[Bullwinkle]

CYCLE Trend Analysis (Turn on/around May 9th)

Well it's that time again where I review the weekly activities on the economic & technical front and give my take on what the week ahead has in store for us. As mentioned in my previous post with which this post replies, I was looking for a relief bounce followed by a continuation to the downside. While I was looking for a 1-2 day bounce with a resumption to the downside on the COMPQ, we more or less got that with the exception of Wednesday finishing green. What we saw was the 3-Line Break pattern I mentioned and posted under last weeks chart play out to a tee and look at the wicks on those candlesticks, now that is some volatility. This weeks COMPQ chart has a lot of things going on, but before I get into that (and some other charts I have decided to post too) let's review the past weeks Econ #'s.

The Econ #'s this week are telling a tale of an improving economy, at least if we can believe the numbers we are seeing. For the most part and as mentioned before, doctored or not these numbers are what the public sees and reacts to. While we did not here about Auto/Truck Sales, we did get the ISM #'s in which the ISM Index came in flat and as expected and the ISM Services were up strongly. We saw Factory Orders double! and Construction Spending rose with Wholesale Inventories and Consumer Credit falling. Then we had the Jobs #'s which came in three increments of data... 1st there was an increase in layoff activity as reported by Challenger, Gray & Christmas in which the number surged to Oct '03 levels. 2nd was the Jobless Claims which fell by another 25K and 3rd was the Jobs created coming in at 288K. Some conflict between #'s layed off and #'s created, but whatcha gonna do? Then to top it all off we got a double dose of GreenSpeak, once on Tuesday where he calmed inflation fears and made Mr. Market happy then again on Thursday where he spooked Mr. Market about the budget deficit being out of control and a threat to long term stability.

My take on all of this is that we do indeed see the economy recovering, but there are underlying currents that could unravel this ball of twine we call an economy at any moment. Could be days, could be years... Basically it reminds me of a home with termites. Everything looks good from the outside, but open up a wall and the inner foundation has been eaten away.

Anyway, Econ #'s for the coming week are plentiful and we will get Import/Export Prices, Trade Balance, Treasury Budget, PPI, CPI, Initial Jobless Claims, Business Inventories, Capacity Utilization and Industrial Production.

So what can we expect for the week to come? Well for starters we have an upcoming turn scheduled for the 9th, since that is a Sunday we automatically will look to the 10th. We are currently in a downtrend and one of two obvious scenarios can play out. Either we get a continuation to the downside or we get a turn and nice move to the upside. I choose the latter and here is why... The COMPQ has many things in motion as expressed in the following chart:



It would also be very helpful if the $SOX played a part in this move and could very well be the catalyst for a COMPQ move to the upside. Of all the indices, sectors, etc., the $SOX was up on Friday while most everything else was down. Here is a chart of what I see, but as always these charts are open to interpretation...



Then for kicks I decided to chart $GOLD and the $TYX. As rate fears continue, it is playing havoc with the price of gold and I do not expect this to change anytime soon. Of course I reserve the right to be wrong and change my mind at will, but I do not see anything different than from what is presently taking place to change that view. Even if rates were to rise tomorrow, I think gold may be cooked for a while...





And on that note, be careful out there. This market takes no prisoners...