Your Economy (No Politics)

[Bullwinkle]

CYCLE Turn On/Around June 17th

As mentioned in my previous update with which this post replies I was looking for a local top in the 2015 or so area on the COMPQ, so what's 5-8 points amongst friends? Close enough for me as last week played out almost exactly as I had thought, some up early in the week (i.e. run to 2023) with a local top being put in and while we did slightly pierce the upper downtrend line off of the January highs, it proved to be resistance at the Fibo 75% retrace (76.4% for you perfectionists). Since the markets were closed Friday it is hard to say what effect if any the mini turn scheduled for the 11th might have produced, but the mini turn on the 8th did appear to have some effect as we turned south in a decisive manner. This could very well be the last word for this most recent uptrend before a more decisive downtrend takes over, but more on that in minute. Now on to the Econ #'s...

Due to the trade shortened week some Econ #'s were delayed such as PPI (nothing new here) and Trade Balances, but we did get Consumer Credit and Wholesale Inventories which both fell sharply from the prior month's readings, Export Prices also fell and Import prices rose. Initial Jobless Claims were up by 12k and the Treasury Budget which came in lower than the prior month still leaves us $50+billion deeper in the red overall for this corresponding timeframe of last year. We also heard from the Fed who stated they would do what is necessary to fight the good fight, let's just hope they don't show up to the gun fight with a knife.

Next week promises to be a very busy week, on deck we have the indicators that were postponed plus CPI, Business Inventories, NY Empire State Index, Sentiment in one form or another, Building Permits, Housing Starts, Capacity Utilization, Industrial Production, Fed's Beige Book, Initial Claims, LEI, Philly Fed and Current Account Deficit. If all that weren't enough, it is also Options Expiry.

So what can we expect for the week ahead? I believe more volatility with a capital "V". Whether or not the trend turn was put in on the 8th or not is still to be seen and the 11th mini turn may still be in effect. If we are to get any kind of a rally next week it will more than likely be short lived, but if we were to move through the upper downtrend line I do not expect 2040-2050 to be taken. As highly unlikely as that may seem (at least to me), stranger things have happened. At this point in time I find it difficult to justify the amount of upside reward with the amount of potential downside risk hanging in the balance. I also believe the 17th which is a key trend reversal date could be the start of a significant downtrend. As far as I can see this uptrend is cooked and while I am not talking crash or anything like that, the risk/reward ratio is just too great to be getting long in here. So I will be buckling up, I think we are in for a rough ride...