Your Economy (No Politics)

[Bullwinkle]

CYCLE/TREND Update for the Week

Oh the brutality! As mentioned in my previious update with which this post replies I stated "We also seemed to have gotten our cycle turn, albeit a couple of days earlier than I anticipated and that is if we do not dip back down from here." I also stated "As mentioned I believe we saw the cycle turn and on another note we have a "Blue Moon" tonight. While I do not follow moon phases I find it interesting that this would occur so close to a key turn date that has just put in a reversal. If it effects the market going forward is anyone's guess, but I will be looking for us to continue higher on the COMPQ next week." What can I say, my bad... I should have taken that full moon a little more seriously although terror alerts, new all time highs in Oil and then a miserable Jobs report are far more to blame than any blue moon, right? Hmmmm... And on that note, a fairly good streak of weekly market calls has come to an end. Oh well, can't win 'em all and now it is time to get back on that horse and ride, but first let's review the Econ #'s for the past week.

Another week of mixed signals with some surprises lacing the week. Auto Sales were flat with Truck Sales slightly higher. Construction Spending fell and the ISM Index came in as expected while ISM Services came in stronger than anticipated. Personal Income was a touch lower and Personal Spending quite a bit lower, but Consumer Credit was on the rise and Factory Orders were up slightly. Then last but not least Nonfarm Payrolls came in at a paultry 32K or 211K less than expected. OUCH!

For the week to come we will get Wholesale and Business Inventories, Productivity, an FOMC meeting, Treasury Budget, Import and Export Prices, Initial Claims, Retail Sales, PPI and Core PPI, Trade Balance and a prelim Michigan Sentiment. This set-up could produce another rough week, but let's see what Uncle Al can do to stem the hemorrhaging.

So what can we expect for the week ahead? While I felt a bottom was in place, I am obviously still looking for one. Looking over a 3 year COMPQ chart it appears as though we are at or near some key support levels of Mar'02, Apr'02, Jul'03 and Aug'03 where these not only seem to form a nice line of support, but are also a 38.2% Fib retrace of the Jan'04 high and Oct'02 low. The P/C Ratio reached 1.57 on friday and leveled off at 1.35, yet oddly enough the QQQ P/C's are not that heavily weighted in one direction or the other. The Nasdaq McClellean and Summation are currently at extremes and forming a possible double bottom. There is also a possible island reversal set-up in play off of the gap down on Friday and if all this is not enough we have a cycle turn on/around Aug 10-12th. A lot of forces at play going into this week and a capitulation sell off may be in the books, but we may just meander around and put in a base before a rebound begins in earnest (that is if we indeed have found our bottom or some support).

NOTE: As mentioned in my previous post I took the bait back on July 30th and flipped my USPIX into UOPIX. What a headfake! At this time I am still holding this position and while I certainly wish I could have foreseen what was to come I would have gladly held off for a better entry. With that said I am not too concerned about it and will just hold from here and wait for the turn.

Disclaimer: This disclosure is not a recommendation to buy or sell or to do as I do, it is for no other purpose than to let people know what it is that I am doing and create a track record.