AI
Monday, September 06, 2004 2:11:42 AM
>>>CYCLE/TREND Update for the week Ahead>>>
It's that time once again to review the past week and look ahead into the next. As mentioned in the previous update with which this post replies " I believe a lot will be riding on the coming Econ #'s this week and depending on how these numbers go so will the market". This pretty much seems to be the case, Econ #'s were rather disappointing and seemed to cast a fog over the market for the early part of the week. We did seem to shrug it off and the COMPQ attempted to move higher. This was short lived as we got a worse than expected mid-quarter update from INTC and other chip companies such as IDTI, CY and ALTR. And if that weren't enough, rumor is that retailers are seeing slow back-to-school sales. Before we get further into this, let's review the Econ #'s for the week...
We started out the week with considerably lower than expected numbers in Personal Income, Chicago PMI and Consumer Confidence. Auto Sales were off slightly, but Truck Sales and Construction Spending were in line with forecasts. ISM Index fell slightly and ISM Services came in much lower than expected, Productivity for Q2 was revised lower with Factory Orders rising slightly. Then last but not least, Initial Jobless Claims rose by 12K, Nonfarm Payrolls came in at 144K or 6K less than expected and the Unemployment Rate was a touch lower at a modest 5.4%. Not a very good week in general on the economic side of things and with a slowdown becoming more evident we then hear from GM and Ford announcing production cut backs and slower sales. This does not bode well for retail in general and could be a sign of things to come in Sept.
Econ #'s for the week ahead include the Fed's Beige Book, Consumer Credit, Import & Export Prices, Initial Jobless Claims, PPI & Core PPI and Trade Balance. These numbers will need to improve somewhat in order to shake off last weeks discouraging numbers and news, otherwise the slowdown we have been hearing about may be well underway.
So what can we expect for the week ahead? The P/C #'s jump out at me the most. The P/C numbers for the QQQ have increased significantly with roughly 1-Mil Calls spread out over the 34-38 strikes (35's=highest) and with roughly 1.3-Mil Puts spread out over the 31-37 strikes (34's=highest). These options are spread out in such a way that we may very well see a lot of volatility over the next week or two, QQQ MaxPain is at 35. We have a trade shortened week and most vacations are coming to an end for the summer. It will be very interesting to see what effect this will have on volume and/or direction as fund managers and the like return to work. I also mentioned a turn on/around Sept 2nd and Sept 6th and am still very interested to see what role if any these dates will play moving forward into this week, the next turn is not due until the 13th. On a technical level we look to be somewhat overbought; 50DMA is trending down hard, Slow Stoch is crossing over, CCI turning down and the 1876 high to date on the COMPQ is close to the upper BBand with MACD starting to show a divergence away from the current trend. This is not to say that we will not move higher. The inverted H&S I was looking for is still intact and another leg up may be in store, but this move looks weak. There is so much overhead resistance in the 1865-1900 area we may be lucky to get 1900 out of this move. Volume will be the key... I also do not like the way news related issues are moving this market and we seem to be one bad news item away from a trend change.
NOTE: At this time I have flipped my UOPIX position to USPIX (probably a little too soon). At this juncture I just feel more comfortable going into Sept on the short side as opposed to the long side.
Disclaimer: This disclosure is not a recommendation to buy or sell or to do as I do. It is to let people know what I think about current market conditions, what it is that I am doing and for no other purpose than to create a track record.
Possible Inverted H&S (chart generated Aug 20th)
Current COMPQ Chart
It's that time once again to review the past week and look ahead into the next. As mentioned in the previous update with which this post replies " I believe a lot will be riding on the coming Econ #'s this week and depending on how these numbers go so will the market". This pretty much seems to be the case, Econ #'s were rather disappointing and seemed to cast a fog over the market for the early part of the week. We did seem to shrug it off and the COMPQ attempted to move higher. This was short lived as we got a worse than expected mid-quarter update from INTC and other chip companies such as IDTI, CY and ALTR. And if that weren't enough, rumor is that retailers are seeing slow back-to-school sales. Before we get further into this, let's review the Econ #'s for the week...
We started out the week with considerably lower than expected numbers in Personal Income, Chicago PMI and Consumer Confidence. Auto Sales were off slightly, but Truck Sales and Construction Spending were in line with forecasts. ISM Index fell slightly and ISM Services came in much lower than expected, Productivity for Q2 was revised lower with Factory Orders rising slightly. Then last but not least, Initial Jobless Claims rose by 12K, Nonfarm Payrolls came in at 144K or 6K less than expected and the Unemployment Rate was a touch lower at a modest 5.4%. Not a very good week in general on the economic side of things and with a slowdown becoming more evident we then hear from GM and Ford announcing production cut backs and slower sales. This does not bode well for retail in general and could be a sign of things to come in Sept.
Econ #'s for the week ahead include the Fed's Beige Book, Consumer Credit, Import & Export Prices, Initial Jobless Claims, PPI & Core PPI and Trade Balance. These numbers will need to improve somewhat in order to shake off last weeks discouraging numbers and news, otherwise the slowdown we have been hearing about may be well underway.
So what can we expect for the week ahead? The P/C #'s jump out at me the most. The P/C numbers for the QQQ have increased significantly with roughly 1-Mil Calls spread out over the 34-38 strikes (35's=highest) and with roughly 1.3-Mil Puts spread out over the 31-37 strikes (34's=highest). These options are spread out in such a way that we may very well see a lot of volatility over the next week or two, QQQ MaxPain is at 35. We have a trade shortened week and most vacations are coming to an end for the summer. It will be very interesting to see what effect this will have on volume and/or direction as fund managers and the like return to work. I also mentioned a turn on/around Sept 2nd and Sept 6th and am still very interested to see what role if any these dates will play moving forward into this week, the next turn is not due until the 13th. On a technical level we look to be somewhat overbought; 50DMA is trending down hard, Slow Stoch is crossing over, CCI turning down and the 1876 high to date on the COMPQ is close to the upper BBand with MACD starting to show a divergence away from the current trend. This is not to say that we will not move higher. The inverted H&S I was looking for is still intact and another leg up may be in store, but this move looks weak. There is so much overhead resistance in the 1865-1900 area we may be lucky to get 1900 out of this move. Volume will be the key... I also do not like the way news related issues are moving this market and we seem to be one bad news item away from a trend change.
NOTE: At this time I have flipped my UOPIX position to USPIX (probably a little too soon). At this juncture I just feel more comfortable going into Sept on the short side as opposed to the long side.
Disclaimer: This disclosure is not a recommendation to buy or sell or to do as I do. It is to let people know what I think about current market conditions, what it is that I am doing and for no other purpose than to create a track record.
Possible Inverted H&S (chart generated Aug 20th)
Current COMPQ Chart
**Happy Trading**
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