AI
Saturday, September 25, 2004 6:45:38 PM
>>>CYCLE/TREND Update for the week Ahead>>>
Overview:
As mentioned in my previous update with which this post replies, I stated; This pattern continues to give us a little more upside to work with, but seems to have ran its course for the most part with numerous indicators reaching or about to reach overbought territory. If there is some more upside to be had, I would say it is very minimal. I had also mentioned that I thought if we had broken below COMP 1900 (more notably 1890) we would have what appears to be a trend change. Well I still believe a trend change is upon us, even more so now that we have reached COMP 1879 although the coming week may have some surprises. Before getting into that, let's review last weeks Econ #'s...
Economic #'s:
The FOMC met and big Al continued with the "sound economy hitting a soft patch" rhetoric and then raised lending rates by .25% as expected. It seemed to buoy the markets, but there was no way to hide or manipulate the poor Econ #'s this week. While Building Permits and Housing Starts rose for the month, Existing Home Sales fell. If you build it, will they come? Initial Jobless Claims rose by 12k to 350K, LEI fell for the 3rd month in a row and Durable Orders fell as well although the talking heads tried to make light of this number by discounting a big percentage due to airliner industry. You can candy coat it, but a short fall is just that, a short fall. Materials pricing is on the rise and I expect this trend to continue no matter which sector is most representative for that given month.
For the upcoming week we will get New Home Sales, Consumer Confidence, GDP, Initial Jobless Claims, Personal Income & Spending, Chicago PMI, Auto & Truck Sales, Mich Sentiment, Construction Spending and the ISM Index. Break out the micorscope...
As a side note, things are not looking too rosey economically speaking. Will the coming weeks numbers be more encouraging? We can only hope, but I wouldn't bet on it. I think the Fed may be able to keep it together just long enough to get through the elections, but then a breakdown may more clearly avail itself to us. While the Fed states he believes this is only a soft patch that will pass, others seem to believe the Fed is reloading the economic pistol for the next coming recession. While the bond market seems to be contradicting the Fed and pricing in for something, nobody knows for sure whether it is discounting for a slowdown or a recession. And while warnings are still coming in, no one sector appears to be safe as slowdowns are hitting various sectors across the board with some areas forecasting a slowdown for the next 2-3 quarters. Oil closes at an all-time high, lending rates are rising and should start working their way into the system soon. Will the the $USD strengthen and if so, what impact will it have on precious metals? What we have today is a bonafide Tug-of-War between deflationary and inflationary measures that sooner or later will resolve themselves in one direction or the other, but for now we are stuck.
What can we expect now?:
Well we have 3 factors going forward into the week; End of quarter window dressing, a Bradley Turn on/around the 28th and the upcoming Econ #'s. These 3 factors will play a big part in the direction for the week to come, but whatever the result I feel the trend change has been established and this could very well be the calm before the storm. We will most likely see some sector rotation and volatility, but all of the indices are painting the same picture and I believe we could be in for what will be a nasty October. While I do not like to look too far ahead especially with us so close to an election where surprises may materialize, we could see COMP 1650 -- INDU 9250 -- SPX 960 -- RUT 500 before it is all said and done. That is if we stick to our lower highs -- lower lows scenario and so far, the lower high appears to be in...
NOTE: I continue to hold a USPIX position
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.
Overview:
As mentioned in my previous update with which this post replies, I stated; This pattern continues to give us a little more upside to work with, but seems to have ran its course for the most part with numerous indicators reaching or about to reach overbought territory. If there is some more upside to be had, I would say it is very minimal. I had also mentioned that I thought if we had broken below COMP 1900 (more notably 1890) we would have what appears to be a trend change. Well I still believe a trend change is upon us, even more so now that we have reached COMP 1879 although the coming week may have some surprises. Before getting into that, let's review last weeks Econ #'s...
Economic #'s:
The FOMC met and big Al continued with the "sound economy hitting a soft patch" rhetoric and then raised lending rates by .25% as expected. It seemed to buoy the markets, but there was no way to hide or manipulate the poor Econ #'s this week. While Building Permits and Housing Starts rose for the month, Existing Home Sales fell. If you build it, will they come? Initial Jobless Claims rose by 12k to 350K, LEI fell for the 3rd month in a row and Durable Orders fell as well although the talking heads tried to make light of this number by discounting a big percentage due to airliner industry. You can candy coat it, but a short fall is just that, a short fall. Materials pricing is on the rise and I expect this trend to continue no matter which sector is most representative for that given month.
For the upcoming week we will get New Home Sales, Consumer Confidence, GDP, Initial Jobless Claims, Personal Income & Spending, Chicago PMI, Auto & Truck Sales, Mich Sentiment, Construction Spending and the ISM Index. Break out the micorscope...
As a side note, things are not looking too rosey economically speaking. Will the coming weeks numbers be more encouraging? We can only hope, but I wouldn't bet on it. I think the Fed may be able to keep it together just long enough to get through the elections, but then a breakdown may more clearly avail itself to us. While the Fed states he believes this is only a soft patch that will pass, others seem to believe the Fed is reloading the economic pistol for the next coming recession. While the bond market seems to be contradicting the Fed and pricing in for something, nobody knows for sure whether it is discounting for a slowdown or a recession. And while warnings are still coming in, no one sector appears to be safe as slowdowns are hitting various sectors across the board with some areas forecasting a slowdown for the next 2-3 quarters. Oil closes at an all-time high, lending rates are rising and should start working their way into the system soon. Will the the $USD strengthen and if so, what impact will it have on precious metals? What we have today is a bonafide Tug-of-War between deflationary and inflationary measures that sooner or later will resolve themselves in one direction or the other, but for now we are stuck.
What can we expect now?:
Well we have 3 factors going forward into the week; End of quarter window dressing, a Bradley Turn on/around the 28th and the upcoming Econ #'s. These 3 factors will play a big part in the direction for the week to come, but whatever the result I feel the trend change has been established and this could very well be the calm before the storm. We will most likely see some sector rotation and volatility, but all of the indices are painting the same picture and I believe we could be in for what will be a nasty October. While I do not like to look too far ahead especially with us so close to an election where surprises may materialize, we could see COMP 1650 -- INDU 9250 -- SPX 960 -- RUT 500 before it is all said and done. That is if we stick to our lower highs -- lower lows scenario and so far, the lower high appears to be in...
NOTE: I continue to hold a USPIX position
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.
**Happy Trading**
Your Economy #board- 1948
Discover What Traders Are Watching
Explore small cap ideas before they hit the headlines.
