AI
Monday, October 11, 2004 2:18:35 AM
>>>CYCLE/TREND Update for the week Ahead>>>
Overview:
As mentioned in my previous update with which this post replies, I mentioned the following: We currently sit at COMP 1942 which is not only a resistance area, but it also happens to be a .618 Fib retrace level off our previous low. On top of this we have another Bradley turn date on/around Oct 4th-6th. Keeping this in mind, can we continue to rally? We sure could, but I still feel a correction is coming. As it turns out we did go higher to COMP 1971, but were repelled by the 200SMA and the major resistance established a few months earlier in June. Currently we are now sitting at 1920 (1919.97) and have lost 50pts in the last two days. Is it soup yet? In other words, are we ready for the decline that I have been speaking of? We will get into that in a minute, but first let's review the Econ #'s for the past week.
Economic #'s:
This week's numbers were nothing less than dismal, Factory Orders dipped and ISM Services fell to a 16 month low. Initial Jobless Claims came in lower than expected and Consumer Credit was not an issue although it is believed that while consumers are getting more credit cards, they do not seem to be using them according to a report by Forex News. The Average Workweek remained flat, but hourly wages continued to shrink. Wholesale Inventories rose a tad and then the big report everyone has been waiting for, Nonfarm Payrolls, came in about 50K less than expected at 96K jobs created.
We have a busy week in front of us which starts out with Import & Export Prices, then Trade Balance, Initial Claims, Business Inventories, PPI & Core PPI, NY Empire State Index, Retail Sales, Capactiy Utilization, Industrial Production, Michigan Sentiment and the Treasury Budget.
As a side note, I found no comfort in any of this past week's Econ #'s while the market seemed to turn a blind eye until last Thursday. Alcoa's (AA) earnings report came in even lower than what they had originally warned a few weeks back, but then GE was steadfast in their outlook and guidance. Next week we officially kick off earnings season and news will most likely get worse before it gets better, so I have to ask what is propping up this market? Is it those who have an interest in seeing the incumbent get re-elected? Is it the Fed who if not for ego alone has an interest in keeping things afloat? How about foreign investment and big banks doing their thing behind the scenes with respect to bonds, bills and derivatives? How about the big houses' whose trading programs launch massive buy/sell orders at the drop of a hat? Hedge funds playing the field? Fund managers blindly putting cash to work? All I do know is that there are a lot of forces at play and sooner or later they will most likely hit the exits simultaneously. It is not so much a matter of "IF", just a matter of "WHEN".
What can we expect now?:
We have had our share of headfakes and dipsy doodles with tops and bottoms proving to be rather elusive during the major portion of the last two trends (6-7 week duration). The 200SMA should prove to be solid resistance although nothing says that we do not move up and test it again. A move through it would almost assure a test of the COMP 1980 area and while I have my doubts that this will occur, most anything can happen before this election is officially in the books. With that said, the Oct 6th Bradley turn appears to be a local top. I am currently waiting on a couple of indicators to confirm whether or not this downturn is of the sticking kind. In the meantime I will be watching earnings news and the price of oil closely. It is my belief that if these worsen, the trend will remain down into the end of the month.
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 mentioned the following: We currently sit at COMP 1942 which is not only a resistance area, but it also happens to be a .618 Fib retrace level off our previous low. On top of this we have another Bradley turn date on/around Oct 4th-6th. Keeping this in mind, can we continue to rally? We sure could, but I still feel a correction is coming. As it turns out we did go higher to COMP 1971, but were repelled by the 200SMA and the major resistance established a few months earlier in June. Currently we are now sitting at 1920 (1919.97) and have lost 50pts in the last two days. Is it soup yet? In other words, are we ready for the decline that I have been speaking of? We will get into that in a minute, but first let's review the Econ #'s for the past week.
Economic #'s:
This week's numbers were nothing less than dismal, Factory Orders dipped and ISM Services fell to a 16 month low. Initial Jobless Claims came in lower than expected and Consumer Credit was not an issue although it is believed that while consumers are getting more credit cards, they do not seem to be using them according to a report by Forex News. The Average Workweek remained flat, but hourly wages continued to shrink. Wholesale Inventories rose a tad and then the big report everyone has been waiting for, Nonfarm Payrolls, came in about 50K less than expected at 96K jobs created.
We have a busy week in front of us which starts out with Import & Export Prices, then Trade Balance, Initial Claims, Business Inventories, PPI & Core PPI, NY Empire State Index, Retail Sales, Capactiy Utilization, Industrial Production, Michigan Sentiment and the Treasury Budget.
As a side note, I found no comfort in any of this past week's Econ #'s while the market seemed to turn a blind eye until last Thursday. Alcoa's (AA) earnings report came in even lower than what they had originally warned a few weeks back, but then GE was steadfast in their outlook and guidance. Next week we officially kick off earnings season and news will most likely get worse before it gets better, so I have to ask what is propping up this market? Is it those who have an interest in seeing the incumbent get re-elected? Is it the Fed who if not for ego alone has an interest in keeping things afloat? How about foreign investment and big banks doing their thing behind the scenes with respect to bonds, bills and derivatives? How about the big houses' whose trading programs launch massive buy/sell orders at the drop of a hat? Hedge funds playing the field? Fund managers blindly putting cash to work? All I do know is that there are a lot of forces at play and sooner or later they will most likely hit the exits simultaneously. It is not so much a matter of "IF", just a matter of "WHEN".
What can we expect now?:
We have had our share of headfakes and dipsy doodles with tops and bottoms proving to be rather elusive during the major portion of the last two trends (6-7 week duration). The 200SMA should prove to be solid resistance although nothing says that we do not move up and test it again. A move through it would almost assure a test of the COMP 1980 area and while I have my doubts that this will occur, most anything can happen before this election is officially in the books. With that said, the Oct 6th Bradley turn appears to be a local top. I am currently waiting on a couple of indicators to confirm whether or not this downturn is of the sticking kind. In the meantime I will be watching earnings news and the price of oil closely. It is my belief that if these worsen, the trend will remain down into the end of the month.
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**
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