Your Economy (No Politics)

[Bullwinkle]

>>>CYCLE/TREND Update for the Week Ahead>>>

Overview:
For the last 6 months leading up to the election we have been knee deep in mud slinging and rhetoric. While I was looking for a slightly different outcome, thank goodness it's over! As mentioned in my previous update with which this post replies; As for the COMP and other indices, we are about to get some resolution. Whether the election results are clear, undecided, whatever, I believe it will bring hell or high water! This statement was meant to be interpreted as hell being a move down or high water being a move up. We now know that the high tide came in and with it we washed out the short term shorts who were betting against the tide and quite possibly attracted some of that sideline money we are always hearing about. In the Econ # portion of last weeks update I also mentioned this; A busy busy week and if ever these numbers did not matter, it is this coming week... For the most part this held true although the one exception may have been the employment #'s. With that said, let's review last weeks Econ #'s...

Economic #'s:
With the elections came a clear and decisive victor, but these numbers were overlooked and I can understand why, they were not pretty and who would want to spoil the party? The week began with Personal Income which fell and Personal Spending that remains flat, both Auto and Truck sales dipped, Construction Spending fell by half a percent, the ISM Index dropped off while ISM Services rose slightly. Factory Orders tumbled, Consumer Credit went up by $2.8 billion, Initial Claims fell by 8K to 332K with Nonfarm Payrolls coming in at a very strong 337K and the Unemployment Rate up modestly to 5.5%.

For the coming week we can get back to business starting off with Wholesale Inventories followed by Import/Export Prices, Trade Balance and Treasury Budget. Then everyones favorite Uncle makes an appearance with an FOMC meeting to be held on the 10th and a more than likely .25% rate hike. We close out the week with Initial Claims, Business Inventories, Retail Sales and a prelim Michigan Sentiment number.

As a side note, now that the distraction of the elections are out of the way and we find ourselves caught up in the current euphoria of a relief rally an old cliche' comes to mind, "The more things change, the more they remain the same". While the employment #'s were impressive, one good report a recovery it does not make. Let's see if these continue on this pace, especialy after the holidays. It is said that the markets do not like uncertainty and who will lead the country has been finally put to bed and with that the path we travel is not going to change either. Sooner or later a reality check may seep into the markets' psyche...

What can we expect now?:
We are currently entering a period that may be more likely to be moved by news than by technicals and there are a lot of geo-political and non political events presently unfolding (Bush victory, Arafat on death bed, Fallujah war plans, Holiday Season, Oil just under $50bbl, etc). Uncertainty is not gone, it is only on hold. We are currently in overbought territory and about to test walls of resistance created throughout the year across most/all of the indices. We still have room to run, but the big question is will the technicals take hold? FWIW I believe we are nearing an intermediate top, whether a pull back is imminent or just a consolidation phase plays out, it is too early too tell. We are cuurently within a Bradley turn date from Friday the 5th with another to follow on/around the 11th. Last weeks date was a minor and may or may not be of any significance with the coming date holding more weight. It's also due right around the FOMC meeting, some coincidence, eh? Now for some charts...

NOTE: I continue to hold a USPIX position although I said if a rally appeared imminent I would flip this position to the UOPIX. I have decided to hold and wait for a better entry to UOPIX...

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 am doing and post my thoughts on current market conditions. I am not a day trader, I attempt to identify up/down trends and play the swings.