Your Economy (No Politics)

[Bullwinkle]

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

Overview:
Not a whole lot to comment on for the last week, low volume with minimum volatility in a holiday trade shortened week. The big stand outs are gold and the dollar. The dollar is in a nosedive and gold a reversed mirror image of that trend. Oil has held steady just under $50bbl and testing the 50SMA, if it clears that hurdle higher prices may lie ahead. The indices seemed to have stalled out after big Al's comments the Friday before last. What is taking place at this juncture is hard to say, but before we analyze the current trend let's review the Econ #'s first...

Economic #'s:
It was a relatively quiet week on the economic front, but the few we got were more or less disappointing... Existing Home Sales came in flat, but as expected while New Home Sales rose a touch by a mere 26K. Durable Orders fell off a cliff to -0.4, almost an entire point lower than the 0.5 expected or 1.5 pts lower than the prior months reading of 0.9. Initial Jobless Claims came in at 323K or 12K less than expected while Michigan Sentiment was revised downward by roughly 3 pts.

For the coming week things will be picking up considerably. We start with GDP, Chicago PMI and Consumer Confidence followed by Auto/Truck Sales, Personal Income/Spending, Construction Spending, ISM Index/Services, Fed's Beige Book, Initial Claims, Factory Orders, Nonfarm Payrolls and Unemployment Rate.

This past week we had Black Friday which kicks off the Christmas Season, supposedly the biggest and best sales/shopping day of the year. Retailers have come out and publicly stated that they will not be lowering prices, yet if you happened to watch any media coverage we saw some pretty intense feeding frenzies on the tube especially surrounding the limited or overstocked electronics items. I just happened into a Kohl's department store the week prior to Thanksgiving and I was surprised to see many items already at 40-60% off and in some cases as much as 70%. Now I am not sure what to make of this, but if discounts like these were being offered prior to the biggest shopping day of the year, how much lower can the retailer go from here? Consumers have become rather accustomed to discounts and how much deeper these outlets can go while maintaining some semblance of profit margins will be interesting to see especially if the consumer decides to tighten the purse strings in lieu of yet deeper discounts.

What can we expect now?:
As mentioned earlier, the indices seemed to have stalled out or have they? Nearly all have dipped and are now retesting the highs they had set. Are they just resting a bit before moving higher or about to top is anyones guess, but we still have extremes that will be dealt with sooner or later. As for the COMP in particular, the high set at 2112 is currently under test with only the Jan ATH of 2153 standing as the last lone resistance area before a new high is established for the year. At the same time the VIX/VXN are as low as ever, the VXO appears to be doing a double bottom, the Equity P/C Ratio is at a rather modest 0.58 and Bullish Advisors are at 57.1% while Bearish Advisors are at 23.5%. Not much has changed although RSI readings are not nearly as extreme as they were a week or so ago. Last but not least, we have a Bradley Turn date scheduled for/around the 3rd. So far these dates have not been a factor, this time may be different especially in conjunction with the Econ #'s which may provide another reality check for the markets to mull. I personally do not feel the Nonfarm Payrolls will be nearly as strong as the last report and that happens to come on the same date as the turn, some coincidence, eh?

NOTE: I continue to hold a USPIX position and will continue to exercise patience and wait for a substantiative turn to re-establish.

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