Your Economy (No Politics)

[Bullwinkle]

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

Overview:
Another week and another move towards new highs. The Bull is still in charge and the main catalyst for this weeks move was the tumbling price of oil, although now that the election is out of the way and G.W. Bush will reside at the White House for another 4 years it is really no surprise (at least to me) that oil is now dropping. Without going off on a political rant, let's just say that for now the oil corporations may be done having their way with us. While $40+ bbl for oil is nothing to get too excited about, it is a move in the right direction. It will be interesting to see if prices continue to drop, stabilize or begin to move back up as winter sets in. Either way it may be too little too late for the average consumer who has possibly been price gouged right out of the Holiday spirit. But I digress, the jury is still out on that one although we have been receiving a lot of mixed messages from the markets.

Economic #'s:
It was a busy week and as mentioned, mixed messages galore. We started out with GDP and Chicago PMI which both came in slightly stronger than expected, but Consumer Confidence took a 6pts dive. Auto Sales inched up, but Truck Sales were down and could be the beginning of a new trend. Personal Income inched up to 0.6%, but Personal Spending jumped to 0.7% and the saga of spending beyond ones means continues. ISM Index & Services rose briskly and Factory Orders were up slightly while Construction Spending fell off considerably. The Average Workweek shrank and so did Hourly Earnings while Initial Jobless Claims went up by 19K to 349K, kind of high for this time of year considering one might expect retailers to be hiring Holiday help. Nonfarm Payrolls were somewhat disappointing at 112K which was roughly 88K short of the 200K+ expected. Last but not least the most useless of all indicators, the Unemployment Rate came in at 5.4%...

As for next week we start out with Productivity, then Consumer Credit, Import & Export Prices, Initial Claims, Wholesale Inventories, PPI & Core PPI, Michigan Sentiment preliminary figure and the Treasury Budget.

A sinking $USD is good for the economy. Strong dollar policy is in place. Running deficits are better than a surplus. There is no housing bubble. Stocks are fairly valued. Credit debt is manageable. No pork in Appropriations bills. There is no derivatives bubble. The economy is humming along. Saddam has WMD's. Jobs are being created everyday. Just a soft patch. Tax cuts gives you more of your money back. The War will be paid for by Iraqi oil. There is no inflation. Cost cutting measures are in place. Wall of worry. Fair and balanced. No spin zone. Ya think?

What can we expect now?:
Not much has changed and we most likely will continue the path of least resistance. TA, FA and news mean nothing at this point. Overbought? Yes... Does it matter? So far, no... We have the same as last week, a moderate consolidation then a move higher. This could very well be the prescription we follow for the rest of the year and into January although we seem vulnerable to a pullback. The VXO is moving higher while the VIX/VXN are at new lows. The Equity P/C Ratio is at a rather modest 0.54 and Bullish Advisors are at 57.3% while Bearish Advisors are at 22.9%. The 5-Day RSI is overbought on the COMP, but still neutral for the SPX and INDU. The 5-Wks RSI is overbought across the board and McClellan Oscillator is moving downward. While the SPX has made new highs for the year, the INDU and COMP are still testing resistance. MaxPain which meant nothing last Ops Exp may be a bigger factor this time around considering the amount of action surrounding the 38 strike. Last but not least we are within the Bardley turn date scheduled for on/around the 3rd and for those who follow moon phases, a New Moon on the 5th.

NOTE: I continue to hold a USPIX position and will continue to exercise patience and wait for a substantiative turn to re-establish. I am also considering shifting some funds into XLB and GLD, but have not committed to anything yet.

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.