AI
Sunday, March 20, 2005 7:06:09 AM
~:~:~CYCLE/TREND Update for the Week Ahead~:~:~
Overview:
Another week is in the books and kind of a strange week at that. So what else is new? The softness of the markets is now becoming more evident and as mentioned in the last update with which this post replies: I continue to believe we see more of the same range bound volatility until a break occurs. That break will be to the downside and it’s just a matter of time as to when it will occur. Could this be the start of things to come? Could be, but with the way these markets have traded as of late there is nothing to say that we head straight down. While the underlying fundamentals have been deteriorating for some time, I am a little reluctant to make a call for considerably lower markets. There are a lot of support zones that were formed on the move up from the post election, so it will take time to work our way back through those once resistance now turned support areas. Options Expiry was a bit of surprise as MaxPain was not met by any of the tracking stocks (QQQQ, SPY DIA), all of which traded a point or so below there respective targets. The price of Oil continues to rise although it may take a breather in here with support residing around 55. CRB has been on a tear and close to testing the highs of 338 set all the way back in late 1980 although a respite may be overdue before an attempt is made of this area. Gold is still holding its own and has decent support around 435 and the U$D is in a holding pattern bouncing around the 82 area where resistance lies. What this means going into next week is anyone’s guess although the FOMC meeting next week may shed some light, but we will review what the market is telling us in a bit as it is now time to review last weeks Econ data.
Economic #’s:
We had quite a busy week. As usual we received mixed data and as usual some of the key components were less than desirable…
NY Empire State Index inched up to 19.6 compared to a months earlier 19.2, but not beating forecasts of 19.9. Despite the overall increase in the index, the new-orders index fell to 7.9 in March from 17.3 in February. This is the lowest level since April 2003. Shipments fell to 21.3 in March from 33.3 in February. Unfilled orders were negative for the second straight month at -10.88, while inventories dropped to -3.7 from 0.8. The employment index rose to 11.4 from 8.9 while the workweek index slipped to 8.4 from 9.3. The prices paid index rose to 53.2 from 48.8 points in February. The prices received index rose to 15.6 from 13.2.
Retail Sales rose 0.5% to $352.1 Bln following a revised 0.3% gain in January and was initially estimated as a -0.3% decline although forecasts called for a 0.6% rise. Excluding automobiles, sales rose 0.4% after a 1% surge in the month earlier. February's strength was attributed to sales of furniture, electronics, food, clothing and general merchandise stores. Two major categories showed a decline -- building materials and garden stores.
ICSC-UBS Weekly Chain Store Sales rose to 0.6% from the previous weeks -0.4% decline. Compared with the same week a year ago, sales increased 3.4% after a 3.3% rise the preceding week. For March ICSC expects retail sales will increase by 3.5% to 4.0%. Johnson Redbook Retail Sales were up +3.8% as retail sales rebounded due to consumers’ preparation for Easter and spring.
Business Inventories rose 0.9% and in line with forecasts while prior month saw a rise of 0.2%. Stocks at manufacturers, retailers and merchant wholesalers grew to a seasonally adjusted $1.291 Tln, while sales rose 0.8% to $994.47 Bln.
Housing Starts rose 0.5% to a seasonally adjusted of 2.195 Mln from a revised 2.183 Mln in January while beating forecasts of 2.030 Mln and marked the 5th time in the last 6 months to top 2.0 Mln. Building Permits posted a decline of 2.7% to 2.074 Mln, down from 2.132 Mln in January, but was in line with forecasts.
Mortgage Applications Index activity increased 3.2% to 727.6 from 704.8 while the Purchasing Index increased 2.5% to 462.8 compared to last weeks 451.7. Index of Refi’s rose 4.2% to 2267.5 after falling 4.6% to 2176.8 the week before. Refis’ made up 42.9% of all mortgage applications, up from 42.6% the previous week. ARM’s applications made up 32.4% of all mortgage applications and up from the previous weeks 30.5%. Fixed 30-year mortgage rates averaged 5.95%, up from 5.67%. Fixed 15-year mortgage rates averaged 5.47%, up from 5.25%. The 5-year ARM averaged 5.31%, up from 5.22%. The 1-year ARM mortgage rates dipped to 4.20% from 4.24%.
Current Account Deficit widened to yet another record of $187.9 Bln from Oct. thru Dec. as the U.S. imported a record $392.1 Bln worth of goods last quarter. A 4th-quarter deficit of $183 Bln was forecast from an initially reported $164.7 Bln shortfall in the previous quarter. The gap set a record every quarter last year. At the current pace, the U.S. needs to attract $2.1 Bln a day to fund the deficit and keep the value of the dollar steady.
Capacity Utilization edged up to 79.4% compared to the prior months upwardly revised 79.2% from a previously reported 79%, but factory capacity utilization was still 1.3% points below its 1972-2004 average. Industrial Production rose to 0.3% compared to the prior months revised 0.1% which was previously reported at a flat 0.0%. The index for consumer durable goods output increased 3.6% boosted by a gain in automotive products and consumer electronics. Manufacturing production increased 0.5%, but there was a 1.1% drop in output at utilities and excluding automobiles, industrial production would have been flat in February.
Initial Jobless Claims came in at 318K or a decline of 10K from the previous week, but slightly above expectations of 315K. The number of people continuing to collect state jobless benefits rose to 2.703 Mln from 2.672 Mln the week earlier. The 4-week average of continuing claims fell to 2.685 Mln from 2.694 Mln the previous week. The insured unemployment rate held at 2.1%.
Leading Economic Indicators (LEI) increased 0.1% after a previously reported decline of -0.3 was the 3rd increase in 4 months and boosted by fewer jobless claims and higher stock prices.
Weekly Leading Index (WLI) fell to 135.9 compared to 135.2 a week earlier while the index's annualized growth rate rose to 3.6% from 3.0% in the prior week.
Philadelphia Fed dove to 11.4 from 23.9 in the month earlier and far below expectations of 19.9. It was the slowest pace recorded in the past 20 months. The New Orders Index rose to 13.2 from 11.7 while the Shipments Index fell to 14.7 from 23.8. The Employment Index fell to 10.1 from 12.3 in February; it's the lowest in 16 months. The Workweek Index fell to 2.6 from 11.3. The Prices Paid Index fell to 29.7 from 43.5. The Prices Received Index fell to 15.3 from 24.6.
Import Prices rose 0.8%, considerably higher than the prior months 0.3% and above expectations of a revised 0.7% from an originally reported 0.9%. Excluding petroleum, import prices rose 0.2%. Import prices were up 6.1% in the 12 months to February. Export Prices were unchanged in February, falling short of the 0.4% increase expected. A 0.9% decline in agricultural export prices offset a 0.2% increase in the cost of imported industrial supplies and materials.
Michigan Sentiment fell to 92.9 from a previously reported 94.1. The Consumer Expectations Index, based on optimism about the next 1 to 5 years, fell to 83.6, the lowest since May 2004, from 84.4. The University's Index of current conditions, which reflects Americans' perceptions of their financial situation and whether it's a good time to make big purchases, fell to 107.3 from 109.2.
Oil Inventories as reported by the DoE (Dept of Energy) and the API (American Petroleum Institute) are as follows: Crude according to DoE rose by 2.6 Mln bbls, but according to API rose 3.5 Mln bbls. . Gasoline according to DoE fell by 2.9 Mln bbls, but according to API fell by 4.5 Mln bbls. Distillates according to DoE fell by 1.9 Mln bbls, but according to API fell by 2.2 Mln bbls
Upcoming Econ #’s for the week ahead PPI/Core PPI, FOMC Meeting, CPI/Core CPI, Durable Orders, Initial Jobless Claims, New & Existing Home Sales…
What is a free market? Do we live in a free market economy? The definition of a free market is as follows: An idealized market, where all economic decisions and actions by individuals regarding transfer of money, goods, and services are voluntary, and are therefore devoid of coercion and theft (some definitions of "coercion" are inclusive of "theft"). Colloquially and loosely, a free market economy is an economy where the market is relatively free, as in an economy overseen by a government that practices a laissez-faire, rather than either a mixed or statist economic policy. Within economics the more usual term is simply "the market", or "the market mechanism", to mean the allocation of production through supply and demand. An argument can be made that we no longer have a “free market” society as evidenced by the bubbles, deflation and reflation of markets. The markets rarely have a chance to just work on their own anymore without the federal reserve or an outside entity intervening. I am not just talking about PPT, we are talking about stepping way over the line. Just last week there was a $43.5 billion increase in M-3, I do not have to tell you that this is a HUGE sum of money. People seem to be under the impression that because the Fed is raising rates that the printing presses have stopped. As you can see, this is not the case. As a matter of fact the presses continue to print at an extraordinary rate. Just where does all the money go? We also have the economic interest of other nations playing a big role in our monetary issues. It does not appear as though these dollars are being used to pay down debt, so could it be making its way into the markets? Maybe... There has been a rumor making the rounds that the US Gov’t is repurchasing its own debt via bond auctions through a Caribbean subsidy. Did this or does this type of activity actually occur? Hard to say, but not too long ago a company by the name of Enron was guilty of similar actions and when the market bubble burst the scam floated to the surface like a dead fish. Whatever it is that has taken place over the last 5 years (or longer) could not be further from laissez-faire and is nothing short of statism. Decide for yourself… Here are the definitions of laissez-faire and mixed or statist economic policy: Laissez-faire is short for "laissez faire, laissez passer," a French phrase meaning to "let things alone, let them pass". First used by the eighteenth century Physiocrats as an injunction against government interference with trade, it is now used as a synonym for strict free market economics. Laissez-faire economic policy is in direct contrast to statist economic policy. Statism is a term to describe an economic system where a government implements a significant degree of centralized economic planning, intervention, and control as opposed to a system where the overwhelming majority of economic planning occurs at a decentralized level by private individuals in a relatively free market. The term "statism" can refer to various dissimilar ideologies that share the commonality of having centralized economic planning conducted by the state. So which is it? If you believe it is Laissez-faire then this administration or federal reserve probably has a job opening for you…
What can we expect now?:
These markets are being propped up to the highest degree and with it the internals are not showing us many extremes. The indicators that once were reliable may not be giving us the full picture. Many more equities had traded on the indices prior to Y2k than do today, then the advent of trading vehicles like ETF’s have really changed the landscape. Throw in some 5000 hedge funds and a 50%+ program trade by the houses and you can see that retail investors are small fish in a large pond. And while all of this has changed many of the indicators have not. Heavier weighting may be needed in order to get a decent feel for what really is going on. It may be this reason why the extremes are not seen, but they are building. Fundamental analysis is getting to be a bigger part of my game and I have to tell you market breadth stinks, it is downright pathetic. We may be getting ready for a dose of selling. Hard to discern, but do not let the market bore you. This is a stealth decline. A lull you to sleep kind of decline that keeps everyone guessing while one tries to figure out just what is going on it is happening before your very eyes. The new lows are outpacing new highs, volume has been down more often than not and when a down day occurs it exceeds the extremes of an up day. 50DMA’s have been crossed on the major indices with the COMP about to test its 200DMA. Not only that, but 2000 is a psychological level. Also take a good look at some of the past momo stocks like GOOG, OSTK, TZOO, etc. These high flyers have been slowly deflating since the New Year and the big cap generals such as GE, IBM, MSFT, CSCO, INTC and the like are not leading the way. The momo chasers jump on the stock du jour and ride coattails of breaking news or a rumor, then a stock is tossed aside like yesterday’s newspaper. What we have is a market of stocks, not a stock market. On top of this we have a very interesting time ban approaching. A Bradley turn is set for on/around the 21st, we also have a Fib timeline coming into play and if that weren’t enough there are 19mos and 44wks cycles close at hand. Will these all intersect at roughly the same time and if so they could just as easily be a low as well as high, but a 4yrs cycle crest is also overdue and could come into play at anytime if it has not already done so, we may only know in hindsight. Since the topping off of new highs in the DJIA, DJTA and SPX we have experienced a change in attitude. Be careful in here, you may wake up one morning and find that the curbs are in, stops may not help if the market jumps the shark…
On a technical note, we have Bullish Advisors at 54.5% with Bearish Advisors at 24.3% and still way too bullish and will need a good shakeout to change these numbers. The VIX/VXN as previously mentioned have broken there downward channels and are in a small yet discernable upward channel trend. While the trend is yet to establish any real momentum, a VIX spike of 16-18 and a VXN spike of 20-22 would most likely garner some attention. For now it looks to be a slow, yet methodical move. This could very well be the beginning of a change in complacency. The Equity P/C Ratio is at .721 and with its 21DMA at .645. The RSI 5-Days are Oversold on the INDU and COMP, while being nearly so on the SPX. The RSI 5-Wks are Neutral on the INDU and SPX, but Oversold on the COMP. The $NASI (Summation) now has a 50/200DMA crossover where the 50DMA has fallen below the 200DMA, also a nice looking H&S pattern in there. The $NAMO (McClellan) still remains in a downward channel although the most recent tick shows a slight upturn in the 50DMA although the average remains well under the 200DMA since back in early Jan’05. The $NAHL (Highs/Lows) downward channel has dropped below the median line and the 50DMA is on top of the 200DMA for an inevitable cross under like so many of these indicators have done or have eluded to. The $NAAD (Advance/Decline) is tightening up although it is doing so below the median and the 50DMA cross under of the 200DMA has shortened up a bit. The BP%'s have all turned down and are below the 50DMA.
NOTE: I continue to hold a USPIX position which I will flip long when the time is right.
CORE: HSGFX, PCRDX, PRPFX, QRAAX, RSNRX and TAVIX. I have added ANO, BHP and SWWC for the longer term.
SWING: GSS, CDIC
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.
Overview:
Another week is in the books and kind of a strange week at that. So what else is new? The softness of the markets is now becoming more evident and as mentioned in the last update with which this post replies: I continue to believe we see more of the same range bound volatility until a break occurs. That break will be to the downside and it’s just a matter of time as to when it will occur. Could this be the start of things to come? Could be, but with the way these markets have traded as of late there is nothing to say that we head straight down. While the underlying fundamentals have been deteriorating for some time, I am a little reluctant to make a call for considerably lower markets. There are a lot of support zones that were formed on the move up from the post election, so it will take time to work our way back through those once resistance now turned support areas. Options Expiry was a bit of surprise as MaxPain was not met by any of the tracking stocks (QQQQ, SPY DIA), all of which traded a point or so below there respective targets. The price of Oil continues to rise although it may take a breather in here with support residing around 55. CRB has been on a tear and close to testing the highs of 338 set all the way back in late 1980 although a respite may be overdue before an attempt is made of this area. Gold is still holding its own and has decent support around 435 and the U$D is in a holding pattern bouncing around the 82 area where resistance lies. What this means going into next week is anyone’s guess although the FOMC meeting next week may shed some light, but we will review what the market is telling us in a bit as it is now time to review last weeks Econ data.
Economic #’s:
We had quite a busy week. As usual we received mixed data and as usual some of the key components were less than desirable…
NY Empire State Index inched up to 19.6 compared to a months earlier 19.2, but not beating forecasts of 19.9. Despite the overall increase in the index, the new-orders index fell to 7.9 in March from 17.3 in February. This is the lowest level since April 2003. Shipments fell to 21.3 in March from 33.3 in February. Unfilled orders were negative for the second straight month at -10.88, while inventories dropped to -3.7 from 0.8. The employment index rose to 11.4 from 8.9 while the workweek index slipped to 8.4 from 9.3. The prices paid index rose to 53.2 from 48.8 points in February. The prices received index rose to 15.6 from 13.2.
Retail Sales rose 0.5% to $352.1 Bln following a revised 0.3% gain in January and was initially estimated as a -0.3% decline although forecasts called for a 0.6% rise. Excluding automobiles, sales rose 0.4% after a 1% surge in the month earlier. February's strength was attributed to sales of furniture, electronics, food, clothing and general merchandise stores. Two major categories showed a decline -- building materials and garden stores.
ICSC-UBS Weekly Chain Store Sales rose to 0.6% from the previous weeks -0.4% decline. Compared with the same week a year ago, sales increased 3.4% after a 3.3% rise the preceding week. For March ICSC expects retail sales will increase by 3.5% to 4.0%. Johnson Redbook Retail Sales were up +3.8% as retail sales rebounded due to consumers’ preparation for Easter and spring.
Business Inventories rose 0.9% and in line with forecasts while prior month saw a rise of 0.2%. Stocks at manufacturers, retailers and merchant wholesalers grew to a seasonally adjusted $1.291 Tln, while sales rose 0.8% to $994.47 Bln.
Housing Starts rose 0.5% to a seasonally adjusted of 2.195 Mln from a revised 2.183 Mln in January while beating forecasts of 2.030 Mln and marked the 5th time in the last 6 months to top 2.0 Mln. Building Permits posted a decline of 2.7% to 2.074 Mln, down from 2.132 Mln in January, but was in line with forecasts.
Mortgage Applications Index activity increased 3.2% to 727.6 from 704.8 while the Purchasing Index increased 2.5% to 462.8 compared to last weeks 451.7. Index of Refi’s rose 4.2% to 2267.5 after falling 4.6% to 2176.8 the week before. Refis’ made up 42.9% of all mortgage applications, up from 42.6% the previous week. ARM’s applications made up 32.4% of all mortgage applications and up from the previous weeks 30.5%. Fixed 30-year mortgage rates averaged 5.95%, up from 5.67%. Fixed 15-year mortgage rates averaged 5.47%, up from 5.25%. The 5-year ARM averaged 5.31%, up from 5.22%. The 1-year ARM mortgage rates dipped to 4.20% from 4.24%.
Current Account Deficit widened to yet another record of $187.9 Bln from Oct. thru Dec. as the U.S. imported a record $392.1 Bln worth of goods last quarter. A 4th-quarter deficit of $183 Bln was forecast from an initially reported $164.7 Bln shortfall in the previous quarter. The gap set a record every quarter last year. At the current pace, the U.S. needs to attract $2.1 Bln a day to fund the deficit and keep the value of the dollar steady.
Capacity Utilization edged up to 79.4% compared to the prior months upwardly revised 79.2% from a previously reported 79%, but factory capacity utilization was still 1.3% points below its 1972-2004 average. Industrial Production rose to 0.3% compared to the prior months revised 0.1% which was previously reported at a flat 0.0%. The index for consumer durable goods output increased 3.6% boosted by a gain in automotive products and consumer electronics. Manufacturing production increased 0.5%, but there was a 1.1% drop in output at utilities and excluding automobiles, industrial production would have been flat in February.
Initial Jobless Claims came in at 318K or a decline of 10K from the previous week, but slightly above expectations of 315K. The number of people continuing to collect state jobless benefits rose to 2.703 Mln from 2.672 Mln the week earlier. The 4-week average of continuing claims fell to 2.685 Mln from 2.694 Mln the previous week. The insured unemployment rate held at 2.1%.
Leading Economic Indicators (LEI) increased 0.1% after a previously reported decline of -0.3 was the 3rd increase in 4 months and boosted by fewer jobless claims and higher stock prices.
Weekly Leading Index (WLI) fell to 135.9 compared to 135.2 a week earlier while the index's annualized growth rate rose to 3.6% from 3.0% in the prior week.
Philadelphia Fed dove to 11.4 from 23.9 in the month earlier and far below expectations of 19.9. It was the slowest pace recorded in the past 20 months. The New Orders Index rose to 13.2 from 11.7 while the Shipments Index fell to 14.7 from 23.8. The Employment Index fell to 10.1 from 12.3 in February; it's the lowest in 16 months. The Workweek Index fell to 2.6 from 11.3. The Prices Paid Index fell to 29.7 from 43.5. The Prices Received Index fell to 15.3 from 24.6.
Import Prices rose 0.8%, considerably higher than the prior months 0.3% and above expectations of a revised 0.7% from an originally reported 0.9%. Excluding petroleum, import prices rose 0.2%. Import prices were up 6.1% in the 12 months to February. Export Prices were unchanged in February, falling short of the 0.4% increase expected. A 0.9% decline in agricultural export prices offset a 0.2% increase in the cost of imported industrial supplies and materials.
Michigan Sentiment fell to 92.9 from a previously reported 94.1. The Consumer Expectations Index, based on optimism about the next 1 to 5 years, fell to 83.6, the lowest since May 2004, from 84.4. The University's Index of current conditions, which reflects Americans' perceptions of their financial situation and whether it's a good time to make big purchases, fell to 107.3 from 109.2.
Oil Inventories as reported by the DoE (Dept of Energy) and the API (American Petroleum Institute) are as follows: Crude according to DoE rose by 2.6 Mln bbls, but according to API rose 3.5 Mln bbls. . Gasoline according to DoE fell by 2.9 Mln bbls, but according to API fell by 4.5 Mln bbls. Distillates according to DoE fell by 1.9 Mln bbls, but according to API fell by 2.2 Mln bbls
Upcoming Econ #’s for the week ahead PPI/Core PPI, FOMC Meeting, CPI/Core CPI, Durable Orders, Initial Jobless Claims, New & Existing Home Sales…
What is a free market? Do we live in a free market economy? The definition of a free market is as follows: An idealized market, where all economic decisions and actions by individuals regarding transfer of money, goods, and services are voluntary, and are therefore devoid of coercion and theft (some definitions of "coercion" are inclusive of "theft"). Colloquially and loosely, a free market economy is an economy where the market is relatively free, as in an economy overseen by a government that practices a laissez-faire, rather than either a mixed or statist economic policy. Within economics the more usual term is simply "the market", or "the market mechanism", to mean the allocation of production through supply and demand. An argument can be made that we no longer have a “free market” society as evidenced by the bubbles, deflation and reflation of markets. The markets rarely have a chance to just work on their own anymore without the federal reserve or an outside entity intervening. I am not just talking about PPT, we are talking about stepping way over the line. Just last week there was a $43.5 billion increase in M-3, I do not have to tell you that this is a HUGE sum of money. People seem to be under the impression that because the Fed is raising rates that the printing presses have stopped. As you can see, this is not the case. As a matter of fact the presses continue to print at an extraordinary rate. Just where does all the money go? We also have the economic interest of other nations playing a big role in our monetary issues. It does not appear as though these dollars are being used to pay down debt, so could it be making its way into the markets? Maybe... There has been a rumor making the rounds that the US Gov’t is repurchasing its own debt via bond auctions through a Caribbean subsidy. Did this or does this type of activity actually occur? Hard to say, but not too long ago a company by the name of Enron was guilty of similar actions and when the market bubble burst the scam floated to the surface like a dead fish. Whatever it is that has taken place over the last 5 years (or longer) could not be further from laissez-faire and is nothing short of statism. Decide for yourself… Here are the definitions of laissez-faire and mixed or statist economic policy: Laissez-faire is short for "laissez faire, laissez passer," a French phrase meaning to "let things alone, let them pass". First used by the eighteenth century Physiocrats as an injunction against government interference with trade, it is now used as a synonym for strict free market economics. Laissez-faire economic policy is in direct contrast to statist economic policy. Statism is a term to describe an economic system where a government implements a significant degree of centralized economic planning, intervention, and control as opposed to a system where the overwhelming majority of economic planning occurs at a decentralized level by private individuals in a relatively free market. The term "statism" can refer to various dissimilar ideologies that share the commonality of having centralized economic planning conducted by the state. So which is it? If you believe it is Laissez-faire then this administration or federal reserve probably has a job opening for you…
What can we expect now?:
These markets are being propped up to the highest degree and with it the internals are not showing us many extremes. The indicators that once were reliable may not be giving us the full picture. Many more equities had traded on the indices prior to Y2k than do today, then the advent of trading vehicles like ETF’s have really changed the landscape. Throw in some 5000 hedge funds and a 50%+ program trade by the houses and you can see that retail investors are small fish in a large pond. And while all of this has changed many of the indicators have not. Heavier weighting may be needed in order to get a decent feel for what really is going on. It may be this reason why the extremes are not seen, but they are building. Fundamental analysis is getting to be a bigger part of my game and I have to tell you market breadth stinks, it is downright pathetic. We may be getting ready for a dose of selling. Hard to discern, but do not let the market bore you. This is a stealth decline. A lull you to sleep kind of decline that keeps everyone guessing while one tries to figure out just what is going on it is happening before your very eyes. The new lows are outpacing new highs, volume has been down more often than not and when a down day occurs it exceeds the extremes of an up day. 50DMA’s have been crossed on the major indices with the COMP about to test its 200DMA. Not only that, but 2000 is a psychological level. Also take a good look at some of the past momo stocks like GOOG, OSTK, TZOO, etc. These high flyers have been slowly deflating since the New Year and the big cap generals such as GE, IBM, MSFT, CSCO, INTC and the like are not leading the way. The momo chasers jump on the stock du jour and ride coattails of breaking news or a rumor, then a stock is tossed aside like yesterday’s newspaper. What we have is a market of stocks, not a stock market. On top of this we have a very interesting time ban approaching. A Bradley turn is set for on/around the 21st, we also have a Fib timeline coming into play and if that weren’t enough there are 19mos and 44wks cycles close at hand. Will these all intersect at roughly the same time and if so they could just as easily be a low as well as high, but a 4yrs cycle crest is also overdue and could come into play at anytime if it has not already done so, we may only know in hindsight. Since the topping off of new highs in the DJIA, DJTA and SPX we have experienced a change in attitude. Be careful in here, you may wake up one morning and find that the curbs are in, stops may not help if the market jumps the shark…
On a technical note, we have Bullish Advisors at 54.5% with Bearish Advisors at 24.3% and still way too bullish and will need a good shakeout to change these numbers. The VIX/VXN as previously mentioned have broken there downward channels and are in a small yet discernable upward channel trend. While the trend is yet to establish any real momentum, a VIX spike of 16-18 and a VXN spike of 20-22 would most likely garner some attention. For now it looks to be a slow, yet methodical move. This could very well be the beginning of a change in complacency. The Equity P/C Ratio is at .721 and with its 21DMA at .645. The RSI 5-Days are Oversold on the INDU and COMP, while being nearly so on the SPX. The RSI 5-Wks are Neutral on the INDU and SPX, but Oversold on the COMP. The $NASI (Summation) now has a 50/200DMA crossover where the 50DMA has fallen below the 200DMA, also a nice looking H&S pattern in there. The $NAMO (McClellan) still remains in a downward channel although the most recent tick shows a slight upturn in the 50DMA although the average remains well under the 200DMA since back in early Jan’05. The $NAHL (Highs/Lows) downward channel has dropped below the median line and the 50DMA is on top of the 200DMA for an inevitable cross under like so many of these indicators have done or have eluded to. The $NAAD (Advance/Decline) is tightening up although it is doing so below the median and the 50DMA cross under of the 200DMA has shortened up a bit. The BP%'s have all turned down and are below the 50DMA.
NOTE: I continue to hold a USPIX position which I will flip long when the time is right.
CORE: HSGFX, PCRDX, PRPFX, QRAAX, RSNRX and TAVIX. I have added ANO, BHP and SWWC for the longer term.
SWING: GSS, CDIC
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.
**Happy Trading**
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