Sunday, April 17, 2005 6:33:46 AM
~:~Market Trend Update for the Week Ahead~:~
Overview:
As mentioned in the last update with which this post replies; Volatility is the name of the game. Sooner or later the underlying support areas will give way to the weight of what is occurring day after day by way of the deteriorating internals and waning market breadth. I still believe this is the formula we will follow. This past week we were afforded a pause and alleviated some of the oversold conditions. Econ #’s were light and the passing of the Pope occupied the minds of many and the airwaves continually. This coming week it’s back to business and I believe the key support levels of COMP 1970, DJIA 10350 and SPX 1160 will be tested and most likely breached this week. I have been warning of an ensuing sell off the whole time we were oscillating between 1970 support and the upper rectangle resistance of 2020 on the COMP. In last weeks update I posted a downside target of 1919 on the following chart;
We blew by my downside target of 1919 which I thought might provide a resting spot of support for a decent bounce, it has now become resistance. Internals were just brutal #msg-6067040 and the whole move started with a gnarly head fake off of the FOMC Minutes. As for myself I did not see what was so inspiring about the minutes and now we know it was a set-up for the sucker punch. The only thing that did surprise me was that we got the whole downward move I was looking for in only 3 days. We ended on a negative Tick with nearly 2.4 Bln shares trading hands while MaxPain targets were of no issue. As mentioned in the last update with which this post replies; The COT’s data “open interest” is on the floor, I have never seen it so low. This could be why we did not even come close to MaxPain targets. As for Equity fund flows, they are drying up with non-Domestics soaking up what little money is coming in along with a huge outflow of cash ($8 Bln+). This was definitely one of the nastiest Ops Exp’s I can recall.
Economic #’s:
This week I am not going to give an in depth review of Econ #’s, the bottom line is they stink and pretty much speak for themselves… Record Trade Imbalance/Budget Deficits, Retail Sales were lagging, Business Inventories stayed about the same, Initial Jobless Claims came in as expected, Import/Export pricing rose, NY State Empire Index fell off a cliff, Capacity Utilization and Industrial Production remained about the same while Michigan Sentiment fell off considerably and the WLI edged higher.
MBA Mortgage Applications data can be found here: http://uk.biz.yahoo.com/050413/323/fg8j7.html
Oil Inventories DoE vs API data can be found here: http://uk.biz.yahoo.com/050413/323/fg9ke.html
In the coming week we can look forward to Building Permits, Housing Starts, PPI/Core PPI, CPI/Core CPI, Fed’s Beige Book, Initial Jobless Claims, LEI and the Philly Fed.
What we are witnessing is the forthright and calculated demise of the lower and middle classes in America. The people have been pandered to and are now being entrapped by what I would define as monetary enslavement. Although it has not yet taken effect, the new Bankruptcy bill which was passed this week on Capitol Hill is one of the many pieces of this puzzle recently put into place. It all started with our rights being invaded by the Patriot Act. Then good paying jobs and technology outsourced to foreign lands. Next border security dropped so that illegals can infiltrate our society and pick up the slack by filling in the minimum wage positions created in place of good paying jobs. Wages and hours worked are falling, pensions are being robbed, Social Security is on the chopping block and medical expenses are out of control. Then the agenda was pushed further along by the lure of easy money and then the so-called dream of an ownership society. The people have fallen for it hook, line and sinker (again). The only thing that has changed is that the echo bubble has taken on a new form and will be far more devastating. You think terrorism is a problem? We ain't seen nothing yet. We are looking into the eye of a storm which will bring prosperity to a very few at the expense of so many. Orwellian in nature and only imagined that it could be perpetrated by an enemy, yet it is happening before our very eyes. The wealth of a nation has been stolen and the final act is soon to begin. There is no time line for such events to unfold, but the writing is on the wall if one bothers to remove the rose colored shades. A wealth effect has been created where the lower to middle income have begun to prosper, although deeply in debted. You can take it to the bank that it will not be permitted to last for long. So many were devastated when the Tech bubble burst, I don’t think many (including myself) have any idea what the landscape will truly look like once the housing and derivative bubbles burst. The magnitude of pain that has been built into this equation does not even register on the meter. I can tell you this, that time is approaching. Why is it do you think that the Bankruptcy laws have been abruptly changed? It is a take no prisoners policy. There are two sets of rules, one for the “haves” and one for the “have nots”. Guess which category the majority of America falls under? These new Bankruptcy laws do NOT apply to companies or corporations as they do to the people. The house of cards has been stacked in such a way that when it falls many will be enslaved to the establishment. It is not just a coincidence that this law was changed after the huge reflation of bubbles. I guess too many fish must have got away after the first calamity called Y2K and this will not be tolerated this time around. If one is to believe that what has been happening is just a coincidence then many naïve individuals are in for a very rude awakening. I know this has the ambiance of gloom and doom and I am not telling you anything that you have not already heard infinitum, but most of the pieces of this puzzle are now in place. Rising rates and a threat of inflation will be used, yes that's right, used as a means to an end. Whether they exist or not does not really matter, only the bait and hook for a desired outcome is what matters. It would not surprise me if sometime in the near future interest rates on long and short term loans spike overnight. Step back for a moment and take it all in. It does not take a brilliant mind to see that this is not just some conspiracy theory. All you have to do is pay attention and connect the dots…
What can we expect now?:
Last week we snowballed into what sure looked to be panic selling, whether this trend continues is yet to be seen. While the drop off looks very similar to that of the Jan’05 drop as far as points lost and duration are similar the structure differs slightly whereas we are looking at a gap down on the 3rd day of losses and are currently looking at 3 black crows. We also ended the week on a negative tick and the P/C ratio is not that extreme, this does not bode well for the coming days ahead. With that said we plunged through the COMP 1919 area which I thought may provide support for a bounce, we now look to the 1900 area for that support. It is quite possible that we continue down to this area and then make a move back towards the 1919 area which now has become resistance. Depending on how we negotiate this area will give us an idea if that gap down is to be filled before resuming the primary trend. If 1900 does not hold, then we may see some more panic selling into the 1850 area. I doubt the 2nd scenario comes into play just yet. Anything is possible, but I believe a war will be waged at the 1900 line in the sand because once this area is breached there is mostly air between that and 1750. Nothing about this most recent downturn has come easy and I certainly do not expect it now, but the markets just may surprise us here. As for the DJIA, 10000 as always is a psychological area. That and there appears to be quite a shelf of support from there down into 9800. As for the SPX, 1140 will be a tough nut to crack. If we should get through this area then 1125 to 1100 is sporting a shelf of support. On all of the indices it would not surprise me to see a long drawn out sideways oscillation play out as we just experienced prior to the most recent decline. If internals do not improve then it will only be a matter of time before they give way to the weight of the primary trend. If a panic sell off should ensue, then I believe most everything will be sold (herd mentality). Gold is still holding its own in the $425 or so area, the U$D is still battling it out with the 85 area and Oil has tumbled and briefly went below $50bbl only to smartly recover. My outlook for these remains the same as stated in the previous update. If interested and as always, they can be reviewed at the post with which this post replies.
On a technical note, Bullish Advisors are at 46.2% with Bearish Advisors at 29.0% and getting more bearish although the Bullish side still may need some convincing. The VIX/VXN trends jumped last week and are moving directionally together for the first time in a while. CBOE Equity P/C Ratio is at 1.004 with a 21DMA of .669. The RSI 5-Days and the RSI 5-Wks are very Oversold across the board. The $NASI Daily (Summation), The $NAMO Daily (McClellan), The $NAHL Daily (Highs/Lows), The $NAAD Daily (Advance/Decline) and The BP%'s are all in downward trends where the 50DMA has clearly crossed under the 200DMA for all except the BP’s. Charts for these indicators can be found below.
NOTE: I continue to hold a USPIX position which I will flip long when the time feels right.
CORE: Funds:HSGFX, PCRDX, PRPFX, QRAAX, RSNRX, TAVIX Stocks:ANO, BHP, SWWC
SWING: Added to GSS, CDIC dropped on Tues run up for small loss and added NXG on Friday’s lows
Disclaimer: This disclosure is not a recommendation to buy or sell or to do as I do. It is only to give my thoughts on current market conditions and share the positions that I am holding as to create a track record. I am not a day trader and only attempt to identify up/down trends and play the swings.
Overview:
As mentioned in the last update with which this post replies; Volatility is the name of the game. Sooner or later the underlying support areas will give way to the weight of what is occurring day after day by way of the deteriorating internals and waning market breadth. I still believe this is the formula we will follow. This past week we were afforded a pause and alleviated some of the oversold conditions. Econ #’s were light and the passing of the Pope occupied the minds of many and the airwaves continually. This coming week it’s back to business and I believe the key support levels of COMP 1970, DJIA 10350 and SPX 1160 will be tested and most likely breached this week. I have been warning of an ensuing sell off the whole time we were oscillating between 1970 support and the upper rectangle resistance of 2020 on the COMP. In last weeks update I posted a downside target of 1919 on the following chart;
We blew by my downside target of 1919 which I thought might provide a resting spot of support for a decent bounce, it has now become resistance. Internals were just brutal #msg-6067040 and the whole move started with a gnarly head fake off of the FOMC Minutes. As for myself I did not see what was so inspiring about the minutes and now we know it was a set-up for the sucker punch. The only thing that did surprise me was that we got the whole downward move I was looking for in only 3 days. We ended on a negative Tick with nearly 2.4 Bln shares trading hands while MaxPain targets were of no issue. As mentioned in the last update with which this post replies; The COT’s data “open interest” is on the floor, I have never seen it so low. This could be why we did not even come close to MaxPain targets. As for Equity fund flows, they are drying up with non-Domestics soaking up what little money is coming in along with a huge outflow of cash ($8 Bln+). This was definitely one of the nastiest Ops Exp’s I can recall.
Economic #’s:
This week I am not going to give an in depth review of Econ #’s, the bottom line is they stink and pretty much speak for themselves… Record Trade Imbalance/Budget Deficits, Retail Sales were lagging, Business Inventories stayed about the same, Initial Jobless Claims came in as expected, Import/Export pricing rose, NY State Empire Index fell off a cliff, Capacity Utilization and Industrial Production remained about the same while Michigan Sentiment fell off considerably and the WLI edged higher.
Date Time Statistic For Actual Forecast Expects Prior Revised
Apr 12 8:30 AM Trade Balance Feb -$61.0B -$59.4B -$59.0B -$58.5B -$58.3B
Apr 12 2:00 PM FOMC Minutes Mar
Apr 12 2:00 PM Treasury Budget Mar -$71.2B -$68.0B -$69.8B -$72.7B -$72.9B
Apr 13 8:30 AM Retail Sales Mar 0.3% 1.0% 0.8% 0.5% -
Apr 13 8:30 AM Retail Sales ex-auto Mar 0.1% 0.7% 0.5% 0.6% 0.4%
Apr 14 8:30 AM Business Inventories Feb 0.5% 0.5% 0.5% 0.9% -
Apr 14 8:30 AM Initial Claims 04/09 330K 330K 330K 340K 334K
Apr 15 8:30 AM Export Prices ex-ag. Mar 0.4% NA NA 0.1% -
Apr 15 8:30 AM Import Prices ex-oil Mar 0.3% NA NA 0.2% -
Apr 15 8:30 AM NY Empire State Index Apr 3.1 18.0 18.0 20.2 19.60
Apr 15 9:15 AM Capacity Utilization Mar 79.4% 79.7% 79.6% 79.3% 79.4%
Apr 15 9:15 AM Industrial Production Mar 0.3% 0.4% 0.3% 0.2% 0.3%
Apr 15 9:45 AM Mich Sentiment-Prel. Apr 88.7 90.0 91.5 92.6 -
MBA Mortgage Applications data can be found here: http://uk.biz.yahoo.com/050413/323/fg8j7.html
Oil Inventories DoE vs API data can be found here: http://uk.biz.yahoo.com/050413/323/fg9ke.html
In the coming week we can look forward to Building Permits, Housing Starts, PPI/Core PPI, CPI/Core CPI, Fed’s Beige Book, Initial Jobless Claims, LEI and the Philly Fed.
What we are witnessing is the forthright and calculated demise of the lower and middle classes in America. The people have been pandered to and are now being entrapped by what I would define as monetary enslavement. Although it has not yet taken effect, the new Bankruptcy bill which was passed this week on Capitol Hill is one of the many pieces of this puzzle recently put into place. It all started with our rights being invaded by the Patriot Act. Then good paying jobs and technology outsourced to foreign lands. Next border security dropped so that illegals can infiltrate our society and pick up the slack by filling in the minimum wage positions created in place of good paying jobs. Wages and hours worked are falling, pensions are being robbed, Social Security is on the chopping block and medical expenses are out of control. Then the agenda was pushed further along by the lure of easy money and then the so-called dream of an ownership society. The people have fallen for it hook, line and sinker (again). The only thing that has changed is that the echo bubble has taken on a new form and will be far more devastating. You think terrorism is a problem? We ain't seen nothing yet. We are looking into the eye of a storm which will bring prosperity to a very few at the expense of so many. Orwellian in nature and only imagined that it could be perpetrated by an enemy, yet it is happening before our very eyes. The wealth of a nation has been stolen and the final act is soon to begin. There is no time line for such events to unfold, but the writing is on the wall if one bothers to remove the rose colored shades. A wealth effect has been created where the lower to middle income have begun to prosper, although deeply in debted. You can take it to the bank that it will not be permitted to last for long. So many were devastated when the Tech bubble burst, I don’t think many (including myself) have any idea what the landscape will truly look like once the housing and derivative bubbles burst. The magnitude of pain that has been built into this equation does not even register on the meter. I can tell you this, that time is approaching. Why is it do you think that the Bankruptcy laws have been abruptly changed? It is a take no prisoners policy. There are two sets of rules, one for the “haves” and one for the “have nots”. Guess which category the majority of America falls under? These new Bankruptcy laws do NOT apply to companies or corporations as they do to the people. The house of cards has been stacked in such a way that when it falls many will be enslaved to the establishment. It is not just a coincidence that this law was changed after the huge reflation of bubbles. I guess too many fish must have got away after the first calamity called Y2K and this will not be tolerated this time around. If one is to believe that what has been happening is just a coincidence then many naïve individuals are in for a very rude awakening. I know this has the ambiance of gloom and doom and I am not telling you anything that you have not already heard infinitum, but most of the pieces of this puzzle are now in place. Rising rates and a threat of inflation will be used, yes that's right, used as a means to an end. Whether they exist or not does not really matter, only the bait and hook for a desired outcome is what matters. It would not surprise me if sometime in the near future interest rates on long and short term loans spike overnight. Step back for a moment and take it all in. It does not take a brilliant mind to see that this is not just some conspiracy theory. All you have to do is pay attention and connect the dots…
What can we expect now?:
Last week we snowballed into what sure looked to be panic selling, whether this trend continues is yet to be seen. While the drop off looks very similar to that of the Jan’05 drop as far as points lost and duration are similar the structure differs slightly whereas we are looking at a gap down on the 3rd day of losses and are currently looking at 3 black crows. We also ended the week on a negative tick and the P/C ratio is not that extreme, this does not bode well for the coming days ahead. With that said we plunged through the COMP 1919 area which I thought may provide support for a bounce, we now look to the 1900 area for that support. It is quite possible that we continue down to this area and then make a move back towards the 1919 area which now has become resistance. Depending on how we negotiate this area will give us an idea if that gap down is to be filled before resuming the primary trend. If 1900 does not hold, then we may see some more panic selling into the 1850 area. I doubt the 2nd scenario comes into play just yet. Anything is possible, but I believe a war will be waged at the 1900 line in the sand because once this area is breached there is mostly air between that and 1750. Nothing about this most recent downturn has come easy and I certainly do not expect it now, but the markets just may surprise us here. As for the DJIA, 10000 as always is a psychological area. That and there appears to be quite a shelf of support from there down into 9800. As for the SPX, 1140 will be a tough nut to crack. If we should get through this area then 1125 to 1100 is sporting a shelf of support. On all of the indices it would not surprise me to see a long drawn out sideways oscillation play out as we just experienced prior to the most recent decline. If internals do not improve then it will only be a matter of time before they give way to the weight of the primary trend. If a panic sell off should ensue, then I believe most everything will be sold (herd mentality). Gold is still holding its own in the $425 or so area, the U$D is still battling it out with the 85 area and Oil has tumbled and briefly went below $50bbl only to smartly recover. My outlook for these remains the same as stated in the previous update. If interested and as always, they can be reviewed at the post with which this post replies.
On a technical note, Bullish Advisors are at 46.2% with Bearish Advisors at 29.0% and getting more bearish although the Bullish side still may need some convincing. The VIX/VXN trends jumped last week and are moving directionally together for the first time in a while. CBOE Equity P/C Ratio is at 1.004 with a 21DMA of .669. The RSI 5-Days and the RSI 5-Wks are very Oversold across the board. The $NASI Daily (Summation), The $NAMO Daily (McClellan), The $NAHL Daily (Highs/Lows), The $NAAD Daily (Advance/Decline) and The BP%'s are all in downward trends where the 50DMA has clearly crossed under the 200DMA for all except the BP’s. Charts for these indicators can be found below.
NOTE: I continue to hold a USPIX position which I will flip long when the time feels right.
CORE: Funds:HSGFX, PCRDX, PRPFX, QRAAX, RSNRX, TAVIX Stocks:ANO, BHP, SWWC
SWING: Added to GSS, CDIC dropped on Tues run up for small loss and added NXG on Friday’s lows
Disclaimer: This disclosure is not a recommendation to buy or sell or to do as I do. It is only to give my thoughts on current market conditions and share the positions that I am holding as to create a track record. I am not a day trader and only attempt to identify up/down trends and play the swings.
**Happy Trading**
Your Economy #board- 1948
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