AI
Sunday, July 17, 2005 5:10:30 AM
~:~:~Market Trend Update for the Week Ahead~:~:~
OVERVIEW:
It’s that time once again to review the past week and look into the next. As mentioned in the previous update with which this post replies; Just as I had reservations about the decisiveness of the 2-day drop back in the end of June, this move seems eerily familiar. While the easiest thing to do would be to proclaim new highs are on the horizon, this current move gives me reason to pause before passing any judgment. While I still hold some reservations, mainly being that the internals do not reflect the market strength we are seeing, we continue to grind higher. After the way this year had started out I did not believe that we would be seeing new highs or even an attempt of new highs at this juncture, but it is what it is and here we are. The R2K and SPX have hit the mark, while the COMP looks to be next with the DJIA continuing to lag. The Equity fund inflows for the week were $3.427 Bln with 74% or $2.542 Bln finding its way into ETF’s. Excluding ETF activity Equity funds reported net inflows $885 Mln with 67% or $591 Mln going into Non-domestic securities and $1.188 Bln into International funds. We also saw Money Market funds report net outflows of -$2.973 Bln with Taxable MM funds reporting net inflows of $4.058 Bln and Tax-exempt MM funds reporting net outflows of -$7.031 Bln. The CoT’s data still reflects very low open interest on the DJIA and COMP. As for position accumulation, little action on the DJIA, but some Commercial short positions on the SPX and COMP with the SPX activity being the most notable. As for Oil, the U$D and Gold, we saw some volatility in oil mainly due to the inventory numbers and psychological havoc of hurricane season. All in all Oil finished out the week above $59bbl. The U$D had fallen to around 88.5, but is starting to move back up and Gold has been getting clobbered, even on U$D weakness. The U$D currently sits just shy of 90 and Gold recovered to $421 oz. The CRB, which continues to be extremely volatile, finished off the week around 309. Bond prices have been taking a dive while 10-yrs and 30-yrs Notes are showing considerable strength wit yields at 4.175% and 4.405% respectively…
ECONOMIC #’s:
MBA Mortgage Applications volumes dropped 7.2% in the holiday-shortened week ended July 8 compared to the prior week. On a seasonally adjusted basis, applications for mortgages to buy homes fell 6.1% on a week-to-week basis, while refinancing applications were down 8.4%. The 4-week moving average for overall mortgage activity slipped 2.9% from the year-ago period. Refinancings accounted for 45.1% of total applications last week, off from the prior week's 45.7%, while adjustable-rate mortgages dropped to 27.9% -- the lowest level since March 2004 -- from 30.7%. Average contract interest rates for 30- and 15-year fixed-rate mortgages increased to 5.62% and 5.21%, respectively, from 5.58% and 5.18% in the last week of June. One-year ARMs averaged 4.56% last week, down from 4.60% a week earlier.
Oil Inventories as reported by the DoE (Dept of Energy) and API (American Petroleum Institute). Crude according to DoE fell by 3.9 Mln bbls, but according to API fell by 1.4 Mln bbls. Gasoline according to DoE fell by 2.7 Mln bbls, but according to API rose by 684K bbls. Distillates according to DoE rose by 3.2 Mln bbls, but according to API rose by 5.8 Mln bbls.
Next week Econ activity slows down considerably as we will get Building Permits, Housing Starts, Initial Claims, LEI, Philly Fed and the FOMC Minutes …
Ever wonder why… the U$D is on the rise while the pumping of bubbles and historic deficits continue to go unabated or that the bond market rallies and yields fall while the Fed has increased interest rates by 3-fold or that stocks that have been subjected to SEC probes and reduced to junk bond status are on the rise or that non-existent inflation has seen the price of oil triple in the last 3½ years?
Ever wonder why… pension funds are being siphoned off to pay down corporate debt or that savings rates are at all-time lows while the USA relies on foreign investment to keep the country afloat or that America's total debt is increasing more than 2-times faster than the entire economy's national income and the size of Government has grown 4-times faster than the economy which is depressing the private sectors share?
Ever wonder why… the educational system is under-funded and grossly mismanaged as American high school 12th graders scored near the bottom of all nations, yet prison construction is on the rise or that job creation has been nil while illegal immigration and the outsourcing of high paying jobs continues at an unprecedented rate or that the minimum wage has remained at $5.15 an hour since 1996 and real wages have decreased while CEO and board member payouts and bonuses have increased exponentially?
Ever wonder why… the divide between the rich and poor is ever widening while the middle class gets squeezed into poverty or that the healthcare reform act does nothing to address rising costs of drugs and treatment while the new energy bill does nothing to repair a sagging infrastructure or that the USA is the only G-8 country to reject the Kyoto Treaty protocol on climate change and the effect of greenhouse gases?
Ever wonder why… consumer debt continues to pile up fostered by the lure of easy money and cheap imported goods or that the existence of no money down – no interest loans being offered not only to the general public are also being offered to illegal immigrants or that the bankruptcy laws have been changed and are about to take effect?
Fundamentals do matter and forsaken reality bites...
Knowledge is power...
WHAT CAN WE EXPECT NOW?:
While new highs have been accomplished or met by the R2K and SPX, the COMP has yet to get there and the DJIA is still lagging. While it is almost certain that the highs will be tested on the COMP, the current internals do not really support market strength (in other words conviction is absent). Don’t get me wrong, some days are very impressive, but others not so impressive and in a bull move with the brass ring in plain sight, I would like to see strength across the board amongst the indices and internally as well price movement. Maybe some of it has to do with Options Expiry, but weak volume mixed with a couple of days of decliners outpacing advancers and the overbought conditions could mean we are in for a respite or this run is getting long in the tooth. The R2K has made its new high, but has turned back down. The SPX is right at its March highs and over the next 2-weeks we will be getting the meat and potatoes of earnings results. The window of opportunity is wide open for the next couple of weeks, after that who knows. Even if we do take out the new highs, I cannot help but wonder what the other side of this strength will look like as we move into the middle of summer and the 2nd half of the year. One thing that I do find of interest is the inverse H&S on the COMP, which formed the left shoulder on the New Year decline, the head on the drop to 1890 and the right shoulder currently playing out. The neckline is at 2100 and possibly points to another 150 points from here. If the move is widely anticipated, it may not come to fruition. Time will tell… As for Oil, U$D and Gold; I believe we will see continued volatility in Oil, but does not look like it is on the verge of a breakdown just yet. The U$D may test 91 again, but I feel it will either be rejected or move sideways for an undetermined amount of time and Gold most likely continues to weaken although we may see some pockets of strength. The Bradley Turn on/around the 13th was a non-event for the most part although we are still under the influence of this date as the indices have stalled at their current levels. We also have a Full Moon coming up on the 21st and for those interested in moon phases, an interesting study at the following link: http://www.isis.ch/download/dokumente/moonstruck.pdf
Technically speaking, Bullish Advisors are at 54.5%% with Bearish Advisors at 22.2%. The VIX/VXN are at all-time lows, nothing even close to these levels has been seen since 1994. CBOE Equity P/C Ratio is at .540 with a 21DMA of .543 as the range continues its downtrend in a very tight range. The RSI 5-Days are Very Overbought across the board. The $NASI Daily (Summation) continues its uptrend while the $NAMO Daily (McClellan) has been in a downtrend and has breached the 50DMA . The $NAHL Daily (Highs/Lows) is in a downtrend and headed towards the 50/200DMA in which the 50DMA has barely crossed over the 200DMA. The overall uptrend since mid-May is still intact. The $NAAD Daily (Advance/Decline) has turned up off of a strong down move. The BP%'s are mostly moving higher with the exception of the BPNDX which is oscillating.
Charts for the indices and indicators mentioned are posted below for your viewing pleasure…
NOTE:
I continue to hold a USPIX position, which I will flip to UOPIX when appropriate.
CORE:
Funds; HSGFX, PCRDX, PRPFX, QRAAX, RSNRX ,TAVIX. Individual Stocks; ANO, BHP, SWWC
SWING: XLE
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 for tracking purposes only. I am not a day trader and only attempt to identify up/down trends and play the swings.
OVERVIEW:
It’s that time once again to review the past week and look into the next. As mentioned in the previous update with which this post replies; Just as I had reservations about the decisiveness of the 2-day drop back in the end of June, this move seems eerily familiar. While the easiest thing to do would be to proclaim new highs are on the horizon, this current move gives me reason to pause before passing any judgment. While I still hold some reservations, mainly being that the internals do not reflect the market strength we are seeing, we continue to grind higher. After the way this year had started out I did not believe that we would be seeing new highs or even an attempt of new highs at this juncture, but it is what it is and here we are. The R2K and SPX have hit the mark, while the COMP looks to be next with the DJIA continuing to lag. The Equity fund inflows for the week were $3.427 Bln with 74% or $2.542 Bln finding its way into ETF’s. Excluding ETF activity Equity funds reported net inflows $885 Mln with 67% or $591 Mln going into Non-domestic securities and $1.188 Bln into International funds. We also saw Money Market funds report net outflows of -$2.973 Bln with Taxable MM funds reporting net inflows of $4.058 Bln and Tax-exempt MM funds reporting net outflows of -$7.031 Bln. The CoT’s data still reflects very low open interest on the DJIA and COMP. As for position accumulation, little action on the DJIA, but some Commercial short positions on the SPX and COMP with the SPX activity being the most notable. As for Oil, the U$D and Gold, we saw some volatility in oil mainly due to the inventory numbers and psychological havoc of hurricane season. All in all Oil finished out the week above $59bbl. The U$D had fallen to around 88.5, but is starting to move back up and Gold has been getting clobbered, even on U$D weakness. The U$D currently sits just shy of 90 and Gold recovered to $421 oz. The CRB, which continues to be extremely volatile, finished off the week around 309. Bond prices have been taking a dive while 10-yrs and 30-yrs Notes are showing considerable strength wit yields at 4.175% and 4.405% respectively…
ECONOMIC #’s:
Date Event For Actual Forecast Prior Orig
Jul 13 Export Prices ex-ag. Jun -0.1% NA -0.4% -
Jul 13 Import Prices ex-oil Jun -0.4% NA -0.3% -
Jul 13 Trade Balance May -$55.3B -$56.0B -$56.9B -$57.0B
Jul 13 Treasury Budget Jun $22.4B $21.0B $19.1B -
Jul 14 Core CPI Jun 0.1% 0.2% 0.1% -
Jul 14 CPI Jun 0.0% 0.1% -0.1% -
Jul 14 Initial Claims 07/09 336K 325K 320K 319K
Jul 14 Retail Sales Jun 1.7% 0.9% -0.3% -0.5%
Jul 14 Retail Sales ex-auto Jun 0.7% 0.6% 0.0% -0.2%
Jul 15 Business Inventories May 0.1% 0.2% 0.3% -
Jul 15 Core PPI Jun -0.1% 0.2% 0.1% -
Jul 15 NY Empire State Index Jul 23.9 10.0 10.5 11.6
Jul 15 PPI Jun 0.0% 0.2% -0.6% -
Jul 15 Capacity Utilization Jun 80.0% 79.7% 79.4% -
Jul 15 Industrial Production Jun 0.9% 0.5% 0.3% 0.4%
Jul 15 Mich Sentiment-Prel. Jul 96.5 95.0 96.0 -
MBA Mortgage Applications volumes dropped 7.2% in the holiday-shortened week ended July 8 compared to the prior week. On a seasonally adjusted basis, applications for mortgages to buy homes fell 6.1% on a week-to-week basis, while refinancing applications were down 8.4%. The 4-week moving average for overall mortgage activity slipped 2.9% from the year-ago period. Refinancings accounted for 45.1% of total applications last week, off from the prior week's 45.7%, while adjustable-rate mortgages dropped to 27.9% -- the lowest level since March 2004 -- from 30.7%. Average contract interest rates for 30- and 15-year fixed-rate mortgages increased to 5.62% and 5.21%, respectively, from 5.58% and 5.18% in the last week of June. One-year ARMs averaged 4.56% last week, down from 4.60% a week earlier.
Oil Inventories as reported by the DoE (Dept of Energy) and API (American Petroleum Institute). Crude according to DoE fell by 3.9 Mln bbls, but according to API fell by 1.4 Mln bbls. Gasoline according to DoE fell by 2.7 Mln bbls, but according to API rose by 684K bbls. Distillates according to DoE rose by 3.2 Mln bbls, but according to API rose by 5.8 Mln bbls.
Next week Econ activity slows down considerably as we will get Building Permits, Housing Starts, Initial Claims, LEI, Philly Fed and the FOMC Minutes …
Ever wonder why… the U$D is on the rise while the pumping of bubbles and historic deficits continue to go unabated or that the bond market rallies and yields fall while the Fed has increased interest rates by 3-fold or that stocks that have been subjected to SEC probes and reduced to junk bond status are on the rise or that non-existent inflation has seen the price of oil triple in the last 3½ years?
Ever wonder why… pension funds are being siphoned off to pay down corporate debt or that savings rates are at all-time lows while the USA relies on foreign investment to keep the country afloat or that America's total debt is increasing more than 2-times faster than the entire economy's national income and the size of Government has grown 4-times faster than the economy which is depressing the private sectors share?
Ever wonder why… the educational system is under-funded and grossly mismanaged as American high school 12th graders scored near the bottom of all nations, yet prison construction is on the rise or that job creation has been nil while illegal immigration and the outsourcing of high paying jobs continues at an unprecedented rate or that the minimum wage has remained at $5.15 an hour since 1996 and real wages have decreased while CEO and board member payouts and bonuses have increased exponentially?
Ever wonder why… the divide between the rich and poor is ever widening while the middle class gets squeezed into poverty or that the healthcare reform act does nothing to address rising costs of drugs and treatment while the new energy bill does nothing to repair a sagging infrastructure or that the USA is the only G-8 country to reject the Kyoto Treaty protocol on climate change and the effect of greenhouse gases?
Ever wonder why… consumer debt continues to pile up fostered by the lure of easy money and cheap imported goods or that the existence of no money down – no interest loans being offered not only to the general public are also being offered to illegal immigrants or that the bankruptcy laws have been changed and are about to take effect?
Fundamentals do matter and forsaken reality bites...
Knowledge is power...
WHAT CAN WE EXPECT NOW?:
While new highs have been accomplished or met by the R2K and SPX, the COMP has yet to get there and the DJIA is still lagging. While it is almost certain that the highs will be tested on the COMP, the current internals do not really support market strength (in other words conviction is absent). Don’t get me wrong, some days are very impressive, but others not so impressive and in a bull move with the brass ring in plain sight, I would like to see strength across the board amongst the indices and internally as well price movement. Maybe some of it has to do with Options Expiry, but weak volume mixed with a couple of days of decliners outpacing advancers and the overbought conditions could mean we are in for a respite or this run is getting long in the tooth. The R2K has made its new high, but has turned back down. The SPX is right at its March highs and over the next 2-weeks we will be getting the meat and potatoes of earnings results. The window of opportunity is wide open for the next couple of weeks, after that who knows. Even if we do take out the new highs, I cannot help but wonder what the other side of this strength will look like as we move into the middle of summer and the 2nd half of the year. One thing that I do find of interest is the inverse H&S on the COMP, which formed the left shoulder on the New Year decline, the head on the drop to 1890 and the right shoulder currently playing out. The neckline is at 2100 and possibly points to another 150 points from here. If the move is widely anticipated, it may not come to fruition. Time will tell… As for Oil, U$D and Gold; I believe we will see continued volatility in Oil, but does not look like it is on the verge of a breakdown just yet. The U$D may test 91 again, but I feel it will either be rejected or move sideways for an undetermined amount of time and Gold most likely continues to weaken although we may see some pockets of strength. The Bradley Turn on/around the 13th was a non-event for the most part although we are still under the influence of this date as the indices have stalled at their current levels. We also have a Full Moon coming up on the 21st and for those interested in moon phases, an interesting study at the following link: http://www.isis.ch/download/dokumente/moonstruck.pdf
Technically speaking, Bullish Advisors are at 54.5%% with Bearish Advisors at 22.2%. The VIX/VXN are at all-time lows, nothing even close to these levels has been seen since 1994. CBOE Equity P/C Ratio is at .540 with a 21DMA of .543 as the range continues its downtrend in a very tight range. The RSI 5-Days are Very Overbought across the board. The $NASI Daily (Summation) continues its uptrend while the $NAMO Daily (McClellan) has been in a downtrend and has breached the 50DMA . The $NAHL Daily (Highs/Lows) is in a downtrend and headed towards the 50/200DMA in which the 50DMA has barely crossed over the 200DMA. The overall uptrend since mid-May is still intact. The $NAAD Daily (Advance/Decline) has turned up off of a strong down move. The BP%'s are mostly moving higher with the exception of the BPNDX which is oscillating.
Charts for the indices and indicators mentioned are posted below for your viewing pleasure…
NOTE:
I continue to hold a USPIX position, which I will flip to UOPIX when appropriate.
CORE:
Funds; HSGFX, PCRDX, PRPFX, QRAAX, RSNRX ,TAVIX. Individual Stocks; ANO, BHP, SWWC
SWING: XLE
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 for tracking purposes only. I am not a day trader and only attempt to identify up/down trends and play the swings.
**Happy Trading**
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