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InvestmentHouse Weekend Market Summary

http://www.investmenthouse.com/weekendmarketsummary.htm

- Bernanke gives the same old line at Jackson Hole, Markets act as if it was something new.
- Textbook case studies of how monetary policy impacts the economy and how Keynesian policy impacts . . . debt?
- Stocks rebounded Friday post-Bernanke, but it was not a definitive move. That may be definitive in itself.
- China manufacturing falls negative for the first time in 9 months.
- Japan, South Korea production falls.
- European unemployment hits a record high as inflation rises: stagflation returns.
- The contrary indicator has spoken? Barron's calls the market 'Tough as Teflon.'
- Stocks react but not to the extent of gold, dollar, bonds: stocks have priced in the promise of stimulus in the run. They now need the fact of stimulus to breakout.
- Defensive stocks from May and June have tested and set up anew.

Same words, a bit of different emphasis, stocks rebound from selling, gold surges.

I hear the cutthroats are biting . . . Have you been fishing yet? Listen . . . hear that fish? Fly rod packed, right? I prefer a red nymph...
Friday was all about Jackson Hole and what Mr. Bernanke would say. Would it be the foreshadowing of another QE as it was in 2010? Would it be the actual announcement of QE3? Well, it was really neither in my book. I believe the hype was simply overplayed. The market was up (and down) after the speech, but the move was nothing to suggest a game changer.

As my graphic shows, there was a lot of hype, but what were they really talking about? A lot of them are up there just to go fishing. As the graphic indicates, there are several conversations with Mr. Bernanke and other foreign dignitaries where they are just talking about the fish, whether their rods are packed, and what they are biting on.

Looking at the speech itself, I am reminded of an old Far Side cartoon where the owner is talking to his dog, and you hear his long speech from the dog's perspective. All the dog hears is "Blah, blah, blah, blah, blah," and then every once in awhile he understands "Rover."

Blah blah blah blah interest rates near 0% through 2014 blah blah blah blah blah
Blah blah blah head winds housing . . . fiscal policy . . . Europe's debts blah blah
Blah blah blah monetary policy limits cannot neutralize fiscal risks blah blah blah
Blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah
Blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah
Blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah
Fed "will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in the labor market."

That's how the Jackson Hole speech seemed to me. It was the same stuff we have heard before: Interest rates will remain near 0% through 2014; there are headwinds in the housing market; fiscal policy; Europe's debts; and monetary policy has limits that cannot neutralize fiscal risk. There he is talking about the state governments and the federal government, saying "You have to get your act together because there is only so much we can do." That is what I have been saying all along, and I am not the only one. Others have said you can only do so much with liquidity. You can maybe keep things from falling off a cliff for a certain period of time, but ultimately you have serious issues. Monetary policy cannot create growth alone.

There was a lot of the same old same old. Even the last line of his speech was nothing new. He said the Fed would provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in the labor market. We have heard it all before, but the markets -- and not just the stock market -- took it as if the door was left wide open for more Quantitative Easing. Indeed it is. The Fed said over a month ago that the door was wide open, and that it would do something in August or September. Mr. Bernanke was not that specific this time, but he did not close the door he opened earlier. We are still looking at more Quantitative Easing if the conditions warrant.

What conditions would warrant that? The Fed has a laser-like focus on unemployment. This Friday brings the August jobs report. If it is a stinker, the Fed is set to act. Why? The Fed has stated it wants to focus on unemployment. That is its goal. It will not give in until it sees the whites of solid jobs growth. That won't happen unless we get some severe monkeying with the numbers. It will have to be worse than the July numbers where actual negative reads were turned positive by aberrant adjustments that were well beyond several standard deviations.

Maybe the federal government was just laying the groundwork for an even bigger distortion this month, but I doubt it; I do not think they could get away with that much. Maybe the reigning party wants to have some Quantitative Easing announced and have the markets rally. I don't see that has a benefit because then the other side would just say "Look, they are trying to rescue a terrible economy with even more Quantitative Easing because our president is providing no leadership. You can almost see it already in the headlines. They already have their press releases prepared for whatever happens. But the market was focused on what the Fed did not do, and Mr. Bernanke did not close the door that he opened a month ago with respect to Quantitative Easing.

It did not matter that there were problems in the rest of the world. Indeed, the futures were up despite reports out of Japan that its industrial production had worsened. There were also reports out of South Korea that its industrial production had worsened. Now we have reports from China that its manufacturing is declining. Yes, it is actually in contraction for the first time in nine months. That is not good news, but futures were well up, bouncing back from the Thursday selloff. We had other Fed speakers out even before Bernanke. Bullard said we should not wait before we take "big action." Williams said the Fed would not raise rates until 2015, not just the 2014 that Mr. Bernanke stated in his Jackson Hole speech later that morning. Eurozone unemployment hit a record high at 11.3% in July, and inflation jumped to 2.6% from 2.4%. Not to worry. Who cares if gasoline prices were up 8.8% in August? It was up $0.31, the highest it has ever been heading into Labor Day.

It was not going to make any difference to market because it wanted to bounce back. It wanted to believe that more QE was coming that would help the market out. Of course it will help the market out to a certain extent. Stocks have run well since July; they are back at the old highs. If we look back in time, as I always love to do, we had a nice move in 2009 when QE1 was first announced. QE2 was announced and we had a pretty good move, but it was not as good. Then we fumbled around and had Operation Twist that provided a lesser move. QE will provide more than Operation Twist because that was basically status quo. We were not taking any money out of the system, we were just rolling it over again and again. It is not the same as adding new liquidity.

What does new liquidity do? With the economies in the world so slow and with banks still so unwilling to lend, new QE would simply go into financial assets and the like. It would increase their price. It would cause inflation in financial assets and what they believe to be a corresponding rise in the so-called wealth effect. That is, the more money people have on paper -- real or not -- the wealthier they feel and the more they spend. That is not utterly true, however. It has not been proven, but it is a widely accepted notion that seems to be logically sound.

But what have we really seen? Even with all of these financial gains since 2009, when we have seen the Standard and Poor's rally from just over 650 to just over 1400. We have not seen any growth in small businesses. They have not put any more money into their businesses. No one has hired anybody. Indeed, wages have gone down almost 5% on average in the US. We are not seeing any real, lasting economic growth. It does not cause growth. This is the new textbook study as to how monetary policy does not create growth alone. Add on top of that the Keynesian Trillion Dollar Baby that was spent and the other Keynesian attempts at economic stimulus that have utterly failed. The only economic gain we have had of the 1.5% average is because of monetarily policy keeping things from falling off a cliff.

This is classic, new economic textbook, real-time data showing us that those policies do not work. On Friday Bernanke was trying to tell us that they do not work. But since investors know that Bernanke's warnings about fiscal policy will go unheeded in an election year and nothing will be done (or could be done) until after the election, the markets know they will get more QE. They price that in. The question is what will happen near term. Longer term, when the stimulus is announced or is anticipated to be announced -- likely next week if the jobs number is poor -- the market will rally. How far? We will just have to see how much impact it has.

Even though the market finished to the upside on Friday, it was not a strong day. There was no change in the status of having rallied up to the prior highs and now being unable to continue. But it is also not falling off yet. The day was not convincing. There was the big selloff Thursday and a rebound on Friday, but it couldn't take out that Thursday range. Indeed, it gave up highs that were above the Thursday high. This is no answer to what actually happened on Friday, and thus we have "Blah, blah, blah" from Ben Bernanke still ruling the day. When will he pull the trigger? I could be wrong, but it does not look like the market wants to rally until it knows more about what could happen.

I will throw out another interesting thing that could happen. In addition to Quantitative Easing, he is probably going to extend and magnify Operation Twist with the goal of driving interest rates -- particularly mortgage rates --as close to zero as possible. Mr. Bernanke wants to make it so cheap to own a home that we try to foment another housing bubble. There won't be the nothing-down loans since that is prevented now, but money will be so cheap for homes. He will want to force people back in. Looking at how rents have surged, that makes sense. Rents always surge at the end of an economic cycle and leading into the next housing recovery. I do not think we are near an economic run now, but the housing market has been beaten down long enough where it can try to start modest recoveries. No one has any money to buy a house, right? Wages are down, and net worth is way down. They have to do something to make housing affordable, and that is to get interest rates close to zero. The lower the rates are, the more house you can afford. That is likely what will happen. The question for the market is WHEN will it happen?

We have taken a quick look at SP500 and saw what it did on the day. It was up as were the other indices.

SP500 +0.51%
NASDAQ +0.6%
Dow +0.69%
SP600 +0.34%
SOX +1.4%

All of the stock indices were higher, but as we will see later, they were not totally impressive.

OTHER MARKETS

Dollar. 1.2571 versus 1.2536 euro. The dollar took a hammering. It looks to be down a lot worse on the DXY0 because it fell against all the other currencies. It was really hit. It has a head and shoulders type of topping pattern. It is trying to hold some support. Indeed, it bounced off of a support level on the intraday low Friday. But the dollar traders believe that the Fed is embarking on new Quantitative Easing, and they were getting out ahead of the curve.

Bonds. 1.57% versus 1.63% 10 year US Treasury. The TLT play bit us in the rear end. Even though Bernanke did not announce anything, the market was ready enough for QE and believes it is coming. As I said, it knows that Congress will not be able to do anything. The president certainly will not provide any leadership or put anything forth. You have to do some work other than campaigning.

Bonds surged above the 50 day EMA. Huge moves indeed.

Gold. 1687.30, +30.20. Talk about a big move. A huge breakout move after the breakout over the 200 day EMA was tested last week. Gold is anticipating more inflation, of course. It actually got news of more inflation out of the eurozone with the 2.6% versus 2.4%. What do you call that? Remember from back in the 1970's: you are getting stagflation in the eurozone. Unemployment is at a record high at 11.3%. Inflation is surging. The UK is in recession, Spain and Italy are in recession. All these countries are in recession. Inflation is running higher, and unemployment is running higher. They have stagflation. Wow, it raises its head yet again.

Oil. 96.47, +1.85. Even with the world economies in recession, oil is moving higher. It is a commodity. It is also something priced in dollars. When dollars tank because of additional stimulus that will undermine the value of the currency, oil rises along with other commodities priced in dollars. Oil bounced back up to the 200 day EMA. I do not think that will stop it. It hit it a couple weeks ago and faded last week and tested. It held at the 20 day EMA and is on the bounce right now.

TECHNICAL SUMMARY

Internals.

Volume. NASDAQ +13%, 1.35B; NYSE +27%, 586M. It is sad to say that those are big numbers. They are very low volumes, but SP500 volume close to average on that. You have to say, in the relative sense, that it was bigger volume. In comparison to days of yore, it was pathetic volume, of course. But we live and trade and invest in the market we have now, not the one we had a year ago, two years ago or five years ago. Volume is volume, and you look at it relative to what it is in more recent history versus reminiscing about how great things were when we were young or how hard we had to work to do anything back then. We have all heard those stories. It is not necessarily from our grandparents, either. The economy has been so bad that those times when we had it better are not that far away.

Breadth. NASDAQ +1.65:1; NYSE +2.4:1. Advancers led, but it was not impressive. Not at all. The downside numbers were heavier on Thursday. It was not that strong a day internally even though volume was up. We can look at the charts to explain why.

THE CHARTS

SP500. Volume was up and the indices were up. SP500 closed well off of its high. SP500 hit 1413 on the high, and it closed at 1406. It basically gave away half of its move. It rallied, but it could not hold. It did manage to hold the 20 day EMA, and that keeps it in the same range it has been, but it does not change the character one iota. I would argue that because it was unable to really establish and hold the rally on Friday, that it was a disappointing session longer term -- or over the next few days. "Longer term" has been really compressed. We have so many events and data points coming out, any one of which could cause the Fed to act.

NASDAQ. NASDAQ tested all the way to the 20 day EMA and rebounded for a gain. It did gap higher, tested lower after Bernanke, and then it gyrated. The entire market gyrated after the Bernanke speech. There were big moves at first, and then they narrowed down as the afternoon went on. What does that tell us? A big fight, the inability to really resolve the fight, and no change in the indices.

Some people may point to the long reach lower on NASDAQ and the rebound and say the buyers obviously came back in. Obviously they did, but this was just in that gyration post-Bernanke. There is no change in the position. Maybe that is good. Maybe it will continue from here. But because it was unable to move even on things that were read as positive in terms of QE -- by the gold market, the bond market, the dollar market, the oil market, and by all commodities -- I think that is a negative near term for stocks.

I have been proved wrong before, but I see no change on what was perceived by all the other markets as good QE news. It shoved those markets higher to nice breakout gains, but it did not happen for stocks.

SP600. SP600 tested the 20 day EMA on the low. It bounced back to positive, but it changed nothing. It is still trending higher, and the small caps actually look pretty good. Higher highs, higher lows. This last one is struggling, but it still has its trend going. It is not a washout. It was not a change in character for any of the indices, I want to make that clear. I do not think it was a change in character that will cause a rally up through the recent highs right now until we get something more. In other words, until the Fed says, "This is what we will do. We just have to see what happens next week." That is a big difference, but it is not what Mr. Bernanke said.

We have the markets still in the same position, but what were they before the Fed came out? They could not make the break before the Fed came out. The Fed came out, and then they could not make the break anyway. Maybe something will happen after Labor Day that brings in more buyers. We will have to see, but the Fed action did not show that that will be the case.

SOX. The SOX looks just fine. It is in the same position it was before Friday. A doji, and it recovered from that Thursday selling that took it down to the 200 day EMA. It bounced off of that level, and it is still in position with a double bottom with handle base. The stocks could still rocket forward and provide leadership. The question is whether it will provide leadership next week. Will they do anything before the Fed acts? They could. They could take a leadership role and start coming to the fore. Leaders move before the actual numbers hit, and we can very well see the SOX take a leadership role. If investors anticipate stimulus coming, they will start looking at leaders to take them higher.

LEADERSHIP

Retail. Thus far, leaders have been in the retail sector. They have shown the most life. AMZN has been performing very well. We can look at any number of the other retail stocks, and most of them have been performing just fine. RL is one. We have been looking at DECK as a possible new buy. It did not hurt itself at all on Friday, and it still leaves itself in excellent position to rally to the upside. Retail still remains strong. It could be one of the leadership areas, but the problem is there are not many good stocks in retail to buy right now.

Medical. Drugs, biotech, and some medical instruments look to be on the comeback trail. ARNA has a nice pullback in place. It could make a nice run. DSCO had a nice break to the upside, and now it is working laterally and testing that break. Not bad at all. LXRX had a nice pullback. MDGN had a nice test. The problem is these are somewhat low-volume stocks. It does not mean you cannot play them, but you have to realize that they are a bit low volume. OSIR has nice action as well. These stocks that led in May and June into July have had a pullback as the market rallied off of the June low. The market turned less defensive at that point, and other areas rallied such as technology.

Tech. Technology is on the defensive a bit. It has made it up to those prior peaks, or just below them, as seen in the NASDAQ, but it stalled there. As worry, concern, and fear rises anew regarding the economy, what is coming back into vogue? The more defensive plays that were in play ahead of that June rally that were leading up in the May and mid-June selloff. Those have come back and based out as the market rallied to the upside and as other growth areas took over. Now they look ready to start moving higher once again.

Financial. Financials could be an aid to the market. MS is up a bit, but I am not convinced that it is a pattern I want to buy. BAC is not bad. This is a nice flag pattern that it put in over the last two weeks. Perhaps it is ready to provide some upside action. Financials have some life. There are some possibilities there, and they are very important to help lead the market. They have improved. But I feel that some of the patterns are just not there yet. But we will see how it plays out. If BAC rallies it could help provide leadership for the market.

THE MARKET

SENTIMENT INDICATORS

VIX. The VIX faded on Friday thanks to the bounce in the market overall. It has bounced off of the prior lows from March 2012 and May 2011. It has put in a move as the markets faded, but it has not been a large fade in the stock market yet. It has come back to throw a doji over the 50 day EMA. That suggests this is just a continuation doji, and it could continue higher. If the VIX continues higher, that means stocks fall. As I said earlier, the movement of the indices, particularly SP500 on Friday, was not convincing that they want to move higher near term without actually hearing something from the Fed saying "This is what we will do." We may get a further pullback in the market before next Friday and the jobs report. The Fed might feel compelled to do something at that point if the number is weak enough. That is how the volatility looks to play into the market action this coming week.

VIX: 17.47; -0.36
VXN: 18.35; -0.68
VXO: 16.32; -0.88

Put/Call Ratio (CBOE): 0.91; -0.15

Bulls versus Bears

With the indices bumping bear market highs, SP500 moving through them only to reverse rather violently intraday, and with sentiment truly low, Barron's issues a cover article about the invincible stock market.

In reality the article's implication that investor confidence is bubbling over is simply wrong: it is liquidity that has pushed stocks higher and funds are scared to death of missing out on any upside moves. The retail investor? Nowhere to be seen. The retail investor is a faint shadow of what he/she was in the early 2000's and is showing no love for equities.

This is a worrisome sign but for the fact it is so wrong in that the average investor and indeed even the hedge funds fear this market and if possible avoid it. Thus the 'cover effect' may not be as great here given it does not reflect the general sentiment towards stocks. That does not, however, save the near term market that is bumping against the highs after stimulus promised but does not have any new stimulus in hand, at least yet.

This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market, then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market does not have the cash to drive it higher.

Bulls: 48.9% versus 43.6% versus 43.6% versus 39.4%. Jumping upside as the stock indices managed to hold gains and avoid a selloff. Never mind SP500 posted a nasty reversal about two weeks back and has not recovered. While bullish sentiment is not overblown it is suggesting this move is a bit overcooked. Undercut 35%, the threshold for bullishness, in early June. You would expect it to rise and it has. Still not at a dangerous level, just working as it should. As noted, hit 34% in early June. It did its job and the market is on the rally. Hard drop to 34 from 39.3% as economic reality and a choppy stock market hit. Off the 55+ level hit in late February. That was the highest level since April and May of 2011, the peak of the post-bear market high. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 24.5% versus 26.6% versus 25.5% versus 27.7%. As with bulls, bears are moving in a more bearish direction, i.e. significantly fewer in number with a drop to the lowest level in a month. Never made it to the 35% that can be a bullish indication, but the bulls were weak enough back in June. Over 35% is the threshold to be really be a good upside indicator. For reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.

NASDAQ

Stats: +18.25 points (+0.6%) to close at 3066.96
Volume: 1.351B (+13.22%)

Up Volume: 860.57M (+703.23M)
Down Volume: 526.43M (-493.57M)

A/D and Hi/Lo: Advancers led 1.65 to 1
Previous Session: Decliners led 3.11 to 1

New Highs: 63 (+26)
New Lows: 23 (-5)

SP500/NYSE

Stats: +7.1 points (+0.51%) to close at 1406.58
NYSE Volume: 586M (+27.11%)

A/D and Hi/Lo: Advancers led 2.37 to 1
Previous Session: Decliners led 2.48 to 1

New Highs: 140 (+56)
New Lows: 20 (-11)

DJ30

Stats: +90.13 points (+0.69%) to close at 13090.84
Volume: 119M shares Friday versus 90M Thursday.

TUESDAY

It is a huge week of data for the market next week. It is a shortened week due to Labor Day on Monday, but it will be packed. ISM will be on Tuesday. It is expected to flatline at 50. We will see. Chicago was better, and that will help it out. But we have seen everything else down: Richmond, Philly, Dallas, you name it. They have all been down outside of Chicago.

We have the Challenger report on Friday and Initial Claims on Thursday. A big lead in to Friday. Then we have the Non-farms Payroll. 130K is expected, but I think it is all smoke and mirrors. I do not know how they are making any jobs out there at all. No one is hiring. The big companies are laying off. Lexmark is laying off 17K people. Small companies are not hiring. They cannot afford to because with every person they hire they have $10K+ of costs associated with that new hire. Those are small businesses, and they are disproportionately skewed to impact small businesses more. The major job creator in our country throughout its history is being penalized for hiring new workers.

What happens when you tax or penalize someone for doing something? They will not do it. What happens when you reward someone for doing something, or at least remove the risk? They do it. Right now small businesses are being threatened with higher taxes and administrative costs if they hire somebody, so they will not do it. Through the policies in place, the greatest job creator in our economy is being penalized to the tune of over $10K for every person they hire. So they are not hiring. That is why the jobs report is not getting any better.

We have a big week ahead. We know that we will have the same problems. We have the possibility of issues in Europe at any point. There is the possibility of issues in China at any point. China just announced its first decline in manufacturing in nine months. We will also hear worsening news out of Europe. Germany will go into recession. We have that event-risk type of situation out there in addition to the scheduled data.

Then we have the actual market itself. While it did not crack on Friday, it was unable to use what was widely perceived by the gold, dollar, and bond market as very pro-QE3. All of those broke either higher or lower based on this, but the stock market was unable to do that. It maintained status quo; at least it did not selloff. As I said before, that is almost as telling as if it broke lower. What does that mean? It did not break lower, and while it may not be able to rally near term, it is ready to. Once there is more clarity, maybe with the jobs report, it will be ready to rally. It did not break down, and that does not mean it will tumble here. But we could get some downside all next week ahead of the employment report. That will be a trigger point for any Fed action. We could make some money on our downside plays such as the SDS and the TECS if the indices fall from where they closed on Friday. As noted, that was at status quo.

Next week we will be looking for new areas that are coming back in vogue such as some of the drug stock areas. They have a more defensive lean given the problems in the rest of the world that came out on Friday. We already knew about them, but new data was released. The US did not have bad data, but it is still not great. And we don't know how fudged it is. We will look at those because they are setting up the best. A lot of the other stocks have already moved up with the markets, so they are near these old highs and may not be as good of buys as they could be. That is fine. We can just play what is setting up. That is what you always do. We still have positions that can make the move, hold up, and continue when the market continues to the upside. As long as they can hold. A lot of them look in very good shape to do that.

The game plan is to watch where the money is going. Looks like it is heading over to the drug stocks. Even if they are smaller, they have great patterns and we can make money off of that. Watch for some downside. That is still out there, too, and we may be able to get a play through the week to the downside on some of these stocks that have set up to break. There is no guarantee that the market will rally back up after the jobs report. If it is bad enough, it probably will because then we have the Fed coming in. If it is good, maybe the market sells because we may not have the Fed come in. What happened here? We had a move higher based on Fed stimulus promises. All we got on Friday was another promise for stimulus. It has priced in the promise of stimulus, and now it wants to see real stimulus to continue on.

We could get some downside if the market does not get anything near term. If the jobs report is strong enough and the Fed does not act, then the market that has priced in the promise of stimulus (and still only has the promise), it will likely pull back and sell off more. Maybe we get that drop down to the 50 day EMA on the SP500 as a result. It is just not automatic. The action on Friday for the stock market was somewhat worrisome. The other markets very much telegraphed what they had planned because they pulled back ahead of the number. They were in position to make a move. Gold made a nice pullback to test. The stock market has not done that. There you have the reason for the disparate responses between stocks and all of the other markets that are sensitive to inflation and the moves that the Fed makes with respect to our currency.

Enjoy Labor Day, and I will see you on Tuesday. Have a great weekend!

Support and resistance

NASDAQ: Closed at 3066.96
Resistance:
3076 is the late April 2012 high
3090 is the mid-March interim high
3101 is the August 2012 high
3134 is the March 2012 post-bear market peak
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
3042 from 5/2000 low
The 20 day EMA at 3039
3026 from 10/2000 low
3024 is the gap point from early May
3000 is the February 2012 post-bear market high
2999 is the bottom of the August 2012 consolidation
2988 is the July 2012 high
The 50 day EMA at 2988
2962 is the April 2012 low
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2910 is the March 2012 low
2900 is the March 2012 low
2888 is the May 2011 peak and PRIOR post-bear market high
2879 is the July 2011 peak
The 200 day SMA at 2879
2866 is the July 2012 closing low
2862 is the 2007 peak
2841 is the February 2011 peak
2816 is the early April 2011 peak.
2810 is the low in the shoulders
2754 is the October 2011 high
2706 to 2705 is the April 2011 low and the February 2011 and consolidation low (bottom of the trading range) 2723 to 2705 is the range of support at the bottom of the January to May trading range

S&P 500: Closed at 1406.58

Resistance:
1406 is the early May 2012 peak
1422.38 is the prior post-bear market high (March 2012)
1427 is the August 2012 peak
1425 from May 2008 closing highs
1433 from August 2007 closing lows
1440 from November 2007 closing lows

Support:
1402.22 is the closing low of the August 2012 lateral consolidation
The 50 day EMA at 1383
1378 is the February 2012 peak
1375 is the early July 2012 peak
1371 is the May 2011 peak, the post-bear market high
1363.46 is June 2012 high
1359 is the April 2012 low
1357 is the July 2011 peak
1344 is the February 2011 peak
1340 is the early April 2011 peak
The 200 day SMA at 1338
1332 is the early March 2011 peak
1325 is the July 2012 intraday low
1309 is the right shoulder low from June 2012
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
1266 is the June 2012 base low

Dow: Closed at 13,090.84
Resistance:
13,297 is the April 2012, prior post bear market high
13,331 is the August 2012 post-bear market high
13,668 from 12-2007 peak
13,692 from 6-2007 peak
14,022 from 7-07 peak

Support:
13,058 from the May 2008 peak on that bounce in the selling
13,056 is the February 2012 high
The 50 day EMA at 12,986
12,971 is the early July 2012 high
12,754 is the July intraday peak
12,716 is the April 2012 closing low
The 200 day SMA at 12,707
12,391 is the February 2011 peak
12,369 is the left shoulder low from May 2012
12,284 is the October 2011 peak
12,258 is the December 2011 peak
12,110 from the March 2007 closing low
12,094 is the April 2011 low
12,035 is the June 2012 base low
The June 2011 low at 11,897 (closing)
11,734 from 11-98 peak
11,717 is the late August 2011 peak

Economic Calendar

August 31 - Friday
- Chicago PMI, August (9:45): 53.0 actual versus 53.8 expected, 53.7 prior
- Michigan Sentiment - Final, August (9:55): 74.3 actual versus 73.6 expected, 73.6 prior
- Factory Orders, July (10:00): 2.8% actual versus 2.0% expected, -0.5% prior

September 4 - Tuesday
- ISM Index, August (10:00): 50.0 expected, 49.8 prior
- Construction Spending, July (10:00): 0.5% expected, 0.4% prior
- Auto Sales, August (14:00): 5.0M prior
- Truck Sales, August (14:00): 6.0M prior

September 5 - Wednesday
- MBA Mortgage Index, 09/01 (7:00): -4.3% prior
- Productivity-Rev., Q2 (8:30): 1.8% expected, 1.6% prior
- Unit Labor Costs - R, Q2 (8:30): 1.4% expected, 1.7% prior

September 6 - Thursday
- Challenger Job Cuts, August (7:30): -44.5% prior
- ADP Employment Change, August (8:15): 140K expected, 163K prior
- Initial Claims, 09/01 (8:30): 375K expected, 374K prior
- Continuing Claims, 08/25 (8:30): 3300K expected, 3316K prior
- ISM Services, August (10:00): 52.2 expected, 52.6 prior
- Crude Inventories, 09/01 (11:00): 3.778M prior

September 7 - Friday
- Nonfarm Payrolls, August (8:30): 130K expected, 163K prior
- Nonfarm Private Payrolls, August (8:30): 145K expected, 172K prior
- Unemployment Rate, August (8:30): 8.3% expected, 8.3% prior
- Hourly Earnings, August (8:30): 0.2% expected, 0.1% prior
- Average Workweek, August (8:30): 34.5 expected, 34.5 prior