AI
Sunday, November 13, 2005 5:29:39 PM
~:~Market Trend Update for the Week Ahead~:~
OVERVIEW:
Another week gone by and another update to try and make sense of what has taken place and what’s ahead. As mentioned in the last update with which this post replies: the COMP has broken its cycle of lower highs, but R2k, SPX and DJIA have yet to confirm this trend. The week ahead should prove to be an interesting one. The bottom line is that it is still too early for a Christmas rally and may very well remain range bound for the remainder of the year. Even if new highs were to materialize, I doubt we get much further than the established highs. I tend to believe we still remain within a range and that if new highs are established, they will be short lived. With that said, new highs for the COMP looks to be in the crosshairs, but will the others follow? We are still at the upper trend line for the R2k, SPX and DJIA which have yet to confirm the trend of higher lows as seen with the COMP, but the Transports have gone off the hook and set a new high. Pretty amazing considering the price of oil is still above $57bbl and gas remains relatively expensive (albeit cheaper than the post Katrina highs). I can see why AMZN’s Qtr went badly, their shipping charges have increased exponentially. I placed an order for a few items and the shipping charges came to $25.00. Needless to say, I cut back on the items I ordered to get the shipping expense down and imagine others will do the same. It will be interesting to see how this effects their Christmas sales as well as other online retailers. Speculation has been that online retailers would get an increase in orders this year because of the cost of gas, but I would not count on it. Another notable issue is the BDI (Baltic Dry Index) and while this does not track cargo containers per se’, it does track prices paid for cargo bookings and thus, the amount of raw materials being shipped for production. A chart of the index can be seen here #msg-8477077 and while this may not be a precursor to a slowdown in Christmas sales, it certainly does not look good for economic growth. The CoT’s data I follow has yet to be updated, but by the time this update is published that may change and can be viewed at #msg-7253670 -- Equity Fund flows as detailed by AMG Data Services reported net cash inflows totaling $3.717B ($2.108B xETF’s) in the week ended November 9 with 71% ($2.656B) going to Non-Domestic funds. Domestic funds reported the 1st inflow ($1.061B) in 8-weeks. The largest ETF outflows were -$738M from the NASDAQ 100 Index Tracking Stock fund (QQQQ) and -$201M from the Select Sector SPDRs Energy fund (XLE). Excluding ETF activity Real Estate funds reported net outflows (-$36M) for the 7th consecutive week, for the first time since 5/19/04. Money Market funds reported net inflows totaling $14.207B. As for the U$D, Gold and Oil -- the U$D gained further traction and touched 92 then closed out at 91.90 with Gold bucking the trend and recovering to $470 then closing at $468.75 while Oil dipped below $58bbl, but closed out at $58.48. The CRB remains below its 50DMA and looks ready to test its 200DMA. It has not touched its 200DMA since Jan’05 and finished out the week at 315.59. The 10-yrs and 30-yrs T-Note yields pulled back slightly to 4.564% and 4.746% respectively…
ECONOMIC #’s:
These numbers are not pretty and probably a lot worse than we are being led to believe...
MBA Mortgage Applications increased by 2.3% in the week ended Nov. 4 compared to the prior week. Also on a seasonally adjusted basis, the number of applications filed for mortgages to purchase homes rose by 6.4%, but refinancing applications slipped 3.4% on a week-to-week basis. Moreover, the rate of applications to buy homes stands 3.6% lower compared to a year ago, noted Jay Brinkmann, MBA's vice president of research and economics and the 4-week moving average for overall mortgage applications was off 1.2%. Refinancings accounted for 41.7% of applications last week, down from the prior week's 43.6%, while the proportion of adjustable-rate mortgages rose to 31.6% from 29.4%. Average contract interest rates for 30- and 15-year fixed-rate mortgages rose to 6.31% and 5.85%, respectively, from 6.21% and 5.75% on a week-to-week basis. One-year ARMs averaged 5.45% last week, up from 5.39%.
Oil Inventories as reported by the DoE (Dept of Energy) and API (American Petroleum Institute).
Crude according to DoE rose 4.5 Mln bbls; according to API rose 4.7 Mln bbls. Gasoline according to DoE rose 4.2 Mln bbls; according to API rose 4.1 Mln bbls.Distillates according to DoE rose –100K bbls; according to API fell –2.8 Mln bbls.
Econ activity for the week ahead and the following expectations are as follows: Core PPI (0.2%), PPI (0.1), NY Empire State Index (15.0), Retail Sales (-0.6%, ex-auto 0.3%), Business Inventories (0.3%) Core CPI (0.2%) CPI (0.1%), Building Permits (2.146M), Housing Starts(2.060M), Initial Claims (N/A), Capacity Utilization (79.3%), Industrial Production (1.0%), Philly Fed (16.3)…
Are we living in some strange times or what? Maybe I am just naïve, but I cannot think of a time in my life when so much was just the opposite of what is. A general euphoria seems to have engulfed the markets. Not an off the hook all out irrationally exuberant type of euphoria, just a general outlook that is far from being based in reality. While the markets continue to have their run, the warning signs flashing in our face. We have moved higher on increasing debt and imbalances, a slowing in the housing market as rates rise and inventories build, $57bbl oil and $2.50 a gallon gasoline not to mention negative pre-announcements, earnings warnings or poor guidance from some of the biggest companies in the country such as CLX, ASD, CAT, HON, KFT, PFE, INTC, MSFT, CSCO and DELL. Maybe seasonality plays a significant part in the recent strength, but I cannot help but feel that what we are witnessing what is a harbinger for a blossoming misadventure. “The quest for riches darkens the sense of right and wrong.” — Antiphanes, ancient Greek dramatist This quote reflects the uneasiness I feel about today’s markets. Participants are blinded by their quest for riches and being sucked into a scene that will surely rival that little episode we had about 5-6 years back. It may not be my place to 2nd-guess why it is happening as I am not privy to all of the information needed to make such remarks, but I think most will agree what is taking place today is not of a healthy sort. You would have to be dumb, deaf and blind to not notice any of the many nuances. In many ways today’s extremes are far worse than those we faced back in the late 90’s. While we are all well aware of the increasing burdens, the markets and its participants continue to shrug it all off as if none of what has transpired will ever be of a consequence. There is no fear in the risk of a catastrophe only fear in the catastrophe itself once it has taken place. I say too little too late and am not sure how much further we can stretch the boundaries and ignore the ominous warning signs about us. "When it is a question of money, everyone is of the same religion." — Voltaire (Francois-Marie Arouet), French author, wit and philosopher (1694-1778) Things are beginning to unwind and many are too caught up in the occult to take notice of what is going on right under their noses. I want to be clear, I do not consider the majority of retail investors to be part of those for which I speak, it is the mutual and hedge fund managers, foreign investors and even the Fed who are in for a rude awakening once the big houses (read as Institutions) open the floodgates and turn loose a tsunami.
Can you say Fallout Shelter?…
WHAT CAN WE EXPECT NOW?:
Next week is what I like to call an “inflation data week”. This could work to the markets advantage or slow the current trend considerably. Considering we are very overbought one would think that this data will need to be very bad to keep this move going because bad news is greeted with glee, still how Mr. Market will react to this data will be interesting, it is da-boyz call if you know what I mean. As mentioned in last weeks update: The bottom line is that it is still too early for a Christmas rally This may no longer be the case… As a matter of fact we may very well be witnessing a Christmas rally a month earlier than expected. This is not a prediction, just an observation so just follow my train of thought for a minute. As mentioned in my “spin of the day”, we are rallying on debt, deficit increases, $57bbl oil, a slew of pre-announcements and warnings from big caps and a slowing in the housing market. We have been on the move up since early October and are now a month into a move that historically would not have started until Nov or Dec. What may make perfect sense is that many expect a Christmas rally so to bring it sooner keeps many off their guard for what is generally expected. The flipside of the coin is it could all end earlier than expected, say mid-Dec? It would not surprise me to see us find a new high directly off of this move and continue higher only to sell off prior to what people expect. Again, this is all just speculation on my part, but without a decent pull back or consolidation in here somewhere we may be setting up for a December decline right into the New Year. I do not like the looks of market breadth (A/D, Up/Down Volume or New Highs/Lows), these take on a semblance of distribution. I see many divergences in weekly charts and I do not like the looks of the technical indicators, namely the BP%’s, Summation Index or the EPC/TPC ratios with us pushing the upper limits of the Bbands. This all looks like one of two things are in the offing; we get a pull back now, consolidate and resume the run or we push the extremes and get a major dump later. Let’s see if what I am proposing pans out, but last thing I would like to mention is the rising wedge off the up trend that began way back in Mar’03. it is clearly evident that we are winding up into something with MACD and RSI diverging from the trend. Sooner or later this divergence most likely plays out and these particular patterns are of a reversal nature. I will post some charts of this pattern a little later on the Your Economy board. We could very well be in a distribution phase and final push before the 4-year cycle comes to an end. As for Oil, U$D and Gold -- Oil continues its move lower and if you look back in my updates (#msg-8046784 for instance in the “what can we expect now” portion of the update) you will see that I have been calling for a test of the 55-57 area for quite some time. The bottom line is I believe a bottom is close at hand for oil namely because a very common 61.8% retrace is close to having played out. These retraces have not been uncommon and we are also testing the 200DMA, which has been an area of support since the Oil bull commenced. U$D -- As stated last week: The U$D most likely remains in the 89-91 range, although an attempt at 92 is not out of the question. We saw 92 tested, but looking back over a longer term chart one can see quite a bit of resistance in this area. I am not saying we do not get through 92, but it seems unlikely. Gold -- As stated last week: Current support is at $455 followed by stronger support at $450. If the trend in MACD holds true, then we should find support right about here. Gold has found a footing and remains in a strong up trend. The next leg up in Gold may be close at hand now that we have retested $455 and bounced. This now creates more support in that area and it would not surprise me to see Gold buck the trend of the U$D and gain strength into the holidays. Any U$D weakness will only be a bonus for Gold…
Technically speaking, Bullish Advisors are back above 50% at 50.6% with Bearish Advisors at 24.7%. The VIX/VXN have resumed residence in their old ranges of VIX 12-14 and VXN 14-16, both currently residing in the lower ends of these ranges. The CBOE Equity P/C Ratio ended the week at .486 with a 21DMA of .619. The RSI 5-Days are Very Overbought across the board. The $NASI Daily (Summation), $NAMO Daily (McClellan), NAHL Daily (Highs/Lows), $NAAD Daily (Advance/Decline), stocks above 200DMA and Bullish %'s all remain in overall down channels, although the intermediate trends have gained while the McClellan continues to oscillate in what appears to be a topping pattern. Charts of the aforementioned can be viewed below along with the major indices…
NOTE:
CORE Funds: HSGFX, PCRDX, PRPFX, QRAAX, RSNRX ,TAVIX, SRPIX
Speculative Stocks; ANO
Picked up AGIX for Q1’06 ARISE trial results for a speculative swing play
[b[]SWING Play: USPIX, PMPIX, GSX
(dropped XLE early on last week, will just ride GSX instead for the time being)
Disclaimer:
This disclosure is not a recommendation to buy, sell or do as I do. It is only to give my thoughts on current market conditions and share the positions that I am holding. I am not a day trader and invest mostly in funds or baskets of stocks and attempt to identify up/down trends while performing occasional swing trades.
OVERVIEW:
Another week gone by and another update to try and make sense of what has taken place and what’s ahead. As mentioned in the last update with which this post replies: the COMP has broken its cycle of lower highs, but R2k, SPX and DJIA have yet to confirm this trend. The week ahead should prove to be an interesting one. The bottom line is that it is still too early for a Christmas rally and may very well remain range bound for the remainder of the year. Even if new highs were to materialize, I doubt we get much further than the established highs. I tend to believe we still remain within a range and that if new highs are established, they will be short lived. With that said, new highs for the COMP looks to be in the crosshairs, but will the others follow? We are still at the upper trend line for the R2k, SPX and DJIA which have yet to confirm the trend of higher lows as seen with the COMP, but the Transports have gone off the hook and set a new high. Pretty amazing considering the price of oil is still above $57bbl and gas remains relatively expensive (albeit cheaper than the post Katrina highs). I can see why AMZN’s Qtr went badly, their shipping charges have increased exponentially. I placed an order for a few items and the shipping charges came to $25.00. Needless to say, I cut back on the items I ordered to get the shipping expense down and imagine others will do the same. It will be interesting to see how this effects their Christmas sales as well as other online retailers. Speculation has been that online retailers would get an increase in orders this year because of the cost of gas, but I would not count on it. Another notable issue is the BDI (Baltic Dry Index) and while this does not track cargo containers per se’, it does track prices paid for cargo bookings and thus, the amount of raw materials being shipped for production. A chart of the index can be seen here #msg-8477077 and while this may not be a precursor to a slowdown in Christmas sales, it certainly does not look good for economic growth. The CoT’s data I follow has yet to be updated, but by the time this update is published that may change and can be viewed at #msg-7253670 -- Equity Fund flows as detailed by AMG Data Services reported net cash inflows totaling $3.717B ($2.108B xETF’s) in the week ended November 9 with 71% ($2.656B) going to Non-Domestic funds. Domestic funds reported the 1st inflow ($1.061B) in 8-weeks. The largest ETF outflows were -$738M from the NASDAQ 100 Index Tracking Stock fund (QQQQ) and -$201M from the Select Sector SPDRs Energy fund (XLE). Excluding ETF activity Real Estate funds reported net outflows (-$36M) for the 7th consecutive week, for the first time since 5/19/04. Money Market funds reported net inflows totaling $14.207B. As for the U$D, Gold and Oil -- the U$D gained further traction and touched 92 then closed out at 91.90 with Gold bucking the trend and recovering to $470 then closing at $468.75 while Oil dipped below $58bbl, but closed out at $58.48. The CRB remains below its 50DMA and looks ready to test its 200DMA. It has not touched its 200DMA since Jan’05 and finished out the week at 315.59. The 10-yrs and 30-yrs T-Note yields pulled back slightly to 4.564% and 4.746% respectively…
ECONOMIC #’s:
These numbers are not pretty and probably a lot worse than we are being led to believe...
Treasury Budget (Oct) -$47.2B vs -$57.3B w/exp of -$50.0B
Michigan Sentiment (Nov) 79.9 vs 74.2 w/exp of 76.0
Trade Balance (Sep) -$66.1B vs -$59.3B w/exp of -$61.3B
Import Prices (Oct) -0.3% vs 2.3% w/prior of 1.8%
Import Prices ex-oil (Oct) 0.8% vs 1.2% w/prior of 1.0%
Export Prices (Oct) 0.6% vs 0.8% w/prior of –0.1%
Export Prices ex-ag (Oct) 0.6% vs 1.1% w/prior of 1.1%
Initial Claims (11/05) 326K vs 324k w/exp of 320K
Wholesale Inventories(Sep) 0.6% vs 0.5% w/exp of 0.3%
Consumer Credit (Sep) -$59.4M vs $5.8B w/exp of –5.8B
MBA Mortgage Applications increased by 2.3% in the week ended Nov. 4 compared to the prior week. Also on a seasonally adjusted basis, the number of applications filed for mortgages to purchase homes rose by 6.4%, but refinancing applications slipped 3.4% on a week-to-week basis. Moreover, the rate of applications to buy homes stands 3.6% lower compared to a year ago, noted Jay Brinkmann, MBA's vice president of research and economics and the 4-week moving average for overall mortgage applications was off 1.2%. Refinancings accounted for 41.7% of applications last week, down from the prior week's 43.6%, while the proportion of adjustable-rate mortgages rose to 31.6% from 29.4%. Average contract interest rates for 30- and 15-year fixed-rate mortgages rose to 6.31% and 5.85%, respectively, from 6.21% and 5.75% on a week-to-week basis. One-year ARMs averaged 5.45% last week, up from 5.39%.
Oil Inventories as reported by the DoE (Dept of Energy) and API (American Petroleum Institute).
Crude according to DoE rose 4.5 Mln bbls; according to API rose 4.7 Mln bbls. Gasoline according to DoE rose 4.2 Mln bbls; according to API rose 4.1 Mln bbls.Distillates according to DoE rose –100K bbls; according to API fell –2.8 Mln bbls.
Econ activity for the week ahead and the following expectations are as follows: Core PPI (0.2%), PPI (0.1), NY Empire State Index (15.0), Retail Sales (-0.6%, ex-auto 0.3%), Business Inventories (0.3%) Core CPI (0.2%) CPI (0.1%), Building Permits (2.146M), Housing Starts(2.060M), Initial Claims (N/A), Capacity Utilization (79.3%), Industrial Production (1.0%), Philly Fed (16.3)…
Are we living in some strange times or what? Maybe I am just naïve, but I cannot think of a time in my life when so much was just the opposite of what is. A general euphoria seems to have engulfed the markets. Not an off the hook all out irrationally exuberant type of euphoria, just a general outlook that is far from being based in reality. While the markets continue to have their run, the warning signs flashing in our face. We have moved higher on increasing debt and imbalances, a slowing in the housing market as rates rise and inventories build, $57bbl oil and $2.50 a gallon gasoline not to mention negative pre-announcements, earnings warnings or poor guidance from some of the biggest companies in the country such as CLX, ASD, CAT, HON, KFT, PFE, INTC, MSFT, CSCO and DELL. Maybe seasonality plays a significant part in the recent strength, but I cannot help but feel that what we are witnessing what is a harbinger for a blossoming misadventure. “The quest for riches darkens the sense of right and wrong.” — Antiphanes, ancient Greek dramatist This quote reflects the uneasiness I feel about today’s markets. Participants are blinded by their quest for riches and being sucked into a scene that will surely rival that little episode we had about 5-6 years back. It may not be my place to 2nd-guess why it is happening as I am not privy to all of the information needed to make such remarks, but I think most will agree what is taking place today is not of a healthy sort. You would have to be dumb, deaf and blind to not notice any of the many nuances. In many ways today’s extremes are far worse than those we faced back in the late 90’s. While we are all well aware of the increasing burdens, the markets and its participants continue to shrug it all off as if none of what has transpired will ever be of a consequence. There is no fear in the risk of a catastrophe only fear in the catastrophe itself once it has taken place. I say too little too late and am not sure how much further we can stretch the boundaries and ignore the ominous warning signs about us. "When it is a question of money, everyone is of the same religion." — Voltaire (Francois-Marie Arouet), French author, wit and philosopher (1694-1778) Things are beginning to unwind and many are too caught up in the occult to take notice of what is going on right under their noses. I want to be clear, I do not consider the majority of retail investors to be part of those for which I speak, it is the mutual and hedge fund managers, foreign investors and even the Fed who are in for a rude awakening once the big houses (read as Institutions) open the floodgates and turn loose a tsunami.
Can you say Fallout Shelter?…
WHAT CAN WE EXPECT NOW?:
Next week is what I like to call an “inflation data week”. This could work to the markets advantage or slow the current trend considerably. Considering we are very overbought one would think that this data will need to be very bad to keep this move going because bad news is greeted with glee, still how Mr. Market will react to this data will be interesting, it is da-boyz call if you know what I mean. As mentioned in last weeks update: The bottom line is that it is still too early for a Christmas rally This may no longer be the case… As a matter of fact we may very well be witnessing a Christmas rally a month earlier than expected. This is not a prediction, just an observation so just follow my train of thought for a minute. As mentioned in my “spin of the day”, we are rallying on debt, deficit increases, $57bbl oil, a slew of pre-announcements and warnings from big caps and a slowing in the housing market. We have been on the move up since early October and are now a month into a move that historically would not have started until Nov or Dec. What may make perfect sense is that many expect a Christmas rally so to bring it sooner keeps many off their guard for what is generally expected. The flipside of the coin is it could all end earlier than expected, say mid-Dec? It would not surprise me to see us find a new high directly off of this move and continue higher only to sell off prior to what people expect. Again, this is all just speculation on my part, but without a decent pull back or consolidation in here somewhere we may be setting up for a December decline right into the New Year. I do not like the looks of market breadth (A/D, Up/Down Volume or New Highs/Lows), these take on a semblance of distribution. I see many divergences in weekly charts and I do not like the looks of the technical indicators, namely the BP%’s, Summation Index or the EPC/TPC ratios with us pushing the upper limits of the Bbands. This all looks like one of two things are in the offing; we get a pull back now, consolidate and resume the run or we push the extremes and get a major dump later. Let’s see if what I am proposing pans out, but last thing I would like to mention is the rising wedge off the up trend that began way back in Mar’03. it is clearly evident that we are winding up into something with MACD and RSI diverging from the trend. Sooner or later this divergence most likely plays out and these particular patterns are of a reversal nature. I will post some charts of this pattern a little later on the Your Economy board. We could very well be in a distribution phase and final push before the 4-year cycle comes to an end. As for Oil, U$D and Gold -- Oil continues its move lower and if you look back in my updates (#msg-8046784 for instance in the “what can we expect now” portion of the update) you will see that I have been calling for a test of the 55-57 area for quite some time. The bottom line is I believe a bottom is close at hand for oil namely because a very common 61.8% retrace is close to having played out. These retraces have not been uncommon and we are also testing the 200DMA, which has been an area of support since the Oil bull commenced. U$D -- As stated last week: The U$D most likely remains in the 89-91 range, although an attempt at 92 is not out of the question. We saw 92 tested, but looking back over a longer term chart one can see quite a bit of resistance in this area. I am not saying we do not get through 92, but it seems unlikely. Gold -- As stated last week: Current support is at $455 followed by stronger support at $450. If the trend in MACD holds true, then we should find support right about here. Gold has found a footing and remains in a strong up trend. The next leg up in Gold may be close at hand now that we have retested $455 and bounced. This now creates more support in that area and it would not surprise me to see Gold buck the trend of the U$D and gain strength into the holidays. Any U$D weakness will only be a bonus for Gold…
Technically speaking, Bullish Advisors are back above 50% at 50.6% with Bearish Advisors at 24.7%. The VIX/VXN have resumed residence in their old ranges of VIX 12-14 and VXN 14-16, both currently residing in the lower ends of these ranges. The CBOE Equity P/C Ratio ended the week at .486 with a 21DMA of .619. The RSI 5-Days are Very Overbought across the board. The $NASI Daily (Summation), $NAMO Daily (McClellan), NAHL Daily (Highs/Lows), $NAAD Daily (Advance/Decline), stocks above 200DMA and Bullish %'s all remain in overall down channels, although the intermediate trends have gained while the McClellan continues to oscillate in what appears to be a topping pattern. Charts of the aforementioned can be viewed below along with the major indices…
NOTE:
CORE Funds: HSGFX, PCRDX, PRPFX, QRAAX, RSNRX ,TAVIX, SRPIX
Speculative Stocks; ANO
Picked up AGIX for Q1’06 ARISE trial results for a speculative swing play
[b[]SWING Play: USPIX, PMPIX, GSX
(dropped XLE early on last week, will just ride GSX instead for the time being)
Disclaimer:
This disclosure is not a recommendation to buy, sell or do as I do. It is only to give my thoughts on current market conditions and share the positions that I am holding. I am not a day trader and invest mostly in funds or baskets of stocks and attempt to identify up/down trends while performing occasional swing trades.
**Happy Trading**
Your Economy #board- 1948
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