BW,...morning to you. again,....some more brillance displaying itself. i'm so grateful to have your perceptions and wisdom available to read and integrate into my understanding. i've learned an immense amount of market overview from your MTUftWA.
thanks !
you might want to contemplate writing a book,...titled something like,....
Market Trend Update for Your Life - An Overview of the Markets and How to Decipher Them.
Saville from shorterm bearish to shorterm neutral with an immediate switch to back to bearish on drop below 1700 on NDX. My Assessment:) Reasonable. Now to make time to ponder your much appreciated labors; BUENO! ot.
OVERVIEW: It’s that time once again to review the past week and look into the next. Last week we saw a continued decline, which began the week before amongst the major indices while Precious Metals, Oil and Commodities in general continued their march upward, in some instances setting new highs. The majority of this move came on the heels of a broad sell off that began on Friday the 7th which reached a climax on the 11th (the date of the Bradley Turn mentioned last week, < coincidence? >) and by the end of the week some daylight for the majors began to appear as they managed to cut some losses and hold their ground by reversing course. If one were to draw a lower support trend line on all of the major indices; COMP, SPX, DJIA and R2K -- it can be seen that this trend line was tested and support held (so far). I find this to be somewhat noteworthy. Simply put, it was a fast hard correction across the board that was followed by a bounce in unison of somewhat equal intent going into a 3-day weekend. As mentioned in the past update with which this post replies: Technicals are skewed, fundamentals are out the window, so what can we expect? A lot has been accomplished by getting Tech involved, but it would not surprise me to see the markets take a break. So we are most likely going to see a pull back to flat-gyration week ahead across the majority of indices. Gyration probably best describes the past week. While some heavy selling had taken place and certain underlying damage had been wrought, when it was all said and done we were nearly right back where we started the week; COMP 2326 (ended the previous week at 2339), R2k 751 (ended the previous week at 756), SPX 1289 (ended the previous week at 1295), DJIA 11137 (a gain on the week which previously ended at 11120) and the Trans 4645 (ended the previous week at 4690)… So as we can see the swift move was followed by what appears to be a quick recovery in process. Other indices of note; Oil 70.8, Gold 599.5, Silver 12.9, CRB 342, U$D 89.5 and last week it was TYX breaking the 5% yield barrier, this week it was the TNX’s turn. Treasury yields continue to climb across the board as the yield curve remains relatively flat. The 2yrs@4.93%, 5yrs@4.96%, 10yrs@5.04% and 30yrs@5.10%. The Yield Curve can be viewed at #msg-10683704 …
The CoT data remains much the same as in the past week. Open interest has flat-lined on the SPX and DJIA with a slight up-trend on the NDX. We also saw a slight build in Commercial Shorts on the NDX, but a pick up in Commercial shorts on the DJIA and the SPX with Small Spec longs taking up the long side. Gold open interest has climbed but seems to have flattened out with Commercial shorts and Large Spec longs remaining in a stand off. Oil open interest is a moon shot (way up) with a Commercial short positions being established and a build of Large Specs longs taking the opposite side. You can go here to view the CoT data graphs #msg-9171642 -- As detailed by AMG Data Services, excluding ETF activity Equity funds reported net cash inflows totaling $2.501B in the week ended April 12 with 60% or $1.502B going to funds investing in Non-domestic securities. Excluding ETF activity, International Equity funds reported net cash inflows of $1.212B to all Emerging and Developed regions. The largest ETF Equity inflows were $389M to iShares MSCI EAFE Index, $361M to Select Sector SPDRs Financial and $357M to Vanguard Extended Market Index VIPER. The largest ETF Equity outflows were -$631M from iShares Russell 2000 Index, -$258 Mil from SPDR Trust Series 1 and -$197M from iShares NASDAQ Biotech Index. Money Market funds reported net inflows totaling $2.312B (4th consecutive week of inflows). The full report can be viewed at #msg-10683685
ECONOMIC #’s:
Trade Balance – Feb = -$65.7B vs -$68.6B w/expectations of -$67.5B #msg-10657677
Treasury Budget – Mar = -$85.5B vs -$81.0B w/expectations of -$71.2B #msg-10657682
Import Prices (excl Oil) – Mar = -0.3% vs -0.6% w/expectations of N/A Export Prices (excl Agr) – Mar = 0.2% vs 0.1% w/expectations of N/A #msg-10670624
MBA Mortgage Applications – 4/07 = to buy a home or refinance an existing mortgage declined 5.5% and to purchase homes dropped 4.7% #msg-10657687
Oil Inventories – 4/07 and as reported by the DoE and API Crude = DoE +3.2M bbls / API +4.3M bbls Gas = DoE -3.9M bbls / API -3.5M bbls Dist = DoE -4.2M bbls / API -4.6M bbls #msg-10657698
Initial Jobless Claims – 4/08 = 313K vs 301K w/expectations of 305K #msg-10670668
Retail Sales – Mar = 0.6% vs -0.8% w/expectations of 0.5% Retail Sales (excl Autos) – Mar = 0.4% vs -0.4% w/expectations of 0.5% #msg-10670704
Michigan Sentiment – Apr = 89.2 vs 88.9 w/expectations of 89.0 #msg-10670748
Business Inventories – Feb = 0.0% vs 0.6% w/expectations of 0.3% #msg-10670449
Capacity Utilization – Mar = 81.3% vs 81.0% w/expectations of 81.4% Industrial Production – Mar = 0.6% vs 0.5% w/expectations of 0.5% #msg-10682438
A lot of unpleasant issues are at the forefront of the media’s attention lately and I have to give some credit where credit is due, they are finally questioning authority in earnest. It should not be a difficult task considering the amount of fodder they have been fed. All I can say is that it’s about time. Then again, those who warned us have been discredited, blackballed and wrongly accused of having an axe to grind when all they were doing was their job. So to an extent I guess I can understand why it took so many sacrificial lambs before the majority got on the bandwagon. Anyway, immigration remains at the forefront and I have to post these 5 bullet points on the illegal immigration issue. I find them ludicrous, annoying and I need to get it out of my system…
1) Those that support illegal immigration make their argument and refer to themselves as immigrants. This would require lawful entry and to go through the process of applying for citizenship. Sneaking over a border does not make you an immigrant, it makes you an illegal, a lawbreaker. 2) Flying the flag of another country while petitioning to become a member of this country is not only distasteful, it’s immoral. Removing an American flag from a flagpole in order to hang another countries flag in its place is outright blasphemy. 3) Illegal immigrants in their solidarity plan to boycott major US businesses and the rallying cry is "Nothing Gringo." Major U.S. companies such as McDonald's, Starbucks, Sears and Wal-Mart are being singled out for this boycott. Little do they know that those firms topping the list of companies that the they would boycott are among the strongest supporters of guest worker amnesty, the very goal of these upcoming demonstrations and boycotts. 4) Pro-illegal alien amnesty groups continue calling their effort a new civil rights movement and say their tactics are reminiscent of those by Martin Luther King and Cesar Chavez. Both Martin Luther King and Cesar Chavez were advocating for the rights of American citizens, not illegal aliens. What’s more Cesar Chavez was absolutely opposed to illegal immigration. 5) Senator John McCain insists that American men and women cannot do the work that Mexicans do in Yuma, Arizona. He said American workers are not willing or able to pick lettuce for an entire season, not even for $50 an hour. This coming from a man who wants to be our next President…
Policy vs Reality
GWB: Pursue the enemy until we bring them to justice. Reality: 51% negative on terrorism. Since 9/11, the president’s core issue.
GWB: This economy of ours is good. It's strong. Reality: 58% disapprove of the president's handling of the economy.
GWB: Any effective immigration reform must include a temporary worker program. Reality: 62% negative marks on immigration.
GWB: We will achieve victory in Iraq. Reality: 65% of Americans disapprove of the president's handling of Iraq.
GWB: I didn't come to Washington, D.C. to chase political opinion Reality: 100% credibility problem
More troubling news: Nebraska Governor Dave Heineman signed into law a plan for state segregation. Under this new law, the Omaha school district will split into three separate districts. One will be mostly white, one mostly Hispanic, and one predominantly black. Talk about setting back race relations about 30 years…
And They Call This Democracy?…
WHAT CAN WE EXPECT NOW?: I tend to believe that with each passing week an overall weariness is taking hold -- be it economic data, geo-politics or troubles in the oval office, an accumulative effect seems to be taking hold. It permeates the air and Mr. Market is getting a whiff. These are not times for complacency or to let down your guard. As mentioned last week: I just assume take a wait and see attitude, but markets can remain irrational for an awfully long time especially within the confines of the framework we are working with. I think we can still go higher from here, but not so much for the following week. Well that was then and it played out as anticipated, but this is now and what I want to touch on is the wording “markets can remain irrational for an awfully long time especially within the confines of the framework we are working with”. As I am sure many of you have noticed, everything has/is gone up together. As I have mentioned on many occasions, this is an unnatural occurrence and it is “within the confines of the framework we are working with” to which I am referring that is responsible for what we have today. That framework consists of an extremely liquefied Fed who is pumping the presses, flooding the markets with cash and simultaneously raising interest rates. Rate hikes increase the costs of borrowing, which in turn will slow growth. It was not until just recently that we have seen the longer term yields finally begin to rise and by extension a manifestation in the form of higher mortgage rates. This action is accompanied by a huge influx of cash, which is being used to fund operations and prop select indices via buy programs. At the same time this liquidity is creating an inflationary pressure, which in turn lends support to commodities. How much longer this can go on is anyone’s guess, but the way I see it, sooner or later worlds will collide. In the near term we most likely continue to see the current atmosphere play out where everything moves up in unison, that is until that date with fate occurs. Having said that and as mentioned in the Overview, support off of the lower trend line in all of the majors seems to have been established. The McClellan appears to have bottomed and 200MA stocks are turning back up although I am still looking for the Summation and BP%’s to confirm. Basically I believe the week begins mixed, but then the floodgates open on many key earnings reports from a bunch of heavy hitters. You can go here to see the entire line up. It is going to be a crucial week to be sure. These earnings reports could very well be the catalyst required for one of the two probable scenarios to play out -- blow off or blow up. If earnings are disappointing the markets could implode, but for the most part earnings will probably be good enough for participants to get behind and we see the week ahead finish out higher than where we started. So for now I am leaning towards a move higher, but as I have heard someone quoted as saying, “if you must dance, dance close to the fire exit.”
As for the U$D, Gold and Oil, I think last weeks update sums up my sentiment best: I do not expect to see any big moves in either direction although as you know world events could take precedence and shift these markets one way or another. With Treasury yields hitting the 5% plateau, we need to see how this is going to be digested by the markets going forward, but I see this favorable for Commodities. Oil stands the best chance of breaking out, although this appears to be a given with $70bbl in the crosshairs. Gold may consolidate a bit in here before taking $600 decisively and the U$D seems content on oscillating between mid-88 to mid-90’s. I would like to add that treasury yields are still a concern as the shorter term yields move closer to 5%. Oil has taken $70bbl and is poised to move on to new highs, the U$D remains in a down channel content in the present range and Gold looks to be running thin and it would not surprise me to see a move down, possibly 20pts or so before breaking out above $600 for the next leg up.
Technically Speaking AAII sentiment as of 4/12 shows 45.36% Bullish, 27.84% Bearish and 26.80% Neutral… The VIX and VXN are 12 & 16 respectively with both indicators exhibiting an up-trend. The CBOE EPC Ratio ended the week at .60 and TPC ratio at .86. The RSI 5-Days are Neutral across the board on SPX, DJIA, R2k and COMP. The P/C ratios, VIX/VXN, Summation, McClellan, Highs/Lows, Advance/Decline, 200DMA stocks and Bullish %'s can all be viewed below along with the major indices…
NDX Channel Chart with past Bradley Turn dates#msg-10671835
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 attempt to identify trends and create a track record. I am not a day trader and invest mostly in funds or baskets of stocks, perform occasional swing trades and some scalps. Data presented may not be 100% accurate as I do make mistakes, so please perform your own due diligence.
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