Replies to post #6781 on Sector Investing

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The Investors Intelligence Poll is way too Bullish now for me to be buying much of anything new:

 
 Date Published  Percent Bullish  Percent Bearish  
     10/17             62              19.3

http://www.schaeffersresearch.com/streetools/market_tools/inv_intel.aspx?click=jumpto

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InvestmentHouse Weekend Update:

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

- CAT gives up on the US economy, raising further mortgage & credit fears and fueling expiration Friday selling.
- Oil runs to $90 but energy balks: too high for its own good?
- Lots of recession talk, and after 5 upside years that is normal. What the market is telling us about it.
- Market giving the October surprise we discussed last weekend.
- Looking for some leaders to hold up and others to recover from some fear-driven expiration selling.

Market gets some CAT-scratch fever on fears of a slowing economy.

GOOG, AMD and indeed most all techs have posted some good numbers thus far, but on Friday that did not really matter as some industrial stocks undermined the good work put in by tech. CAT, MMM, and HON failed to impress though their numbers were not bad. What was bad was the commentary, the words that accompanied the results. CAT said the recovery in the first half of 2007 would fade in the second half of the year. More than that, it could threaten the rest of the world economy, in effect dragging everyone with us. With some anecdotal evidence that Europe was slowing (and it was purely anecdotal; the UK reported a 3.3% GDP growth rate), the impact was devastating on a market that was already in pullback mode, trying to find some footing to continue its breakout move.

Instead it was more of a breakdown. Stocks started lower, tried the traditional (of late) midmorning bounce, but failed the attempt. It failed it horribly. There were many negatives on the session, at least there were many that were repeated all day on CNBC and other financial stations. On top of the CAT comments there were calls that the US economy was going into a 'doozy' of a recession. It was the 20th anniversary of Black Friday and the comparisons during the day were ad nauseam. There was the weak dollar with the dollar index hitting a new low and again, comparisons to 1987 when the dollar was weak as well.

All of this led to a snowball selling effect, and in the afternoon when there was no rebound as in the prior sessions there was the definite smell of panic as shares were dumped and the indices went straight down to the close without even trying to bounce or otherwise come up for air. Oh there was a 3 minute or so blip in the last 15 minutes once the sell on close orders cleared out and there were no buy or sell imbalances on the NYSE board, but that was washed over in a last wave of selling.

Technically the action was about as weak as you can get it. A low open that only got worse as the day progressed, knifing lower in the afternoon right into the bell. The indices all lost more than 2.5% with the small caps pushing 3% (-2.98%). Nothing like economic and recession worries to skewer the smaller issues that are so economically, and specifically US economically, dependent. The internals were commensurately weak with surging volume on the selling (3 out of 7 distribution sessions on NYSE, 4 out of 7 on NASDAQ). A sad fact is that the only really strong volume outside the Fed rate cut day has occurred on the downside, just as in the July and August sell off. Breadth was -5:1; weak anyway you cut it.

The charts also told a weak story as SP500 and DJ30 dove through their 50 day EMA and into the May and June trading ranges just before the July and August breakdown. NASDAQ is still hanging in there above its July high and thus holding its breakout, but it is a very tenuous save. Now 200 of the Dows downside was due to just 7 stocks, and more than half of that was attributed to just three. That, however, does not change the outcome and it certainly doesn't explain the massive weakness in SP500 and the small caps.

Leadership was mixed. Energy was just coming to life the past week once more and then Friday it suffered a blowout. SLB reported great earnings but it was torched. There were calls oil would reverse sharply, and along with the recession talk (recession means less demand for oil) the energy stocks got hit as well. Industrials were slaughtered after CAT spoke its mind about the economy. Financials were of course lower with the renewed worries regarding the economy and CAT's comments about the housing industry.

On the other hand techs were remarkably solid. Of course, tech earnings have been solid, indeed strong (e.g. GOOG, NOK, INTC, YHOO). Amazing what some solid earnings can do for a stock and a sector. Interestingly, techs led the move higher and looking over many of those same stocks on Friday, they held up very well, holding their uptrends and just making normal tests. Metals were also quite strong. Yes they were lower, but they were just testing, setting up nicely for a new break higher. It remains to be seen whether they continue their normal tests or succumb to the selling in the other sectors, but on Friday when investors were throwing everything out the window, these stocks were holding the line. That is a nice plus, and we are looking at these areas for when the selling winds down.

Friday was a classic example of why we take gains on the way up, i.e. after the strong runs in stocks when they start the moves we anticipated. Even though the move looks strong, when a stock makes a strong surge over a few sessions it is prudent to lock in some gain, particularly with options. In a market where the economics still look good and the Fed is on investors' side, the market can still react adversely. After all, the Fed tends to lead the economy, selling off before there are many hints of an economic decline. That is why you have to look at what the market does as opposed to relying on your own conclusions and emotions. Friday smelled of panic, especially in the afternoon when no rebound transpired. With the very heavy negative technical indications, however, you cannot just write it off to panic and assume things will be back up next week. The market was consolidating nicely until Friday when it was clocked and the breakouts in the NYSE were given up. This may just be a new buying opportunity in the making, but we have to see how this coming week pans out, particularly watching how the remaining leaders hold up.

THE ECONOMY

Oil blitzkrieg balks at $90/bbl.

Energy broke higher in September after a good base, and after a three week test of that initial run, it started to break higher again this past week. As oil moved toward $90/bbl that started to pull some of the major integrated companies along with the service and independents that had already broken higher. The high prices also got the tar sands and other alternative energy plays moving again.

As oil hit 90, however, if immediately came back. That did not kill the energy stock advance, not until SLB announced some solid results and got slammed. The results were better than expected but nonetheless SLB blew up. It took the other service stocks with it, the particular sector that really led energy higher. Now on the positive it did not take down the rest of the energy sectors. There was some selling in the independents as they are considered a bit riskier, but they did not fold up their patterns. The majors sold some as well, but they also held up. The tar sands and other alternative energy stocks held up just fine. It was not a washout, but the leading sector took a hammering.

What is the deeper story here? Is there a deeper story? The first thing that you think of is oil approaching $100/bbl. Boone Pickens said that might be the choke point but he quickly followed with a general denial of just at what point the economy would seize up. Good reason too as he believed it was a lower point last year. Not criticizing him; he has made billions for himself and his investors. Just pointing out that the economy has changed such that quantifying oil's impact on its output is very difficult.

Thus you look at how everything reacts when it reaches certain points. It hit 90 the past week and it immediately pulled back. The service stocks, despite strong earnings, gapped lower. The stock market struggled all week and then went into a tailspin Friday. There is a point where oil becomes too expensive and the economy stalls as a result. Call it the 1970's syndrome when it surged due to the embargo and western economies seized up into recession. Again in the early 1980's when price hit its all-time high (and that is still the champ in inflation adjusted dollars even with this spike higher) the economy recessed. Price just got too high and the economy couldn't handle it.

When you have $90/bbl oil and then add a housing bust, a credit crunch, a tanking dollar, protectionism, and talk of ending the economic policies that brought about the prosperity, it is tough to keep things going. When you think about it, that is a harsh laundry list of negatives for any economy to withstand. It is easy to fall into the trance many are in that recession is inevitable. It doesn't look great, but it hasn't for a couple of years. The acid test is what the stock market does. This last week was a nice pullback until Friday. Now it is a question mark as to whether the market will recover or will roll over and end the expansion. The latter seems improbable, but lets look at the issues at hand.

What is the market saying about the economy.

Lots of talk Friday about a market crash and a doozy of a recession. As noted, that helped fan the selling frenzy. Up until Friday the market was running higher and making rather orderly pullbacks with strong leaders plowing the road ahead. Definitely positive action. Even with Friday and the sharp sell off there is no reason to panic based on that event alone. Sharp sell offs are rather normal in continuing runs higher, though Friday, for just one session, was a bit extreme with all indices down more than 2.5%. That was a spanking. Nonetheless, even after Friday with SP500 and DJ30 plunging, it was not a breakdown. NASDAQ still holds its breakout, and as noted, some good solid leadership basically ignored the selling.

But market, and thus the economy, has some issues. In July and early August we discussed how the VIX was rising even as the indices made new highs. The last time that happened was in late 1999 and early 2000 and the market topped in March. Volatility did fall as the market rallied out of the August selling, but it held above the average level for the past 3.5 years and has rebounded close to 23 with the Friday selling. That is a sign to be watching for events such as Friday to develop into something worse.

There was heavy distribution in the summer selloff. Massive volume at record levels never seen on NASDAQ or NYSE. The recovery lacked any volume and indeed volume remained below average on over 90% of the recovery. To be fair average volume surged thanks to that record volume, but the point is the selling volume far surpassed the trade as the market recovered. That has been the major weakness of this recovery. Without a doubt much of the July and August volume was panic selling over the credit crisis, but it shows investors are ready to sell en masse if the conditions are right. After 5 years of economic expansion, investors are a bit more skittish.

There is also a big divergence among sectors in the market. Retail, housing, and other consumption related stocks are in the tank, declining even as the overall market rises. Energy, materials, metals, technology, agriculture, etc. are hitting highs. Divergences never go on forever. Remember in the 1990's the large cap techs were leading and no small caps were following? It took a nasty yet quick bear market in 1998 to get everything working together in harmony.

These current divergences have a huge difference, however, to those in the 1990's. Back then the US was THE game in town. The world was producing goods and selling them to us. Japan was in its depression after the 1980's when we were phobic about Japan buying up all of the US. It did, then those assets went down the tubes and we had the money and the property. Sweet deal. Makes you kind of wonder why we are all bent out of shape now about foreign purchases. It always tends to work out when the economy turns over and the house keeps everything. In the current situation the foreign countries are expanding sucking up all of the materials, thus driving prices, and those of the stocks dealing with these materials, higher. The consumer and retail sectors are languishing because of a slower US economy vis- -vis the rest of the world. After a 5 year run that is hardly unexpected. Thus the divergence is not the big issue that some make it out to be.

Okay, so the divergence is not anything to fret, but the rising VIX on the new highs and the heavy selling volume versus the rebound volume are significant market issues. Still, even with those the market is not breaking down. This pullback is thus far similar to others. It is the fact that it comes after a long expansion that makes each pullback worrisome to many pundits. How it responds to this selling given that there are some important issues is the key to how it moves going forward. Thus we want to see how this expiration sell off pans out in the week ahead. The market dug itself into a hole with that move and now we see how it responds.

THE MARKET

MARKET SENTIMENT

VIX: 22.96; +4.46
VXN: 25.94; +3.8
VXO: 23.15; +4.83

Put/Call Ratio (CBOE): 1.16; +0.37. Back over 1.0 for the first time in a couple of weeks after spending about 24 straight sessions above that level during the summer selling.

Bulls: 62.0%. Up from 60.2% the prior week and continuing the streak higher and well above the 55% level considered bearish. Fourth week above that level, an indication that the market is getting overdone. The theory is that when too many investors or advisors are bullish then most of the money is in the market and there is nothing ready to come in off the sidelines to drive prices higher. On a steady climb from a low of 40.6%, the low for this round. Never made the thirties. Hit 56.7% in June and now it has blown past that. The market peaked about a month later. For reference it bottomed in the summer 2006 near 36%, and 35% is considered bullish.

Bears: 19.6%. Falling below the 20% threshold, continuing the sharp drop. 21.5% the prior week and down 25.0% the week before that. It peaked at 37.4% on this move. Closer to the 18% hit in August, and it topped the June 2006 peak (36%) on this 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).

NASDAQ

Stats: -74.15 points (-2.65%) to close at 2725.16
Volume: 2.413B (+18.82%). The fifth day of above average volume for the month. Two on upside sessions, three on downside. More distribution than accumulation since the stronger volume started on that reversal session two Thursdays back. Once again a trend lower is marked by the stronger volume, and that is a red flag as NASDAQ moves into the coming week and tries to stem the selling and hold its breakout above the July high.

Up Volume: 201.686M (-1.005B)
Down Volume: 2.202B (+1.429B). 11:1 downside volume. Massively extreme to the downside.

A/D and Hi/Lo: Decliners led 5.24 to 1. Also massively extreme to the downside.
Previous Session: Decliners led 1.05 to 1

New Highs: 15 (-36)
New Lows: 153 (+70)

NASDAQ CHART: Click to view the chart

The internals were at extremely extreme levels, and so quickly into the selling. After an extended period of selling that would signal a cleansing, a catharsis. Not as likely with this just over a week old. Recall early on in the summer selling the internals jerked to extremes and we made the same comment. It took another three weeks to get to the bottom of a pretty quick selling binge. In any event, NASDAQ is still hanging onto its breakout to a new post-2002 high by a gnat's behind, closing right on top of that July peak. It has some room to play with down near 2700, but if it goes much farther than that it is going to be a longer correction. That makes this coming week and how it responds to being dragged lower by the industrials critical to how the market sets up for the run to the end of the year.

SOX (-4.30%) posted a truly weak session, undercutting the September and October lows and now dances with the June and August lows. It looks like warmed over gruel. A bounce up to test the 480 level will give us a short play.

SOX CHART: Click to view the chart

SP500/NYSE

Stats: -39.45 points (-2.56%) to close at 1500.63
NYSE Volume: 1.79B (+41%). Big, big jump in volume, the strongest of the month and easily topping even the Fed rate cut volume. The only above average volume of the month. Pretty much puts the session in perspective, though you have to throw in it was expiration and that perked up the trade.

Up Volume: 89.242M (-504.787M)
Down Volume: 1.698B (+1.632B). -19:1 down to up volume. I have to say I do not recall ever seeing it at this level.

A/D and Hi/Lo: Decliners led 5.32 to 1. As with NASDAQ, a big divergence here.
Previous Session: Decliners led 1.01 to 1

New Highs: 18 (-70)
New Lows: 119 (+58)

SP500 CHART: Click to view the chart

The large caps lost a little market cap Friday as big industrials such as CAT faded and the financials were whacked around once more as the credit issues continue to take back some of the gains scored over the past few weeks. Indeed many of the financials are in the crapper again, e.g. WB that made is a nice downside gain this week in very short order. SP500 fell through the 50 day EMA and landed near the 90 day. There is some support here at 1500. There is a key level at 1490ish from the June twin lows (double bottom) that many are looking at as the fulcrum for the index. Break that and it heads lower as some sell programs kick in.

SP600 (-2.98%) was the downside leader if you toss out SOX (and for all intents and purposes over the past several months that is the appropriate thing to do). After holding at the 50 day EMA with some nice tests it broke that support, the 90 day SMA, and the 200 day SMA, and it did so quite convincingly. It broke below some peaks at 420 and is trying to hold some interim peaks from February and March. Thin ice and with the worries about the economy the small caps look to be in for trouble ahead. Of course they are down 50% of the rebound off the rebound from the August low. They look to have put in a big double top, and hate to say it, but that is one of the most telling indications of the market's view of the economy. We will see how they respond this coming week, but this decline was almost half of the decline since the peak early this month. Wanton selling.

SP600 CHART: Click to view the chart

DJ30

The blue chips were plundered by just a few stocks that were exceptionally weak, e.g. CAT and MMM. Volume was huge, higher than Wednesday and the strongest of the month as the blue chips mirrored the SP500, crashing the 50 day EMA and the 90 day SMA, holding at some interim support near 13,500. A drop to the July 2006/March 2007 trendline (roughly 13,300) would represent roughly a 50% retracement of the move off the August low, and that would be the point we look for it to try and find some footing.

Stats: -366.94 points (-2.64%) to close at 13522.02
Volume: 332M shares Friday versus 205M shares Thursday. After calming down Thursday, volume shot higher. Expiration helped push the trade, but there was some nasty earnings selling volume as well.

DJ30 CHART: Click to view the chart

MONDAY

Mercifully next week the economic data dies down somewhat, leaving earnings as the main focus. They would be the focus in any event given this is the heaviest week of the season for S&P results, but there won't be the distraction of a lot of economic data.

Thus far S&P earnings are running at a -1% clip versus last quarter. Outside of technology the picture is just not looking that promising. Indeed even with all of the positives from tech the industrial earnings are overrunning the good news. The fear has to be that the foreign economies will start to slow either due to getting just too hot, because oil has moved too high, or some combination of both. Coupled with the grim expectations recently expressed about the US and its economic future, there was some selling that, combined with expiration Friday, became some panic selling.

Looks as if this is the October surprise we talked about in last weekend's report. No weakness in September and a run right up into earnings. Earnings at first did not live up to the run, but then they almost pulled it off when tech started coming in and giving credence to the run higher. When industrials, the shoe-ins for strong results given the world economic expansion, did not serve up results topping expectations, the pullback started, and Friday it started to have the look of a correction.

This is, however, somewhat typical action for an October. There can be selling in September that continues in October until it bottoms, or there can be a run to October that then turns into selling as we have here. We are looking for some more selling after this recent turn to the downside, but when DJ30 gets to its trendline (which won't take long at this rate) and SP500 tests the 1490ish range we will look for some kind of upside answer. That is not much further at all and we could see some undercutting of those levels, but a hold generally near those would be the start of a recovery to take the markets higher to the end of the year.

The question is what will leadership look like when this is over. Will the same guard take up the point or will a new crop rotate in? Tech held up well Friday as did metals and ag, and both of those led the move higher thus far. We keep looking for the move to spread out and it tried to do so, but it never really caught on. Now with the small caps getting clubbed the logical choice is tech along with those other leading sectors that are holding up (and that does not rule out energy despite SLB's collapse Friday).

Of course we have to see how this week pans out. Given expiration Friday and the more emotional reaction to the CAT comments you would surmise that the Friday selling was overdone. Indeed the market tends to always overshoot in the short run. Thus we could see stocks try to start back up early in the week given expiration is over. Whether they try to bounce or fade a bit further, the key is to be patient. When casting a fly you have to be patient and let the line move through its pattern after your arm movement lest you rush it and pop your flow off your tippet. Same with pullbacks; you have to let them run their course as a harsh sell off is often met with a relief bounce that does not last. You can get caught moving in too early, and then when it fades back again you are susceptible to second guessing and doubt that pushes you into bad decisions even as you look at the charts and see things are going as you would expect. It is one thing to look at a chart without money at risk versus looking at one when you are significantly invested. The goal is to always look at a chart with the mindset of the former, but it is a constant battle to do so.

That is one good reason why it is a good practice during these times to move in piecemeal, i.e. if you see a move you like, don't go all in on the first bounce. Put some money to work, and see how it pans out. If it moves on up then add when there is a test. If it moves lower you are not killed, and when the bottom does come again you can add to your position and get a better overall price. If it does not bottom you can sell and not be hit as bad.

In short, adjust to the times. Back in September when the energy and metal stocks set up beautiful bases and tests we were going all in on the plays and we made a ton of money. That was a situation where everything was perfect. Now things are jumbled at best, and it is prudent to move slowly and cautiously, taking advantage of moves when they show up, but realizing the set ups are not as sure. Remember, these are the times that are not going to make you rich but they can hurt you. In other words, during this kind of action the risk/reward ratio is not as good. It behooves us to recognize that and to be patient and let the plays come to us whether upside or downside. Everyone was running to go short Friday and more will be doing so to start the week. It is best not to rush after it but let it test; if it fails the test then you move in. Otherwise you are chasing the bus and just after you catch it, it slams on the brakes.

We still see some great stocks in good position, and if they continue to show nice, easy pullbacks to test their last moves we are going to be ready to move in. Indeed we have some for this week that we are looking to do just that. If they show the moves, great. If they are not ready we will wait on them and adjust the buy points based upon their moves. There are a lot of earnings coming this week, and right now the market is going through the initial phase of the season where it makes its first strong move based on the results. This one is down. It will have to run that course, and if say tech earnings continue to come in strong the selling will wind down and then the second phase will take control. If tech remains solid then those earnings will propel that sector and start the move toward year end. What we will do is be ready to move into the leaders that are holding the line and setting up new bases for the upside, and if there is a weak bounce in the market overall or in certain sectors, we can use the bounce to bird dog some downside plays. Again, it is a time to be patient and let the move mature, then be ready to move as it concludes and the next phase begins.

Support and Resistance

NASDAQ: Closed at 2725.16
Resistance:
2764 is the November/February up trendline
The 10 day EMA at 2768
2778 from a July 1999 peak
2887 from a September 1999 peak
2920 from an October 1999 peak

Support:
2725 is the July high
2712 is the November/December/February up trendline
The 50 day EMA at 2682
2673 is the early July high
2634.60 is the June peak

S&P 500: Closed at 1500.63
Resistance:
The 90 day SMA is at 1502
1514 is the July 2006/March 2007 up trendline
The 50 day EMA at 1515
1534 is the early July high
The 10 day EMA is at 1537
1539 is the mid-June intraday high
1541 is the early June high
1553 intraday high from March 2000 used to be the all-time peak
1556 is the July intraday high
1576 is the Thursday intraday high.

Support:
1490.72 is the early June closing low and early August peak.
The 200 day SMA at 1477
1475 from peaks in December 1999 and January 2000

Dow: Closed at 13,522.02
Resistance:
The 90 day SMA at 13,565
The early July peak at 13,671
The early June high at 13,676 (closing), 13,692 (intraday)
The mid-June high at 13,689
The August high at 13,696
The 50 day EMA at 13,701
The 10 day EMA at 13,881
14,010 is the old channel line
The July high at 14,022
14,088 is the early October closing high
14,198 is the Thursday intraday high.

Support:
13,300 is the July 2006/March 2007 up trendline
The 200 day SMA at 13,137
12,845 is the August closing low
12,786 is the June peak

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

October 24
- Existing home sales, September (10:00): 5.30M expected, 5.50M prior
- Crude oil inventories (10:30): 1.78M prior

October 25
- Durable goods orders, September (8:30): 1.5% expected, -4.9% prior
- Initial jobless claims (8:30): 337K prior
- New home sales, September (10:00): 785K expected, 795K prior

October 26
- Michigan sentiment, October final (10:00): 82.5 expected, 82.0 prior

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Amateur Investors Weekend Stock Market Analysis (11/10/07)

http://www.amateur-investor.net/Weekend_Market_Analysis_Nov_10_07.htm

As I have pointed out over the past few weeks two things were of concern involving the rise in the price of Crude Oil and the breakdown in the Semiconductor sector. As we have seen in the past each time there has been a significant rise in the price of Crude Oil (points A to B) the Dow has gone through a correction (points C to D) and vice versa.



Meanwhile the Semiconductors as tracked by the Semiconductor Index (SOX) have been selling off since July (points E to F). In the past each time the SOX has gone through a major correction (points G to H) the Nasdaq has followed shortly thereafter (points I to J).



As far as major averages the Dow has now dropped below its 200 Day EMA (green line) and also has failed to hold support at its 61.8% Retracement Level (calculated from the August low to the early October high). If the Dow continues lower the next support area for the Dow would be at its 76.4% Retracement Level near 12900.

The current drop in the Dow looks similar to what occurred from July into August when it initially sold off for a few weeks (points K to L) which was then followed by a one week bounce (points L to M). This was then followed by more selling pressure before a bottom occurred in mid August (points M to N). Thus we will see if the same pattern can evolve this time around however it will be important for the Dow to hold support around the 12900 level next week.



The Nasdaq really got clobbered this week and has fallen around 240 points in 7 trading days. If the Nasdaq continues lower in the near look for the next level of support either at its 200 Day EMA (green line) around 2590 or at its 61.8% Retracement Level near 2575.



As far as the S&P 500 it has fallen below its 200 Day EMA (green line) and has dropped back to its 61.8% Retracement Level near 1450. If the S&P 500 fails to hold support at the 1450 level then its next area of support would be at its 76.4% Retracement Level near 1420.

Meanwhile just like the Dow the S&P 500 is exhibiting a similar pattern that occurred last July and August. Notice how the S&P 500 initially sold off (points O to P) for a few weeks but then had a brief oversold bounce (points P to Q) before eventually going lower and making a bottom in mid August (points Q to R). If the S&P 500 can hold support at or above the 1420 level then we could see a similar pattern develop.



Over the next several weeks the market is likely going to remain very volatile which will lead to substantial moves in both directions on a daily basis. Thus your best opportunities will come from the Exchange Traded Funds (ETF) rather than individual stocks. One of the strong Buy Signals I will look for on a daily basis is when the Relative Strength Index (RSI) closes 3 days in a row below 65 with the last reading below 10. Some examples since August are shown below when the RSI has closed below 65 (3) days in a row with the last value below 10 (points A). The entry price is at the open of the next trading (points E) which occurred on 7/30, 8/16 and on 10/22. On 7/30 the SPY gained nearly $2 over the next 2 trading days while on 8/16 the SPY gained over $6 in (2) trading days. On 10/19 the SPY gained $3 in 2 trading days and nearly $5 in (5) trading days

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From Briefing.com: 4:10 pm : The stock market headed into the Thanksgiving holiday on a low note, as investors sold equities and bought bonds in a flight to quality on Wednesday.

The risk aversion trade is apparent in the yen's strength and the rally in U.S. Treasuries where the yield on the 10-year note dropped below 4.00% for the first time since 2005, before finishing the day at 4.01%.

There is also a concern among investors about holding long positions going into the Thanksgiving holiday, which played a role in the selling pressure.

A late-day recovery effort was staged, but the Dow and S&P ran into resistance at their intraday peaks, and eventually finished the day at their intraday lows. The Nasdaq, for its part, weathered the late-day selling efforts better, to finish well above its intraday lows.

Weakness was broad-based with all ten of the major economic sectors ending the day in the red. The beleaguered financial sector (-2.2%) finished the day as the main laggard, as it had yesterday.

Strikingly, the S&P 500 Retailing Index (-0.3%) and consumer discretionary sector (-1.0%) outperformed on a relative basis in the wake of several disappointing earnings reports from retailers this morning.

There were a few economic releases of note on Wednesday.

New claims for unemployment for the week ended Nov. 30 fell to 330,000 from 341,000 the week before. That is almost exactly in line with the four week moving average of 329,750. The news won't attract much market attention, but it does serve as a reminder that businesses are not acting in recessionary fashion.

October Leading Indicators fell to -0.5%, compared to last month's reading of 0.3%. Economists expected the reading to come in at -0.3%. The Leading Indicators report is, for the most part, a compendium of previously announced economic indicators. There was a slight increase in selling pressure immediately following the report.

The November University of Michigan Consumer Sentiment Index was revised to 76.1 from 75.0. The revision was mostly ignored by the stock market.

In commodity trading, crude oil hit a new all-time high of $99.29 per barrel overnight, but subsequently declined into negative territory ahead of the government's weekly inventory stats. Crude inventories showed a draw of 1.07 million against expectations for a build of 750,000. Despite the bullish report, crude oil traded in a volatile manner finishing the day down 0.9% to $97.20.

In observance of the Thanksgiving holiday, all U.S. markets are closed on Thursday (11/22). On Friday (11/23) the stock market and bond market reopen for a shortened day, closing at 13:00 ET. DJ30 -211.10 NASDAQ -34.66 SP500 -22.93 NASDAQ Dec/Adv/Vol 2082/903/1.94 bln NYSE Dec/Adv/Vol 2245/1023/1.35 bln

6:23AM ASE Test appoints independent financial adviser (ASTSF) 13.98 : Co refers to the proposed acquisition by Advanced Semiconductor Engineering of all the ordinary shares of ASE Test which ASE doesn't directly or indirectly own through a scheme of arrangement. The directors of the co who are considered independent for the purposes of making a recommendation on the Proposed Scheme have today, pursuant to the requirements of the Code, appointed ANZ Singapore as independent financial adviser to advise them on the Proposed Scheme.

11:37 am LTX Corp: Stifel Nicolaus reiterates Buy. Target $8 to $6. Stifel notes on Tuesday, LTXX reported 1Q08 earnings results of $29.6 mln in rev and a pro forma loss of $0.04, excluding options (a loss of $0.06, including options), below firm's rev ests of 30.6 mln, but above their pro forma loss est of $0.05, excluding options (a loss of $0.07, including options). However, they continue to believe the stock has been way oversold given the improved co fundamentals when compared to previous cycles. Firm believes the co has made significant strides in terms of improving its business model and they are seeing the initial positive impacts of new share wins with some leading IDMs outside of its largest customer, Texas Instruments. Firm cuts tgt to $6 from $8.

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Amateur Investors Weekend Stock Market Analysis (12/22/07)

http://www.amateur-investor.net/Weekend_Market_Analysis_Dec_22_07.htm

Since 1943 each year prior to a Presidential Election Year the Dow has finished the year with a positive return as shown in the table below. So far in 2007 the Dow is up nearly 8% for the year and unless there is big sell off next week which is highly unlikely it appears the pattern that has been in place since 1943 will continue.

Dow Yearly Performance prior to a Presidential Election Year (1943-2007)

As far as the major averages the Dow has risen back above its 50 Day EMA (blue line) and closed on Friday near its 50% Retracement Level (calculated from the early October high to the late November low). If the Dow continues to rally into the end of the month look for upside resistance to develop at its 61.8% Retracement Level around 13630 (point A).



The Nasdaq has also rallied back above its 50 Day EMA (blue line) and is nearing its 50% Retracement Level around 2700 (point B). If the Nasdaq can rise above the 2700 level then its next area of upside resistance would be at its 61.8% Retracement Level near 2735 (point C) which is where it stalled out at just a few weeks ago.



The S&P 500 just like the Dow and Nasdaq was able to rise back above its 50 Day EMA (blue line) on Friday as well. If the S&P 500 can break above its 50% Retracement Level near 1490 (point D) then its next area of upside resistance would be at its 61.8% Retracement Level around 1510 (point E).



Meanwhile as I mentioned last weekend keep a close eye on the Russell 2000. For the 4th time since July the Russell 2000 has held support near the 735 level and if the current rally is going to continue it must rise above its 40 Week EMA (blue line) which is where it stalled out at just over a week ago (point F).



As mentioned above the Russell 2000 has a key support area near 735 which coincides with its longer term 23.6% Retracement Level (calculated from the late 2002 low to the June 2007 high). If the Russell 2000 were to eventually drop below its 23.6% Retracement that would signal a change in longer term direction which has been upward since the late 2002 low.



Finally when looking for stocks to invest in focus on those with decent Sales and Earnings Growth that are developing a favorable chart pattern such as the "Cup an Handle" pattern.

For example BYI formed a 3 1/2 Year Cup from 2004 thru the Summer of 2007. BYI then developed a 5 Week Handle (H) from late August into September which was when I started to focus on it. BYI then broke out in late September and has gained nearly 50% since then and has been one of the market leaders the past few months.

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From Briefing.com: 4:25 pm : It didn't take long for Monday's rally to be unwound as a dismal fourth quarter report from Citigroup (C 26.94, -2.12) and a weaker than expected retail sales report for December triggered a host of sell orders that led to material losses for the major indices.

As far as Citigroup is concerned, it reported a large write-down as expected - $18.1 billion to be exact - yet some critics felt that write-down still wasn't large enough to serve as an inflection point that suggested the worst is over for the investment bank.

Altogether Citigroup reported a net loss of $9.83 billion, or $1.99 per share, on a 70% decline in revenues. Analysts had expected the company to record a loss of $1.03 per share.

In addition to posting its operating results, Citigroup said it slashed its dividend by 41% to $0.32 per share and that it raised $12.5 billion in new capital from outside investors that include Saudi Prince Alwaleed bin Talal and former CEO Sanford Weill's family foundation.

The market didn't find anything to cheer about in the report, which also contained the unsettling admission that credit costs for its U.S. Consumer business increased by $4.1 billion due to increased delinquencies on 1st and 2nd mortgages, unsecured personal loans, credit cards and auto loans. This revelation triggered concern about the deteriorating state of debtors in the U.S. that weighed heavily on other banks in Tuesday's trading.

Fellow Dow component JPMorgan Chase (JPM 39.17, -2.19), which reports before Wednesday's open, was among the hardest hit with investors cognizant that its card services business accounted for 24% of its net revenues last year and 25% of its operating income.

Separately, Merrill Lynch (MER 53.01, -2.96) languished after announcing it raised $6.6 billion in new capital through the issuance of convertible preferred stock that carried a 9.0% coupon.

The financial sector, which dropped 3.7%, led Tuesday's retreat that saw the indices close near their lows for the day. The energy sector, which fell 3.5%, the materials sector, which shed 3.0%, and the technology sector, which lost 2.4%, were the other big laggards as slowdown concerns permeated the market.

Every economic sector, in fact, closed the session with a loss that exceeded 1.0%. In turn, there wasn't a single stock in the Dow that closed higher.

A report from the Dept. of Commerce that total retail sales and retail sales, excluding autos, declined 0.4% in December contributed to the slowdown concerns. Economists had forecast a flat reading for retail sales and a 0.1% decline excluding autos.

The December weakness followed an otherwise robust November when retail sales increased 1.0%, so the December data wasn't as bad as it was made out to be. Nonetheless, a number that was off the mark, combined with a fourth quarter earnings warning from Williams-Sonoma (WSM 20.01, -2.19), exacerbated the negative sentiment that was rooted in large part in Citigroup's woeful report.

In typical fashion, the Treasury market advanced in the face of the stock market's weakness. Gains were registered across the yield curve with the strongest performance at the back end. The benchmark 10-year note jumped 22 ticks and its yield fell to 3.68%.DJ30 -277.04 NASDAQ -60.71 NQ100 -2.8% R2K -2.1% SP400 -2.4% SP500 -35.30 NASDAQ Dec/Adv/Vol 2277/724/2.42 bln NYSE Dec/Adv/Vol 2347/815/1.82 bln

5:48PM TTM Tech announces filing of shelf registration statement for maximum aggregate of $200 mln (TTMI) 8.95 -0.45 :

5:10PM Linear Tech beats by $0.05, reports revs in-line; guides Q3 revs in-line (LLTC) 27.80 -0.47 : Reports Q2 (Dec) earnings of $0.46 per share, $0.05 better than the First Call consensus of $0.41; revenues rose 2.6% year/year to $288.7 mln vs the $288.9 mln consensus. Co issues in-line guidance for Q3, sees Q3 revs of $289.6 - $303.14 mln vs. $299.91 mln consensus. Co also raises its dividend to $0.21/share from $0.18/share.

4:08PM CalAmp reports Q3; guides Q4 revs below consensus (CAMP) 2.47 -0.05 : Reports Q3 (Nov) net of breakeven, vs recent company guidance of Breakeven; revenues fell 45.7% year/year to $32.1 mln, in-line with preannouncement. Co issues guidance for Q4, sees EPS of $(0.05)-(0.01), may not be comparable to ($0.09) consensus. Co issues downside revs guidance; sees Q4 revs of $29-33 mln vs. $37.59 mln consensus. Co says, "The settlement agreement with this key DBS customer has allowed CalAmp to start meaningful negotiations with our lenders to address the previously announced noncompliance related to financial covenants under our credit facility. We are working to resolve this matter expeditiously, but we do not believe that the current restriction on borrowing under the credit facility will adversely impact our near term operations."

3:59PM Market View: Broad based pressure from the opening bell (TECHX) : A firmly negative bias in the stock market from the opening bell. Overseas weakness, a substantial EPS miss from C due to sub-prime and consumer loan losses, weak Retail Sales for Dec (-0.4% vs. consensus of 0.0%-- 2007 weakest year since 2002) and disappointing commentary out of AAPL's Macworld expo conspired to pressure the market. We did see a quick rebound in the last hour but the indices gave back the majority of these minor gains into the close. The Dow dropped to its lowest level in nine months and closed under its Jan/Aug lows as well. The S&P 500 and Nasdaq Comp closed at a new 10 month lows (1380, 2417) but are thus far still holding above the intraday lows from Jan (1379, 2407), Aug 2007 lows (1370, 2386) and March 2007 lows (1364, 2331). The weakest performing sectors were led by Oil Service HOLDRs -5.1%, Steel -4.6%, Broker -4.3%, Regional Bank HOLDRs -4%, Oil -3.8%, Bank -3.4%, Housing -3.3%, Natural Gas -3.1%, Internet HOLDRs -3.1%, Casino -3%, Restaurant -2.9%, Semi HOLDRs -2.5%. Little was firmer other than Airline +3.2%.

1:30PM Apple issues press release with details for MacBook Air (AAPL) 170.39 -8.38 : Co confirmrs the MacBook Air, "the world's thinnest notebook. MacBook Air measures an unprecedented 0.16-inches at its thinnest point, while its maximum height of 0.76-inches is less than the thinnest point on competing notebooks. MacBook Air has a stunning 13.3-inch LED-backlit widescreen display, a full-size and backlit keyboard, a built-in iSight(R) video camera for video conferencing, and a spacious trackpad with multi-touch gesture support so users can pinch, rotate and swipe. MacBook Air is powered by Intel Core 2 Duo processors running at 1.6 GHz or 1.8 GHz, and includes as standard 2GB of memory and an 80GB 1.8-inch hard drive. The new MacBook Air will be shipping in two weeks through the Apple Store, Apple's retail stores and Apple Authorized Resellers for a suggested retail price of $1,799.

1:14PM Apple issues press release - Twentieth Century Fox & Apple introduce iTunes digital copy (AAPL) 171.05 6.65 : Twentieth Century Fox and Apple announced Digital Copy for iTunes, which provides customers who purchase a DVD with an additional Digital Copy of the movie. Just like movies purchased from the iTunes Store, an iTunes Digital Copy can effortlessly be transferred to iTunes and then viewed on a PC or Mac, iPod with video, iPhone or on Apple TV. The new iTunes Digital Copy provides a consumer friendly way to transfer a DVD purchase to a user's iTunes library. Once a customer buys the DVD, they insert it into their computer, enter a unique code into iTunes and iTunes automatically copies the movie to their iTunes library within minutes.

12:45PM Apple confirms it Premieres iTunes Movie Rentals With All Major Film Studios (AAPL) 170.67 -8.11 : Co confirms it announced iTunes Movie Rentals featuring movies from all the major movie studios including 20th Century Fox, The Walt Disney Studios, Warner Bros., Paramount, Universal Studios Home Entertainment, Sony Pictures Entertainment, Metro-Goldwyn-Mayer, Lionsgate and New Line Cinema. Users can rent movies for as low as $2.99 and watch them on their Macs or PCs, all current generation iPods, iPhone and Apple TV. iTunes Movie Rentals launches today and will offer over 1,000 titles by the end of February, including over 100 titles in stunning high definition video with 5.1 Dolby Digital surround sound which users can rent directly from their widescreen TV using Apple TV. iTunes Movie Rentals are priced at $2.99 for library titles and $3.99 for new releases, and high definition versions are just one dollar more with library titles at $3.99 and new releases at $4.99... The all new Apple TV software delivers an entirely new user experience centered around iTunes Movie Rentals, allowing movie fans to rent and watch movies right from their widescreen TV, with no computer required. Users can also view photos from their computers, Flickr and .Mac Web Galleries on their widescreen TV as slideshows or screen savers, and anytime photos are updated on Flickr or .Mac they are automatically updated on Apple TV. Apple TV users can now browse and enjoy the iTunes Store podcast directory of over 125,000 video and audio podcasts, view over 50 million originally created videos from YouTube, or choose from a selection of six million songs, over 600 TV shows and 10,000 music videos to purchase directly from their Apple TV. Purchases downloaded to Apple TV are automatically synced back to iTunes on the user's computer for enjoyment on their computer, iPod or iPhone.

12:38PM Apple confirms free software update for its iPhone; allows users to automatically find their location using the redesigned Maps application (AAPL) 170.76 -8.01 : Co confirms a free software update for its iPhone that allows users to automatically find their location using the redesigned Maps application; text message multiple people in one message; create Web Clips for their favorite websites; customize their home screen; and watch movies rented from the new iTunes Movie Rentals right on their iPhone. With its multi-touch user interface and pioneering software, users can add new features to their iPhone through software updates whenever an update becomes available.

12:27PM Apple confirms anouncement of Time Capsule (AAPL) 174.07 -1.77 : Co confirms the introduction of Time Capsule, a backup appliance that automatically and wirelessly backs up everything on one or more Macs running Leopard, the latest release of Apple's Mac OS X operating system including the amazing Time Machine automatic backup software. Time Capsule combines an 802.11n base station with a server grade hard disk in one small package. Simply plug it in, then easily set up automatic wireless backup for every Mac in your house to a single Time Capsule with just a few clicks. Time Capsule offers the benefits of a full-featured 802.11n Wi-Fi base station, and comes in two models: a 500 gigabyte model for just $299 and a 1 terabyte model for just $499.

11:07AM Verichip expects revenues for 2007 at the high-end of the co's previously released guidance (CHIP) 2.40 +0.38 : As mentioned at 11:05 the co expects revenues for 2007 at the high-end of the co's previously released guidance of $30-32 mln vs $31.7 mln single analyst est. During the fourth quarter of 2007, the co said it continued to experience strong sales of its healthcare security products, specifically its infant protection and wander prevention systems. (ADSX, DOC)

Photon Dynamics (PHTN) announces that it has received an order for its ArrayChecker flat panel display test and ArraySaver repair system from Plastic Logic for their new flexible electronic paper display manufacturing facility in Dresden, Germany...

9:01AM Applied Materials will reduce its global workforce by approximately 1,000 positions; expects to record charges of approximately $20 million related to the plan (AMAT) 16.84 +0.44 : Co announces a global cost reduction plan that primarily affects its semiconductor equipment and services businesses and related support organizations. As part of the plan the co will reduce its global workforce by approx 1,000 positions or about 7%, through a combination of job elimination and attrition. AMAT expects to record charges of approx $20 mln related to the plan, with the majority of the charges being recorded in the 1Q08, and to complete the plan by 4Q08. The plan is expected to result in annualized savings of about $150 mln from fiscal 2007 spending levels.

6:42AM Citigroup Q4 results include $18.1 bln write-down; cuts dividend 40%; raises $12.5 bln via private placement (C) 29.06 : Reports Q4 (Dec) loss of $1.99 per share, results include $18.1 billion in pre-tax write-downs and credit costs on sub-prime related direct exposures in fixed income markets, and a $4.1 billion increase in credit costs in U.S. consumer primarily related to higher current and estimated losses on consumer loans, may not be comparable to the First Call consensus of ($1.03); revs fell 69.7% yr/yr to $7.22 bln vs $10.63 bln consensus. Operating expenses increased 18%, primarily driven by the impact of acquisitions, increased business volumes, charges related to approximately 4,200 net headcount reductions, and the impact of foreign exchange. Co announces it is lowering their qtrly dividend to $0.32 per share from $0.54 per share. Co says its raising a total of $12.5 bln of capital through the sale of convertible preferred securities in a private offering. The private offering is complete, subject to settlement, and includes a $6.88 bln investment from the Government of Singapore Investment Corporation as well as investments from Capital Research Global Investors; Capital World Investors; the Kuwait Investment Authority; the New Jersey Division of Investment; HRH Prince Alwaleed bin Talal bin Abdulaziz Alsaud; and Sanford I. Weill and The Weill Family Foundation.

09:45 am NVIDIA: Deutsche Securities downgrades Buy to Hold. Deutsche Bank downgraded NVDA to Hold from Buy with a $30 tgt saying they are taking a more cautious stance on NVIDIA due to a seasonally slow period and limited share gain potential. After several quarters of accelerated growth driven by share gains vs. ATI/AMD and a strong P.C cycle, they believe that demand has slowed in the 1H. Given the background of a seasonally weak period and lack of new product cycle, the firm does not see near-term drivers for the stock.

09:41 am O2Micro: Needham & Co reiterates Strong Buy. Target $21 to $17. Needham notes OIIM is on a negative sentiment streak that until Dec 2007 was totaly unfathomable. Firm notes OIIM should be riding high on the waves of spectacular LCDTV growth or its penetration into LED notebook backlighting or high voltage battery charger sockets or Intel prospects in 2008. Instead everyone is running around trying to count notebooks like it is the third grade all over again. With nothing more than "seasonal" to work with, firm decided to lower their MarQ1 Q/Q decline from 5% to 13%. Carrying this less into Q2 resulted in a reduction of their 2008 EPS from $0.95 to $0.81 and a more pronounced reduction in target price from $21 to $17.

09:30 am Citigroup (C)

The fourth quarter was a dismal quarter for Citigroup (C 29.06). The question is, was it dismal enough to convince investors that the worst is behind the company?

For the three-month period ending December 31, Citigroup posted a net loss of $9.83 billion, or $1.99 per share, compared to a profit of $1.03 per share in the year-ago period. The current results included an $18.1 billion pre-tax write-down for its subprime exposure, as well as a $4.1 billion increase in credit costs for its U.S. Consumer segment.

On Monday it was speculated that Citigroup's write-down could be as much as $24 billion, so the reported figure wasn't as bad as anticipated. It was, however, much worse than the company's initial $8 billion to $11 billion estimate provided in November.

In addition to the earnings report, Citigroup also announced that it is cutting its dividend 41% to $0.32 per share and that it is raising $12.5 billion in new capital through the sale of convertible preferred stock to several different investors, including Saudi Prince Alwaleed bin Talal and Sanford I. Weill and The Weill Family Foundation. Mr. Weill used to be CEO at Citigroup and is considered to be the architect of Citigroup's empire.

Citigroup is also offering an additional $2 billion in convertible preferred securities to the public, bringing its total capital raise to $14.5 billion, excluding the capital it will preserve by cutting its dividend.

In a remark that will go in to the stating the obvious hall of fame, recently named CEO Vikram Pandit said the fourth quarter results are "clearly unacceptable." Pandit noted that Citigroup will continue to focus on divesting non-core assets, enhancing its risk management processes, and improving expense productivity. It can be presumed, too, that significant job cuts will eventually be announced as part of the restructuring effort.

At the end of the fourth quarter Citigroup had $37.3 billion of net CDO Super Senior exposures and gross Lending & Structuring exposures versus $54.6 billion at the end of the third quarter. It can be inferred, then, that another large write-down is still possible if market conditions deteriorate.

The latter consideration, combined with the dilutive nature of the capital raising effort, has limited investor interest following the report. Moreover, we suspect the acknowledgment that the bank has had to increase credit costs for its U.S. Consumer business due to increased delinquencies on 1st and 2nd mortgages, unsecured personal loans, credit cards, and auto loans is also serving as an unsettling factor since it speaks to the weakened state of debtors in the U.S.

All things considered, there isn't a lot to root about with this report. The bank is doing what is necessary to improve its capital base, but it is coming at the expense of common shareholders. Its ability to sell preferred stock in the current environment to some sophisticated investment entities can be construed as a hopeful sign for long-term investors, but clearly, the near-term outlook continues to be cloudy.

--Patrick J. O'Hare, Briefing.com

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Investors Intelligence

 
 Date Published Percent Bullish Percent Bearish  
      1/23           41.6            31.5

http://www.schaeffersresearch.com/streetools/market_tools/inv_intel.aspx?click=jumpto



Generally it takes 35% bears to make a bottom. We are getting closer.

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Chart of the Day - COTD - NASDAQ Still Within 4 Year Uptrend:

http://www.chartoftheday.com:80/20080125.htm?T

The Nasdaq is currently down 17% since peaking 12 weeks ago. For some perspective, today's chart presents the current trend of the Nasdaq. Today's chart illustrates that the Nasdaq still remains within its four-year uptrend. This is due in no small part to the inter-meeting, 75 basis-point cut in the fed funds rate that occurred earlier this week. Regardless, the Nasdaq is currently testing support (green line).

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InvestmentHouse Weekend Update 2/8/08

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

- Large cap tech dead cat bounce ends a down week.
- Only OPEC, and Congress, would consider raising taxes heading into a recession.
- Wholesale inventories piling up in another indication of an economy in trouble.
- Market firmed at the end of the week but that is not likely going to change the downtrend.

Techs try to lead a Friday rebound from a big down week.

Friday morning the futures were lower to flat as the market, after a Thursday bounce, struggled to advance the gain. There were the usual suspects once more to mull over. Earnings and the stragglers with same store sales were not bad; TIF raised its 2008 guidance, GLW affirmed its guidance, MCD reported solid sales in Europe, ATVI beat, and BRCM beat as well on the back of strong overseas sales. On the downside, De Beers, the diamond monopoly boys, reported a 2% sales decline on lower demand; gee, might be time to go buy some stones. AMZN helped spur the large cap techs with a $1B stock buy back announcement. MBI (mortgage insurer) increased its stock offering to $1B from $750M in what will likely be a futile attempt to raise enough cash to keep its debt rating.

The market summed up all of this data with a shoulder shrug; 'sluggardly' we called it in an afternoon alert. It started soft then moved positive and then rolled over and looked as if there was going to be blood at the close. After lunch, however, some shorts started to cover and stocks 'rallied' in the afternoon. A half-hearted effort at best, but it was enough to close the market mixed on the day but still down sharply for the week thanks to that early week dive lower.

TECHNICALLY it was another volatile day though the Dow only swings 175 points or so high to low. The action was up and down with that mixed close in what was really a nothing session. Sure some look at the bounces in the tech big names and find hope, inspiration, salvation - - the usual misleading emotions - - but the big names have been slaughtered. Any bounce is just that, a bounce. That short covering did, however, salvage what was shaping up to be a very ugly day.

INTERNALS: Volume and breadth matched the ho-hum performance in the indices with volume fading back below average on both NASDAQ and NYSE. Whatever bounce NASDAQ mustered, it was on low trade as the large cap techs bounced from their selling on some short covering and traders looking to play that move higher. Breadth matched the lack of enthusiasm, coming in negative on both NASDAQ (-1.3:1) and NYSE (-1.5:1). Very narrow gains in those sectors and indices that did move higher. The shorts were covering on the big techs while some other sectors found some buyers (e.g. metals, energy); most of the upside action was not due to a new influx of buyers.

CHARTS: The week was a down one, a big down one for the Dow, enough to draw comparisons on the financial stations to bad weeks in years past. The losses were at the start of the week with Thursday and Friday spent trying to bounce or turn the tide, but it was a half-hearted effort at best with not all indices participating. There was some bouncing late in the week, but none of the indices could even make it to near resistance at the 10 day EMA. Maybe they can put up some better numbers to start next week and try the 10 day EMA, but, as said all too often last week, we are still looking for a further test lower on this the third leg of the initial selloff in this recession-driven downdraft. The question remains if this third leg will be just a test of the January low or continue on down, indicating much more economic weakness.

LEADERSHIP: There was again some leadership Friday just as there was all week. There was a twist, however. Earlier in the week the airlines were up on the declining oil prices and the speculation of consolidation in the sector. Metals were stronger, and not just gold; steel picked up the ball to end the week. Energy was stronger again, picking up from some of the strength on Thursday when those stocks reversed from some intraday selling. With the OPEC nonsense regarding production cuts ahead, energy had its reason to rebound. Large cap technology, as noted above, bounced back from getting body slammed. Even with this false hope in techs, all week saw some interesting patterns trying to shape up as a decent number of stocks are trying to form up bases during this market weakness, i.e. not plunging lower at a 45 degree death plunge, but working in an orderly manner and constructing a good foundation for another move. In addition, some of the old leaders are emerging once more into good patterns. MA, POT, CLF, ISRG are forming up well. With this improvement in some patterns that leaves the test of the January lows as the important inflection point as indicated last week.

THE ECONOMY

What do OPEC, Congress, and the Fed all have in common? They talk a good game but cannot play a good game.

Not too long ago Congress was talking of the need to raise taxes even as it was clear to those paying attention that there was serious trouble ahead. As we noted in the second half of 2005, the housing market peaked in May of that year, and there was already trouble showing up as lenders were using some insane tactics such as no money down, no credit checks, etc. Even as the first sub-prime issues started to surface and there were definite signs the economy was slowing (no recession worries, but definitely slowing), many in Congress were talking tax hikes. Fortunately that movement was shouted down before it gathered any strength. Many pointed out only Congress would talk of tax hikes just as the economic cycle peaked. Out of touch, foolhardy, downright stupid; all were used in describing the idea. Even Congress was able to get over the itch for more dollars before it repeated the mistakes of the past.

OPEC may not be so clever. Friday OPEC announced that it was likely to cut production in March in order to prop up oil prices above $80/bbl. Above $80. Back in 2006 OPEC worried that prices at $50/bbl would cause a recession. When oil moved to $60 it was still worried. Then $70, $80 and on to a brief tryst with $100. Along the way, blinded by all of the dollars pouring in making all kinds of capital and political moves possible (e.g. the marked increase in bravado of Venezuela's Chavez with each $10 rise in oil, the recalcitrance of Iran as oil prices climbed), OPEC is forgetting what happens when oil gets too high. Yes while many economies are no longer as oil dependent and have shown resilience as prices climbed, OPEC has forgotten the lesson clearly pointed out in 'The Matrix Reloaded,' i.e. cause and effect. At some point, even with improved efficiency and less reliance on oil, prices become too high and cap economic activity.

Every time OPEC forgets this link between price and world economies and gets too greedy, economic activity declines and along with it the amount of oil used, oil prices, and ergo oil profits. When the west slides into recession, OPEC suffers as well. And while the US may be more efficient with oil use there are developing nations in the position we were in back in the 1940's and thereafter when we used a lot of oil for our industrial development. Just look what is happening now: the US is basically in recession, the UK is about six months behind us, and Europe is heading there as well. It is not only oil of course, but oil is a key player in the story because prices have been so high for so long that the cumulative impact is adding to the other negatives. Consumer sentiment polls put nearly $3/gallon gasoline as a big albatross around consumers' necks. Prices have been high enough for long enough and they are taking their toll.

This latest gambit for more green shows OPEC's clouded memory. It is addicted to high prices as much as we are addicted to the oil it sells, the foreign goods we buy, and the foreign currency needed each month to support our habit. The money, as noted above, provides the means for capital improvements in their countries, and it allows those so desiring to make things more difficult for the west as the profits help fund nefarious activities.

OPEC is beguiled by the huge dollar train rolling in, and that is luring OPEC into making bad economic decisions such as this proposed production cut that jumped oil prices that were about to hit $80 up to 91.69, +3.58, on the Friday close. In short, OPEC is trying to curtail a slide in prices caused by the fear and the reality of slowing world economies by raising prices. That is the same as Congress raising taxes in a recession in order to increase declining tax revenues due to slower economic activity: it only drives revenues lower. Cutting production to drive prices higher will ultimately only drive prices lower as world economies suffer further under the increased burden.

In this sense OPEC is very much like the Fed. The Fed always starts out a rate hiking campaign saying it has learned from the mistakes of the past, of hiking and hiking without really considering what the economy is showing, hiking the economy into recession. They start carefully and thoughtfully, but toward the end of the campaign they become impatient at the lack of apparent impact (even though they know it takes a long time for hikes to hit the economy) and start hiking faster and harder. Finally the market knuckles under all at once and things collapse even as the Fed is ready to hike again (see Greenspan Fed, first half of 2000). OPEC talked a good talk of worry about prices moving higher, but now it has them mainlining into its veins and it likes it. It has forgotten there are no endless spigots, that the well, so to speak, can run dry. The last thing the world economy needs is oil spiking higher to $100 even as these credit issues in the US and now Europe spread across the globe.

Wholesale inventories rise. That will boost Q4 GDP revisions, but it is not a good thing.

In the weird world of government calculations, a build up of inventories is considered a good thing and is added to GDP calculations. Sure inventories represent economic activity in the sense they were made, but as is often the case, rising inventories also mean something is wrong.

December, not January, but back in December, inventories rose 1.1% versus the 0.3% expected and 0.8% in November. That can mean that companies are ramping up production as the economy improves, but we know that is not the case. We are on the backside of an expansion, and inventories are rising because buying is falling, leaving more 'stuff' left sitting around. The proof is in the sales: they fell 0.7%; when you don't sell what you make, inventories rise if there is no corresponding decrease in production. Now up until recently sales were pushing past inventories. That trend appears to be ending with sales now declining, leaving more inventory looking for a home.

Fortunately, inventories are still much lower than the prior recession that was truly painful as literally hundreds of billions of dollars of inventories was written off as worthless junk. The inventory to sales ration remains very low, meaning inventories are lean heading into the slowdown. We cannot say enough about what a positive that is as it really helps in the recovery as companies were not burned by the inventory overhang. That along with the overall low P/E ratios, relatively quick Fed action bodes better for this recession than the last.

THE MARKET

MARKET SENTIMENT

VIX: 28.01; +0.35. Even with the dump lower Tuesday, VIX never crossed over 30 on the week. It came close on the weak Thursday open, but it never made it. We are expecting another big spike in VIX on another selloff in the market. After that, then we can look for the market to make its bottom several weeks down the road.
VXN: 30.08; -1.48
VXO: 30.42; +0.81

Put/Call Ratio (CBOE): 1.15; +0.02. Four consecutive sessions above 1.0 on the close. Racking up the 1.0 closes again. If we get a couple of weeks of closes above 1.0 and the other indicators line up with it (e.g. VIX, bulls/bears) then we can start seeing a bottom set up.

Bulls: 41.6%. Up from 40.2% as the rebound last week buoyed spirits some. Down from 56.5 seven weeks back. Fell below the 40.6% hit on the last significant round of selling but has bounced. A move into the lower 40's is a decline of significance, but it needs a bigger move is to 35% which is a big bullish indication. If bulls and bears kiss or better yet cross, that is very bullish. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.

Bears: 32.6%. Bears continued to rise, albeit modestly from 32.2%. Up from 31.5% three weeks back after the massive jump higher from 26.7% the prior week. It is over 30%, meaning it is in the range that means business. Big move after falling to a low of 19.6% on this round. 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). Still a bit more work to do to really set a bottom, and that means more selling before it gets there.

NASDAQ

Stats: +11.82 points (+0.52%) to close at 2304.85
Volume: 2.26B (-24.13%). No trade on the move higher; there was no accumulation, just bouncing.

Up Volume: 1.463B (-480.925M)
Down Volume: 734.159M (-257.347M)

A/D and Hi/Lo: Decliners led 1.33 to 1. Breadth negative despite the gain. Dead cat bounce by some large cap techs that were previously gutted and left on the sun-baked dock.
Previous Session: Advancers led 1.36 to 1

New Highs: 46 (+6)
New Lows: 129 (-54)

NASDAQ CHART: Click to view the chart

NASDAQ posted its second consecutive gain after gapping lower Tuesday and selling more Wednesday. It is trying to make a higher low off of the old 2004/2006 trendline, but it is well below the 10 day EMA still and while it can bounce some more after the start of this next leg lower, it likely won't break through any significant resistance before turning back down.

NASDAQ 100 (1.17%) led the move higher in techs, trying something of a double bottom already, but with the dismantling of the large cap tech patterns during the past month, there is a lot of basing needed to heal the wounds and set up the foundation for a new sustained run higher.

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: -5.52 points (-0.42%) to close at 1331.29
NYSE Volume: 1.453B (-16.3%). Volume plopped down well below average on a loss. No heavy selling, just not a whole lot of interest. Volume was overall down for the week of losses, indicating no dumping, just no buyers.

Up Volume: 517.924M (-591.615M)
Down Volume: 923.095M (+303.844M)

A/D and Hi/Lo: Decliners led 1.5 to 1. Down more than the modest point losses would suggest.
Previous Session: Advancers led 1.73 to 1

New Highs: 31 (+15)
New Lows: 96 (-4)

SP500 CHART: Click to view the chart

Hard selloff for the week, at least in terms of point losses; as noted, volume was not that bad. After that 78 point drop on the week it slowed the selling and moved laterally, trying to set up a bounce. As with NASDAQ, it may bounce back up to the 10 day EMA or so, but it certainly looks weak still.

SP600 (-0.36%) tried to move higher through near resistance at the 10 and 18 day EMA, but failed, showing a doji at that level. After strength on Thursday, it gave it up on Friday though not without a head fake early that, unfortunately, got us out of our IWM positions due to nervous feet. Still looks ready to roll back down, and so we will play it down again if it does.

SP600 CHART: Click to view the chart

DJ30

The Dow had the worst week of the lot though it too tried to slow the decline by the weekend, holding a tighter range, at least on the close, Wednesday through Friday. Still very weak and well below the 10 day EMA as it trends lower. May bounce a bit more but there is more to go here.

Stats: -64.87 points (-0.53%) to close at 12182.13
Volume: 262M shares Friday versus 326M shares Thursday. Low volume heading into the weekend so no distribution even with the downside close.

DJ30 CHART: Click to view the chart

MONDAY

Earnings are winding down but economic data ratchets back up this week with retail sales, regional PMI action, production and capacity, and Michigan sentiment. We will also hear more from the Fed and there will be the signing of the economic stimulus plan that puts out $20B more than the House bill. And who knows, we may get more dropouts from the presidential race; maybe all will drop out.

As for the market, it ended the week trying to firm after another sharp dump lower, but still holding a very weak hand heading into the new week. As noted above, the indices tried to bounce toward their near resistance at the 10 day EMA but didn't have much success. Another bounce to test that level, particularly after the gutting the market took on Tuesday, wouldn't be too far out of normal.

Unless the market gets something else going for it, however, overall it will have trouble moving further upside and will start looking at a test of the January low. Retailers improved after the FOMC cuts; they usually benefit faster from Fed action. Financials, however, are already back in the struggle mode even with the Fed slashing up rates. There are some hopeful signs in industrial metals, and many overseas stocks are perking up again. Indeed, we took some upside positions Friday on stocks enjoying strong patterns (showing they were being accumulated) and good breaks higher, but they are still the exception at this juncture. We are willing to accumulate shares in these stocks because the bases and the breaks higher show they are being bought despite the slowing economy. The market looks ahead, not just the here and now, and thus we will see stocks set up and break higher ahead of the economic data. Right now, however, many are still in very weak position and will need quite a bit more work before they are ready to move in the next sustained move higher.

As for the nearer term we will continue to look at those stocks forming up nice patterns amid the carnage such as last week. We may not make 25% on the stock or 150% on the options, but we can grab a nice gain. With a bit more upside on the indices that stalls at resistance at the 10 day EMA, the downside will be ripe once again and we will look to add to positions and pick up new plays. The downside dam for the third leg did not break last week, it just got the move going. When it moves toward the January lows it will likely be rather fast.

Support and Resistance

NASDAQ: Closed at 2304.95
Resistance:
2315 to 2300 is a range of support from old peaks
The 10 day EMA at 2333
2340 from the March 2007 low
The 18 day EMA at 2367
2370 from the April 2006 peak
2379 from the October 2006 peak
2386 is the August intraday low
2451 is the August closing low
The 50 day EMA at 2477
Some modest resistance at 2500 from interim August lows.
2540 is the November closing low
2550 to 2540 from May/June consolidation and the November lows 2554 is the August 2004/April 2005/October 2005/March 2007 up trendline

Support:
2275 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
2216 from August 2005 peak
2202 is the January intraday low
2175 from the December 2004 peak

S&P 500: Closed at 1336.91
Resistance:
1349 is the 10 day EMA
1361 is the 18 day EMA.
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
The 50 day EMA at 1404
1406 is the August and November 2007 closing low
1412 is a longer term trendline from the August 2003/September 2004 lows
1430 from the August interim lows
1440 - 1437 from January and March peaks
1459 is the February peak
1467 is the June/July 2006 up trendline
1475 from peaks in December 1999 and January 2000
The 200 day SMA at 1480

Support:
1325 from May 2006 peak prior to the summer 2006 correction
1313 is an ancient trendline
1305 to 1302 from an August 2006 peak and matches a range of support from March and April 2006.
1294 from the January 2006 peak
1288 from June 2006
1280 from June and August 2006
1270 is the January intraday low
1255 from June 2006 lows

Dow: Closed at 12,182.13
Resistance:
12,250 from late March 2007 lows
The 10 day EMA at 12,355
12,518 is the August intraday low
12,743 is the November low
12,786 is the February 2007 peak
The 50 day EMA at 12,775
12,845 is the August closing low
13,050 to 13,000 range
13,092 is the December low
13,250 from price points from June through December 2007
13,347 is the 200 day SMA

Support:
12,050 from the March 2007 low is trying to hold.
11,670 is the May 2006 intraday high; 11,642 closing
11,634 is the January intraday low
11,317 is the March 2006 peak
11,228 from a July 2006 peak

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

February 12
- Treasury Budget, January (2:00): $30.0B expected, $38.2B prior

February 13
- Retail sales, January (8:30): 0.0% expected, -0.4% prior
- Retail ex-Auto (8:30): 0.2% expected, -0.4% prior
- Business Inventories, December (10:00): 0.4% expected, 0.4% prior
- Crude inventories (10:30): 7.05M prior

February 14
- Weekly jobless claims (8:30): 356K prior
- Trade balance, December (8:30): -$61.0B expected, -$63.1B prior

February 15
- New York PMI, February (8:30): 7.5 expected, 9.0 prior
- Net foreign purchases, December (9:00): $90.0B
- Industrial production, January (9:15): 0.1% expected, 0.0% prior
- Capacity utilization, January (9:15): 81.4% expected, 81.4% prior
- Michigan sentiment, preliminary, February (10:00): 76.5 expected, 78.4 prior.

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Amateur Investors Weekend Stock Market Analysis (2/23/08)

http://www.amateur-investor.net/Weekend_Market_Analysis_Feb_23_08.htm

Over the past few months we have been hearing the word Stagflation. The Wikipedia definition for Stagflation describes a period of inflation combined with stagnation (slow economic growth and rising unemployment, possibly including recession). The last period of Stagflation occurred in the 1970's and was blamed on a huge rise in oil prices in combination with the central banks excessively aggressive monetary policy that was trying to avoid a recession.

A longer term chart of the Dow during this time shows that from the mid 1960's through the early 1980's it basically got stuck in a longer term trading range. Furthermore in 1966 the Dow was around 1000 (point A) and by 1981 it still was hovering around the 1000 level. Thus over a 16 period the Dow went basically nowhere during a Stagflation environment. This is why we don't want to see the development of Stagflation as that could have an adverse affect on the market for several years.



In the near term during the past 10 trading days the Dow has traded basically between 12550 and 12100 which is a key short term support area. If the Dow continues to hold support above the 12100 level and attempts to rally look for initial resistance near 12600 which is at its 38.2% Retracement Level and declining 50 Day EMA (blue line). If the Dow could rise above the 12600 level then its next area of resistance would either be at its 50% Retracement Level around 12900 or at its 200 Day EMA (green line) at 13000. Meanwhile if the Dow takes out the 12100 support area then that would lead to a retest of the January 23rd low just above 11600.



The S&P 500 has been trading between 1370 and 1320 the past 10 trading days as the 1320 level has been a key support area. If the S&P 500 remains above the 1320 level and attempts to rally look for initial resistance near 1390 which is where its declining 50 Day EMA (blue line) and 38.2% Retracement Level resisde at. If the S&P 500 were to break above the 1390 area then its next area off upside resistance would be at its 50% Retracement Level near 1420. Meanwhile if the S&P 500 tales out the 1320 level then that would lead to a retest of the January 23rd low at 1270.



As far as the Nasdaq it has been encountering resistance near its declining 20 Day EMA (blue line) for the past few weeks. If it can find a way to break solidly above its 20 Day EMA then it could rally back to its declining 50 Day EMA (green line) around 2430 or its 38.2% Retracement Level near 2450. Meanwhile if the Nasdaq fails to rally above its 20 Day EMA then that will eventually lead to a drop back to or below its January 23rd low near 2200.

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Amateur Investor Weekend Update (3/8/08)

http://www.amateur-investor.net/Weekend_Market_Analysis_Mar_8_08.htm

The selling pressure continued this week with the Nasdaq being the first major index to retest its January 23rd low. The question is now will the Nasdaq make a significant bottom in the next week or two leading to the development of a potential Double Bottom pattern like occurred in 2006 or will it make another significant move downward with an eventual drop back to its longer term 50% Retracement Level?

Back in 2006 the Nasdaq formed a Double Bottom pattern as the 2nd bottom dropped slightly below the 1st bottom which was then followed by a significant rally. If the Nasdaq is going to form a Double Bottom pattern in the near term we probably don't won't to see it drop below the 2150 area next week.



Meanwhile if the Nasdaq fails to develop a Double Bottom pattern in the near term and makes another significant move lower the next major support level would be at its longer term 50% Retracement Level near 2030 which is also very close to the low made in 2006 (point A).



The Dow also has a chance of forming a Double Bottom pattern over the next week or two much like occurred in 2006 if it can find support at one of these two levels. The first support area to watch for would be at the January 23rd low at 11635.



Meanwhile the 2nd support area that could also come into play would be at its longer term 38.2% Retracement Level near 11500 (point B). In order for the Double Bottom pattern to occur the Dow must hold support at or above the 11500 level. If the Dow were to drop solidly below the 11500 area then I expect it may eventually fall back to its longer term 50% Retracement Level near 10700 which also coincides with the 2006 low (point C).



As far as the S&P 500 just like the Dow and Nasdaq it has a chance to form a Double Bottom pattern like in 2006 if it can hold support next week near the 1270 level which was the January 23rd low.



Also the 1270 level is very close to the S&P 500's longer term 38.2% Retracement Level which is at 1268 (point D). Thus if a Double Bottom pattern is going to develop we probably don't want to see the S&P 500 drop too far below the 1268 level. If the S&P 500 were to fall well below the 1268 level then its next major area of support would probably be at its longer term 50% Retracement Level near 1170 (point E).



Meanwhile fear has increased somewhat among investors as the recent 5 Day Average of the Put to Call Ratio has now reached the 1.20 level. In the past when the 5 Day Average of the Put to Call Ratio has risen to or above the 1.20 level (points F) some significant oversold rallies (generally 10% or more) have developed within a few weeks in the S&P 500 (points G to H). The last time the 5 Day Average of the Put to Call Ratio reached the 1.2 level was in the 3rd week of January (point I) which was followed by a sharp 10% oversold bounce in the S&P 500 (points J to K).



As talked about in the beginning it's possible we could see a potential bottom occur before much longer so now is a good time to start searching for stocks which have been holding up well.

For example ATLS has completed the right side of a 4 month Cup and now needs to develop a constructive Handle over the next few weeks to form a favorable Cup and Handle pattern.

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Bears abound in the Investors Intelligence Poll.

 
 Date Published Percent Bullish Percent Bearish  
      3/19           30.9            44.7  
      3/12           31.1            43.6

http://www.schaeffersresearch.com/streetools/market_tools/inv_intel.aspx?click=jumpto

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From Briefing.com: 4:57 pm Weekly Wrap

Given the week that just concluded, it's a good thing we're heading into a 3-day weekend. The market was as volatile as ever. Once again, the financial sector had a lot to do with that. It wasn't just the financials, though. Commodities were also at the center of things, only this time they were there in a negative light.

To begin, there was little question that there was a sense of fear Monday morning after it was announced over the weekend that the Federal Reserve stepped in and brokered the sale of investment bank Bear Stearns (BSC) to JPMorgan Chase (JPM) for the remarkable sum of just $2.00 per share. In turn, the Fed also announced a 25 basis point cut in its discount rate to 3.25% and created a new lending facility to provide financing to participants in securitization markets - its first weekend action in more than 25 years.

The Bear Stearns news was stunning in every respect as it was clear the deal had rescue written all over it. Accordingly, it sparked a wave of worry that other financial firms might follow suit and warn of solvency issues.

In expected fashion, the stock market opened the week on a much lower note, but strikingly, the sense of fear soon dissipated and the market began to rebound in a sense of appreciation for the Fed's efforts to squelch what would have been an epic sell-off had it not carried out the action that it did. The S&P 500 still dropped 0.9% in Monday's session, but it had been down as much as 2.4%; meanwhile, the Dow rebounded from a 1.6% decline and finished with a slight gain.

The stock market's resiliency on Monday set a good tone entering Tuesday's session that rang loud and clear for the bulls after both Goldman Sachs (GS) and Lehman Bros. (LEH) delivered better than expected (or was it better than feared?) earnings reports and clarified that they are in good shape - the best ever in Goldman's case - from a liquidity standpoint.

Stocks shot higher on the news, all but dismissing a higher than expected reading in the core Producer Price Index and triggering a short-covering rally that produced huge gains for many of the financial issues. Lehman Bros., for instance, closed Tuesday at $46.25, up 130% from its low in Monday's trade.

The Fed, again, played a supportive role in Tuesday's rally, having pleased the market with an announcement that it agreed to cut the fed funds rate 75 basis points to 2.25% and the discount rate another 75 basis points to 2.50%. Although the Fed noted there is some increased uncertainty surrounding the inflation outlook, it still believes inflation will moderate. The downside risk to growth, though, remains the Fed's main concern and it was implied in the statement that the Fed stands ready to cut rates again if necessary.

The Fed's decision put the finishing touches on what was already a healthy rally. The S&P 500 advanced 4.2%, scoring its biggest one-day percentage move since October 2002 while the S&P financial sector soared 8.5%, marking its biggest one-day gain since March 2000.

Wednesday's trade started out well enough as the market took stock of Morgan Stanley's (MS) better than expected earnings report and word from The Office of Federal Housing Enterprise Oversight that it was relaxing its excess capital requirement for Fannie Mae (FNM) and Freddie Mac (FRE) in an effort to increase liquidity in the U.S. mortgage market.

The bullish tone early Wednesday began to turn on the heels of a broad-based, and material, sell-off in the commodity arena. That sell-off, incidentally, coincided with a big rally in the Treasury market, particularly at the front end of the yield curve, which fostered concerns the commodity sell-off was a function of forced selling by accounts needing to deleverage or having to meet margin calls.

The recognition that the dollar jumped in the midst of the commodity sell-off supported the notion of a deleveraging trade. Either way, it was a striking move in the commodity arena that saw gold prices drop 5.9% in a single session, wheat prices plunge 7.7%, and oil prices dip 4.5%. The stock market for its part took cover in the wake of the disconcerting action, with the S&P 500 falling 2.4%.

It didn't get much better for most commodities on Thursday either. The dollar continued to rebound and gold prices slipped another 2.7%, ending the week at $920.00 an ounce after starting the week just shy of $1000.00.

Unlike Wednesday, the stock market didn't buckle amid the commodity retreat on Thursday, which was also a quadruple-witching options expiration and S&P rebalancing day. In fact, it rallied around a number of items that included brokerage upgrades of General Electric (GE), Fannie Mae and Freddie Mac, a better than feared regional manufacturing survey and a bold call from Punk Ziegel analyst Dick Bove who proclaimed the financial crisis is over.

Investors in financial stocks rallied around the latter call. The S&P financial sector jumped 6.9%. For the shortened week, it gained a whopping 11.9%.

Fittingly, the Fed also had a hand in Friday's rally that reclaimed nearly all of Wednesday's losses for the broader market. Its influence came into play following an afternoon announcement that it plans to expand the list of eligible collateral in next week's Term Securities Lending Facility to include agency collateralized-mortgage obligations (CMOs) and AAA/Aaa-rated commercial mortgage-backed securities (CMBS), in addition to the previously announced AAA/Aaa-rated private-label residential mortgage backed securities (RMBS) and OMO-eligible collateral.

In essence, the Fed's willingness to broaden the collateral it will accept in the first of two auctions was seen as a constructive measure that will provide some temporary relief, sooner rather than later, for financial firms that have been weighed down holding the difficult-to-trade securities.

Enjoy your weekend!

--Patrick J. O'Hare, Briefing.com

 
 Index      Started Week Ended Week Change % Change   YTD  
 DJIA         11951.09    12361.32  410.23    3.4 %  -6.8 %  
 Nasdaq        2212.49     2258.11   45.62    2.1 % -14.9 %  
 S&P 500       1288.14     1329.51   41.37    3.2 %  -9.5 %  
 Russell 2000   662.90      681.42   18.52    2.8 % -11.0 %

4:20 pm : On Thursday, the stock market closed the shortened week on a high note. The major indices surged more than 2% in heavy trading, and finished near their best levels of the session. Financials led the way higher, thanks to a pair of upgrades and news that the Fed is expanding its previously announced plan to increase liquidity.

The financial sector (+6.9%) was the driving force behind this session’s strength. It got off to a strong start after Fannie Mae (FNM 34.30, +3.59) and Freddie Mac (FRE 32.58, +2.68) were upgraded to Outperform from Market Perform at Keefe, Bruyette & Woods.

Financials, and the market, got a further boost after the New York Fed announced modifications to its new Term Securities Lending Facility (TSFL). The TSFL auctions will now allow schedule 2 collateral, instead of the schedule 1 collateral previously proposed. Schedule 2 collateral will now include collateralized mortgage obligations (CMOs) and AAA rated commercial mortgage-backed securities

In other words, the Fed will be lending banks highly liquid Treasury securities in exchange for less liquid assets. Banks will now be able to use a wider range of collateral than previously announced. The first auction will take place on March 27 with an offering size of $75 billion for a term of 28 days. Up to $200 billion in loans have been authorized. This is a positive development as it temporarily relieves holders of the difficult to trade securities.

The thrifts & mortgages group (+10.3%) was a standout for the third day in a row. The group has spiked 53% from its low on Monday. Investment banks & brokerages was also a leader with a 11.2% gain.

The March Philadelphia Fed, a regional manufacturing survey, also gave stocks a boost. The survey came in at -17.4, which is higher than the previous reading of -24.0. Economists expected a reading of -18.0. The stock market spiked on the release even though the number was only slightly better than expected. Since the reading is below zero, it reflects contraction in manufacturing in the Philadelphia region. The survey has shown contraction for the last four months.

Other economic data were bearish, although the market shrugged off the news. Jobless claims for the week ended March 15 rose to 378,000 from the prior reading of 356,000. Economists expected 360,000 claims.

In a separate report, February leading indicators fell 0.3%, which was in-line with expectations. The prior reading, however, was revised lower to -0.4% from -0.1%.

Also of note, General Electric (GE 37.49, +1.90) posted a healthy 5.3% gain after being upgraded to Buy from Sell at Merrill Lynch.

Nine of the ten sectors trended higher. Consumer discretionary (+3.2%) was the second best performing group behind financials, thanks to a 4.9% surge in retailers. Materials (-0.5%) was the only sector to finish in the red, as the Commodity Index (-1.7%) has slid four of the last five days.

The strengthening dollar (+0.84%) weighed on commodities, with oil sliding -1.0% to $101.54 per barrel, and gold giving up 3.5% to $912.22 per ounce. Gold is down 11.8% from its all-time non inflation adjusted high of $1033.90 per ounce that was reached on Monday.

For the week the S&P advanced 3.2%, the Dow gained 2.2% and the Nasdaq advanced 2.1%. The CRB Commodity Index slipped 8.3%, while the dollar gained 1.5%.

The stock and bond markets will be closed tomorrow in observance of Good Friday. Trading will resume on Monday.DJ30 +261.66 NASDAQ +48.15 NQ100 +2.1% R2K +2.6% SP400 +2.4% SP500 +31.09 NASDAQ Dec/Adv/Vol 971/1867/2.67 bln NYSE Dec/Adv/Vol 825/2338/2.77 bln

4:06PM Electroglas misses by $0.02, misses on revs; guides Q4 revs below consensus (EGLS) 1.50 +0.06 : Reports Q3 (Feb) loss of $0.11 per share, excluding non-recurring items, $0.02 worse than the First Call consensus of ($0.09); revenues rose 18.4% year/year to $11.6 mln vs the $12.5 mln consensus. Co issues downside guidance for Q4, sees Q4 revs of $12.5-13.5 mln vs. $13.60 mln consensus.

9:19AM Newspaper Notable Mentions (WIRES) : Reuters.com: DELL plans to buy $23 bln worth of components from China this year, 28% more than in 2007, the co said on Thursday... WSJ: Information technology provider TietoEnator received a $1.72 bln bid from Cidron Services, a co owned by private equity fund Nordic Capital Fund VI, but said the bid was too low. The deal values represents a 38% premium to Wednesday's closing price... DigiTimes: In order to defend its entry-level notebook market, INTC is planning to launch two 65nm Merom-based processors for its Centrino 2 platform, according to sources at motherboard makers... TSM is said will boost its 8-inch wafer fabrication capacity at its Songjiang, China fab to 40,000 wafers per month amid the upcoming completion of Atmel equipment move-in, according to sources at equipment makers.

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Amateur Investors Weekend Stock Market Analysis (3/29/08)

http://www.amateur-investor.net/Weekend_Market_Analysis_Mar_29_08.htm

The market pulled back this week on diminishing volume after rallying strongly the previous week. The Dow stalled out at its 38.2% Retracement Level near 12600 (calculated from the October high to its January 23rd low) and has dropped around 400 points. Also notice volume dropped off significantly as the Dow pulled back from Tuesday through Friday.



If the Dow is going to maintain its rally from the most recent low it must hold support at or above its 61.8% Retracement Level near 12190 next week (calculated from the low made on 3/17 to the high made on 3/24).



The Nasdaq rallied back to its 50 Day EMA (blue line) near 2340 and then stalled out on Tuesday. This has been followed by a 3 day pullback with a substantial decrease in volume as well.



If the Nasdaq is going to maintain its rally from the 3/17 low it needs to hold support next week at or above its 61.8% Retracement Level which is near 2230 (calculated from the March 17th low to the March 25th high).



As far as the S&P 500 it also stalled out near its 50 Day EMA (blue line) and then pulled back from Tuesday through Friday on diminishing volume as well.



Just like the Dow and Nasdaq it will be important next week for the S&P 500 to hold support at or above its 61.8% Retracement Level which is around 1296 (calculated from the March 17 low to the March 24 high) if the rally from the March 17th low is going to continue.



Overall next week is going to be a pivotal week for the major averages and if the rally from the March 17th lows is going to continue they must hold support at or above their 61.8% Retracement Levels mentioned above. If the major averages fail to hold support at their 61.8% Retracement Levels next week then that would likely lead to an eventual retest of the March 17th lows.

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IvestmentHouse Weekend Market Summary 4/4/08

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

- Bad news takes its shot, market holds its gains.
- A long time coming, but market finally shows some rotation.
- Jobs report tries to upset the market with more recession speculation.
- Earnings are coming as the market sets up for more gains.

Another round of bad news, another nice consolidation to set up the next run.

Friday it was the jobs report with the 80K loss topping expectations, downgrades, and some earnings misses. All week, however, it has been one less than cheery economic story after another. Jobless claims spike over 400K, manufacturing continues to contract, the service sector posts a third month of contraction, factory orders nearly double their downside expectations. All week it was one weak report then another.

Nonetheless, the market held up. Indeed, it started the week with a big bang as stocks exploded higher Tuesday, launching back to the upside after a week of testing the move off the March low. It could not keep the pace up after 3.5% gains that session, but it did something it has not done in the past: it held its gains. Further, it held its gains in the face of bad news, finishing out the week flat and on low volume. It is a very good sign of health when the market can weather blows that would have cratered it before.

Another sign of strength: rotation. In the selloff from the October peaks the only stocks moving higher were those feasting on the dollar's decline: energy, gold, other metals, commodities in general, and agriculture. Everything else fell while they rose, getting all of the money invested in the market. Now there are other good stocks that have set up nice patterns, forming up for the breakout or indeed already breaking out. They started showing up on the move off the March low, and again on the Monday and Tuesday upside moves. As the market moved laterally the rest of the week, the energy, commodity and agriculture stocks started moving higher once more as the new emerging leaders took a break.

That is the kind of action you really like to see, and it shows that this rally, whether 'the' bottom or just an interim one in a further selloff, has underlying strength. Stocks from many different sectors are forming up and breaking higher, e.g. tech, telecom, transports, and other appear to have bottomed for now (housing, financials). Again, this is a sign of new health in the market.

TECHNICALLY the Friday action was more of the same we have since Wednesday. There was no real gain, just some up and down action in a narrow range, but in the end the refused to give up their gains. That is another change in character: after strong moves this year the market has given them up rather quickly. This week the gains were held and the lateral movement is setting up the next break higher.

INTERNALS: Friday the breadth was basically flat and volume was once again very low, matching Thursdays slow trade. Flat breadth, light volume; just no strength . . . but in a good way. When the market is consolidating low volume and flat breadth are fine. That shows no strength from the sellers even as the buyers take a respite after a strong move. Basically taking a rest and the numbers show it.

CHARTS: Another day of the same thing Wednesday and Thursday showed: a very flat lateral move after the Tuesday surge. SP500 and DJ30 are just below the 90 day SMA; NASDAQ is not there yet, but it showing that same lateral action. The big test for the move is still the 12,750 level for the Dow, but this lateral rest stop after strong gains is putting it in good shape to make a run at that level.

LEADERSHIP: Friday once again saw energy, agriculture and commodities (particularly metals) lead the way. As the dollar weakened once more to end the week these stocks tied to the dollar took off again. They were in trouble in March, but they have recovered nicely and are breaking out once more. The other leaders that are starting to show up were not dumped; they just held their gains and consolidated. That keeps a lot more stocks in the game for the week ahead, something the market hasn't had thus far in 2008.

THE ECONOMY

Jobs fall more than expected, ramp up recession talk.

The Thursday jobless claims topping 400K was the latest warning the jobs market was down and had not yet recovered. Sure Friday's 80K drop was more than the 50K expected, but the monthly report lags the more contemporaneous weekly claims data. Thus that Friday decline in non-farm payrolls is likely not the worst of it given that it lags what the weekly numbers show.

That wasn't discussed much in the aftermath of Fridays report, however. Seems the report and the revisions to prior reports occupied all of the gloomy thoughts. January and February were rewritten and the net was an additional 67K jobs lost. That makes three straight months of declines, four months for private payrolls (less government). Manufacturing has lost jobs for 21 consecutive months. Construction is down 9 in a row.

The unemployment rate, the household survey, rose to 5.1% from 4.8% in March and topped the 5.0% expected. More households are answering the question 'are you working' with 'no.' For what it is worth, NAIRU considers 5% inflation neutral. Whatever. It also means we are losing jobs, but in a recession that is no surprise.

When recovering from the last recession the upturn in jobs in the household survey was the clue that the economy was starting to recover even with the low non-farms number. Greenspan swore it was the latter that mattered, but when you have a recession where there are massive job losses and the large companies are not hiring individuals had to do what they had to do, and that meant a lot of startup businesses. If this is the bottom of this recession then we are not going to see the same thing because there has not been the massive turnover as large corporations trimmed the fat. They have done the cutting and did not do much hiring during the good times. Thus this is not going to be the indicator it was in 2002 unless . . . it gets really ugly from here, i.e. the market rolls over after this run higher.

Of course, even as the market rallies off the double bottom the lagging (i.e. lagging) jobs report spawned talk of recession, as in 'this confirms the recession,' or 'if there was any doubt, we are in a recession.' There is no doubt. Even though GDP was not negative in Q4, the decline from 4+% growth to flat is basically recession material. Even if there is technically no recession it really doesn't matter because all of the indicia of recession is present: job losses, foreclosures, bankruptcies - all of the things that we try hard to avoid but seem to inevitably find.

Why have a Fed, at least a meddling Fed?

It is a normal part of the economy to go through a downturn. What we have to avoid is the kind of bonehead moves the Fed makes such as lowering interest rates to 1% for over a year and creating economic bubbles on top of bubbles. Then the Fed tries to rescue the economy the next time the bubble starts to deflate in a continuing effort to thwart recessions that want to occur to clean out the excesses, i.e. get the trade balances more back in line, get the dollar firmed up, get Congress thinking really hard about actually trimming spending, etc.

The problem is the Fed's mandate. It has to promote the highest possible growth while maintaining price stability. In Europe it is just price stability. Which is better? Neither. What we have learned about the Fed is that its mandate promotes economic meddling, i.e. trying to fine tune growth using the caveman club of interest rates to perform brain surgery. Effective if you are trying to terminate the patient.

What the Fed needs to do, what its mandate should be, is simply acting as the lender of last resort, i.e. the backstop, in order to forestall major collapse if things go awry. No trying to slow things down to stay within a perceived 'speed limit' or trying to goose things along. The Fed should set interest rates, if at all, by following the market of interest rates. Then when things get really bad such as in the Russian currency crisis, it can step in and make sure that kind of panic doesn't get out of hand by making funds readily available. That is it. Simple, understandable, no guessing about when a bunch of guys and girls in the ivory tower are going to decide it is time to mess up your retirement plans as in 2000.

THE MARKET

MARKET SENTIMENT

VIX: 22.45; -0.76
VXN: 25.6; -1.33
VXO: 23.75; -1.02

Put/Call Ratio (CBOE): 1.2; +0.15. Back above 1.0 Thursday and Friday, making something in the neighborhood of 25 to 2 over the past month. Still a lot of downside bets and that is a good contrary indicator.

Bulls: 36.4%. Slight drop from 36.7% after the big jump from a very low 30.9% two weeks back. Not really worried about it; the indicator did its job with the dive below 35% and the crossover with the bears. They are still in crossover mode even with the rise in bulls and the decline in bears. The bulls and bears were eye to eye in mid-February and have crossed. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator. This is smashing that. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.

Bears: 37.5%. Substantial decline from 41.1%, but you knew that was going to come with the recovery. As with the bulls the jump in bears did its job after hitting 44.7% that was up from an already freakishly strong 43.3% the week before. That was a surge from an already high 36.6% the prior week. Up sharply from a low of 19.6% on the last rally. It is over 30% and indeed over 35% the prior week, meaning it has blown past the range that means business. Big move after falling to a low of 19.6% on this round. 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). This is a huge turn, unlike any seen in recent history.

NASDAQ

Stats: +7.68 points (+0.32%) to close at 2370.98
Volume: 1.962B (-0.99%). Volume flat-lined, holding well below average as NASDAQ continued testing the strong Tuesday move. Great action.

Up Volume: 1.086B (-101.447M)
Down Volume: 809.324M (+29.474M)

A/D and Hi/Lo: Advancers led 1.07 to 1
Previous Session: Decliners led 1.09 to 1

New Highs: 59 (+21)
New Lows: 67 (-29)

NASDAQ CHART: Click to view the chart

Rallied Friday but with no volume it could not hold the move and slid back to basically flat on the session. Flat breadth, flat volume as NASDAQ moves laterally over its 50 day EMA (2333) after clearing that resistance Tuesday. Very nice test, very nice set up for the next break higher.

NASDAQ 100 (+0.58%) tapped the 90 day SMA on the high and slid back, basically to flat. Led the NASDAQ overall this past week and looking for a break once more to the upside to move to test the 200 day SMA (1966) on the next move.

NASDAQ 100 CHART: Click to view the chart

SOX (-0.38%) stalled at the 90 day SMA after the strong surge through Thursday. Very solid, almost matching the early February peak on the move. A pause here and it is ready to move to next resistance at 400. Looks like an upside play here.

SOX CHART: Click to view the chart

SP500/NYSE

Stats: +1.09 points (+0.08%) to close at 1370.4
NYSE Volume: 1.24B (-1.07%). Another flat session of volume well below the average line. Very good price/volume action as the NYSE indices move laterally after that strong Tuesday surge.

Up Volume: 620.806M (-124.417M)
Down Volume: 607.627M (+118.552M)

A/D and Hi/Lo: Advancers led 1.23 to 1
Previous Session: Advancers led 1.44 to 1

New Highs: 66 (+19)
New Lows: 19 (-4)

SP500 CHART: Click to view the chart

Big move Tuesday on decent volume, then a tight lateral move to end the week, tapping near the 90 day SMA (1386) on the high and fading back. An excellent lateral consolidation has SP500 set up to continue higher though it might test back just a bit before it makes a run at the early February high at 1400.

SP600 (-0.13%). If SP500 has a good pattern, SP600 has a really nice pattern. It broke over the 90 day SMA (375.72) Tuesday, then slid laterally over that level in a tight range - a very tight range - through Friday. It is just below resistance at 382 to 385, but is in perfect position to make the break and run to 400. Very nice.

SP600 CHART: Click to view the chart

DJ30

Very similar to SP500, and that means not bad at all. A three day move below the 90 day SMA (12,665) on very low volume, just below key resistance at 12,750. This lateral move that refuses to give up the gains is a solid set up for a break higher to test that level, and from the way the market is acting, a move through that level. That frees up a run to 13,250ish. Need to see that break over 12,750; that is the gateway for the Dow.

Stats: -16.61 points (-0.13%) to close at 12609.42
Volume: 181M Friday versus 183M shares Thursday. Very low, weakly pathetic volume. In short, just what you want to see on a lateral move that consolidates a strong move higher.

DJ30 CHART: Click to view the chart

MONDAY

A lot more economic data next week; not like the old days when you would get a report about one a month because it took that long to compile the data using a yellow legal pad and a box of number 2 lead pencils. These days you get 10 to 12 data points a week. Then you have the odd Fed speaker (or more accurately, it would be odd not to have a Fed speaker) sprinkle three to four times during the week. Data overload. No wonder the market is finally ignoring the bad news or any news for that matter, and rallying higher.

The big event to come, however, is earnings. They have already started with RIMM's excellent results, MON's big numbers, and MOS' results on Friday. They are all in nice growth areas, so their gains are not representative, at least for the run of the mill stock. For the leaders they are. We can expect a lot of 'blame the economy' results this time from run of the mill companies. That is always the case as CEO's use the available cover to excuse poor performance.

The point: no one is expecting decent earnings, and look what happened to companies that report better than decent. Bing, bang, boom. This is prime time for big moves on earnings just because no one expects anything good. Of course, the market is expecting some good things as it has moved off the lows, tested, and is moving again. It is ready for the next break higher right now. That is why we have started accumulating the upside again and will continue to do so when the opportunity shows itself.

Thus this weekend we are looking at more stocks that are in position to make the next break higher and make us some strong money. Recession? May still come. May get worse. Market may turn back down after this rally. Until then, however, as long as we see this kind of nice set up in more and more stocks ready to make the breakout, we are going to participate in the move as the opportunity presents itself. The market is the final decision maker despite all of the pundit talk about recession. Remember, PE ratios remain very solid as we entered this slowdown; a shallow market pullback is one of the possibilities in that situation.

Support and Resistance

NASDAQ: Closed at 2370.98
Resistance:
2370 from the April 2006 peak
2378 is the mid-February peak
2379 from the October 2006 peak
2386 is the August intraday low
2419 is the January 2008 peak
2451 is the August closing low
Some modest resistance at 2500 from interim August lows.
The 200 day SMA at 2550

Support:
2340 from the March 2007 low
The 50 day EMA at 2333
The 18 day EMA at 2307
2292 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
2252 is the early February low
2221 is March low
2216 from August 2005 peak
2202 is the January intraday low
2175 from the December 2004 peak
2168 is the March 2008 low

S&P 500: Closed at 1370.40
Resistance:
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
The 90 day SMA at 1386
1396 is the January 2008 peak
1406 is the August and November 2007 closing low
1420 is a longer term trendline from the August 2003/September 2004 lows

Support:
The 50 day EMA at 1351
The 18 day EMA at 1341
1325 from May 2006 peak prior to the summer 2006 correction
1324 is an ancient trendline
1317 is the early February low
1305 to 1302 from an August 2006 peak and matches a range of support from March and April 2006.
1294 from the January 2006 peak
1288 from June 2006
1280 from June and August 2006
1272.66 is the March 2008 low
1270 is the January intraday low
1260 from July 2006
1258 to 1255 from May and June 2006 lows

Dow: Closed at 12,609.42
Resistance:
The 90 day SMA at 12,685
12,743 is the November low
12,750 to 12,768 is the February 2008 peak and a series of lows and highs from August 2007
12,786 is the February 2007 peak
12,845 is the August closing low
The 200 day SMA at 13,139

Support:
12,573 is the mid-February high
12,518 is the August intraday low
The 50 day EMA at 12,438
The 18 day EMA at 12,401
12,250 from late March 2007 lows
12,070 from the early February 2008 lows
12,050 from the March 2007
11,731 is the March 2008 low
11,670 is the May 2006 intraday high; 11,642 closing
11,634 is the January intraday low

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

April 7
- Consumer Credit, February (3:00): $6.0B expected, $6.9B prior

April 8
- Pending home sales, February (10:00): -0.5% expected
- FOMC Minutes, March (2:00)

April 9
- Wholesale inventories, February (10:00): 0.5% expected. 1.0% prior
- Crude oil inventories (10:30): 7.3M prior

April 10
- Initial jobless claims (8:30): 407K prior
- Trade balance, February (8:30): -$57.4B expected, -$58.2B prior
- Treasury Budget, March (2:00): -$80.0B expected, -$96.3B prior

April 11
- Export prices, March (8:30): 0.5% prior
- Import prices, March (8:30): 0.6% prior
- Michigan sentiment, preliminary, April (10:00): 69.4 expected, 69.5 prior

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InvestmentHouse Weekend Update 4/11/08

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

- GE shocks the market as its financial services division runs aground.
- Import prices surge as the US is in fact importing inflation.
- Sentiment falls to 1982 levels in the great north.
- Talk of a bigger bailout in the works.
- Volatility not budging with the Fed and the feds acting as the backstop.
- Low volume Friday holds out possibility market can heal itself, but more than ever it needs good guidance, a lot of good guidance, to pull things back together.

Market gets tired of swallowing bad news.

The market was looking for a catalyst and it got one, just not the right kind. The indices were set up well and Thursday showed indications an upside breakout was close. Then a big name issues a big surprise. You expect disappointments from AMD and AA, and they didn't disappoint by disappointing for yet another quarter earlier last week. But GE?

GE missed earnings by 7 cents and lowered its 2008 guidance. Just three weeks ago it said earnings would be in the 50 to 53 cent range with analysts expecting 51. 44 cents hurt. How was GE so wrong so late in the quarter? The financial services business hit the reef when BSC blew up. It is apparent that the entire financial sector came to a standstill at that point, and that left everyone wondering if one part of GE's business could drag earnings down so much when its other business units are in excellent shape, what is going to come out of the financial stocks whose sole means of income is from the financial sector.

Indeed, GE's revenues, while down from the financial unit, were up 8% overall. The overseas revenues rose 23%. Goodness gracious. Yet . . . GE warned for the year. Does it see things as that bad? Probably not. What it sees is that three weeks ago things looked super and then one business unit imploded with almost unprecedented speed. It simply does not know what lies ahead for that part of the company and thus it pulled in its guidance as a matter of prudence. Of course that doesn't mean everyone can let out a big 'whew' that all is clear. While it has been bad in the financial sector, GE is showing it could be a lot worse than everyone expects even with all of the write-downs at this point.

Maybe. While GE's results were hurt in the finance sector there are signs the credit crunch just in the past few weeks is better. The amount bid at the Fed auctions is on a rapid decline. Primary dealers bid only $39.5B last week of the $50B available. People who watch these say that is showing the dealers have liquidity again. Investment bank borrowing fell to $26.5B last week from $34.4B the prior week and $37B two weeks ago. Slowing at the discount window means improved liquidity. Seems opening the discount window was just in time. GS says there is a light at the end of the tunnel and that the credit crisis is in the beginning of the fourth quarter in sporting terms. MS CEO kept the sports analogy saying the crisis was in the final innings.

GE was bad and then there was piling on. Import prices surged with China jumping 148% year/year. Michigan sentiment for April flopped to a 26 year low. We wanted China to stop controlling its currency as much and it is doing so. As we said would happen over a year ago, when that happened the yuan would rise against the dollar and our imports from China would increase in price, basically importing inflation to the US. As discussed Thursday, we are doing this elsewhere as well with oil, metals, and other commodities priced in dollars. As the dollar falls foreign producers require more dollars to remain whole. We may export more but we pay more for just about everything. To top it off we are on this kick of burning food for fuel, driving world prices higher and helping cause food riots around the globe. That makes you really take a hard look at this ethanol issue and ask 'is this really the best solution to the problem given all the troubles in the world?' Sure doesn't look like it.

This was more than enough bad news to undercut the nice rally set up. Industrials were hammered but the weakness was market wide though not as intense as in the GE wannabes. Indeed many quality stocks held up well even as other big names (e.g. AAPL) took hits. It is definitely trouble when a big name that never misses, or at least has not missed in a decade, is blindsided because things turned so fast you have to wonder, and the market is, what is next? There was widespread downside but it was not an across the board wipeout. Volume was actually lower; there was no dumping overall and a lot of recent leaders held up well. There was some culling, and of course, GE was moving into leadership.

TECHNICALLY the action was weak as you would expect. The indices started low and moved lower, never able to put together a recovery as a midmorning attempt rolled over into a steady afternoon slide lower and lower. The market was overcoming bad news time and again, but there is a point where you are so full of bad food that you just cannot swallow another bite. If you are lucky it doesn't all come back up. It didn't Friday, but next week with all of the earnings reports is now even more important given the GE miss.

INTERNALS: Breadth jumped back to those levels seen during the selling and the up and down gyrations as the indices tried to put in that double bottom in January through March. Not surprising given the import of GE and the magnitude of its miss. -3.6:1 NYSE, -3.7:1 NASDAQ; it was not just GE and the industrials though many stocks were just weaker and were not selling off hard. Volume was the quite interesting technical aspect. It was lower on both NASDAQ (-11%) and NYSE (-1.6%), the latter even with GE trading 36M shares, 7 times its average volume. All of the heavy selling was in GE.

CHARTS: SP500, burdened by GE, had a bad day, blowing out the bottom of its lateral consolidation. It managed to hold some support at 1330. DJ30 also had to bear the yoke of GE, and it caved in its lateral consolidation a the 10 day EMA. It managed to hold its support at 12,250, not even getting there. NASDAQ did the same, making a new low on this pullback, but it did hold its long term trendline on the close and on very low volume. There is hope but it has to find the bottom here.

LEADERSHIP: There were definitely some implosions; you cannot have that kind of news and not see some stocks that were building nicely get plowed under. Overall, however, leadership held up well and our stocks mirrored that action. That is always good to see in a negative environment. Still, they cannot hold up if the market is not able to shake off GE and look to brighter futures elsewhere. Translated that means with all of these earnings coming out this week there need to be some big names with strong reports and upside guidance that is enough to wash GE right out of investors' hair. The market has no chance if other stocks don't show that GE was truly related to the March financial issues related to BSC financial decline.

THE ECONOMY

Import prices confirm what the trade deficit told.

Prices for foreign products rose 2.8% in March, surging back from the 0.2% February gain, and back on path more with the trend that saw January rise 1.6%, December fall 0.2%, but November surge 3.2%. A lot of that has to do with oil imports, but even if you take out oil foreign goods rose 1.1%, the strongest in the last five months.

A lot of that was due to rising Chinese prices, up 4% for the month and 148% year over year. Oil imports were not cheap, however, rising 9.1% in March. Volatile number that was down in February, up 4.8% in January, down again in December, and up 12.4% in November. Follow the bouncing ball, but that ball is still bouncing uphill.

Some say the falling dollar is just a normal correction after years and years of a rising dollar that took it out of a normal relationship to other economies. Is that a bad thing? We had a strong dollar and we could buy goods from all over the world and do so cheaply. That is called raising your standard of living, and that is not a bad thing in just about everyone's book. You don't suffer inflation because of your strength. Now we have to spend more for oil and gasoline leaving less money to go elsewhere for things we typically enjoy in our standard of living. We have to spend more for everything. Our economy is in recession, helped along by hugely surging oil prices, surging metals prices, food prices and goods in general gratis a weaker and weaker dollar. Again, this is a good thing? Used to be we just complained about the cost of medical care and education. Now you wonder whether you want two-ply or single-ply. THAT is the definition of a lower standard of living.

Michigan Sentiment is . . . how do you say it? . . . crappy.

At 63.2 sentiment was bad. Well off the 69.0 expected, the 69.5 in March, etc. Steady downtrend and still heading lower. A combination of high gas prices, higher food prices, rising unemployment, politics, and general gloom in the media. Feeds off itself.

Sentiment is at recession levels in an absolute number sense, but the decline from 78 to 69 in just two months shows the rate of change indicative of a recession even without hitting historical recession ranges. That is a moot point now; it is there.

Present conditions were the stalwart at 78.4. The outlook is a pathetic 53.4, truly a recession level.

Comparisons to the past are of course widespread and somewhat appropriate. The big one thrown out was the worst showing in 26 years. Back in March 1982 the US was suffering through a horrible recession after the 1970's, the worst period in economic history since the Great Depression. In 1982 the economy was starting to emerge from that truly disastrous period after the Reagan Emergency Economic Recovery Tax Act of 1981 was passed and in place.

While the economy is likely in recession right now, it is hard to argue it is emerging from it. If it is, it is a shallow one. If it is we will see the stock market emerge ahead of it as it was trying to do before Friday and the GE miss. May still do it, but as noted above, it will take other widely followed stocks to put up some good guidance. If not then there is likely more downside for stocks and the economy.

Resolution Trust Fund Part 2?

It was only a matter of time. The Feds are talking about a bill to bailout those mortgagors who cannot pay their mortgage and the builders and lenders who became overextended and are now in trouble. Once more our government, in order to ensure domestic tranquility and the pursuit of financial irresponsibility, is preparing to bail out those that knew better but didn't act accordingly.

Today we heard it: the feds need to form an entity similar to the Resolution Trust Corporation back in the early 1990's to clean up the mortgage mess. In the early nineties the RTC was in charge of the Resolution Trust Fund that was basically a mechanism to throw money at the savings and loan collapse that occurred after the real estate market fell to pieces all across the south and other parts of the country. An entire branch of case law developed in the courts to assist in expediting the clean up by limiting claims of borrowers against lenders to keep the hundreds of billions in losses from growing into trillions. At the same time the 'trust fund' (a.k.a. a tax dollar fund) was used to pay off both sides in order to keep the nation's financial sector from collapsing altogether (it was not only S&L's that failed but bank after bank was taken over by other banks to avoid outright failures).

It worked but it cost a lot of taxpayer dollars that went to the wrongdoers. Basically it was a decision to grease the system and get through the mess even if it meant assisting those that were major players in the problem in order to avoid a larger economic collapse. The feds meant business. The Federal courts were given jurisdiction (no invasion into state's rights there) and the judges knew what the legislation was enacted for: to clean up the mess and limit the losses, and that meant harsh rulings. I was a newbie lawyer at the time and the case law that developed in favor of the lending institutions was so strong I had no trouble starting off my career with several summary judgment victories for defendant financial institutions. I liked to think I was smart and resourceful, but I knew better: the deck was stacked in the lender's favor as long as the bank hadn't done something like promise to place gold coins in the borrower's account every Monday. Even then you could probably get them off.

Anyway, after GE's sudden and unexpected miss, many Friday were saying the mess is going to be much larger than expected, even with the billions already written off. Who can sweep billions of dollars lost due to inappropriate actions under the rug? The federal government, a.k.a. the candy man. Of course it would mean more if the dollar had some weight behind it, but why quibble. With talk of a second stimulus package already you can bet that an offshoot of that will be some sort of federal creation to deal with the issue if earnings guidance does not improve drastically in the near term.

THE MARKET

MARKET SENTIMENT

VIX: 23.46; +1.48. Bounced higher but still right at the 200 day SMA and at the lows that it hit to start April. The bounce was nowhere near commensurate with the point losses and the gloom you heard on the financial stations over GE's miss. It just goes to show that with the Fed basically promising to do whatever it takes, the federal government passing one stimulus package and talking about another even before the first checks are issued, and talk of a mortgage bailout similar to the Resolution Trust Fund in the early 1990's, and there is no reason for volatility to rise. If the Feds are willing to pick up the tab, why worry?
VXN: 27.54; +1.77
VXO: 25.94; +2.79

Put/Call Ratio (CBOE): 1.29; +0.32. Back in its comfort zone above 1.0 on the close. Lots of downside speculation and protection buying. Ironically, even as VIX refuses to rally due to the feds acting as a backstop, there is no lack of put buyers.

Bulls: 37.4%. Creeping higher, up from 36.4% after falling to 30.9% in mid-March. The indicator did its job with the dive below 35% and the crossover with the bears. They remain in crossover mode even with the rise in bulls as bears edged higher again. The bulls and bears were eye to eye in mid-February and have crossed. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator. This is smashing that. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.

Bears: 38.5%. Up a point from 37.5% as the bears are skeptical of a potential bottom in the market. Heading back up toward the 44.7% peak, but not likely to make it there of course. Like to see the continued pessimism even as the indices form up a bottom and leadership improves. As with the bulls the jump in bears did its job after hitting 44.7% in the third week of March that was up from an already freakishly strong 43.3% the week before. That was a surge from an already high 36.6% the prior week. Up sharply from a low of 19.6% on the last rally. It is over 30% and indeed over 35% the prior week, meaning it has blown past the range that means business. Big move after falling to a low of 19.6% on this round. 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). This is a huge turn, unlike any seen in recent history.

NASDAQ

Stats: -61.46 points (-2.61%) to close at 2290.24
Volume: 1.913B (-10.83%). After bouncing close to average Thursday on that upside session volume dumped right back down to early April levels, i.e. well below average. That indicates no heavy dumping of tech shares overall, and despite the losses, that leaves open the ability to recover from this selling if the techs get some important names announcing strong earnings and upping guidance.

Up Volume: 268.995M (-1.383B)
Down Volume: 1.633B (+1.082B)

A/D and Hi/Lo: Decliners led 3.72 to 1. That stings.
Previous Session: Advancers led 1.48 to 1

New Highs: 32 (-3)
New Lows: 144 (+28)

NASDAQ CHART: Click to view the chart

After recovering the 50 day EMA (2333) Thursday it gave it right back up as well as the 50 day EMA right at 2300. Managed to hold its old 2004/2006 up trendline on the close; minor victory. NASDAQ put in a closing low for the month on the move but volume did not ramp. This is a good point for it to hold and the TL did hold in February as it tested it. A higher low here would be very solid for the index and the market. For now, however, the onus is on the bulls to show they can make a stand at support.

NASDAQ 100 (-2.93%) was whacked as well and undercut its 50 day EMA, but it was in better technical position to start with and is still in position to hold support near 1800. AAPL and company were down Friday as the market took back some of the recent leaders with big names, and it will be up to them to turn the tide back up as they did in March.

NASDAQ 100 CHART: Click to view the chart

SOX (-3.41%) showed signs of live last week and indeed this entire month, but the market weakness Friday kept it from breaking over the 90 day SMA and making this move meaningful. It closed at its 50 day EMA so there is still some life here or more accurately, potential life.

SOX CHART: Click to view the chart

SP500/NYSE

Stats: -27.72 points (-2.04%) to close at 1332.83
NYSE Volume: 1.263B (-1.64%). Even with GE selling at 7 times its average volume, trade on the NYSE was still way below average and was down from Thursday where the indices posted a gain. No dumping of shares, just a melt lower gratis GE.

Up Volume: 121.724M (-654.457M)
Down Volume: 1.128B (+635.824M)

A/D and Hi/Lo: Decliners led 3.62 to 1. With the small caps sulking over the GE miss, breadth was bad.
Previous Session: Advancers led 1.66 to 1

New Highs: 24 (-16)
New Lows: 56 (+8)

SP500 CHART: Click to view the chart

It was going to be a struggle from the get-go because GE accounts for 2.8% of SP500's movement as it is a market cap weighted index and GE holds the second largest weighting on the large cap index. The index sold through the 50 day EMA and down to 1330 where there is some support. There is also an old trendline at 1324ish where SP500 can try and hold similar to NASDAQ and its old trendline. Its work is cut out for it after failing to take out the late February high and now moving back toward 1320ish that many are looking at as potential support. We always say 'many are looking at' because that is true; the big houses do their technical analysis and will buy some at that level and see if any others join in. If so then the level holds. That is why it is always important to look at potential support levels on the way down and resistance levels on the way up.

SP600 (-2.53%) was hammered lower as the small caps did not like the specter of a weaker economy emerging given the GE guidance and they undercut the 50 day EMA and will now try and hold some support just over 360. Not promising.

SP600 CHART: Click to view the chart

DJ30

With GE pushing the Dow found it hard to hold its consolidation. It didn't, falling through the 50 day SMA and heading toward a support level at 12,250ish. Volume was up to average thanks to GE. If it is going to make the breakout move still, it has to hold near that support range and turn back up. If it cannot then it looks ready to trade lower in the range once more. Again, a key week of earnings that now has an even higher premium on good future guidance.

Stats: -256.56 points (-2.04%) to close at 12325.42
Volume: 286M shares Friday versus 227M shares Thursday. A jump in volume for sure but it was still just average on this bad news.

DJ30 CHART: Click to view the chart

MONDAY

Too much economic reporting this week with retail sales, regional manufacturing indices, housing starts, and CPI. More important than all of the data are the earnings and they guidance. With UPS and GE warning re the future, quite a few stocks have to come up with the goods in order to turn the market back up and forget about GE.

It can turn things back up. Volume Friday was low despite the impressive point losses so there was not wanton unloading of shares. That could still develop, but at least the initial reaction was not for everyone to hit the panic sell button. That made the selling more palatable, but low volume alone is not the answer. Again, good guidance from important stocks is required, and even that may not be totally sufficient because the speed of the GE earnings decline casts guidance in doubt. Of course, C, JPM and MER all report earnings this week and that will give us a better idea of just how bad things got for the rest of the financial sector outside of WMT.

Leadership remains solid after a day of big point losses on the indices, but then again, it is just one day. The market already pulled back last week; leadership cannot be bled to death and expect to keep the market going. Thus while there is some room to work with, the market has put itself in the position of having to shake off GE and continue higher. Pretty tall order. That is why we were closing positions that were not holding support Friday, culling the stocks that the market was weeding out.

We like the number of stocks that are still in good shape after a pullback all week and then a hard downside price blow Friday. The majority of the market was not ready to chuck it all on Friday, just those that were active, and judging from the volume, there was no surge in those folks. Doesn't mean it won't happen; over the weekend the GE and consumer sentiment stories will be spun many different ways by Monday. We will stick with the leaders but we are going to be ready to close them out if the leaders start giving in. That would be too bad; they were on the verge of a good move. Still are, just had a log thrown in their way.

Support and Resistance

NASDAQ: Closed at 2290.24
Resistance:
The 50 day EMA at 2333
2340 from the March 2007 low
2370 from the April 2006 peak
2378 is the mid-February peak
2379 from the October 2006 peak
2386 is the August intraday low
2392 is the April 2008 peak
2419 is the January 2008 peak
2451 is the August closing low
Some modest resistance at 2500 from interim August lows.
The 200 day SMA at 2544

Support:
2291 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
2252 is the early February low
2221 is March low
2216 from August 2005 peak
2202 is the January intraday low
2175 from the December 2004 peak
2168 is the March 2008 low

S&P 500: Closed at 1332.83
Resistance:
The 50 day EMA at 1352
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
The 90 day SMA at 1380
1396 is the January 2008 peak
1406 is the August and November 2007 closing low
1420 is a longer term trendline from the August 2003/September 2004 lows
1433 from a pair of August 2007 lows and December mid-month intraday low

Support:
1325 from May 2006 peak prior to the summer 2006 correction
1324 is an ancient trendline
1317 is the early February low
1305 to 1302 from an August 2006 peak and matches a range of support from March and April 2006.
1294 from the January 2006 peak
1288 from June 2006
1280 from June and August 2006
1272.66 is the March 2008 low
1270 is the January intraday low
1260 from July 2006
1258 to 1255 from May and June 2006 lows

Dow: Closed at 12,325.42
Resistance:
The 50 day EMA at 12,452
12,518 is the August intraday low
12,573 is the mid-February high
The 90 day SMA at 12,631
12,743 is the November low
12,750 to 12,768 is the February 2008 peak and a series of lows and highs from August 2007
12,786 is the February 2007 peak
12,845 is the August closing low
13,092 is the December 2007 intraday low
The 200 day SMA at 13,117

Support:
12,250 from late March 2007 lows
12,070 from the early February 2008 lows
12,050 from the March 2007
11,731 is the March 2008 low
11,670 is the May 2006 intraday high; 11,642 closing
11,634 is the January intraday low

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

April 14
- Retail sales, March (8:30): 0.1% expected, -0.6% prior
- Retail ex-autos (8:30): 0.2% expected, -0.2% prior
- Business inventories, February, (10:00): 0.4% expected, 0.8% prior

April 15
- PPI, March (8:30): 0.4% expected, 0.3% prior
- Core PPI (8:30): 0.2% expected, 0.5% prior
- NY Empire state Index, April (8:30): -16.0 expected, -22.2 prior
- Net foreign purchases, February (9:00): $62.0B prior

April 16
- CPI, March (8:30): 0.3% expected, 0.0% prior
- Core CPI (8:30): 0.2% expected, 0.0% prior
- Housing Starts, March (8:30): 1.025M expected, 1.065M prior
- Building permits, March (8:30): 970K expected, 984K prior
- Industrial production, March (9:15): -0.1% expected, -0.5% prior
- Capacity utilization, March (9:15): 80.4% expected, 80.4% prior.
- Crude oil inventories (10:30)
- Fed Beige Book (2:00):

April 17
- Initial jobless claims (8:30): 357K prior
- Leading economic indicators, March (10:00): 0.1% expected, -0.3% prior
- Philly Fed, April (10:00): -14.0 expected, -17.4 prior

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Amateur Investors Weekend Stock Market Analysis (5/10/08)

http://www.amateur-investor.net/Weekend_Market_Analysis_May_10_08.htm

As mentioned last weekend I said it was possible we could see a pullback develop this week as the 2 Period Relative Strength Index (RSI) had closed 3 weeks in a row below the 20 level. The last time the 2 period RSI closed three weeks in a row below the 20 level was in October (point A) which was followed by a sharp downward reversal in the S&P 500 (points B to C). However this weeks reversal (points D to E) wasn't nearly as bad as last October's.

Meanwhile also notice after the big initial drop in mid October (points B to C) the market actually rallied the following week (points F to G). It's not out of the question we could see a similar scenario occur next week.



As far as the major averages the Dow lost just over 400 points from last Friday's high and has dropped back to its newly developed upward sloping trend line (black line) from the mid March low. If the Dow bounces off its upward sloping trend line next week then we may see it eventually rally up to either its 200 Day Moving Average (purple line) just above 13000 or to its 61.8% Retracement Level (calculated from the October high to the January low) near 13200 (point H). Meanwhile if the Dow drops below its upward sloping trend line then look for a potential drop back to its 50 Day Moving Average (green line) near 12500.



The Nasdaq has only fallen 70 points since last Friday's high and still remains above its 20 Day Moving Average (blue line) and newly developed upward sloping trend line (black line) from the mid March low. If the Nasdaq holds support at or above its 20 Day Moving Average early next week and rallies I expect it will eventually rally up to the 2510-2520 area which corresponds to its 50% Retracenment Level (calculated from the October high to the March low) and 200 Day Moving Average (purple line). Meanwhile if the Nasdaq breaks below its 20 Day Moving Average then look for a drop back to its upward sloping trend line near 2380.



For those watching the Nasdaq 100 it really didn't drop that much this week and currently is holding support near its 200 Day Moving Average (purple line). If the Nasdaq 100 attempts to rally next week its next area of significant upside resistance remains at its 61.8% Retracement Level (calculated from the late October high to the mid March low) near 2020 (point I). Meanwhile if the Nasdaq 100 comes under some more selling pressure look for support at its 20 Day Moving Average (blue line) near 1920.



The S&P 500 has fallen just under 40 points from last Friday's high and is now near a critical short term support level near 1385. The 1385 level corresponds to its 20 Day Moving Average (blue line) and is also along its newly developed upward sloping trend line (black line) from the mid March low. If the S&P 500 can hold support near the 1385 level early next week then we may see a rally develop with a potential rise up to its 200 Day Moving Average (purple line) around 1430. Meanwhile if the S&P 500 breaks solidly below the 1385 level next week then look for a drop back to its 50 day Moving Average (green line) near 1355.



Finally when looking for stocks to invest in focus on those with the best looking chart patterns. For example ROSE in the strong Oil sector has completed the right side of an 11 month Cup and now needs to develop a Handle.



It's important for a stock once it develops a Cup to develop a Handle before moving higher as the chances for a successful breakout in the longer term are greater than those stocks which fail to develop a Handle. Recently ATLS broke out of a Cup and Handle pattern in late March and has moved steadily higher over the past 6 weeks.

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Goldman Sachs upgrades chip sector
Monday May 19, 8:16 am ET

Goldman Sachs upgrades semiconductor sector, says stocks likely to improve in 2009

http://biz.yahoo.com/ap/080519/semiconductors_ahead_of_the_bell.html?.v=1

NEW YORK (AP) -- Investment bank Goldman Sachs raised its view on the U.S. semiconductor sector late Sunday to "Attractive" from "Neutral," telling investors the stocks will likely rise going into next year.

"We are comfortable in taking a more aggressive stance on the sector and expect stocks to outperform the market into 2009 after several years of significant underperformance," analyst James Covello said in a note to clients.

Fundamentals for the industry are expected to improve late this year, and stocks are trading a "reasonable levels" given their multiyear underperformance, he said.

"Semiconductor stock performance tends to be closely related to trends in semiconductor inventories, with stocks outperforming the market coming out of an inventory correction and underperforming the market heading into an inventory correction," analyst James Covello said in a note to clients.

Such an inventory correction is now "imminent," which would provide the boost later this year, he said.

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Amateur Investors Weekend Stock Market Analysis (5/31/08)

http://www.amateur-investor.net/Weekend_Market_Analysis_May_31_08.htm

During the past several years there has been a common theme in the S&P 500 which involves its 12 Month EMA (blue line). Notice from the middle part of 2003 through 2007 each time the S&P 500 dropped below its 12 Month EMA that it closed back above it by the end of the month (points A) as it remained in a longer term up trend. This trend was broken in January of this year (point B) as the S&P 500 failed to close back above its 12 Month EMA after dropping below it. Meanwhile from late 2000 through 2002 notice each time the S&P 500 rallied from oversold conditions it failed to close back above its 12 Month EMA (points C) as it remained in a longer term down trend. During the month of May the S&P 500 did rise back above its 12 Month EMA (point D) however it failed to close above it by the end of the month. Thus the question is will the failure of the S&P 500 to close above its 12 month EMA eventually lead to another substantial downward move over the next month or two?



In the near term the major averages rallied to end the month of May with the Nasdaq and Nasdaq 100 acting the best. The Nasdaq bounced off a key short term support level around 2430 (point E) which coincided with its upward sloping trend line (brown line) from the mid March low. It's possible the Nasdaq may rally up to where it stalled out at in mid May near 2550 (point F) which may act as a significant upside resistance area next week. If the Nasdaq does stall out near the 2550 level next week and then pulls back look for initial support at its 200 Day EMA (green line) near 2460 which also coincides with its upward sloping trend line.



The Nasdaq 100 bounced off a key short term support level near 1950 (point G) which coincided with its upward sloping trend line (brown line) from the mid March low. It's possible the Nasdaq 100 may encounter resistance next week where it stalled out at in mid May around the 2050 level (point H). If the Nasdaq 100 does stall out near this level and then pulls back look for initial support around 1980 which corresponds to its 20 Day EMA (purple line) and upward sloping trend line.



The Dow found support early in the week just above its 50% Retracement Level near 12430 (calculated from the March low to the May high) and rallied back to its 50 Day EMA (blue line) near 12700. If the Dow attempts to move a little higher early next week I expect it will encounter resistance at its 200 Day EMA (green line) near 12800. Overall the Dow is still exhibiting a potentially bearish looking Double Top pattern (looks like the letter "M").



As far as the S&P 500 it bounced off its 50 Day Moving Average (blue line) this week and if it attempts to move a little higher early next week look for upside resistance to occur at its 200 Day Moving Average (green line) just above 1420. If the S&P 500 stalls out near the 1420 level and begins to pull back once again look for support to occur at its 50 Day Moving Average which is now around 1380.

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InvestmentHouse Weekend Market Summary 7/18/08

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

- Expiration Friday leaves the building quietly but its work was already done.
- Oil cracks through its lower 2008 trendline, but it won't all be straight down from here.
- Inflation and recession have a silver lining: as both get worse, pay off debts, pick up bargains.
- After a pause, looking for some more upside to release some more oversold pressure.

Market takes a pause after the upside blast.

After partying hard midweek, very hard, the market eased into the weekend to nurse the hangover and look for a bit more fun early next week. The oversold bounce finally unleashed itself with impressive fury. Oversold, over-shorted markets finally do unload, and when they do the moves are stronger than anything you see in an upside bull run. By Friday the chamber was empty, and now we see if the market can reload over the weekend and make a second charge up to first real key resistance.

Stocks faced some Friday morning headwinds from techs after disappointing GOOG and MSFT results. There was a little more M&A, this time in drug sector with TEVA buying BRL. Citigroup reported losses of 'only' $2.2B and gapped higher. You know things are bad in the financials when a $2B loss is viewed as a positive. Oil was flat all day (finished at 128.69, -0.60). Gold was down all day (out at 950,00, -15.20). The dollar was flat after bouncing back up from the slaughter that started the prior week, but it is not looking good here as it stalls at the 10 day EMA, possibly making a lower high. The Fed threw it under the bus last week, and it doesn't look promising ahead. Hello more inflation, but as discussed below, there are some silver linings. Bond yields continued to rise, recovering some of the lost ground but still well off the highs hit not so long ago (2.65% 2 year, up 8BP on the session; 4.09% 10 yr, up 4BP on the day) as investors back out a bit more from the run to safety in US treasuries.

Even with more data hitting, it was a week full of data and investors had their fill. Moreover, it is a technical move at this point: if you wind up a kids propeller airplane with a big rubber band, once it slips your grip and starts unwinding, it tends to go ahead and unwind, and those sticking their hands in the way to stop that propeller get hacked up pretty bad. Thus the oversold bounce started, and the data, outside of oil's decline, did not impact it much. Friday the move paused and the indices meandered up and down all session around the opening price. This week they are likely to resume the move.

TECHNICAL. Intraday it was up and down around the opening price, and that was higher for DJ30, lower for NASDAQ, and flattish for SP500. No direction, no impetus either way. The market was exhausted to end the week after huge surges ahead of expiration and indeed fanned by expiration as the oversold market sparked a reversal.

INTERNALS: The internals matched the price action: flat. Even volume was lower on expiration Friday, further evidence the market used up all of its energy in the sprint stages on Wednesday and Thursday. Just a pause, no big deal.

CHARTS: The indices didn't make any headway, but they also held up well with even the loss leading NASDAQ holding its 10 day EMA on the low and bouncing off of that level. Nice easy rest day at near support after the run. Just making a pause on the way up to the 50% retracement or the 50 day EMA as may be the case, the first serious test of resistance on this bounce.

LEADERSHIP: Most every stock, sector, commodity, etc. that moved sharply in one direction or the other on Wednesday and Thursday (and that was pretty much everything), paused or reversed field a bit on Friday. No major moves, just a bit of normal pushback after those very strong moves. Again, typical action after a strong charge, and the result was no changes in leadership. It is still too thin with basically only health services/medical sector stocks in good patterns and showing good moves: still safety oriented even with the snapback rally. We will see how the market acts next week in part two of the rally attempt, i.e. will it post a follow through session (another strong upside move on breadth and volume that shows buyers picking up the torch) and try to set up some base building to bring some more stocks into the leadership level. Lots of work to get there and we are not holding our breath, but if we stick with strong stocks in good bases and stocks moving up from support and forming new bases, then if there is a continued rally that just won't stop we will be in very good shape in that event.

THE ECONOMY

Oil falls below $130 on the week, starting to crack its trendline.

We enjoyed a nice drop in oil, banking gain with some DUG options, the ultrashort ETF that plays a decline in oil with an upside gain (the new inverse ETF's for those adverse to playing the downside like the downside). The quick reversal back toward the trendline after just visiting the trendline the prior week indicated oil had spent its last drop on the near term rally.

It tumbled down to that first trendline Tuesday, then broke it Wednesday and continued lower to the second trendline Thursday with more sharp selling. Friday, even with energy stocks rebounding from their similar pounding, oil slipped a bit lower and through that second and lower trendline formed here in 2008 when that last, 45 degree run higher began.

Is it going to tumble further? Very likely. From the Friday close? Not so likely. A 12% drop in less than a week typically cannot sustain itself without an interim bounce. The second trendline of 2008 is a logical point for a bounce. After that bounce and a move up toward the 10 day EMA, however, it will likely be done and heading lower once more, this time to the low 120's. Then a bounce, then a slice through the 120's . . . IF there are no shocks to the system. Interestingly, renewed violence in Nigeria Friday didn't bounce oil. Militants will be militants the market figured.

Lower oil prices because it killed world economies can then be the savior of the economy.

If there is a slice through 120, and I am getting slightly way ahead of the game here, that could be the move that salvages the economy. In the strange world of supply and demand, it was demand and perceived limited supply that drove prices into the 140's that killed demand and started to undermine world economies. As a result of that overshot in price, prices are now falling.

Too much of a good thing for the oil producing countries just as in the 1970's: they made a ton of money, but they didn't learn their lesson of 35 years back and blamed speculators for high prices, doing nothing to slow them down, not even try to talk them down. Greed got in the way and now there are many world economies heading lower. The US, much of Europe, and when the Asian countries finish lifting their petroleum and gasoline subsidies, they will face slowing as well as demand will plummet. Indeed, China has already said that after the Olympics it is prepared for slowing. Kind of like getting ready for a party for months, then when it is over you don't spend a nickel.

If prices drop far enough and fast enough, however, there is hope. Prices reached levels where they did not truly reflect demand, just fear of loss of demand. China and India were buying up reserves as fast as possible in a kind of 1970's US fear of running out that caused consumers to wait in line for hours just to keep their tanks topped off for fear of running out. This fear buying was not on a nationwide level but a global level by countries with burgeoning economies and lots of money as a result. They bought everything 'just in case.'

This last spike likely quenched the need to for these countries to feel they need to keep the 'tanks topped off,' and thus that pervasive underlying upside pressure is going to abate as well. Oil could finally shake off that $20 to $30 of fear premium, and that puts it near $100.

At $100 things suddenly look much rosier. Hard to imagine saying that level would help the economy, but indeed it would be the thing that might, just might, pull the US out of its recession. Many things are accomplished with oil almost 50 clicks off its high. Consumer confidence immediately jumps as oil prices decline and anticipation of lower gasoline prices jumps. Indeed anticipate a 20 cent drop in pump prices in the coming week based on this past week's decline. Plans that were put off are suddenly viable both on a consumer and a business level. Prices would have to stay down as consumers will be skeptical at first, but after this kind of spike, the tumble typically takes the wind out of the sails for quite some time.

Thus the move that killed the economies in the end helps revive them as the cycle of supply and demand continues to work. The worst thing we can do if prices collapse below 120? Forget all of the initiatives that were planned and/or started to help combat the rise. Well, there is one to forget: ethanol. Don't need our food prices rising anymore. We should still push for some more near term drilling, wind, hydrogen, nuclear, geothermal. It is only through a combination or 'cocktail' of solutions will we buy enough time to come up with the real solution that gets our vehicle fleet off the internal combustion engine. When we get there, we have won. No more transfer of wealth to countries that hate us, immediately raising our standard of living and giving us all of the appurtenant benefits. Have to like that.

The modest positives of higher inflation and recession.

The Phillips Curve pundits say it doesn't happen: they say you cannot have a slowing economy and jumping inflation. Once again, hard facts prove otherwise. Even as the economy slows faster and faster, inflation rises faster and faster. Those understanding money supply and supply and demand know that slowing economies produce less supply of goods and services, and that causes an immediate jump in inflation. Add on to that the impact of a recession and the usual attempts to combat it with interest rate cuts and easy money, and you have a falling dollar and thus even more growth in inflation. Now if you fall into depression you may at some point deep, deep down in the bottom of the trough see inflation slow simply because demand falls to zero. So the one time the Phillips Curve works is at the bottom of Depression. Given that we typically avoid depression in our economy, that makes the Phillips Curve about as, as they say in the south, tits on a boar.

Given that we likely will see inflation continue to rise even as the economy slips further, what good can we get from it. Not a whole lot as a country, but as individuals you can use it to your advantage. First, when we go into recession and even as we head that way you will see a lot of goods go on sale. You will see very aggressive auto promotions (and likely more federal incentives to buy autos to come), farm equipment and other machinery on sale, etc.

The sales are already hitting fast. We can use this slowdown to pick up big ticket items that are aggressively priced and then use the tax incentives already in place ($250K of section 179 expensing for small businesses) or to come to give us a solid 1-2 savings punch. In the last recession we picked up some farm equipment at lower prices and 0% financing (free money, why not take it?). Boats were also at fire-sale prices. If you saved your money as you made it you will be rewarded with tremendous bargains on long-lasting goods. As Jimmy Stewart said in "It's a Wonderful Life" when the run on the banks began in the depression: 'Everyone is selling. You know what old man Potter is doing? Buying!' You may not have liked Potter, but he knew when to strike. Stocks will show that kind of bargain time, but we want to buy them as they are ready to surge back up and not just for the sake of moving in and sitting around. When the time is right we load the boat as we did in the fall of 2002 and again in March of 2003.

As inflation runs higher start considering paying off debt. Inflation makes dollars worth less and less. Your household mortgage, however, is not going to cost more dollars just because the dollars you owe are worth less. When inflation stats to peak (we will let you know when), it is a good time to pay off debts with dollars that are worth less. The dollars you make after that will increase in value after you eliminated the same dollar amount of debt but with dollars worth less than the ones you are earning as inflation declines.

THE MARKET

MARKET SENTIMENT

VIX: 24.05; -0.96. The week saw VIX rise to 30.81 on the Tuesday high just as NASDAQ turned off the bottom and closed positive. That helped launch the upside surge on the week. Original CBOE data was incorrect, showing a spike to 38 intraday midweek. Not the case as it turns out. That means VIX never hit a level commensurate with a serious reversal. That move up into the 40's remains elusive on this selling, and that indicates there is still plenty more work to get done here and that this move is indeed a relief move.
VXN: 30.49; +0.62
VXO: 25.46; -0.46

Put/Call Ratio (CBOE): 0.92; +0.06. Three straight sessions below 1.0 on the close after 13 straight above 1.0. Plenty of backlog to drive a bounce, and indeed, one started.

Bulls versus Bears:

For the second time this year bears are crossing above bulls, doing so basically where they did in March on their way to much more extreme readings just about the time the market made the March low and started the last rally. Positive for the market and if SP500 is going to hold the long term trendline is the place to do it.

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 doesn't have the cash to drive it higher.

Bulls: 27.8%. Scratched back up last week, but basically no gain, up just 0.4% from 27.4%. I guess it just got about as bad as it could get as the market was not showing any signs of improvement at that point. A sharp plunge from 31.9% the prior week, blowing past the 30.9% low hit in March and well below the 35% level considered bullish for stocks (gets so low there is plenty of money lying around to fund a rally if things turn). Steep drop from a rebound high at close to 50% on the run through May. In March the indicator did its job with the dive below 35% and the crossover with the bears. Now it is going above and beyond. Bulls and bears have crossed over again, doing so even before the prior lows are hit. The bulls and bears were eye to eye in mid-February and have crossed. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator. This is smashing that. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.

Bears: 48.9%. While the bulls may have managed a paltry optimism gain, the bears swelled their ranges, rising from 47.3%. Not as strong a move as before with a gain from 44.7% and 39.3% in the preceding weeks. Well above the bullish level and the highest since 1995. Again, that is one of the best indications that sentiment is getting extreme on the negative side. It is again past 35%, the level that historically indicates too much pessimism. As with the bulls the jump in bears did its job after hitting 44.7% in the third week of March that was up from an already freakishly strong 43.3% the week before. Up sharply from a low of 19.6% on the last rally. 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). This is a huge turn, unlike any seen in recent history.

NASDAQ

Stats: -29.52 points (-1.23%) to close at 2282.78
Volume: 2.269B (-14.5%). Sharp decline in volume, not what you usually expect for expiration, but with all of the midweek trade it was all used up.

Up Volume: 933.089M (-1.025B)
Down Volume: 1.305B (+582.477M)

A/D and Hi/Lo: Decliners led 1.22 to 1
Previous Session: Advancers led 2.16 to 1

New Highs: 54 (-4)
New Lows: 113 (-13)

NASDAQ CHART: Click to view the chart

NASDAQ gapped lower, sold some more down to the 10 day EMA, then rebounded to hold support and cut its losses. Lower trade so no real selling. Held up pretty well given the earnings disappointments from GOOG and MSFT, and it is in good position to bounce higher this coming week toward the 50 day EMA at 2355.

SOX (-0.68%) sold Friday, but it too managed a rebound off the 10 day EMA to close with just a modest loss. Still in shape to make a continued run toward next serious resistance at 380, another 14 points higher.

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: +0.36 points (+0.03%) to close at 1260.68
NYSE Volume: 1.729B (-12.24%). Lower trade but not a major drop off from levels hit midweek.

Up Volume: 978.468M (-407.994M)
Down Volume: 707.817M (+160.511M)

A/D and Hi/Lo: Advancers led 1.16 to 1
Previous Session: Advancers led 2.7 to 1

New Highs: 31 (0)
New Lows: 135 (-10). Hit over 1100 new lows Tuesday just as the market turned. It was extreme and that pushed it over the edge.

SP500 CHART: Click to view the chart

After two strong sessions, SP500 was out of gas as well and it tested the 10 day EMA on the intraday low as well, then rebounded to flat. Nice and orderly test lower after a massive run, setting it up in great position to continue the run this week up toward the 50 day EMA at 1314, right at the 50% retracement level from the losses incurred from the May peak.

SP600 (-0.29%) finished the week in good shape with a small test. It formed a short double bottom over the past two weeks at the March lows and shot higher off the Thursday reversal that just slightly undercut that level. Great action off the prior low and as with SP500, the small caps are set up nicely to continue the move next week on up to the 372 level (closed at 363.49)

SP600 Chart: Click to view the chart

SP400 CHART: Click to view the chart

DJ30

The blue chips continued their upside movement, aided Friday by the Citigroup losses that were in the billions, but not as many billions as expected. Find your catalyst and hang onto it baby. The Dow put in the best move on Friday, but even after three upside sessions it is still below the prior 2008 lows, the closest the January intraday low at 11,635. Will move with the rest of the market and move up to that prior low and the 11,750 resistance level. Things will get tougher from there.

Stats: +49.91 points (+0.44%) to close at 11496.57
VOLUME: 378M shares Friday versus 335M shares Thursday. Volume kept rising all week, capping it with the strongest trade on Friday. Good upside trade, but again, it was expiration driven and exacerbated by the reversal that caused even more short covering than usual.

DJ30 CHART: Click to view the chart

MONDAY

All eyes will be on oil and how it responds off its second trendline from 2008. It could bounce a bit more and thus pressure stocks a bit to start the week, but as with Friday, that will likely just set up a better point to rally from for the next leg. Earnings will also hit full stride; thus far there have been very solid results followed by the Thursday clinkers from a couple of big name techs. Even those did not sink NASDAQ and simply left it in a good position to continue the oversold rally after this pause.

Barring any damning news over the weekend we still anticipate another run higher in this leg. The indices just cleared the 10 day EMA on this move, something they could not do on the entire selling cycle from May, and after such a pernicious downtrend there is typically more upside than just a run to that first resistance. After a breather Friday and another Monday it will be in position to continue the move.

While many of the contrary indicators hit extreme levels (put/call ratio, new lows, bulls/bears) and are lining up, they did not all line up. VIX is still low, and with the Fed no longer the put behind the interest rate market (though it is moving again in that direction somewhat), VIX is no longer under the governor it was back in January through May. Thus it needs to really spike higher over 40 for the market to really consider putting in a bottom, and note as discussed in the spring, after the VIX spikes it takes several weeks for the actual bottom to find itself.

The market's fate also rests with oil, and this first move lower is a good one; after a modest bounce we want to see it collapse lower yet again to the next rung down at low 120's. That will help set up a market recovery even better, and if it really collapses, perhaps it jumps right past the next part of the bottoming process and takes off from here. Maybe; that is still a stretch given all of the financial stress still to work through. Plunging oil and the bottoming in the housing market, however, is a strong 1-2 punch.

If all goes to plan and basic market history, then we get another pause to start the week as oil tests its dive lower, then the market makes another leg in this run, this one up toward the 50% retracement level. That is the key initial level of serious resistance to test it hard. As an aside, in discussing market history, we talked last weekend about how a market attempts to bottom on Tuesday after a tough prior week. Sure enough the market was weak Monday, but then was awful Tuesday, only to reverse off the low. Again, if no external forces bear down on the market, history says we get a run up to cut half the losses. From there we see what kind of strength there is: a turn back down to test again , or a continued summertime rally.

With more upside anticipated we are still looking at playing the good stocks that can take us up there and make us some nice gain. We are not looking for long term romance, just stocks that can take advantage of a further move to next resistance, and then if things continue in a longer summer rally, on up from there. At the same time we watch oil and energy's relief bounce and look for more opportunity to play the downside. Many were talking about how this current decline is an opportunity to load up. After the gain leading up to this plunge, that is likely too early as oil needs to work off more of the excesses. Thus a bounce will suck some in only to turn on them. Thus we will be spying on oil stocks as they rebound, picking some juicy ones for the downside as they set up over the week.

As for other downside, if the indices run up to the 50 day EMA or the 50% retracement level (and on most indices they are currently coincident) and reverse we want to play the downside move. Thus as the market bounces we will watch closely for stocks that run out of gas at resistance and start to reverse (along with some index plays); if they start looking top-heavy we will get ready, and if they do flip we will move into them and shut down the upside that was in bounce mode with the overall market.

Support and Resistance

NASDAQ: Closed at 2282.78
Resistance:
2286 is the first April 2008 gap up point.
2339 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
2340 from the March 2007 low
2358 is a 50% retracement of the June to July selloff.
The 50 day EMA at 2356
2370 from the April 2006 peak
The 90 day SMA at 2378
2378 is the mid-February peak; 2379 from the October 2006 peak
2386 is the August 2007 intraday low
2388 is the June 2008 low
2392 is the April 2008 peak
2419 is the January 2008 peak and the early February peak
2451 is the August closing low
The 200 day SMA at 2473
2500 from interim August lows.

Support:
2261 is a March 2008 interim low
2202 is the January 2008 low
2155 is the March 2008 low

S&P 500: Closed at 1260.68
Resistance:
1270 is the January low
The 18 day EMA at 1268
1317 from the February low
The 50 day EMA at 1315
1320 is a 50% retracement of the May to July selloff
1324 is the April low
1331 is the June low
1343 is an ancient trendline
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
1387 is the April 2008 intraday high
1396 is the February 2008 peak
The 200 day SMA at 1396
1406 is the August and November 2007 closing low

Support:
1257 is the March low
1244 is an August 2005 peak
1240 to 1221 are September 2005 peaks1234 is the July 2006 low
1224 is the June 2006 low
1176 from the Q4 2005 lows
1167 is the January 2005 low
1154 from the May 2005 lows
1142 is the 2005 closing low

Dow: Closed at 11,496.57
Resistance:
11,634 is the January intraday low
11,670 is the May 2006 intraday high; 11,642 closing
11,731 is the March 2008 low
The 50 day EMA at 11,863
11,982 is a 50% retracement of the May to July selloff
12,050 from the March 2007
12,070 from the early February 2008 lows
12,250 from late March 2007 lows
The 90 day SMA at 12,291
12,518 is the August intraday low
12,573 is the mid-February high
The 200 day SMA at 12,697
12,743 is the November low
12,750 to 12,768 is the February 2008 peak and a series of lows and highs from August 2007
12,786 is the February 2007 peak
12,845 is the August closing low
13,092 is the December 2007 intraday low
13,133 is the May 2008 high

Support:
11,317 from March 2006
11,061 from February 2006
10,912 peak from March 2005
10,854 from December 2004
10,701-10,705 from July 2006, July 2005

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

July 21 - Monday
- Leading Economic Indicators, June (10:00): -0.1% expected, +0.1% prior.

July 23 - Wednesday
- Crude oil inventories (10:35): +2.95M prior

July 24 - Thursday
- Initial jobless claims (8:30): 366K prior

July 25 - Friday
- Durable goods orders, June (8:30): 0.1% expected, 0.0% prior
- Michigan sentiment, July revision (10:00):
- New home sales, June (10:00: 505K expected, 512K prior

[ReturntoSender]

Chart of the Day - Average Major Correction?

http://www.chartoftheday.com:80/20080725.htm?A">CLICK

The stock market dropped sharply today and investors remain concerned. For some perspective on the current correction, today's chart illustrates all major stock market corrections (15% loss or greater) of the last 108 years. Each dot represents a major correction as measured by the Dow. For example, the bear market that began in 1973 lasted 481 trading days and ended after the Dow declined 45%. There are a few items of interest... Since 1900, the Dow has undergone a major correction 26 times or one major correction every 4.2 years. Second, most major corrections since 1900 (64%) have resulted in a drop of less than 40% while lasting less than 400 trading days. Since 1950, the percentage of major market corrections that were less than 40% and 400 trading days increased to 84%. As it stands right now, the current stock market correction (October 2007 peak to most recent low) would measure slightly below average in both magnitude and duration.

[ReturntoSender]

InvestmentHouse Weekend Market Summary 8/1/08:

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

- 'Benign' jobs report spares market a selloff, finishing off the week basically where it started.
- Jobs report relieves and at the same time worries the market.
- ECRI turning back down after an early summer pop.
- Lack of clear thinking: proposed energy plans play the shell game.
- The slow process of working through a drawn out bottom.

Market struggles Friday, just as it did all week.

Investors worried over the jobs report given the surging weekly jobless claims the past month and the unexpected jump reported Thursday (448K, a five year high). As it turned out, non-farm payrolls fell, but at -51K that was much better than expected (-75K) and the market's need for Prozac diminished. That is not the end of this story, but for a market extremely worried about the report, enough so to sell off ahead of it in the last half hour of Thursday, it was enough for the day.

Earnings were not that great as CVX missed, following in XOM's footprints. The conspiracy theorists would say this is all planned given that Congress is talking windfall profits. They don't realize that these big companies are in both ends of the business (production and refining/marketing), and indeed even more than that with their chemical businesses, and thus while higher product prices may help the production end, they kill the refining/marketing and chemicals end of the business. Thus they operate on thinner margins than real estate, software, tech in general, and most other industries outside of grocery stores. But once more I digress; more on this later. APA (gas production) beat big time. See the difference? Oh, but I digress again. How about this: GM missed big as well. Earnings are better than expected, but they are very hot or very cold. That makes for a difficult mistress.

The national ISM moved up to 50.0, the breakeven point, and while that beat expectations, it was less than June's 50.2. Nonetheless, after a rather dismal Q1, manufacturing is firming, and that is one of the areas that showed early indications the economy was turning back in 2002. Wish the market was in better shape with more leadership ready to step up; it is trying to lay some of the groundwork now, however. Oil was up as well, rising over 128 on the high before setting at 125.10, +1.05. It held 122 support and bounced. The first bounce was expected and the market still rallied on that day. Now it is clearer that oil is going to rebound just as the market did from its selling. There is still enough worry about oil, however, especially with its intraday streak to 128, that even a bounce is wearing on investors as the action last week showed.

This was all enough to stymie the market on Friday and indeed it was the same news that kept the indices flat all week. Yes there were ups and downs, and significant triple digit moves on the Dow just about each session. It was like running with my dog: I run 4 miles while the dog is all over the map, putting in two or more times the mileage. Lots of effort, nothing more to show for it.

TECHNICAL. Another session of significant intraday moves. NASDAQ covered over 40 points high to low and back up. DJ30 150 points. High to low, to back up but not to session highs. Lots of running, going nowhere. Think of the dog, but the market is not nearly as loyal and faithful.

INTERNALS. They matched the market with a dead heat in advancers to decliners on both NYSE and NASDAQ. Volume was lower; typical of a summer Friday. New highs and new lows were not worth measuring. Despite the up and down moves intraday it was just boring. I had to touch off an air horn in the trading room to wake everyone up.

CHARTS. Up and down intraday, up and down all week, ending up going nowhere. In the end the indices managed to hold more or less near near support. That continues the life of this move and that of the relief bounce. That bounce was knocked around early in the week but it hung on by its nails for another try this coming week.

LEADERSHIP. Desperately seeking more leadership. Medical and healthcare were the leaders again last week as the rest of the market wound up and down. Transports sold back to test after some strong upside runs. Industrials tried to run but they faltered; still trying to get some base building going and they are still in the early stages. Some financials are turning the corner, setting up decent bases. After the MER trash found some buyers and the market realized they could start valuing the garbage (at 22 cents on the dollar), financials suddenly felt the earth firm. Techs are trying to form up as well, but it is very scattered and they struggled again on Friday.

SUM. All of the above shows it was a struggle for the indices all week. They looked ready to roll over early on but then hung on at the precipice. Tenacity is noteworthy. Holding off the heavy selling to end the week to, still in position to make another higher low at near support and continue the relief bounce next week. If it does that allows stocks to stretch out laterally and continue working on bases, an essential part to the bottoming process. It is up and down, sweat and toil, feast and famine as the buyers and sellers wear each other out. That is what we are seeing now with these big downside then upside sessions. They are working out their differences, and as they do individual stocks have time to try and establish the foundation for a move higher. At this point success is still up in the air with the indices still simply in a relief bounce from the rough May to July selloff, struggling to get higher. As long as this action continues we look for those stocks that have built good bases, and if they break higher we move their way. Financials are starting to break trendlines as they try to put in their bid for some market leadership.

THE ECONOMY

Jobs report better than expected, but then again, not.

The headline everyone hangs on, non-farm payrolls, slid in a bit better than feared (-51K versus -75K expected, -51K prior). Despite the relief that jobs didn't fall 100K or more per the whisper, unemployment rose to 5.7% from 5.5% (5.6% expected). Even though the economy lost 'only' 51K jobs in July, more people entered the workforce looking for jobs, but they didn't find them. Thus they were counted in the survey as looking for work but not finding it.

Rising unemployment is not great, but this is all a lagging indicator. What do the leading indicators of this lagging indicator suggest about the future? The average hours worked is telling. It has held steady at 33.7 in May and June, and that was down from 33.8 for several preceding months. That is not the level nor the trend that indicates jobs growth is about to ramp and is indeed a reversal of the prior modest strengthening. Historically hours worked needs to rise closer to 35+ to build the pressure to create more jobs. Why? When employees average this number that means they are working overtime at higher cost to the employer and start getting overloaded. Employers have to hire in order to avoid losing the efficiency they have gained with fewer employees by working them too hard for too long.

In July the workweek fell to 33.6. While one month is not definitive, it is clear that the pressure to push hours higher is not building. Moreover, part-time workers jumped again, pushing the gain this year to 1.4M. Nothing wrong with that except this statistic tracks people wanting to work full time but having to settle for part time work. More evidence there is simply not any real upside pressure on jobs production.

What does this mean for the economy? Not much about its future because jobs lag what the economy does. Jobless claims tend to spike at the end of a cycle, but they can stay up for awhile so as a timing mechanism it is more like a calendar than a stopwatch. On the other hand, the jobs losses are nowhere near as weak as in past recessions. Thus while the lack of improvement is frustrating to many, the decline has been shallow, and if the economic numbers continue their plod toward better times, jobs should not decline too much more.

ECRI heading back down.

While ECRI's inflation gauge continues to decline, moving to a six year low in July and consistent with a shallower recession as we are seeing, its leading US annualized index slid lower again, down to -7.6%) last week, continuing a slide that started in late May. ECRI had bounced in April into May, but it is now backsliding.

At this level ECRI is not predicting any recovery near term. Indeed it needs to get much better to indicate any recovery at any point down the road. The overall levels are not saying deep, nasty recession, but they are also not saying this one is about to end.

This conflicts somewhat with the improving economic data in certain areas. The thing about ECRI is, however, is it is pretty darn accurate in gauging slowdowns and recoveries. Thus the sag in the Leading index suggests nothing is over near term.

Energy 'plans' just ain't making it. Why doesn't anyone call BS?

The presidential candidates are defining their energy plans more with one adding some parts and the other simply clarifying the same position. Listening to some pundits argue over what candidate had the better plan I simply had to call BS. Why their opponents or the moderators didn't point out the glaring problems is anyone's guess.

McCain first proposed a federal tax holiday on gas. It won't produce anymore gasoline, but after hearing the other side, it has its benefits if you have to choose between the two. More recently McCain has pushed for drilling offshore and in other areas, citing changed conditions ($4/gallon gas) as a good reason for change. Of course why he insists on preserving the ANWR wasteland (where maybe 16 people visit annually) from a few small drilling pads and production sites but instead pushes for offshore drilling in environmentally fragile Florida or California coastlines that we all see and enjoy every day is beyond most practical mindsets. It does have the effect of ultimately increasing reserves, and despite shrill claims otherwise, it will immediately impact price if we make this kind of commitment, expedite the process, etc.

Obama is for conservation as is McCain. We all are. He is also for a windfall profits tax on oil companies on the theory that high product prices simply fell into their laps. That sure sounds similar to the tech companies in the 1980's, real estate in the mid-1980s and again in the 1990's. Indeed any industry goes through periods where it prints money. Let's not forget the agriculture, steel, coal, copper and other industries that are reaping a great reward from rising prices. Hell, tax them all too. They just happen to be in the right place in the right time and it has nothing to do with their business model and the like, right? Of course he is not going that far. Why bother when the oil companies are so easily hated by many? If he went further everyone would call it socialism, planned economics, etc., and that is not good for winning elections, at least in the US.

Obama plans to tax oil companies' 'excess' profits due to the rise in prices (can you imagine the nightmare of accounting for what is excess versus your prior profit levels? More lawyer and accountant retirement programs as gifts from Congress) and give some of the money to the 'hard workers' in our society (he cannot pass it all along; the feds have to take their cut in the form of paying for the bureaucracy). 'Hard workers' apparently doesn't include those who do in fact work very hard but in doing so make more money. I know of no one who is part of the so-called rich who doesn't work hard 12 to 16 hours a day. That one always puzzles me. In any event the beneficiaries of this tax and rebate are to use that money to go out and buy gasoline so they can supposedly buy more goods that they would not buy if they instead stay at home. An Obama energy advisor said that was the goal: get them money to get them out and drive more (he bemoaned the low number of miles driven this year due to high gasoline prices) and go about the business of the economy.

Stop. I call BS. You tax oil companies because they make too much, give the money to 'hard workers' so they can go out and buy more gasoline, putting the money right back into the oil companies' hands? And let's face it: Congress hates XOM, CVX, all the big integrated companies that produce, refine and market oil and oil products. They are the target of this idea. In short, the money goes back into their hands where it came from in the first place.

First, this doesn't incent production of another drop of oil or gas. It is just a shell game, a movement of money from one source to a beneficiary, then back to that source, at least according to the Obama energy analyst lobbying for the measure. Second, the real impact is tax revenue for the federal government by creating three new taxation points. The first is the initial windfall tax. The second is when the recipient buys the gas and the feds take their cut through the federal excise gasoline tax. The third is when the oil companies are taxed, again on the profits from selling the gasoline. The incredible federal shell game. No new supply, no economic stimulus, just more federal revenues taken from the economy at a time it needs them.

While McCain's tax holiday does not create any more gas or oil, it does help accomplish one of McCain's goals, i.e. slowing the revenues of the federal government and thus help curtail spending by virtue of the theory if you don't get it you cannot spend it. Well, that doesn't work with our Congress, but at least it keeps more money in the pockets of those that earn it, and that helps the economy.

As you can see, neither plan really attacks the problem or at least the whole problem. I keep waiting for McCain to make the next logical step and that is saying that the extra drilling is just a stopgap to buy time while we incent our great ingenuity and entrepreneurship to devise a means to remove our vehicle fleet from the need for fossil fuels. That would be a Reagan-esque moment and potentially quite inspiring. Instead we have a couple of plans that don't get us where we need to be and are as inspiring as any new tax would be. It won't create incentives to find solutions, it will just create incentives to avoid the tax.

THE MARKET

MARKET SENTIMENT

VIX: 22.57; -0.37
VXN: 25.97; -0.27
VXO: 24.26; -0.41 Put/Call Ratio (CBOE): 0.99; +0.04. Spent all but one day below 1.0 on the close. That 1.0 is the point where there is enough anxiety about the downside to suggest a bounce or something more. Plenty of backlog during the May to June selling helped the market bounce higher.

Bulls versus Bears:

For the second time this year bears are crossing above bulls, doing so basically where they did in March on their way to much more extreme readings just about the time the market made the March low and started the last rally. Positive for the market and if SP500 is going to hold the long term trendline is the place to do it.

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 doesn't have the cash to drive it higher.

Bulls: 30.0%. Up modestly from 29.2%. On a rise, but still below the 35% level, below which is considered bullish. Up from 27.8% on the low this round, moving back up toward the 31.9% a month back and the 30.9% low hit in March. Steep drop from a rebound high at close to 50% on the run through May. In March the indicator did its job with the dive below 35% and the crossover with the bears. Now it is going above and beyond. Bulls and bears have crossed over again, doing so even before the prior lows are hit. The bulls and bears were eye to eye in mid-February and have crossed. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator. This is smashing that. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.

Bears: 50.0%. Still rising as bears remain worried, up from 49.4%. Bears, despite what the bulls are doing, continue to increase, up from 48.9% that was up from 47.3%, 44.7% and 39.3% before that. A steady, strong rise and still going. Well above the bullish level and the highest since 1995. Again, that is one of the best indications that sentiment is getting extreme on the negative side. It is again past 35%, the level that historically indicates too much pessimism. As with the bulls the jump in bears did its job after hitting 44.7% in the third week of March that was up from an already freakishly strong 43.3% the week before. Up sharply from a low of 19.6% on the last rally. 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). This is a huge turn, unlike any seen in recent history.

NASDAQ

Stats: -14.59 points (-0.63%) to close at 2310.96
Volume: 2.176B (-9.32%). Volume falls below average to end the week after three sessions above average midweek as NASDAQ moved higher though Thursday it reversed off its high ahead of the jobs report. Overall decent price/volume action for the week.

Up Volume: 750.389M (-241.726M)
Down Volume: 1.371B (+18.145M)

A/D and Hi/Lo: Decliners led 1 to 1
Previous Session: Decliners led 1.15 to 1

New Highs: 36 (-26)
New Lows: 93 (-19)

NASDAQ CHART: Click to view the chart

Sold off below 2300 as well as the 10 and 18 day EMA at roughly coincident prices, then rebounded to close over those levels. Down for the session of course but also 24 points off its low. Still trending higher though slowly, and still finding it very difficult to get over the 50 day EMA (2339) and the old 2004/2006 trendline. Techs definitely struggled Friday. They are starting to set up more bases, but they also have a ways to go.

NASDAQ 100 (-1.22%) was the worst offender Friday. Sold off sharply and did rebound to recover half the losses. Still in its 4 week rounded bottom but had a tougher time of it Friday as the new month started; no new money coming into the large cap techs the first day of August.

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: -7.07 points (-0.56%) to close at 1260.31
NYSE Volume: 1.226B (-15.78%). Volume fell off the table to end the week after at least one decent session midweek on an upside day.

Up Volume: 537.614M (+76.701M)
Down Volume: 676.247M (-311.41M)

A/D and Hi/Lo: Advancers led 1 to 1
Previous Session: Decliners led 1.58 to 1

New Highs: 35 (-6)
New Lows: 141 (+28)

SP500 CHART: Click to view the chart

Sold through the 10 day EMA on the close but still in position to make a higher low as it did in late July. Stalled out at the mid-July peak on the week, having a hard time getting past the March and January 2008 lows. It is trying to continue the rebound toward 1300 and even 1320ish. It is a struggle but the financials are working on bases and thus it is a back and forth, slow effort, and at this juncture it is not a pretty pattern, just a rebound.

SP600 (+0.53%) was a leader on the rally and it too is now attempting to make a higher low, tapping the 18 day EMA on the low and rebounding to post the only gain of the indices. Nice doji with tail, setting up a break higher for further upside leadership.

SP600 Chart: Click to view the chart

SP400 CHART: Click to view the chart

DJ30

The blue chips sagged a bit more to end the week, holding at some interim support at 11,250 on the low. Made a lower high this past week. A very indecisive pattern right now, very much a rebound move looking for a reason to try and hang on but not finding it just yet.

Stats: -51.7 points (-0.45%) to close at 11326.32
VOLUME: 189M shares Friday versus 220M shares Thursday. Below average volume all week as the Dow thrashed around with big point swings. Like a prize fight with pillows tied to the fighters' hands. No distribution, and at this stage of the game that is not bad.

DJ30 CHART: Click to view the chart

MONDAY

Big week of data. More earnings. Personal income and spending, ISM services, pending home sales, production, and the granddaddy of them all, a one-day FOMC policy meeting. My bellybutton has been puckering and un-puckering in anticipation (email me if you know what show that is from).

Oil remains a dominant player after it held support at 122 and did not just go ahead and collapse. It is no mystery it has bounced here; the selling was sharp. Friday it closed well off its intraday high in a showing of some weakness. It will likely try higher again for another two to three sessions up toward 130ish, then it should keel over once more, and the test of 122 will tell the conscience of the king of industry. Of course Friday it closed below the 90 day SMA after punching through and testing close to the 50 day SMA so it may just collapse. The point: we still see oil falling again and falling significantly.

That will continue to be market friendly action and help it attempt to base out and find some new leadership. We are watching the financials try to develop; picked up some WFC last week and are looking at some others for this week if they can continue to reverse the nasty downtrend. That is the way it is going to have to be for the upside: locating those stocks that are setting up new bases and getting some on the move out and then on the test. The more that do this the better the prognosis for the market. It needs more leadership; a lot more. If the financials continue their improvement, that is very good for the market as they were the bad boys that kicked out the legs from under the market attempts to move higher.

There are still sentiment indicators that are not there such as the VIX. The index patterns are still weak. Leadership is the main factor and it is still thin. If the market continues to work on its base and more stocks set up in good accumulation patterns that how bottoms, and more importantly, new strong runs are born. This move here looks more like just part of the process with likely more downside in the future before it is done. The lack of aggression in the selling last week (in terms of volume) indicates the sides are fairly even in strength for now, and if this continues the market can put in a quiet bottom, but that doesn't mean that there won't be price swings along the way. That is par for, dare we say it, August and a bear market.

Support and Resistance

NASDAQ: Closed at 2310.96
Resistance:
The 50 day EMA at 2339
2340 from the March 2007 low
2340 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
2358 is a 50% retracement of the June to July selloff.
2370 from the April 2006 peak
2378 is the mid-February peak; 2379 from the October 2006 peak
The 90 day SMA at 2383
2386 is the August 2007 intraday low
2388 is the June 2008 low
2392 is the April 2008 peak
2419 is the January 2008 peak and the early February peak
The 200 day SMA at 2450
2451 is the August closing low
2500 from interim August lows.

Support:
The 18 day EMA at 2304
2286 is the first April 2008 gap up point.
2261 is a March 2008 interim low
2202 is the January 2008 low
2155 is the March 2008 low

S&P 500: Closed at 1260.31
Resistance:
1270 is the January low
1285 is the recent July peak
The 50 day EMA at 1297
1317 from the February low
1320 is a 50% retracement of the May to July selloff
1324 is the April low
1331 is the June low
1345 is an ancient trendline
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
The 200 day SMA at 1381
1387 is the April 2008 intraday high
1396 is the February 2008 peak
1406 is the August and November 2007 closing low

Support:
1257 is the March low
1244 is an August 2005 peak
1240 to 1221 are September 2005 peaks1234 is the July 2006 low
1224 is the June 2006 low
1176 from the Q4 2005 lows
1167 is the January 2005 low
1154 from the May 2005 lows
1142 is the 2005 closing low

Dow: Closed at 11,326.32
Resistance:
11,634 is the 2004/2005 up trendline
11,634 is the January intraday low
11,670 is the May 2006 intraday high; 11,642 closing
The 50 day EMA at 11,716
11,731 is the March 2008 low
11,982 is a 50% retracement of the May to July selloff
12,050 from the March 2007
12,070 from the early February 2008 lows
The 90 day SMA at 12,199
12,250 from late March 2007 lows
12,518 is the August intraday low
The 200 day SMA at 12,566
12,573 is the mid-February high
12,743 is the November low
12,750 to 12,768 is the February 2008 peak and a series of lows and highs from August 2007
12,786 is the February 2007 peak
12,845 is the August closing low
13,092 is the December 2007 intraday low
13,133 is the May 2008 high

Support:
11,317 from March 2006
11,061 from February 2006
10,912 peak from March 2005
10,854 from December 2004
10,701-10,705 from July 2006, July 2005

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

August 4 - Monday
- Personal income, June (8:30): -0.1% expected, 1.9% prior
- Personal spending, June (8:30): 0.5% expected, 0.8% prior
- Factory orders, June (10:00): 0.7% expected, 0.6% prior

August 5 - Tuesday
- ISM Services, July, (10:00): 48.0 expected, 48.2 prior
- FOMC policy statement (2:15)

August 6 - Wednesday
- Crude oil inventories (10:35): -81K prior
- Consumer credit, June (3:00): $6.0B expected, $7.8B prior

August 7 - Thursday
- Initial jobless claims (8:30): 448K prior
- Pending home sales, June (10:00): -1.3% expected, -4.7% prior

August 8 - Friday
- Q2 Productivity, preliminary (8:30): 2.6% expected
- Wholesale inventories, June (10:00): 0.6% expected, 0.8% prior

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The Coming Consumer Crash of 2009:

http://leavittbrothers.com/chartspeak/ChartSpeak_083108_The%20Great%20Consumer%20Crash%20of%202009.pdf

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Amateur Investors Weekend Stock Market Analysis (9/6/08)

http://www.amateur-investor.net/Weekend_Market_Analysis_Sep_6_08.htm

The market got hit hard this week and as I mentioned in last weekend's report September has historically been the worst performing month for the market going back to 1900. Currently it looks like we are seeing a similar pattern develop like occurred in the Fall and Winter of 2007 when the Volatility Index (VIX) rose just above the 30 level (point A) which was followed by an 8% rally in the S&P 500 (points B to C) as the VIX dropped back to around the 18 level (point D). This was then followed by another significant rise in the VIX as it rose well above the 30 level (points D to E) as the S&P 500 went through a substantial drop over a 6 week period (pints C to F) in which it lost 17% of its value.

Meanwhile during the past few months the VIX peaked in mid July just above the 30 level (point G) which was followed by a 9% rally in the S&P 500 (points H to I) as the VIX dropped back to just above the 18 level (points G to J). Furthermore during the past two weeks the VIX has begun to move higher again and the question is will we now see a repeat of what happened last Fall and Winter when the S&P 500 underwent a substantial sell off over a 6 week period.



Overall the longer term pattern in the S&P 500 looks very similar to that of the 2000-2002 time period in which it made a series of lower Lows (L) and lower Highs (H) until a bottom occurred in the October of 2002. So far it appears we are seeing the same type of pattern developing.



In the weeks ahead the key support level to watch in the S&P 500 is at 1200 (point K). If the 1200 level is taken out then the next level of support would either be at the 50% Retracement Level near 1170 (point L) or at the 61.8% Retracement Level around 1075 (point M). Both of these Retracement Levels were calculated from the October 2002 low to the October 2007 high.



As far as the Dow the key support level to watch in the weeks ahead is at its 50% Retracement Level near 10700 (point N) which was calculated from the October 2002 low to the October 2007 high. If the 10700 level is taken out then the next level of support will be at its 61.8% Retracement Level near 9750 (point O). Also as you can see below the Dow has been making a series of lower Lows (L) and lower Highs (H) just like we saw from 2000 through 2002.



Meanwhile as for the Nasdaq the key support level to watch over the next few weeks remains around the 2200 level which coincides with its 38.2% Retracement Level calculated from the October 2002 low to the October 2007 high. During the past 8 months the Nasdaq has been holding support near this level (points P). If the Nasdaq were to take out the 2200 level then its next level of support would be at its 50% Retracement Level near 2000 (point Q).



As far as the Nasdaq 100 so far it has held support near 1670 which coincides with its 38.2% Retracement Level (point R) calculated from the October 2002 low to the October 2007 high so that will be a key area to watch in the weeks ahead. If the Nasdaq 100 were to take out the 1670 level then its next area of supporrt would be at its 50% Retracement Level near 1500 (point S).



Overall I expect to see a lot of volatility the rest of the year with large moves occurring in both directions although the longer term trend remains to the downside.

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Technical Analysis: Another Sign of a Bottom
The NYSE gave another sign of a major bottom on Friday.
September 19, 2008
By Paul Shread:

http://www.internetnews.com/bus-news/article.php/3772916

We've had back-to-back 80% upside days on the NYSE, which could well mark a major bottom, per the award-winning work of Paul Desmond of Lowry Research.

It's worth noting that the 2002 bottom formed the same way — except that this one could turn out to be stronger because it was preceded by a half-dozen 90% downside days, the most since 1974.

Coming as it does off a very important support level, the longer-term implications for the economy are better than they might otherwise be.

So where from here? We've rallied 1,000 points in two days on the Dow (first chart below), so some manner of pause or pullback seems almost a given here. 11,250-11,282 is first support; much below that and we could fill today's gap at 11,019. To the upside, clearing 11,750-11,867 is essential to get back above the 2000 peak and to break the pattern of lower highs. 11,483-11,550 is first resistance.

The S&P (second chart) faces resistance at 1265, 1280, 1304 and 1313, and first support is 1233-1237.

The Nasdaq (third chart) faces resistance at 2313, 2347-2450 and 2386, and support is 2239.

Paul Shread is a Chartered Market Technician (CMT) and member of the Market Technicians Association.

Next Article

Investors Cheer Financial Rescue Plan
Investors responded enthusiastically Friday to the federal government's massive financial rescue plan, but the long-term process of sorting winners and losers is just beginning.
September 19, 2008
By Paul Shread:

http://www.internetnews.com/bus-news/article.php/3772911

Investors responded to the federal government's massive financial rescue plan with the biggest two-day rally for stocks since October 2002.

The sweeping plan includes measures to buy distressed mortgage assets from financial institutions, shore up money market funds, and temporarily ban short sales of financial stocks, or bets that the stocks will fall.

It remains to be seen if the program works as hoped, what shape it comes out of Congress in, and whether regulators and financial institutions can then agree on a price for the impaired assets.

But there is little doubt that the announcement marked a watershed moment in U.S. financial history, and market participants and historians will long be debating the winners and losers and heroes and villains of the 14-month crisis.

Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson, along with New York Fed President Timothy Geithner, will likely be viewed favorably for the bold and resourceful steps they have taken throughout the crisis. The measures will be expensive, but no one knows the alternatives better than Bernanke, a long-time student of the Great Depression.

But federal regulators could also be fairly questioned for not moving sooner to stop the growth of the complex debt and credit insurance instruments at the heart of the crisis, which continued to grow exponentially even after the housing market had already peaked.

The SEC has come under heavy criticism for its response to the crisis. If SEC officials believed that abusive short-selling was contributing to the troubles of financial companies, why did they wait for four major failures (Freddie Mac, Fannie Mae, Lehman Brothers and AIG) in two weeks before reinstating short-selling limits? When the dust settles, the SEC should reinstate the 70-year-old "uptick" rule that was eliminated in July 2007 — coincidentally, the start of the crisis — and issue permanent restrictions on "naked" short selling.

But beyond those steps, let's not forget that short sellers and bears are among the market's savviest participants — they have to be to position themselves against the long-term trend of the market — and the insights they offer should not be dismissed out of hand. They sure warned about the risk of derivatives and growing debt for years.

Much has also been made of "mark to market" accounting rules, or FAS 157, which state that assets must be accounted for at current market values regardless of whether the holder intends to sell. The principle is an important one, but perhaps some accommodation should be made for frozen markets where assets can't be moved at any price, which forced financial firms to raise money to meet capital adequacy requirements in a very difficult market.

The biggest losers, of course, are those who bet the future of their companies on short-term profits and lost — and their shareholders. Leverage and risk must be better controlled among all market participants, including unregulated areas like derivatives and hedge funds.

Others coming in for criticism include the ratings agencies like S&P and Moody's, which gave the complex debt instruments at the heart of the crisis high ratings — and then downgraded the companies that initiated them when there was no hope of raising capital.

And we'll end with this quote from former Fed Chairman Alan Greenspan from a speech five years ago in defense of the unregulated derivatives market:

"[T]he benefits of derivatives, in my judgment, have far exceeded their costs. Derivatives unquestionably do pose risk-management challenges to market participants. But those challenges are manageable and thus far have generally been managed quite well. The best way to ensure that those challenges continue to be met is to preserve and strengthen the effectiveness of market discipline."

The failure of five of the nation's financial pillars — four in the last two weeks and Bear Stearns in March — seems to us to be a little more market discipline than the former Fed chairman had in mind.

One winner on Friday was Oracle (NASDAQ: ORCL), which jumped 7% on better than expected results.

Apple (NASDAQ: AAPL), Cisco (NASDAQ: CSCO), Sun (NASDAQ: JAVA) and Research In Motion (NASDAQ: RIMM) jumped 5% or more.

The Nasdaq soared 75 to 2274, the S&P rose 46 to 1255, and the Dow surged 368 to 11,388. Volume declined to 9.38 billion shares on the NYSE, and rose to 4.05 billion on the Nasdaq. Advancers led by a 30-4 margin on the NYSE, and 23-6 on the Nasdaq. Upside volume was 85% on the NYSE, and 79% on the Nasdaq. New highs-new lows were 212-130 on the NYSE, and 231-152 on the Nasdaq.

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InvestmentHouse Weekend Market Summary 9/26/08

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

- Market holds up surprisingly well given the day's issues, then rallies to the close, anticipating a deal this weekend.
- Final Q2 GDP backslides below 3%. Likely shades of things to come.
- How about some outside of the box thinking versus Washington as usual?
- Waiting on our leaders to craft a plan so market can get on to the next task.

Market marks some time, not bad given the environment.

The session started lower as expected, but in the end the market rebounded to close basically flat, at least outside of the Dow as that index surged higher as its financial components performed well, some rocketing higher. Oil was basically flat (106.96, -1.06) and gold as well (883.40, +1.40). Bonds closed lower, but they were up off of the early lows, somewhat splitting the baby though once more all the action was in the short end as it sees more quick money than a night clerk at an hourly rate hotel in the red light district (2.11% on the 2 year, down from 2.18% Thursday but up from 2.01% on the open).

The ability to bounce and close near flat to higher was somewhat impressive given the landmines laid out. The largest bank failure in US history was viewed as a positive, at least for the strongest banks. JPM, already owning Bear Stearns' assets, picked up WM's deposits for $1.5B, just pennies on the dollar. JPM surged 11% on the session. WFC surged as well as it is expected it will be called upon to 'assist' with another bank this weekend, picking up some great assets for nothing. There was also the lack of a bailout plan and the rancor that developed Wednesday with legislator infighting. I found it humorous and yet annoying when in a single sentence some would call for bipartisan spirit and then blame others for grandstanding or some other. Business as usual I suppose. RIMM missed on its earnings and was slaughtered to the tune of 27%, dragging the large cap techs down with it. The final report on Q2 GDP slipped below 3% (2.8% versus 3.3% in the prior iteration) as the effects of the credit freeze start to show up in the economy much more and sooner than expected. Even with a bailout package this is not likely to improve anytime soon as the damage is done and the credit markets have to normalize before the economy can even begin to get back on track and improvement begins.

Plenty of news to move the market, news that would have yanked its chain pretty hard on a typical session. But Friday, even though the lack of a deal on Thursday helped set a negative mood, the prospect of a new day and a new bailout deal to come kept things under control. Indeed, as the day wore on and no deal was forthcoming, it apparently was assumed that a deal would then come over the weekend. That sparked a late rally in anticipation, aided by some short covering just in case. It was not all short covering, however, as the big name financials took off to the upside late. Can't short them so it was buyers anticipating a bailout deal and other deals with other banks over the weekend as the credit and mortgage stress forces banks down. A suspension of the mark to market rules while awaiting a bigger deal seems to make sense, but no one is talking about that. In any event, the market rebounded and we used that to buy some more WFC, one of the few, the proud, the benefactors of no bailout deal as the smaller banks fold one by one (at least for now; may be 2 by 2, 5 by 5 or more if nothing is done). In sum, it was a day of waiting on a plan with that overriding all of the negatives, enough so that the market rallied late.

TECHNICAL. Intraday action was positive with a lower start followed by a solid recovery and sprint to the close. Not reading too much into this as everything is skewed by the external force of $700B in taxpayer money or a privately funded insurance program.

INTERNALS. The market turned off its lows but as usual breadth lagged the move with NYSE logging -2:1. NASDAQ more matched its flat close with decliners leading 1.4:1. Volume was mixed, up on NASDAQ, down on NYSE. NASDAQ volume jumped after the RIMM earnings and explosive volume. Some distribution in the techs.

CHARTS. Gapped lower on NASDAQ while the NYSE indices opened and immediately tanked. They held above the September low hit the prior week then rebounded back to near resistance at the 10 day EMA for NASDAQ and SP500, the 18 day EMA for DJ30. Trying to make higher lows but no change of character . . . still. NASDAQ remains at the prior 2008 lows before the September dive while SP500 remains at the July low, its prior 2008 low before, again, the September decline. They can bounce on news such as a bailout, but the patterns are still overall weak. DJ30 is trying to emerge as a leader with something of a double bottom trying to form up. As noted last week, it will have to take the reins as the other indices are struggling. A bounce on the indices will have to be a serious move to change their character.

LEADERSHIP. Energy may have been trying to form up but it did not carry the ball Friday. Financials had the best session, and most of the glory went to the biggest and the best in the group. Medical and healthcare held up very well though they were not breaking upside. The leaders in consumer related, early cycle stocks remain under pressure. Homebuilders, however, while up and down on the week, are still in good position. Some dropping out, others hanging on. Once the 'deal' is done we will see if the ones hanging in are really strong and can provide real breakouts. In this market you have to start viewing all stocks skeptically.

SUMMARY. The action on the week was driven by the Feds and their bailout plans. Economic and other more typical forces took a back seat as the credit lock up worsened again as the deal for a bailout came under pressure late in the week. It is much harder to invest in this kind of market and trading is tough as well. Once there is a plan in place the market will likely gush with delight and jump higher. After that initial jump it will be back to the reality of dealing with an economy hard-pressed after the credit freeze harmed so many businesses and now individuals seeking loans for anything. A lower Q3 growth rate and now many saying a negative Q4 GDP are looming. The market will handicap how long this will last as it looks out 9 to 12 to 15 months down the road. It just made a new low for this down cycle so there is still work to do even if this bailout proves to be the game changer and helps set the floor in the bear market. History tells us, however, that even when a deal is in place, after the short term 'rah rah' the harsh reality, the reason for the bailout has to be dealt with. Thus after a relief bounce, the near term is likely more downside and more volatility. Of course the market has the final word and how it and the leading sectors perform will tell that story. Who knows, perhaps the financials will use a bailout plan to finally take the lead that they have to take in order for any recovery to be successful.

THE ECONOMY

The bailout plan: too late to do the right thing? Why not some outside the box thinking?

I am going to digress here for a few paragraphs before I get to what should be done. Bear with me or skip ahead 5 paragraphs.

While both sides are, as usual, acting rather childish and hardly working with clean hands with respect to any rescue package, I was particularly taken Friday by Barney Frank's comments regarding the House republican plan. Not taken in the thoughtful, touched sense, but as in taken aback. Frank deemed the House republican plan 'irresponsible' because it came late - in his opinion of course. No statement that it was not a good plan or that the Paulson plan was better. The only support he offered for his position is that Paulson and Bernanke had brought it, that some unnamed experts supported it, and they had all invested a lot of time on it. Thus it must be a good one.

There is an old saying about throwing good money after bad. Who cares if a lot of time is invested in something if it proves to be the wrong idea or a better idea emerges? Is it, as Frank's comments suggest, too late to do the right thing? Is it irresponsible to push for what is right even if it emerges late in the game? Frank's comments were asinine.

They were also hypocritical. He calls for bipartisan support at all costs and in the same sentence chides House republicans and others for grandstanding and not going along with the plan in place as if its position in time holds some special powers. More importantly, however, with all of the talk of bailing out Main street and protecting the taxpayer with requiring equity interests, salary caps, etc., his party loaded the bill with pork favors to groups of questionable repute such as ACORN that currently has some of its higher ups serving jail time for fraud. Not even considering the shady character of these groups, why on earth would they be receiving funds taxpayers, the underwriters of this $700B socialist pig (no lipstick on this one), should be receiving, not in the form of reducing the budget or some new federal spending, but in hard dollars mailed back to them with a big thank you note attached.

Instead the majority party in Congress acted just as childishly and just as disdainfully as the republicans did when they had the majority. It was, once more, a disheartening display of largesse and power lust behind a smokescreen of helping the average American.

So what about the outside of the box thinking? Everyone says all financial institutions with the junk mortgages must participate for the bailout to work. Well it is clear that there is an impasse. While you may not agree with the House republicans, bless their souls for standing up to their principles and saying the emperor has no clothes with respect to this monarchical plan. But they need to get with the program as well because they are not going to get their way in favor of the plan that Frank has invested so much time, albeit wasted time in my opinion, with his government grab plan (that was a Paulson/Bush power grab plan before modified into a socialist power grab plan).

What they need to press for is a dual methodology for gaining assistance with the bad loans. For those that are truly heading down the toilet, the RTC-like plan swings into action. They get their junk bought by the Treasury and as they were so desperately in trouble they give up some equity to 'protect the taxpayer' though as we have seen that was going to pet groups and projects. Didn't we just go through this debate recently and yet when the country is in a Great Depression-like crisis these jerks still put pork into bills? Despicable.

The second part of the plan would allow those institutions that are not terminal but just have a headache or the flu to buy the privately funded insurance the House republicans are calling for and in doing so do not have to give up equity: they are buying protection and not using all public funds so they don't have to allow the feds to muscle into their business. Of course it would not all be private funds as it will take quite a bit of money in the insurance pool, but again, these are not the terminal cases, just those that caught the same flu from these bad loans and the credit freeze. They can suspend dividends, suspend the mark to market requirements, get some tax credits. Some tax credits for the ordinary citizens for losses in market value of homes, for losses in the financial markets (as one reader suggest, raising the limit from 3K to $50K), etc. to restore buying demand. There are many ways to incent behavior and raise capital without spending taxpayer money. Of course you would hear the tired line that tax credits are spending but that is nonsense. Returning tax money to citizens is not spending; giving 20% of any profits to ACORN is spending.

In this manner they get a deal done because the initial price tag can be trimmed, it is not a government equity grab of every financial institution in the US that is suffering from these mortgages (and this group includes basically all of them, making the scope of this plan absolutely staggering in its expansion of federal control), there is confidence of two systems to back up the institutions, and the tax incentives help launch more

A massive federal power expansion play.

I am going to digress from plan specifics again. Be forewarned. What is behind the almost manic push for this plan is that it is the perfect way for the government to grow larger as it enters new areas that are constitutionally banished to it. The Paulson plan was dictatorial. The majority added features that it says make it fair and gives oversight. It gives oversight into the entire financial industry via warrants in the companies that use the plan, and according to Paulson, Bernanke, and many in Congress, all institutions with these bad loans need to be involved and thus give up equity. It is the perfect vehicle to extend federal powers by both law and funding. As equity owners receiving profits from both the sale of the mortgages once they appreciate as well as company earnings, the federal government has massive new funding mechanisms to grow ever larger. It also would then have the precedent to own equity and the European socialist morph of the economy would be complete.

That is what makes this such a terrible plan and why the House republicans made a stand. It clearly delineates the philosophical differences in our country about the role of government. If it passes we may as well tear up the Constitution because the government will be into everything. Ask yourself this: do you want the federal government owning shares of every financial institution in the United States and thus directing the company boards and officers and having access to every bit of information about your banking transactions? People always think of government intrusion in terms of wiretaps and spying. The real horror of Orwell's '1984' is that the all-knowing central government gains this information and power through acquiescence of the citizens as they willingly yet unwittingly open their doors to the intruder that our founding fathers tried so hard to keep closed. When this bill passes it may indeed save the financial system and thus the economy for another quarter century, but it will be likely the most tragic of the five tragic days in the Constitution's history.

THE MARKET

MARKET SENTIMENT

VIX: 34.74; +1.92. After a 42.6 reading two Thursdays back VIX fell. It will likely make another spike before this is over and then there could be a bottom over several weeks. Still way too early to determine that.
VXN: 36.85; +1.99
VXO: 39.41; +2.66

Put/Call Ratio (CBOE): 1.01; +0.21. Back over 1.0 on the close. 10 of 13 days over 1.0 during the selling so it has done its job.

Bulls versus Bears:

For the second time this year bears are crossing above bulls, doing so basically where they did in March on their way to much more extreme readings just about the time the market made the March low and started the last rally. Positive for the market and if SP500 is going to hold the long term trendline is the place to do it.

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 doesn't have the cash to drive it higher.

Bulls: 37.5%. Not much of a drop from 37.9% last week. Down, but just edging lower, indicating most don't understand the gravity of the credit situation. A dive under 35% would be a positive given the inverse nature of sentiment indicators. Down from 40.7% on the high during the rally off the July lows. Turned back up before it got down to 35%, below which is considered bullish for the market as the number of upbeat investors is relatively low. A long way up from the 27.8% on the low this round. Hit 31.9% two months back and the 30.9% low hit in March. Steep drop from a rebound high at close to 50% on the run through May. In March the indicator did its job with the dive below 35% and the crossover with the bears. Now it is going above and beyond. Bulls and bears have crossed over again, doing so even before the prior lows are hit. The bulls and bears were eye to eye in mid-February and have crossed. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator. This is smashing that. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.

Bears: 40.9%. Bears fell from 43.7%, apparently on the belief a bailout will immediately cure the market's woes. It won't but these guys will apparently need to be convinced. Unfortunately, they will likely get that education over the next several months. If the bulls turn over and crap out below 35% again that would be a strong signal. Interestingly they are still 'crossed over,' i.e. more bears than bulls. Moving toward 50.0%, the high on this move, but a long way off. As the NYSE indices test the lows you would want it higher. Still above the 35% threshold so still a bullish indication. A steady rise to 50% on this move: 48.9%, 47.3%, 44.7% and 39.3% before that. Well above the bullish level and the highest since 1995. Again, that is one of the best indications that sentiment is getting extreme on the negative side. It is again past 35%, the level that historically indicates too much pessimism. As with the bulls the jump in bears did its job after hitting 44.7% in the third week of March that was up from an already freakishly strong 43.3% the week before. Up sharply from a low of 19.6% on the last rally. 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). This is a huge turn, unlike any seen in recent history.

NASDAQ

Stats: -3.23 points (-0.15%) to close at 2183.34
Volume: 1.987B (+6.02%)

Up Volume: 920.999M (-472.513M)
Down Volume: 1.041B (+587.179M)

A/D and Hi/Lo: Decliners led 1.38 to 1
Previous Session: Advancers led 1.48 to 1

New Highs: 13 (-2)
New Lows: 207 (+68)

NASDAQ CHART: Click to view the chart

Finished flat on Friday and below 2200, a key range/level this year, representing three bottoms more or less. Trying to make a higher low but this is still a very weak pattern with a lower high in August, a lower high in mid-September and a lower low as well. Still a lot more work to be done unless the bailout package is just so good it is a game changer. As noted above, history doesn't suggest that will be the case.

NASDAQ 100 (-0.92%) has felt the hardest tumble after looking so good in late August. It is still below the March low, the prior low for 2008. At least it is oversold . . .

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: +4.09 points (+0.34%) to close at 1213.27
NYSE Volume: 1.17B (-3.1%). A week of below average volume as the market was held hostage by the bailout proposal.

Up Volume: 450.309M (-411.902M)
Down Volume: 704.762M (+365.069M)

A/D and Hi/Lo: Decliners led 2.01 to 1
Previous Session: Advancers led 2.53 to 1

New Highs: 7 (-1)
New Lows: 277 (+139)

SP500 CHART: Click to view the chart

Making a higher low attempt near 1200 the July 2008 low. The selling this month started a third leg lower and the bailout bounced it two weeks back after a significant new low for the year. After a move higher on the bailout announcement we anticipate another test of that low as SP500 tries again to put in a floor on this selling that start a year ago. The credit freeze is not helping the economy, and after the next bounce SP500 will help tell the story of when the economy recovers.

SP600 (+0.10%) put in a gain Thursday and a fraction Friday after an ugly selloff. Held interim support and is trying to bounce. Great. If it can, perfect. The triple failure at 400 in June, August and September is typically a bad indication, and this last failure really disrupted the pattern. Not a breakdown so it can work on a new pattern over a few weeks after the bailout plan.

SP600 Chart: Click to view the chart

SP400 CHART: Click to view the chart

DJ30

Riding the financials, trying to make a higher low after the modest new low for the year, and that means the blue chips can still pull off a double bottom. That makes it the aberration among the indices, and as they other indices are in need of some help, some leadership from the Dow is welcome. Plenty of work to do as there is a range of overhead supply from 11,400 to 11,800. Digging out of a hole is work, but again, the Dow has the best pattern and thus the best shovel to do it.

Stats: +131.07 points (+1.1%) to close at 11143.13
VOLUME: 232M shares Friday versus 218M shares Thursday.

DJ30 CHART: Click to view the chart

MONDAY

The near term action is riding on when a deal is done. Not necessarily what deal is done; that will be mulled in the months after the announcement. A deal will bump the market. It may come this weekend, it may take until Wednesday. That means a lot of stress if it doesn't come this weekend before the Asian markets open, so there is pressure to get it done, and Congress was working on it until midnight Friday.

Again, expecting a rally on the news of a deal on the bailout. Will get what we can to the upside, watching how it reacts to resistance. After that we anticipate a turn back down as the market deals with the effects of the credit freeze on the economy and what is likely an inevitable slowdown in the aftermath. It survived spiking oil prices and started to show improving data in May through July. The housing market looks to have bottomed. Then it gets a worldwide credit freeze and that could be the killer that finally puts it into a technical recession just as Ireland, and as reported Thursday, New Zealand.

The key is when the market starts to factor in an economic recovery. The bailout plan will stop the bleeding and allow companies to function again. Then it is a matter of getting over the bruises and breaks and moving back to running speed. The extent of the damage is unknown. Oil prices are trying to rise and other commodities, though not their stocks, are showing strength as well. Gold is back up on inflation worries and solvency worries given the massive amounts of liquidity injected in the global economies. Still plenty of landmines to avoid after the package is passed. We certainly don't want to do anything to stymie businesses getting back to buying capital equipment and ginning up the economy as in 2003. Some tax credits and other tax incentives after the bailout package would be very welcome with respect to getting the growth in the economy back and thus getting jobs back up.

There are still many beguiling upside patterns out there. While we believe a bounce will be followed by another test lower, it may take a few weeks to do that. If the belief in a recovery is weak, however, it may happen quickly after an initial bounce following the bailout announcement. The market will have to show the way but we are anticipating the latter followed by several weeks of trying to put in another floor to rally from.

We cannot ignore the good patterns and we won't. We just won't pile into them all at once but move in piecemeal if we get good moves. Given we anticipate a pop and drop we prefer seeing if the breakouts test and hold on the market drop following the bailout bounce. If they do and start back up that is the perfect time to enter them. Again it depends upon how the market reacts to the bailout. No rush. Just have to be methodical.

Downside is also a must consideration in this climate as a bounce higher that stalls and starts to reverse on volume indicates more selling to come. The index ETF's are a good way to play that. We will have to let the market make its bounce and see where it stalls. Near the 50 day EMA on SP500 is a possibility. We can anticipate that and be ready for downside from there, but again, we will simply have to see how the market responds to any bailout package, ready to trade the initial move and then the test. After that we see how the strong patterns held up and whether they indicate that more upside is ahead by resuming their moves after a test.

Everyone would like to see the travails end with the bailout announcement but as history suggests, that is not the case. Again, the bailout applies a tourniquet to stop the bleeding and save the life. The patient still has to heal and may need some additional medical treatment to get through the healing process and back up to full speed. Thus we need to be ready for some range trading as well as another selloff at some point to test that new low for the year. Not everyone's favorite kind of market, but if that is what the market is giving we need to adjust to it and take it.

Support and Resistance

NASDAQ: Closed at 2183.34
Resistance:
The 10 day EMA is 2194
2202 is the January 2008 low
2261 is a March 2008 interim low
2286 is the first April 2008 gap up point.
The 50 day EMA at 2287
2300 is some resistance
2340 from the March 2007 low
The 90 day SMA at 2343
2370 from the April 2006 peak
2372 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
The 200 day SMA at 2374
2378 is the mid-February peak; 2379 from the October 2006 peak
2386 is the August 2007 intraday low
2388 is the June 2008 low
2392 is the April 2008 peak
2419 is the January 2008 peak and the early February peak

Support:
2167 is the July 2008 low
2155 is the March 2008 low
2070 is the recent September 2008 low
2043-47 from the July 2006 low and October 2005 low
2020 from January and April 2005
1912 from April 2005

S&P 500: Closed at 1213.01
Resistance:
1215 is the July 2008 closing low
The 18 day EMA at 1222
1239 is the 2002/2003 up trendline
1244 is an August 2005 peak
The 50 day EMA at 1253
1257 is the March low
1270 is the January low
1285 is the recent July peak
The 90 day SMA at 1286
1313.15 is the August 2008 peak
1317 from the February low
1324 is the April low
1331 is the June low
The 200 day SMA at 1336
1362 is an ancient trendline

Support:
1200 is the July 2008 intraday low
1176 from the Q4 2005 lows
1167 is the January 2005 low
1154 from the May 2005 lows
1142 is the 2005 closing low
1133.50 is the September 2008 low
1065 is the Q4 2003 level that SP500 started the run to 2007 after the first run in the recovery.

Dow: Closed at 11,143.13
Resistance:
11,317 from March 2006
The 50 day EMA at 11,360
11,388 is the prior August low
The 90 day SMA at 11,608
11,635 is the January intraday low
11,670 is the May 2006 intraday high; 11,642 closing
11,695 is the 2004/2005 up trendline
11,731 is the March 2008 low
11,867 is the August 2008 peak
12,050 from the March 2007
12,070 from the early February 2008 lows
The 200 day SMA at 12,167
12,250 from late March 2007 lows

Support:
11,061 from February 2006
10,962 is the July closing low
10,827 is the July 2008 intraday low
10,459 is the recent September 2008 low
10,215 from Q4 2005
10,100 to 10,000

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

September 29 - Monday
- Personal Income, August (8:30): 0.2% expected, -0.7% prior
- Personal Spending, August (8:30): 0.2% expected, 0.2% prior

September 30 - Tuesday
- Chicago PMI, September (9:45): 54.0 expected, 56.9 prior
- Consumer confidence, September (10:00): 55.0 expected, 56.9 prior

October 1 - Wednesday
- ADP employment survey, September (8:15): -33K prior
- Construction spending, August (10:00): -0.5% expected, -0.6% prior
- ISM Index, September (10:00): 50.0 expected, 49.9 prior
- Crude oil inventories (10:35)

October 2 - Thursday
- Initial jobless claims (8:30): 493K prior
- Factory Orders, August (10:00): -1.8% expected, 1.3% prior

October 3 - Friday
- Non-Farm Payrolls, September (8:30): -90K prior
- Unemployment rate, September (8:30): 6.1% expected
- Average workweek (8:30): 33.7 expected
- Hourly earnings (8:30): 0.3% expected
- ISM Services, September (10:00): 50.0 expected, 50.6 prior

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Technical Analysis: TED and the Dow Hold the Clues
Two signs to watch for evidence that the bailout plan is working.
October 3, 2008
By Paul Shread:

http://www.internetnews.com/bus-news/article.php/3775976

The Dow (first chart below) remains below our major support level of 10,683, which holds a great deal of economic significance — below that level, the economy could face a genuine crisis; above it and the bailout plan just might work.

Also one to watch: the TED spread, which continues to trade at record highs, signaling very tight credit markets.

It will take time to see if the financial rescue plan works, and those two indicators will be as good as any to watch for evidence of the plan's effectiveness.

To the downside, the Dow has support at 10,000 and 9700, and resistance above 10,683 is 10,750-10,869.

The S&P (second chart) has very important support at 1060, with 1000 and 960 below that. To the upside, 1133, 1153, 1168 and 1200-1219 are resistance.

The Nasdaq (third chart) has support at 1890, 1800 and 1750, and resistance is 2000-2012, 2070 and 2155-2167.

Next Article

Bailout Bill Passes — Now The Hard Part Begins
Will the government's massive financial rescue plan work? The answer for technology companies and their investors won't be academic.

October 3, 2008
By Paul Shread: More stories by this author:

http://www.internetnews.com/bus-news/article.php/3775961

Stocks traded in a rocky fashion on Friday after the U.S. House of Representatives passed the government's massive financial rescue bill after rejecting an earlier version on Monday.

After posting strong gains ahead of the vote, stocks sold off sharply after the bill was passed, ending the day down about 1.5% after trading 3% higher before the vote.

Credit markets fared no better, as measures of banks' willingness to lend actually worsened after the vote.

Behind the market's reaction is the realization that it will take time to see if the plan crafted by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke will work. Since Lehman Brothers and AIG failed in mid-September, credit markets have seized up and capital has been hard to come by, hurting banks and other businesses that depend on commercial paper markets to fund operations.

Evidence of the sudden massive slowdown from the credit crisis showed up in the government's monthly jobs report today, which showed a worse than expected loss of 159,000 jobs last month, the biggest monthly decline in five years and the ninth straight month of job losses.

The core of the plan seeks to remove distressed debt from the balance sheets of financial companies by using a reverse auction process to see what price companies are willing to sell the assets at. When the market eventually improves, the government hopes to recoup much of the cost of the program by selling the assets.

But it will take time to set up the program and even longer to see if it works. The stakes are very high; if it works, the economic benefits will be immense, and the plan could become a model for other countries dealing with systemic crises. If it doesn't, there are other options that came up over the two-week bailout debate that could be tried next, but at that point the economy will likely be well into recession.

And after that, officials will long be dealing with the causes of the crisis. The major investment banks will no longer be as heavily leveraged, with the bankruptcy of Lehman, the acquisitions of Bear Stearns and Merrill Lynch, and the conversion to commercial banks of Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS). But much of the rest of the system remains clogged with leverage, including the massive unregulated derivatives trade and hedge funds.

The SEC has admitted in recent weeks that voluntary regulation doesn't work, so stronger regulation of financial markets appears likely. Still, the SEC has yet to reinstate Depression-era shorting restrictions that were removed last year or to make good on promises of permanent restrictions on naked short-selling despite taking the view that abusive short-selling contributed to the demise of some financial firms.

And credit ratings agencies like S&P and Moody's will likely face calls for reform after initially giving their blessing to the complex debt instruments at the heart of the crisis.

The stakes are also high for technology companies, whose shares have been battered in recent weeks on fears that the strong IT spending market would weaken amid a broader slowdown and credit crunch.

Microsoft (NASDAQ: MSFT), for one, welcomed the bill's passage, saying in a statement that the plan "is a critically important step to bringing back economic stability in the U.S. and around the globe. This crisis affects more than just the U.S. financial sector, it affects every corner of the world economy, and today's vote will help re-instill confidence around the globe."

Microsoft shares ended the day fractionally higher.

Apple (NASDAQ: AAPL) had a volatile day on a false rumor about CEO Steve Jobs' health, ending the day 3% lower.

Symantec (NASDAQ: SYMC), SAP (NYSE: SAP) and Xyratex (NASDAQ: XRTX) fell on downgrades.

Sprint (NYSE: S) lost 5.5% despite reports of interest in its Nextel unit.

AMD (NYSE: AMD) rose more than 9% on no apparent news.

The Nasdaq lost 29 to 1947, the S&P fell 15 to 1099, and the Dow lost 157 to 10,325. Volume rose to 6.73 billion shares on the NYSE, and 2.54 billion on the Nasdaq. Decliners led 22-12 on the NYSE, and 20-8 on the Nasdaq. Downside volume was 89% on the NYSE, and 74% on the Nasdaq. New highs-new lows were 17-655 on the NYSE, and 5-478 on the Nasdaq.

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COTD - The Price of Gas:

http://www.chartoftheday.com:80/20081127.htm?T

The price of gasoline continues to plunge. Over the past 19 weeks, the average US price for a gallon of unleaded has declined $2.22 per gallon. That works out to a decline of 54%. Today’s chart provides some perspective on the latest decline with a long-term view of the average US price for a gallon of unleaded gasoline. It is interesting to note that most gasoline price spikes were a result of Middle East crises and often preceded or coincided with a US recession. So while the current plunge in gasoline prices is welcome news, it did come at an extraordinarily high price.

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COTD - How Signicant is this Bear Market?

http://www.chartoftheday.com/20081212.htm?T

How significant is this bear market? It all depends on how you measure. When measured in US dollars, the Dow currently trades 39.5% off its October 2007 record high. However, when measured with that other world currency (gold), the picture is actually more dismal. To help illustrate the point, today's chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 10.5 ounces of gold to “buy the Dow.” This is considerably less that the 44.8 ounces it took back in 1999. When priced in gold, the US stock market has been in a bear market for the entire 21st century.

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From Briefing.com: Weekly Recap - Week ending 12-Dec-08

We concluded last week's recap with the thought that it was tough to imagine the body of news getting much worse this week. It's all a matter of perspective, but let's take a look at some of the major headlines from a week that had an ample amount of bad news.

-- Media giant, Tribune Co., filed for Chapter 11

-- 3M, FedEx, Texas Instruments, Kroger, Nucor, and Electronic Arts issued earnings warnings (note the diversity of industry groups here)

-- Dow Chemical said it will cut 11,000 jobs; Rio Tinto said it will cut 14,000 jobs; and Bank of America said it will cut up to 35,000 jobs over the next three years (many other companies also announced job cuts)

-- Weekly initial jobless claims were 573,000 (a 26-year high) while continuing claims hit 4.43 million (also a 26-year high)

-- Yields on the 1-month and 3-month T-bills both went negative for a time, indicating a willingness on some investors' part to pay the government for holding their money versus the other way around

-- Illinois governor Rod Blagojevich was indicted amid several allegations that included a charge he tried to sell President-elect Obama's vacated Senate seat

-- JPMorgan Chase CEO Jamie Dimon said November was a terrible trading month for the bank, that December hasn't been much better, and that it's possible U.S. home price could fall another 20%

-- November retail sales declined 1.8% from October and were down 4.7% in the 3-month period ending in November from the 3-month period ending in August

-- Former Nasdaq Chairman, Bernard Madoff, was arrested on allegations he orchestrated a $50 billion Ponzi scheme

-- After being approved in the House, legislation that would have provided $14 billion in financial aid to the automakers was voted down in the Senate, raising the risk of imminent bankruptcy filings in the auto industry

There were some positive developments, like Procter & Gamble reaffirming its earnings guidance and core producer prices moderating. Also, there was a positive buzz Monday over the news that President-elect Obama favors a massive stimulus package when he takes office that centers around improvement to the nation's infrastructure.

Mr. Obama didn't provide a specific price tag, yet his acknowledgment that his aim is to jumpstart the economy now and worry about the budget deficit later suggests it will be a big number. Many economists think it will be at least $500 billion. Again, depending on one's perspective, this could be viewed either positively or negatively.

Currency traders didn't seem all that enthused by it as the dollar index dropped 4.0% this week. The stock market, though, rallied on the news Monday before giving way to a roller coaster trade the rest of the week.

The volatility was nothing new to this market, although there was a new pattern that emerged, which was that the stock market digested all of the bad news with a sense of aplomb.

Despite the topsy-turvy trading action at times and a preponderance of headlines that skewed to the negative side of things, the S&P 500 ended the week modestly higher. It wasn't that long ago that this battery of bad news would have produced a week of material losses.

In this respect, it can be argued convincingly that sentiment has improved. However, the piling up of bad fundamental news and the continued flight-to-safety trade in the Treasury market leaves plenty of room for second-guessing whether this newfound perspective can be maintained.

The current take on things, though, is that bad news just isn't carrying the shock value that it used to. Consequently, the market's resilience in the midst of the bad news is attracting buyers who see this behavior as a sign of a bottoming process.

Looking ahead, the Bush administration's decision on whether to use TARP funds to help the automakers and the success, or lack thereof, of GMAC's bid to become a bank holding company should get things started in the coming week, which will also produce the industrial production report (Monday), earnings reports from Best Buy and Goldman Sachs (Tuesday), the FOMC meeting (Tuesday), the OPEC meeting (Wednesday), General Electric's Annual Outlook Meeting (Wednesday), and a quarterly options expiration (Friday).

--Patrick J. O'Hare, Briefing.com

**For interested readers, the S&P 400 Midcap Index, which isn't included in the table below, increased 1.9% for the week and is down 40.9% year-to-date.

 
 Index      Started Week Ended Week Change % Change  YTD  
 DJIA          8635.42    8629.68   -5.74    -0.1 % -34.9 %  
 Nasdaq        1509.31    1540.72   31.41     2.1 % -41.9 %  
 S&P 500        876.07     879.73    3.66     0.4 % -40.1 %  
 Russell 2000   461.09     468.43    7.34     1.6 % -38.8 %

2:06PM GT Solar announces workforce reduction in Merrimack Production Facility; maintains full-strength employment in reactors business (SOLR) 2.85 -0.11 : Co announces it is reducing its production workforce at the co's Merrimack solar furnace operations by 25 employees. Employment in all other segments and at the company's other locations are being maintained at full strength based on continued strong demand for its polysilicon reactors. The workforce reduction was related to slower directional solidification system furnace production rates over the next six months as a result of the slower economy and several customer requests in this environment to delay shipments of DSS furnaces under existing contracts.

09:35 am First Solar downgraded to Source of Funds at ThinkEquity: . ThinkEquity downgrades FSLR to Source of Funds from Buy and cuts their tgt to $105 from $175 saying they believe there are multiples of 10MWps of First Solar panels sitting in customer warehouses. Moreover, they do not expect these modules to move out soon, given weakening economies, lower natural gas prices, higher interest rates, and tougher underwriting requirements. The firm says, global solar PV demand headwinds are unlikely to subside for at least the next few quarters. The firm also says take-or-pay contracts are only as good as the counterparty's willingness and ability to do either.

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From Briefing.com: Weekly Recap - Week ending 19-Dec-08

Whether you recognize it or not, a little bit of history is made every day. This week history was made in a big way for the financial markets when the Federal Open Market Committee (FOMC) cut the fed funds target rate from 1.00% to a range of 0.00% to 0.25%.

In addition, the FOMC directive implied the Fed stands ready to do any, and all, things possible to stimulate the credit market and the economy, including possibly buying a lot of long-term Treasury securities.

The move in Treasuries this week was astounding. The 10-year note yield fell as many as 49 basis points to 2.08% Thursday while the yield on the 30-yr bond dropped as many as 52 basis points to 2.52%.

This no holds barred approach from the Fed fueled a sizable short-covering rally effort Tuesday that proved to be as fleeting as snow on the ground in Houston this time of year.

When it comes down to it, the directive conveyed a pretty bleak economic outlook, certainly for the near-term, and made it apparent that the economic fix won't be quick and easy. By the same token, neither will the fix for the stock market.

Even so, the stock market pressed on with a bullish bias and closed higher for the week, led by the transportation, health care, financial and retail sectors.

It was another week where bad news didn't carry the same weight it once did.

Goldman Sachs (GS) reported its first loss as a publicly-traded company and yet its stock traded higher after the news.

Best Buy (BBY) beat earnings estimates for its third quarter but observed that there has been a dramatic and potentially long-lasting change in consumer behavior. The translation is that the consumer is in retrenchment mode. Best Buy's stock gained 15% this week.

Industrial production declined 0.6% in November, housing starts declined 18.9%, marking the largest decline since March 1984, building permits hit a record low, and weekly initial jobless claims held near a 26-year high.

Standard and Poor's lowered its outlook (though not its rating) for AAA rated General Electric (GE) and lowered its rating by one or two notches on 11 major U.S. and European financial institutions.

Additional details were heard about the Bernard Madoff Ponzi scheme, including the names of many wealthy investors that got burned by Madoff's dealings.

OPEC, meanwhile, said it is going to cut 4.2 million barrels a day from the actual September 2008 OPEC-11 production of 29.045 million barrels per day. News like that would be expected to cause a spike in oil prices. There was a spike alright, only it was a spike lower.

Oil for January delivery tumbled 27% this week to $33.87 per barrel, with the majority of the decline coming after the OPEC announcement.

The downturn in oil prices, which touched $147 in July, is a positive for consumers and most businesses, yet that silver lining is dulled for now by a host of issues, the most nettlesome of which is a rising unemployment rate that is weighing heavily on spending and investment decisions.

The energy sector (-4.6%) was the worst-performing sector this week.

The drop in oil prices was all the more striking given that the dollar had a tough week as growing concerns about the U.S. government's increasing debt and interest rate differentials weighed heavily on the greenback. The dollar index fell 6.0% at one point before recovering some lost ground late in the week after Japan said it will undertake efforts to weaken its currency.

In terms of government spending, the big news came Friday with the Bush administration agreeing to lend $17.4 billion in TARP funds to the automakers.

GM and Chrysler are going to receive $13.4 billion and, if Congress approves the release of the other half of the TARP funds, GM ill get access to another $4 billion in February. The loans are being made on the contingency that the automakers have a viable plan by March 31 to become profitable.

Friday's mixed market left it clear that doubts remain.

In a separate, but not wholly unrelated development, word circulated this week that President-elect Obama might endorse a stimulus plan that costs as much as $850 billion.

Yes, Virginia, there is a recession.

--Patrick J. O'Hare, Briefing.com

**For interested readers, the S&P 400 Midcap Index, which isn't included in the table below, gained 3.1% this week and is down 39% year-to-date.

 
 Index      Started Week Ended Week Change % Change YTD %  
 DJIA          8629.68    8579.11  -50.57    -0.6  -35.3  
 Nasdaq        1540.72    1564.32   23.60     1.5  -41.0  
 S&P 500        879.73     887.88    8.15     0.9  -39.5  
 Russell 2000   468.43     486.26   17.83     3.8  -36.5

4:32PM Auto Fails to Inspire : A plan to provide automakers with more than $17 billion helped drive stocks higher, but the bounce proved unsustainable as investors remain cognizant of broader headwinds... The White House is providing $13.4 billion in TARP funds to automakers as part of an effort to shore up their finances. An additional $4.0 billion will be available in February. Though the funds won't ensure automakers achieve a successful recovery, the announcement does help clear up the market's concern on the matter... Shares of General Motors (GM 4.49, +0.83) rallied on the news, as did many suppliers dependent on the survival of the Big Three. Ford (F 2.95, +0.11) also traded higher, though to less of an extent since it is currently not depending on government funds. Ford and GM traded with heavy volume, part of which was induced by the expiration of December options... The expiration of December options also increased share volume in the broader market. More than 2.4 billion shares were traded on the New York Stock Exchange, most of which came in the early going... Futures contracts for January crude oil also expired this session, but not before sinking to a new four-year low of $32.40 per barrel. The contracts finished 6.5% lower at $33.87 per barrel. However, February contracts gained 1.5% to settle at $42.31 per barrel. The advance in February crude futures prices came despite continued gains in the U.S. dollar... The greenback gained 2.3% against a basket of major foreign currencies today. It is up 3.0% over the past two days. That has weighed on metals for two straight sessions. February gold shed 2.7% to settle at $837.40 per ounce, while March silver slipped 2.4% to finish at $10.85 per ounce. Their weakness continues to undermine the materials sector (-1.3%), which was the session's worst performer... Financials (+0.4%) had a relatively solid performance even though Standard & Poor's lowered the credit ratings of Goldman Sachs (GS 80.73, +0.68), Wells Fargo (WFC 28.70, -0.95), JPMorgan Chase (JPM 30.32, +0.11), and Bank of America (BAC 13.80, -0.16). Traders' reaction to the downgrade was relatively muted given the belief that the credit analysts are essentially late to the game... Tech (+0.9%) was a relative leader after Oracle (ORCL 17.78, +1.17) and Research In Motion (RIMM 42.83, +4.39) posted in-line earnings results for the latest quarter. Their strength helped the Nasdaq outperform... In other earnings news, Accenture (ACN 32.21, +1.80) made its way to a new December high after posting better-than-expected results for its latest quarter... European stocks ended the week lower after a volatile session. Lodon's FTSE fell 1.0%, Germany's DAX tumbled 1.3%, and France's CAC closed 0.3% lower... Russia's MICEX advanced 0.7%, but the RTS tumbled 5.1%... The MSCI Asia-Pacific Index closed 0.6% lower, while Japan's Nikkei closed 0.9% lower after the Bank of Japan lowered its key policy rate to 0.10% from 0.30%. In Hong Kong, the Hang Seng closed down 2.4%, ending four days of gains... Dow -0.3%... Nasdaq +0.8%... S&P 500 +0.3%... Nasdaq 100 +1.0%... S&P 400 +0.7%... Russell 2000 +1.5%.

7:56AM TrimTabs estimates all equity mutual funds post outflow of $6.0 billion in week ended Wednesday, December 17 : TrimTabs Investment Research estimates that all equity mutual funds posted an outflow of $6.0 billion in the week ended Wednesday, December 17, versus an outflow of $2.8 billion in the previous week. Equity funds that invest primarily in U.S. stocks posted an outflow of $5.6 billion, versus an outflow of $1.7 billion in the previous week. Equity funds that invest primarily in non-U.S. stocks had an outflow of $389 million, versus an outflow of $1.1 billion in the previous week. In addition, bond funds had an outflow of $4.1 billion, versus an outflow of $10.6 billion in the previous week, and hybrid funds had an outflow of $1.3 billion, versus an outflow of $3.5 billion in the previous week. Separately, TrimTabs reports that exchange-traded funds that invest in U.S. stocks posted an inflow of $11.6 billion, versus an inflow of $8.4 billion in the previous week. ETFs that invest in non-U.S. stocks had an inflow of $3.8 billion, versus an inflow of $2.9 billion in the previous week.

7:51AM North American semiconductor equipment industry posts November 2008 book-to-bill ratio of 1.00, according to SEMI : North America-based manufacturers of semiconductor equipment posted $805 million in orders in November 2008 (three-month average basis) and a book-to-bill ratio of 1.00 according to the November 2008 Book-to-Bill Report published by SEMI. The three-month average of worldwide bookings in November 2008 was $805.4 million. The bookings figure is about 4% less than the final October 2008 level of $839.7 million, and about 29% less than the $1.13 billion in orders posted in November 2007. The three-month average of worldwide billings in November 2008 was $807.3 million. The billings figure is about 7% less than the final October 2008 level of $871.4 million, and about 42% less than the November 2007 billings level of $1.38 billion. "The book-to-bill ratio reached parity as billings have declined sharper than bookings over the past six months," said Stanley Myers, president and CEO of SEMI. "2008 is closing with expected declines on the year, which have been further exacerbated by the deepening seismic global economic situation over the past quarter."

7:37AM Jabil Circuit misses by $0.02, misses on revs; guides Q2 EPS in-line, revs below consensus (JBL) 6.46 : Reports Q1 (Nov) earnings of $0.30 per share, $0.02 worse than the First Call consensus of $0.32; revenues rose 0.4% year/year to $3.38 bln vs the $3.42 bln consensus. Co issues mixed guidance for Q2, sees EPS of 0.20-0.24, excluding $0.03 per share for amortization of intangibles and $0.05 per share for stock-based compensation and related charges, vs. $0.20 consensus; sees Q2 revs of $2.8-3.0 bln vs. $3.07 bln consensus. Co says "Liquidity and a resilient balance sheet are key advantages in this market environment. The $1.4 bln of liquidity we enjoyed at the end of our first quarter should improve as our working capital and capital expenditure requirements decline during our second quarter." Jabil has nearly $600 mln in cash and $800 mln available under a five-year revolving credit facility expiring in 2012.

6:43AM Cabot Micro to acquire Epoch Material Co., Ltd. (CCMP) 26.26 : Co announces that it has entered into a definitive agreement to acquire the shares of Epoch Material Co., Ltd., a consolidated subsidiary of Eternal Chemical Co., Ltd. Epoch is a Taiwan-based company specializing in the development, manufacture and sale of copper CMP slurries and CMP cleaning solutions to the semiconductor industry, as well as color filter slurries to the liquid crystal display industry. Under the share purchase agreement, Cabot Microelectronics will purchase Epoch for a total purchase price of US$66 million. Cabot Microelectronics will initially obtain 90 percent of Epoch's stock, with the remaining 10 percent to be transferred eighteen months later. During this interim period, Eternal will hold a minority ownership interest in Epoch.

09:36 am Palm upgraded to Hold at Needham: . Needham upgrades PALM to Hold from Underperform after the company reported Q2 results in line with it preannouncement guidance on Dec 1. Firm is upgrading in advance of the co's pending launch of "Nova", its new operating system, and possibly its new smartphone. Although the new platform is unlikely to challenge any of the competing smartphone platforms, the credentials of PALM's engineering team lend a modicum of credibility to this possibility. The only thing that might save Palm is this disruptive new operating system, along with a breakthrough new form factor in its forthcoming smartphone.

09:04 am Research In Motion (RIMM)

Research In Motion (RIMM 38.44), makers of the popular BlackBerry smart phone, reported Q3 (Nov.) earnings that matched expectations and offered upside guidance for the current quarter.

Research In Motion reported earnings of $0.83 per share, excluding nonrecurring items, exactly in-step with the First Call consensus of $0.83. Revenue revenues rose 7.9% year-over-year to $2.78 billion, shy of the $2.81 billion consensus.

The company issued upside guidance for the current quarter, expecting earnings per share between $0.83 and $0.91; the current consensus stands at $0.83. Research In Motion expects revenue to range from $3.3 billion to $3.5 billion compared to the $2.98 billion consensus.

Research In Motion added approximately 2.6 million net new BlackBerry subscriber accounts during the quarter

A slip in gross margins provided the disappointing side to RIMM's report. Gross margins for the third quarter were 45.6%, lower than originally estimated and are expected to continue to drop, as the company sees gross margins between 40% and 41% in the fourth quarter.

The company said a rapid shift in product mix is causing gross margins to decline faster than expected.

08:40 am Oracle (ORCL)

Enterprise software giant Oracle (ORCL 16.61) issued a mixed earnings report following Thursday's close, meeting the mark on earnings per share but coming up a bit shy on revenues due to currency fluctuations.

For the quarter Oracle reported earnings that climbed 9% year-over-year to $0.34 per share, excluding nonrecurring items, spot on with the First Call consensus estimate.

While Oracle's revenues grew 5.5% year-over-year to $5.61 billion, they were short of the consensus that expected $5.84 billion.

The strength of the dollar in November had a significant impact on Oracle's results since nearly half of their business comes from overseas. The company said that strength in the dollar compared to other currencies impacted non-GAAP earnings by $0.03 per share, while revenue would have risen 13% in constant currencies.

Oracle posted solid gains in the important software segment, with non-GAAP revenues up 8% year-over-year while software license update and product support revenues were up 15% year-over-year.

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There just has not been enough volume behind this recent advance to convince me it has any chance of being off the final bottom for this downturn.

Look back at 2002. Note that even the July bottom which failed started on a week of higher volume than the previous height of volume of selling:



But what have we got started now? A low volume advance that is doomed to fail unless a lot of money is put to work soon raising the volume above previous trends:



RtS

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From Briefing.com: 5:23PM Linear Tech beats by $0.04, misses on revs; guides Q3 revs below consensus (LLTC) 22.60 +0.91 : Reports Q2 (Dec) earnings of $0.38 per share, $0.04 better than the First Call consensus of $0.34; revenues fell 13.7% year/year to $249.2 mln vs the $254.7 mln consensus. Co issues downside guidance for Q3, sees Q3 revs down ~15-20%, which equates to ~$199.4-211.8 mln vs. $237.76 mln consensus. Co says "Looking ahead to the March quarter, we believe we have not yet seen the bottom from the economic fallout of the global credit crisis as our bookings continue to be weak in the early part of this quarter. At this time it is difficult to forecast when we will see some stabilization and subsequent recovery. Our current estimate anticipates that our third fiscal quarter revenues will be down in the 15% to 20% range from the second quarter. In order to meet these expectations, turnable bookings in February and March will need to exceed the depressed December and January run rate. Nevertheless, we will continue to control costs where possible and make adjustments to our operations as necessary to mitigate the effect of declining revenues. However, pre-tax profits are likely to fall into the low to mid thirties range as a percentage of net sales and around 40% of net sales on a non-GAAP basis, excluding the impact of stock-based compensation. We anticipate having industry leading profitability as we successfully navigate through this difficult period."

4:30 pm : Stocks finished a choppy session with mixed results amid continued uncertainty in the broader market.

Financials were able to register strong gains after receiving some relief this session. The sector advanced 1.4% after finishing lower in each of the four prior sessions. Financials are down 12.6% through the last five sessions, though.

Recent selling efforts in the sector follow revived concerns regarding the health of financial institutions and the losses that may be lurking on their balance sheets. Steep losses could lead to further capital raises, which would likely dilute existing shareholders.

To help ensure a healthy financial system, Fed Chairman Bernanke stated that more capital injections and guarantees may become necessary.

Separately, Fed Vice Chairman Kohn stated TARP funds could be used in modifying large numbers of troubled mortgages, which would help protect lenders from losses associated with failed mortgages. Kohn stated TARP funds could also help restart key credit markets.

Repairing lending and credit markets remain key in stimulating broader economic conditions. With macro conditions still bleak, expectations are low this earnings season.

A collective batch of warnings during recent weeks has also undercut expectations. Most recently, NVIDIA (NVDA 4.65, +0.04) slashed its fourth quarter revenue guidance due to weak demand in end markets. NVIDIA's cut was largely expected, though, so its stock was able to resist selling pressure.

Meanwhile, Dow component Alcoa (AA 9.55, -0.51) succumbed to continued selling pressure. Analysts expected Alcoa to post a loss of $0.10 per share after the company recently indicated it would cut production and restructure itself amid slumping demand. Alcoa disappointed, though, by reporting a loss of $0.28 per share.

Energy stocks were able outperform the broader market for virtually the entire session. The sector closed 2.2% higher, riding a 0.8% advance in crude prices. Crude oil futures closed at $37.90 per barrel.

Crude prices gyrated for the entire session. They had been up as much as 5.1% at its session high, and down as much as 4.0% at its session low.

Stocks also had a choppy session. They had been up as much as 0.8%, and down as much as 1.0% before finishing with mixed results.

The lack of direction in the broader market reflects continued uncertainty among market participants. With dour economic data on tap and profits still a point of concern, investors do not appear ready to jump back into the stock market.DJ30 -25.41 NASDAQ +7.67 NQ100 +0.1% R2K +1.1% SP400 +1.1% SP500 +1.53 NASDAQ Adv/Vol/Dec 1503/1.99 bln/1233 NYSE Adv/Vol/Dec 1648/1.31 bln/1434

4:31PM Applied Materials Chairman James Morgan to become Chairman Emeritus at Annual Meeting (AMAT) 10.19 +0.19 : The co announces that after more than 31 years as a member of the Board of Directors, including over 20 years as Chairman, James Morgan will not be standing for re-election. Having reached the customary Board retirement age of 70, Morgan will step down as Chairman of the Board and will become Chairman Emeritus, effective at the March 10, 2009 Annual Meeting of Stockholders. As part of its succession planning, the Board intends to appoint Mike Splinter, President and Chief Executive Officer and a Board member, to succeed Morgan as Chairman.

4:15PM FormFactor announces cost reduction plan; to reduce workforce by 22% (FORM) 14.68 +0.39 : Co announced a global reorganization and cost reduction plan. As part of the plan the company will reduce its workforce by 22%. FormFactor expects to incur approximately $8 million in charges related to the plan, which will be recorded in the first quarter of fiscal 2009.

8:22AM Arris: Collins Stewart notes MOT wins EMTA order from CMCSA (ARRS) 7.75 : Collins Stewart notes their checks indicate that CMCSA has awarded Motorola (MOT) with an order for D2.0 EMTA modems in the magnitude of 50-100K units with anticipated shipments beginning in Q109. Recent checks indicate that ARRS has lost EMTA market share at CMCSA to MOT. While ARRS mgt has previously warned investors that they do not anticipate to be sole source over the longer term, they do not believe share loss to a second source provider is currently reflected in current Street est. While they remain constructive on ARRS's participation in the D3.0 upgrade cycle over the longer term, they recommend investors remain on the sidelines at this point in time. They are cutting their Q109 ests to $278 mln/$0.20 from $282 mln/$0.21 (consensus $285 mln & $0.20) and their Q209 est to $274 mln/$0.18 from $277 mln/$0.19 previously (consensus $293.9 mln & $0.21).

10:00 am Nvidia (NVDA)

Graphics chip maker Nvidia (NVDA 7.85, +0.24) slashed its fourth quarter revenue expectations as demand continues to crumble.

Nvidia said it now expects fourth quarter revenue to decline between 40% and 50% from the third quarter. The new guidance equates to revenues between $448 million and $538 million. The current First Call consensus still stands at $805.1 million.

Nvidia said the new outlook reflects further weakness in end-user demand and inventory reductions by NVDA's channel partners in the global PC supply chain.

09:17 am Citigroup (C)

Financial Times reports that Citigroup's (C 5.60) deal to cede control of its brokerage unit, Smith Barney, to Morgan Stanley (MS 18.79) is set to result in a tax payment of about $4 billion. Citigroup would pay about $4 billion in federal and local taxes on its expected $10 billion-plus gain from the combination of the two brokerage arms, people close to the situation said.

The gain would comprise a $7.5 billion revaluation of Smith Barney as a result of the deal, and a $2.7 billion payment from Morgan Stanley for a 51% stake in the venture. Morgan Stanley will also have an option to buy the remainder over the next three to five years.

In the end, Citigroup is expected to receive more than $6 billion in post-tax gains, which it plans to use to repair its balance sheet and boost results in the first quarter.

The New York Post reported that Morgan Stanley and Citigroup are looking to set aside between $2 billion and $3 billion to keep top brokers at the wealth-management shop in order to pay out to as retention bonuses for top-tier brokers that the companies hope to keep. Merging the units would result in 22,000 brokers, according to the article.

In a separate report, Reuters reported Citigroup will close its private banking unit in China after nearly three years of operations. The venture aimed to attract money from a rapidly expanding base of millionaires.

The closure will not affect top-end individual clients in China since they will be automatically folded into Citigroup's consumer banking arm, which serves less wealthy customers. Citigroup's private banking businesses elsewhere in Asia, including Hong Kong and Singapore, are being operated normally. However, it is unclear whether the decision to close the China operation would lead to similar restructuring in other locations, said sources to Financial Times.

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From Briefing.com: 4:25 pm : Strength in tech, energy, and financial stocks helped the broader market shake off early weakness to finish the session 0.5% higher. Stocks had been down more than 2.6% at their session low.

Google (GOOG 324.70, +18.20) helped drive the tech sector 1.6% higher. Investors bid shares of the Internet titan higher after it announced better-than-expected fourth quarter results, which featured double-digit top and bottom line growth. Google's annual cash flow totaled roughly $25 per share, which is more than double that of Apple (AAPL 88.36, +0.00) or Microsoft (MSFT 17.20, +0.09).

The energy sector (+2.2%) put together a strong advance of its own as crude oil prices rebounded from a 5% loss to finish more than 4% higher at $45.60 per barrel. Crude advanced nearly 25% this week. Though oil staged a strong advance, demand concerns remain in focus.

Oil services outfit Schlumberger (SLB 41.00, +3.73) indicated a sharp drop in oil and gas prices caused a rapid and substantial decline in spending on exploration and production services. Its shares provided leadership to the energy sector in what some pundits believe was a short-covering rally. Schlumberger has been trading at multiyear lows in recent sessions, and reported this morning quarterly earnings results that fell short of the consensus estimate.

Financial stocks logged the best performance of the session. They advanced 3.4% with the support of other diversified financial services companies (+7.0%). Capital One Financial (COF 19.32, -2.62) was a laggard in the sector and traded at new multiyear lows; it reported a loss of $1.59 per share for the latest quarter. The results further underscore profit concerns and the threat of capital raises.

Such concerns have taken their toll on General Electric (GE 12.03, -1.45). The economic bellwether reported in-line earnings results and said it does not see a scenario where it would need to raise capital. Management also reiterated that it is maintaining its dividend. At GE's current share price, GE's dividend yield stands at almost 10%, leading many to quesion whether it is sustainable. GE registered new multiyear lows this session; its weakness undercut the industrial sector (-3.3%) and the Dow Jones Industrial Average.

Though overall credit conditions remain tight, cash rich companies are able to take advantage of depressed asset and securities prices by making acquisitions. According to reports, Pfizer (PFE 17.45, +0.24) may be looking to acquire Wyeth (WYE 43.74, +4.91) in a deal valued at more than $60 billion. Such a deal would help Pfizer rebuff concerns stemming from a narrowing product pipeline and increased competition from generic drug makers.

Stocks finished with a weekly loss of 2.1%, which isn't quite as severe as the 4.5% loss registered last week. Stocks are down almost 8% for the month.DJ30 -45.24 NASDAQ +11.80 NQ100 +0.7% R2K +0.3% SP400 +1.0% SP500 +4.45 NASDAQ Dec/Adv/Vol 1406/1268/2.18 bln NYSE Dec/Adv/Vol 1386/1663/1.42 bln

1:00PM Intel Chairman Craig Barrett to retire in May (INTC) 12.98 +0.17 : Co announces that Craig Barrett intends to retire from active management and his role as chairman and member of the board of directors in May at the company's annual stockholders' meeting. The co also announced that independent director Jane Shaw, who joined the Intel board in 1993, has been elected by the board of directors to replace Barrett as non-executive chairman beginning in May.

8:38AM Suntech Power raises rev guidance, but sees negative impact to gross margin; announces headcount reduction (STP) 8.78 : Co issues upside guidance for Q4 (Dec), sees Q4 (Dec) revs of $405-420 mln vs. $357.68 mln First Call consensus. Suntech expects to make an inventory provision in the range of $46 mln to $58 mln, which would have a negative impact to the gross margin of 11% to 14%. Fourth quarter 2008 consolidated GAAP gross margin is expected to be in the range of -1% to 2%. The co also announced that it had reduced the workforce by approximately 800 employees as a result of ongoing performance evaluation in the fourth quarter of 2008. In addition, Suntech suspended the hiring of a further 2,000 new staff in line with the co's decision to maintain production capacity at 1GW as a result of the difficult economic environment. Suntech will consider further expansion and hiring when market conditions improve. During Q408, Suntech conducted open market repurchases of Suntech's 0.25% Convertible Senior Notes due 2012. Through December 31, 2008, Suntech re-purchased $93.8 mln aggregate principal amount of the Convertible Senior Notes for a total cash consideration of $61.0 mln. As a result, Suntech realized a net gain of approximately $30 mln. Suntech may from time to time seek to make additional repurchases of its Convertible Senior. Due to the rapid decline in silicon prices and difficult financing environment, Suntech expects to incur a $49-52 mln expense related to the impairment of Suntech's investments in Nitol Solar and Hoku Materials.

6:41AM General Electric reports EPS in-line, revs below consensus; no change to Plan for $1.24 Dividend; reaffirms operating framework for 2009 (GE) 13.48 : Reports Q4 (Dec) earnings of $0.37 per share, results included $1.5 billion of after-tax restructuring and other charges, vs the First Call consensus of $0.37; revenues fell 4.8% year/year to $46.21 bln vs the $50.07 bln consensus. Cash generated from GE's operating activities in 2008 totaled $19.1 billion, down 18% from $23.3 billion last year, reflecting a 5% increase from the Industrial businesses. This increase was more than offset by a decrease in GECS' dividends primarily due to a non-repeat $2.7 billion special dividend and a third quarter 2008 reduction in GECS dividend rate to 10% of earnings. The Company had solid Industrial cash flow from operating activities of $16.7 billion, an increase of 5% from 2007. "We expect 2009 to be extremely difficult... However, we have taken strong actions to prepare the Company, including strengthening cash flow and liquidity; managing costs; taking restructuring charges; intensifying risk mitigation; accelerating cycle of management reviews; and protecting revenue. We ended 2008 with $172 billion of Infrastructure equipment and service backlogs. We have solid momentum in services, global growth and margins... We have positioned GE to perform through this cycle and return to double-digit growth in a post recession economy... At the December 16 outlook meeting, we presented a 2009 financial framework of Infrastructure and Media earnings growth of 0-5%. In addition, we have a differentiated financial services model and should earn approximately $5 billion in Capital Finance earnings. This continues to be our operating framework for 2009... The first quarter dividend is done, and we are committed to our plan for $1.24 per share for the year. We believe the GE dividend provides our investors with a solid return in this uncertain time,"

6:08AM Harley-Davidson misses by $0.23, reports revs in-line (HOG) 12.40 : Reports Q4 (Dec) earnings of $0.34 per share, $0.23 worse than the First Call consensus of $0.57; revenues fell 6.8% year/year to $1.29 bln vs the $1.29 bln consensus. In Q109, co plans to ship between 74,000 and 78,000 new Harley-Davidson motorcycles, a 3.0-8.5% increase vs Q108. For FY09 to ship between 264,000 and 273,000 new Harley-Davidson motorcycles, a 10-13% reduction from 2008. Co expects gross margins to be between 30.5-31.5%, which compares to 34.5% for FY08. The decrease is primarily due to an expected unfavorable shipment mix versus 2008, the allocation of fixed costs over fewer units, and expected unfavorable foreign currency exchange rates versus 2008. Given the volatility of the current economic environment, HOG also indicated it would not provide EPS guidance for 2009.

09:59 am Microsoft downgraded to Neutral at Davenport: . Davenport downgrades MSFT to Neutral from Buy. The firm notes that MSFT reported lower than expected Q2 09 results and suspended its fiscal 2009 rev and EPS guidance. The firm believes that given extremely weak PC demand MSFT has limited visibility into its business. They are concerned by MSFT's lack of visibility and the company's reluctance to materially reduce its operating costs.

09:58 am Advanced Micro downgraded to Hold at Collins Stewart: . Collins Stewart downgrades AMD to Hold from Buy following earnings. The firm says at this point they are unable to envision a sustainable long term business model. Firm says the economic recession could not have come at a worse time, the co is still bleeding cash as its core PC processor business continues to be challenged competing with Intel. While the ATI division has certainly improved its competitiveness with NVIDIA, there is not enough revenue and scant profits from ATI.

09:45 am Advanced Micro Devices (AMD)

Advanced Micro Devices (AMD 1.92, -0.10) reported a loss as revenues dropped a steep 33% year-over-year.

AMD reported a loss of $0.68 per share in the fourth quarter, excluding nonrecurring items. The loss was worse than expected, as the First Call consensus called for a loss of $0.54 per share.

Sharply lower demand led to a 33.1% year-over-year drop in revenues to $1.16 billion. The consensus expected revenues of $1.23 billion.

AMD said that it expects revenue in the first quarter to decline from Q4 2008 levels, but declined to give specifics.

Fourth quarter 2008 gross margin was 23%, including a negative impact of 20 percentage points due to a $227 million incremental write-down of inventory due to weak market conditions.

08:32 am Marvell Technology (MRVL)

Marvell Technology (MRVL 6.21) cut its fourth quarter revenue outlook Thursday and said that "the current macro economic environment is having a significant negative impact on our business."

Marvell now sees fourth quarter revenues between $500 million and $520 million, well below the $700.07 million First Call consensus and below earlier guidance that expected revenue between $690 million and $730 million.

The updated revenue guidance translates to a decline of 34% to 37% from the third quarter and a year-over-year decline between 38% and 41%.

The company said the visibility in future demand in the PC and consumer electronics markets remains uncertain, but, "it is clear an inventory correction process is underway in the near term." Marvell said it will continue to take actions to realign its expense profile to the current environment, but did not give specifics.

08:28 am General Electric (GE)

General Electric (GE 13.48) reported in-line earnings and said it is committed to maintaining its dividend.

The company reported adjusted earnings of $0.37 per share, matching the First Call consensus of $0.37. The results included $1.5 billion in after-tax restructuring and other charges.

Revenues dipped 4.8% year-over-year to $46.21 billion, below the consensus that expected $50.07 billion.

GE's report contained no surprises, as profit downturns in consumer, industrial, capital finance and NBC Universal were all anticipated. The best performers were energy (profits up 11%) and infrastructure (profits up 1%). Infrastructure orders fell 6%, but backlog rose 9%. GE said it ended the year with $172 billion of infrastructure equipment and service backlogs.

While GE's report was generally in-line, it is clear the company was wounded by the financial crisis. Provision for losses on financing receivables rose to $3 billion from $1.3 billion in the same period last year.

GE was able to fund $29 billion of its $45 billion long-term debt. Improvement in GE's debt should help alleviate concerns regarding the company's coveted Triple-A credit rating.

Importantly, GE restated its commitment to its dividend. "The first quarter dividend is done, and we are committed to our plan for $1.24 per share for the year," said CEO Jeff Immelt. "We believe the GE dividend provides our investors with a solid return in this uncertain time."

Looking ahead, Immelt said "We expect 2009 to be extremely difficult. However, we have taken strong actions to prepare the company, including strengthening cash flow and liquidity; managing costs; taking restructuring charges; intensifying risk mitigation; accelerating cycle of management reviews; and protecting revenue."

08:04 am Google (GOOG)

Google (GOOG 306.50) reported strong revenue growth and earnings that topped Wall Street's expectations.

For the fourth quarter, Google reported earnings of $5.10 per share, excluding nonrecurring items, $0.15 better than the First Call consensus of $4.95.

Revenues rose 24.6% year-over-year to $4.22 billion after deducting traffic acquisition costs -- the portion of revenues shared with Google's partners -- of $1.48 billion. The consensus expected revenues of $4.12 billion.

Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of its AdSense partners, increased approximately 18% year-over-year and increased approximately 10% over the third quarter of 2008.

Half of Google's revenue in the quarter came from outside the U.S. The company said it recognized a benefit of $129 million to revenue through its foreign exchange hedges.

As of the end of 2008, Google had cash, cash equivalents and short-term marketable securities of $15.85 billion. Google said it "expect(s) to continue to make significant capital expenditures" but did not provide specifics.

Looking ahead, CEO Eric Schmidt said, "It's unclear how long the global downturn will last, but our focus remains on the long term, and we'll continue to invest in Google's core search and ads business as well as in strategic growth areas such as display, mobile, and enterprise."

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From Briefing.com: 4:15 pm : Sellers claimed control of the stock market for the second straight session, pushing the S&P 500 2.3% lower Friday. That left stocks down 0.7% for the week.

Stocks actually began the session with a gain after investors reacted positively to a better-than-feared GDP report. However, a closer look at the data revealed conditions are hardly sound. According to the latest data, the U.S. economy contracted at an annualized rate of 3.8% during the fourth quarter, marking the steepest drop in economic activity since 1982. The decline was less severe than the 5.5% drop that was expected, but that was largely due to an unexpected increase in inventories. Consumer spending, which accounts for roughly 70% of economic activity, remains weak as consumption expenditures dropped at a 3.5% annual rate.

However, government spending increased modestly and is likely to be a bigger contributor going forward with the enactment of a major stimulus plan. Though the House of Representatives passed an $819 billion stimulus plan earlier this week, many pundits believe the plan will become ensnared in political partisanship. There is also doubt that such a plan would have an immediate stimulative impact. Other initiatives, like a plan that would allow banks to sell their risky assets to an FDIC-run "bad bank," are being treated with skepticism since the plan would like prove to be an expensive stabilization program, not a cure-all.

Without a clear, effective remedy for banks at hand, financial stocks remain under pressure. The sector closed 2.5% lower with particular weakness in regional banks (-6.5%) and diversified financial services companies (-1.8%).

A lack of leadership weighed on the other sectors. Energy periodically sported a gain throughout the session, but still finished 1.2% lower. Industry giant Exxon Mobil (XOM 76.48, -0.52) posted better-than-expected earnings, but finished lower after spending almost the entire session trading higher. It failed to inspire a broader advance even though it is the largest company by market cap.

Online retailer Amazon.com (AMZN 58.82, +8.82) bested earnings estimates with ease; its shares logged their best single session performance since mid-2007 by surging almost 18%. It failed to share its strength with other stocks, though.

In other earnings news, Procter & Gamble (PG 54.50, -3.72) met analysts' estimates, and offered an in-line outlook. Industrial outfit Honeywell (HON 32.81, +0.14) did the same. However, the earnings announcements were largely relegated, given the implications of the day's economic data.

In the end, the week finished on a disappointing note as all 10 major sectors finished the session lower. Not one sector is showing a monthly gain. DJ30 -148.15 NASDAQ -31.42 NQ100 -2.0% R2K -2.1% SP400 -2.6% SP500 -19.26 NASDAQ Adv/Vol/Dec 866/2.09 bln/1797 NYSE Adv/Vol/Dec 791/1.51 bln/2224

8:30AM TrimTabs estimates all equity mutual funds post inflow of $6.5 billion in week ended Wednesday, January 28 : TrimTabs Investment Research estimates that all equity mutual funds posted an inflow of $6.5 billion in the week ended Wednesday, January 28, versus an outflow of $138 million in the previous week. Equity funds that invest primarily in U.S. stocks posted an inflow of $5.1 billion, versus an inflow of $1.0 billion in the previous week. Equity funds that invest primarily in non-U.S. stocks had an inflow of $1.4 billion, versus an outflow of $1.2 billion in the previous week. In addition, bond funds had an inflow of $1.5 billion, versus an outflow of $4.5 billion in the previous week, and hybrid funds had an inflow of $459 million, versus an outflow of $1.4 billion in the previous week. Separately, TrimTabs reports that exchange-traded funds that invest in U.S. stocks posted an inflow of $1.8 billion, versus an outflow of $4.2 billion, in the previous week. ETFs that invest in non-U.S. stocks had an outflow of $814 million, versus an outflow of $1.8 billion in the previous week.

Ixia (XXIA) announces that it has selected Plexus (PLXS) as its strategic supply chain solutions partner. Plexus will manufacture Ixia's test, measurement and service verification solutions for its global customer base.

2:12AM Pixelworks reports EPS in-line, misses on revs; guides Q1 EPS below consensus, revs below consensus (PXLW) 0.75 : Reports Q4 (Dec) loss of $0.05 per share, excluding non-recurring items, in-line with the First Call consensus of ($0.05); revenues fell 30.0% year/year to $18.9 mln vs the $19.4 mln consensus. Co issues downside guidance for Q1, sees EPS of $(0.33)-(0.13) vs. ($0.09) consensus; sees Q1 revs of $10.0-13.0 mln vs. $18.50 mln consensus. Co expects non-GAAP gross profit margin of approx 42-46%.

08:07 am Juniper Networks (JNPR)

Juniper Networks (JNPR 16.97) reported earnings that met expectations and grew revenue despite the tough economy.

For the fourth quarter, Juniper reported earnings of $0.32 per share, in-line with the First Call consensus of $0.32. Earnings were up 19% year-over-year.

Revenues were also on the rise, jumping 14.1% year-over-year to $923.5 million. The consensus expected a bit more, forecasting revenues of $936.2 million. Juniper's revenue came in at the low end of its earlier guidance; in October the company projected fourth quarter revenue between $921 million and $971 million.

Non-GAAP operating margins increased 100 basis points year-over-year to 24.5%.

"We continue to play offense and grow market share," said Juniper's CEO, "while at the same time taking action to responsibly manage our cost structure." Juniper didn't give specific guidance.

Troubles loom on the horizon for Juniper after two of the largest buyers of communications infrastructure, AT&T (T 24.71) and Verizon (VZ 30.23) both said they would cut back on spending in 2009.

08:01 am Amazon.com (AMZN)

Online retailer Amazon.com (AMZN 50.00) reported strong earnings for its fourth quarter, sending shares more than 14% higher in Friday's premarket trade. And, unlike so many other companies, Amazon issued in-line guidance for the current quarter.

For the fourth quarter, Amazon reported earnings of $0.52 per share, $0.13 better than the First Call consensus of $0.39.

Revenues rose 18.2% year-over-year to $6.7 billion, topping the $6.44 billion consensus estimate.

Amazon saw strong sales growth in the U.S., where sales increased 18% year-over-year. International sales were up 19% year-over-year, but were up 31% excluding unfavorable foreign exchange rates.

E-books continue to gain traction, as CEO Jeff Bezos said the company was "particularly grateful for the unusually strong demand for Kindle in the fourth quarter."

Looking ahead, Amazon issued in-line guidance with room for an upside surprise for the first quarter, expecting revenues between $4.525 billion and $4.925 billion. The consensus currently projects revenues of $4.57 billion.

The company projects operating income in Q1 between $125 million and $210 million, or between a decline of 37% and 6% growth year-over-year.

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Today showed that the whole recent move was entirely suspect. It still may be that we hold the November bottoms but watch 800 on the SPX. If what happened today was any indication we may be headed into a wave 5 yet:

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From Briefing.com: 4:30 pm : Word that the Obama administration is working on a plan to subsidize mortgage payments for troubled homeowners spurred a late rebound in the major indices. That helped the stock market turn a 3% loss into a modest gain.

Stocks traded with broad-based weakness for much of the session. The downbeat tone was an extension of the stock market's inability to sustain an advance since tumbling Tuesday in the wake of Treasury's disappointing bank rescue plan.

The Dow actually fell to its lowest level since registering a bear market low on Nov. 21, while the S&P 500 approached its January lows.

Declines were led by financial stocks, which remain central to the concerns for the broader stock market. Financials were down more than 7% at their session low, but finished the session with a 1.3% loss.

Stocks put together a rebound after Reuters reported the Obama administration is working on a plan to subsidize mortgage payments for troubled homeowners that pass certain tests. Fannie Mae and Freddie Mac would reportedly play a supporting role. Market participants cheered the news since stemming foreclosures is considered central to restoring the mortgage market, which will help stop bank write-downs.

Meanwhile, investors remain largely unimpressed by the $789.5 billion economic stimulus bill, which is expected to come to a vote by this weekend. Critics contend the bill is unlikely to lead a recovery in the short-term.

Investors looked past the latest batch of quarterly announcements. Coca-Cola (KO 44.39, +3.12) led the way by announcing better-than-expected results. Its rival, Pepsico (PEP 52.00, +1.39), announces tomorrow. Waste Management (WMI 29.26, +0.81) and Aetna (AET 33.06, +0.82) both topped expectations as well. Network Appliances (NTAP 16.40, +1.20) performed in-line with estimates, while Las Vegas Sands (LVS 3.49, -0.49) disappointed with a loss. Overall, the announcement failed to have much influence in the broader market.

Market participants found little inspiration from a better-than-expected January retail sales report. The report showed January retail sales jumped 1%, which is the first increase since a 0.1% gain in July.

However, the report is being treated with skepticism amid ongoing reminders of poor macro conditions. Jobless claims for the week ending Feb. 7 totaled 623,000, which is a bit more than expected, but down slightly from the prior week. Initial claims are at their highest level in more than 25 years.

Meanwhile, 4.81 million continuing claims were filed. That is the highest level recorded since records began in 1967.

Separately, businesses inventories dropped a larger-than-expected 1.3% in December. That is the largest drop since 2001. DJ30 -6.77 NASDAQ +11.21 NQ100 +1.3% R2K +0.6% SP400 +0.5% SP500 +1.45 NASDAQ Adv/Vol/Dec 1328/2.15 bln/1276 NYSE Adv/Vol/Dec 1414/1.48 bln/1609

4:06PM JA Solar announces update on strategic alliance with BP Solar (JASO) 2.53 -0.48 : Co announced that it has signed a supply contract with BP Solar International, Inc., pursuant to the broader strategic cooperation agreement signed with BP Alternative Energy Holdings Limited, announced last November. Under this new agreement, JA Solar will supply monocrystalline and multicrystalline solar cells to BP Solar in 2009, with an initial volume of 175 MW and with the potential to expand to 360 MW. JA Solar is already delivering product under its existing supply agreement with BP.

4:02PM Monolithic Power beats by $0.04, reports revs in-line; guides Q1 revs in-line (MPWR) 12.93 +0.10 : Reports Q4 (Dec) earnings of $0.16 per share, ex-items, $0.04 better than the First Call consensus of $0.12; revenues fell 9.9% year/year to $34.7 mln vs the $34.5 mln consensus. Co issues in-line guidance for Q1, sees Q1 revs of $24-$29 mln vs. $28.74 mln consensus. Co sees gross margin below the lower end of the company's target range of 60-63%.

8:05AM Aehr Test Systems announces expense reduction actions; reduction in total headcount ot nearly 20% (AEHR) 1.29 : Co announces that it has taken a series of actions designed to substantially reduce the company's operating expenses. The restructuring actions include a reduction in total headcount of nearly 20%, reductions in compensation for salaried employees and a shutdown for one week each qtr. The cumulative effect of these and other actions is expected to reduce total operating expenses by 20% starting in the qtr ended May 31, 2009.

7:33AM Juniper Networks and Nokia Siemens networks enhance partnership to address worldwide carrier ethernet market (JNPR) 15.55 : Co announces an enhancement to their partnership with plans to deliver a fully interoperable Carrier Ethernet solution intended to provide resilient access and aggregation for service providers worldwide. The enhanced partnership is intended to bring the vision of a unified Carrier Ethernet solution supporting all services on a single network. Current plans are for the new Carrier Ethernet solution to be sold by the respective parties or qualified resellers. The targeted availability date is the second half of 2009 subject to compliance with applicable laws.

09:33 am Network Appliance downgraded to Neutral at MKM Partners: . MKM Partners downgrades NTAP to Neutral from Buy. The firm notes that NTAP is cutting 6% of its workforce as it awakens to the adverse economic climate after several quarters of over-investment. The cost reductions should result in pro forma operating margin expansion in FY10. However, the firm notes that mgmt has yet to achieve its 16% margin tgt, and they now project cash flow to grow only 2% in FY10. Therefore, despite strong technology and market share gains, the firm is reluctant to assign premium multiples.

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From Briefing.com: 4:30 pm : The major indices began the session with solid gains, helped by ongoing efforts to bolster the financial system, but choppy trading and more negative headlines eventually took their toll on stocks, sending them into the red.

Stocks climbed as much as 2% in the early going after participants reacted positively to reports the United Kingdom government will help protect banks against future losses by insuring assets.

To address potential future challenges to the U.S. financial system, President Obama is proposing to add a $250 billion placeholder in this year's budget. The money would come on top of funds already allocated to stemming the financial crisis, and would push the proposed deficit to $1.75 trillion.

The planning in Europe and at home marked another step in overcoming financial calamity.

At its session high, the financial sector was up almost 7%, while banks were up more than 13%, according to the KBW Banking Index. Those gains were eventually pared, though.

FDIC reported that at the end of the fourth quarter its list of troubled institutions grew to 252 from 171 at the end of the third quarter. News that there is a larger number of institutions challenged by dour economic conditions didn't necessarily tell investors anything new. However, the report still accounts for one more negative headline.

Financials finished the session 2% higher. The KBW Banking Index finished almost 5% higher. JPMorgan Chase (JPM 23.05, +1.32) provided leadership after it indicated first quarter results are solidly profitable thus far, and the company's outlook is roughly in-line with analysts' expectations.

Though the broader market has followed the lead of financial stocks in recent weeks, financials were unable to induce buying in the broader market. All three major indices gradually surrendered their early gains and finished the session with a loss.

Health care stocks lagged for the entire session. The sector closed with a 5.1% loss. Particular weakness was seen in managed care companies, which dropped amid concern that health care reform will reduce Medicare spending.

Bleak economic data did little to support stock buying.

The latest data indicated January durable goods orders fell a more-than-expected 5.2%. Excluding transportation, durable goods fell 2.5%, which was also steeper than expected.

January new home sales fell more than expected to an annualized rate of 309,000 units, which is a record low.

Jobless claims continue to rise beyond expectations. Initial claims climbed 36,000 to 667,000 from the prior week. Continuing claims came in just below 5.03 million, up from nearly 5.00 million in the prior reading.

Earnings news had little impact on trading. General Motors (GM 2.38, -0.17) missed expectations, as did Safeway (SWY 18.37, -2.75). Fluor (FLR 34.90, +1.95) posted better-than-expected results and issued upside guidance. Express Scripts (ESRX 52.79, -4.67) reported in-line results. DJ30 -88.81 NASDAQ -33.96 NQ100 -2.9% R2K -2.1% SP400 -1.8% SP500 -12.07 NASDAQ Dec/Adv/Vol 1675/956/2.15 bln NYSE Dec/Adv/Vol 1674/1412/1.49 bln

4:24PM Magma Design beats by $0.06, beats on revs; guides Q4 EPS above consensus, revs in-line; guides FY09 EPS in-line, revs above consensus (LAVA) : Reports Q3 (Dec) loss of $0.09 per share, excluding non-recurring items, $0.06 better than the First Call consensus of ($0.15); revenues fell 44.9% year/year to $30.7 mln vs the $28.5 mln consensus. Co issues mixed guidance for Q4, sees EPS of $0.01-0.03 vs. ($0.01) consensus; sees Q4 revs of $33-34 mln vs. $33.43 mln consensus. Co issues mixed guidance for FY09, sees EPS of (0.21)-(0.19) vs. ($0.30) consensus; sees FY09 revs of $146-147 mln vs. $144.17 mln consensus.

4:20PM UTStarcom misses by $0.12, beats on revs (UTSI) 1.09 -0.04 : Reports Q4 (Dec) loss of $0.65 per share, $0.12 worse than the First Call consensus of ($0.53); revenues fell 70.1% year/year to $241 mln vs the $224.7 mln consensus. Gross margins for the fourth quarter 2008 were 12.4% as compared to 12.7% in the fourth quarter of 2007.

4:10PM OmniVision misses by $0.08, misses on revs; guides AprQ below consensus (OVTI) 7.10 -0.60 : Reports Q3 (Jan) loss of $0.24 per share, excluding non-recurring items, $0.08 worse than the First Call consensus of ($0.16); revenues fell 64.4% year/year to $80.0 mln vs the $89.8 mln consensus. Co issues downside guidance for Q4 (Apr), sees EPS of $(0.40)-(0.31), excluding non-recurring items, vs. ($0.14) consensus; sees Q4 revs of $60-70 mln vs. $89.2 mln consensus.

4:03PM Anadigics beats by $0.05, beats on revs; guides Q1 EPS below consensus, revs below consensus (ANAD) 1.81 -0.29 : Reports Q4 (Dec) loss of $0.08 per share, excluding non-recurring items, $0.05 better than the First Call consensus of ($0.13); revenues fell 33.1% year/year to $45.2 mln vs the $43.9 mln consensus. Co issues downside guidance for Q1, sees EPS of ($0.28), excluding non-recurring items, vs. ($0.09) consensus; sees Q1 revs down ~35%, which equates to ~$29.4 mln vs. $40.30 mln consensus.

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Amateur Investors Weekend Stock Market Analysis (2/28/09)

http://www.amateur-investor.net/Weekend_Market_Analysis_Feb_28_09.htm

The market had another bad week as all three major averages are now exhibiting their final 5th Wave down in association with a longer term Elliott 5 wave pattern that began in October of 2007. A classic looking Elliott 5 Wave pattern is shown below. Keep in mind once the 5th Wave down ends this should be followed by a substantial "ABC" type corrective rally that may last several months.



In the chart below I have labeled all of the sub Waves and major Waves for the Dow. Also notice the Nasdaq and S&P 500 are exhibiting similar patterns as well.



Nasdaq



S&P 500



At this point I know many investors are wondering when a bottom may occur. As mentioned above it does appear we are seeing the final 5th Wave down so that is a positive sign. However it's nearly impossible to know when the exact bottom will occur. According to Elliott Wave Theory the 5th Wave should have 5 sub waves to it with "3" Waves down and "2" Waves up. If we take a closer look at the S&P 500 on a daily chart it appears we are in the 3rd sub wave down at this time which eventually should be followed by a 4th sub wave up and then the final 5th sub wave down.



Finally one thing to keep an eye on in the weeks ahead is the 5 Day Average of the Put to Call Ratio. So far since the October 2007 top it has done a good of signaling the completion of major Waves. Notice when the 5 day Average of the Put to Call Ratio has risen above the 1.15 level (purple line) that this was followed by the completion of Waves 1 and 3 Down. Meanwhile when the 5 Day Average of the Put to Call Ratio dropped below the 0.85 level (green line) this was followed by the eventual completion of Waves 2 and 4 Up shortly thereafter.

Now what is a little bit mystifying to me at this point is that the latest drop in the S&P 500 hasn't generated any fear among the Options crowd as the 5 Day Average of the Put to Call Ratio has actually been falling (points A to B) and is getting close to the 0.85 level again. Thus you really have to wonder what it's going to take to get investors fearful of this market to allow for a bottom to occur. At this time it appears the Options crowd believes the market is getting near a bottom so that is why they have been loading up on Calls of late. Thus we shall see if they are right or not over the next few weeks.

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From Briefing.com: Weekly Recap - Week ending 06-Mar-09

It was a rough week for the stock market as a slew of negative economic data and continued concerns over the state of financials weighed on investor sentiment. In the end, the S&P 500, Nasdaq and Dow dropped 7.0%, 6.1% and 6.2%, respectively, for the week. All three of the major indices fell to multi-year lows, with the S&P 500 trading at its lowest level in 12 years. Selling pressure was broad-based, although financials saw the brunt of the decline, dropping 19.2% for the week.

The negative tone started off Monday with AIG (AIG) reporting a massive $61 billion quarterly loss, the largest in U.S. corporate history. In turn, the struggling insurer received an additional $30 billion in government aid. Also adding to the bearish sentiment was a sharp sell-off overseas after HSBC (HBC) reported a steep drop in profits. The UK-based bank said it will raise capital in a dilutive stock offering, pare its U.S. operations, cut 6,100 jobs and reduce its dividend.

Financials were in focus throughout the week, mostly in a negative light as Fed Chairman Bernanke and Treasury Secretary Geithner testified before House and Senate finance panels on Tuesday and Wednesday. Meanwhile, U.S. Bancorp (USB) and Wells Fargo (WFC), which are widely considered among the better run banks, both announced that they will cut their dividends by roughly 85% to $0.05 per share in an effort to save capital. Shares of USB dropped 38.4% for the week.

At the same time, General Electric (GE), which slashed its dividend last week, got hammered on capital concerns. The company moved to shore up investor confidence as several corporate insiders made stock purchases, and the CFO went on CNBC to reassure the market. Still, concerns remained over the health of GE Capital Finance -- which accounts for 83.5% of GE's assets -- sending the stock down 17.0% for the week.

The financial sector did get one piece of positive news, however. On March 12, the House Financial Services Committee will meet to discuss mark-to-market rules. Some analysts believe a repeal of the mark-to-market rule will help alleviate the pressures on financials.

Economic news added to concerns of the state of the U.S. economy. The ADP report showed 630,000 private job losses in February, foreshadowing the official government release on Friday.

The number of jobs lost totaled 651,000, which matched expectations, although previous months were revised downward to show sharper losses. The unemployment rate, however, rose to 8.1% from 7.6%, which was worse than the expected reading of 7.9%.

With job losses mounting, many homeowners are unable to stay current on their mortgage payments. In turn, mortgage delinquencies as a percentage of total loans totaled 7.88% in the fourth quarter. That was up from the 6.99% delinquency rate in the third quarter. Meanwhile, January pending home sales dropped 7.7%, which was worse than the expected decline of 3.5%.

The negative economic data was reflected in the Fed's latest economic forecast in the Beige Book. The Fed reduced its economic outlook, saying it doesn't expect economic recovery until late 2009 or 2010.

Meanwhile, Europe is facing a sharp downturn in economic activity on its own. As a result, the European Central Bank lowered its target interest rate 50 basis points to 1.50%, as expected. The Bank of England lowered its target interest rate to 0.50% from 1.00%, in-line with expectations. The Bank of England also announced it will begin buying assets in order to increase the country's money supply.

In corporate news, Retailers had an ugly session on Thursday after a large number of companies reported poor same-store sales for February. Gap (GPS), Abercrombie & Fitch (ANF), American Eagle (AEO), and Nordstrom (JWN) all reported double-digit declines. However, companies catering to more cost-conscious consumers reported increased same-store sales -- Wal-Mart (WMT) same-store sales rose 5.1% and raised its dividend.

Auto sales also plummeted. Ford Motor (F) reported February sales in North America fell 48%, which is steeper than the 42% drop that was expected. General Motors (GM) reported February sales sank nearly 53%, exceeding the 45% drop that was forecast. As a result, concerns regarding a GM bankruptcy were elevated. GM shares dropped 35.6% for the week.

Warren Buffett's annual letter to shareholders reflected the gloomy economic outlook, saying he was certain "the economy will be in shambles throughout 2009 -- and, for that matter, probably well beyond -- but that conclusion does not tell us whether the stock market will rise or fall." But, optimistic as ever, Buffett said, "Though the path has not been smooth, our economic system has worked extraordinarily well over time. It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead."

--Ryan McShane, Briefing.com

 
 Index      Started Week Ended Week Change % Change YTD % 
 DJIA	     7062.93	 6626.94  -435.99   -6.2  -24.5 
 Nasdaq	     1377.84	 1293.85   -83.99   -6.1  -18.0 
 S&P 500	      735.09	  683.38   -51.71   -7.0  -24.3 
 Russell 2000  389.02	  351.05   -37.97   -9.8  -29.7

09:39 am Marvell upgraded to Buy at AmTech Research: . AmTech Research upgrades MRVL to Buy from Hold. The firm notes that near-term end-markets remain challenging, but the firm believes that the worst of the inventory cycle and number cuts are behind the co and note that valuation appears attractive at these levels. The firm notes that they could be early with their upgrade, but they would buyers here or on weakness

08:17 am Marvell Technology (MRVL)

Marvell Technology (MRVL 7.52) reported better-than-expected earnings for its fourth quarter, but the semiconductor company said it doesn't expect the current economic climate to substantially improve and is cutting costs and jobs in response.

For the fourth quarter, Marvell reported earnings of $0.05 per share, $0.04 better than the First Call consensus of $0.01.

Revenues plunged 35.2% year-over-year to $512.9 million; the consensus expected $510.7 million.

Marvell said it plans to reduce its global workforce by 15%, or approximately 850 employees. Marvell estimates that the restructuring charges associated with the reduction in force and consolidation of facilities taken to date will be approximately $20 million, including approximately $14 million related to severance and other employee benefit payments and approximately $6 million related to facility consolidation. The company expects the expense reduction actions in the plan to be implemented through calendar year 2009.

On its conference call, Marvell said it expects first quarter earnings between $0.03 and $0.05, ahead of the First Call consensus that expected a breakeven quarter. Marvell's revenue expectations also top the consensus, as the company expects Q1 revenues from $490 million to $530 million; the consensus stands at $471.2 million.

Shares of MRVL are more than 7% higher in premarket trade.

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This rally is looking much better on a volume basis. In addition there have been at least two 90% upside days with volume growing again today. We had 89% upside volume on both exchanges today.

Oh I am sure we will get a pullback but I think we have to realize that there will be a long lasting bottom. We may have already found it? This one looks better than anything I have seen since October 2002.

RtS

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Technical Analysis: S&P Tests Its Downtrend

http://www.internetnews.com/bus-news/article.php/3813496/Technical+Analysis+SP+Tests+Its+Downtrend.htm

If this is a bear market rally, the S&P won't go much higher.

April 2, 2009
By Paul Shread: More stories by this author:

The S&P (first chart below) today ran straight into a downtrend line that has capped every rally since October.

A move above today's high of 845 would be a plus for the bull case, but 866-878 is potentially an even bigger level, since at that point the rally would equal the 200-point advance from November to January; if it's a bear market rally, that would be the place to look for it to end. Higher than that and the market would appear to have entered a longer recovery.

To the downside, 804 and 790 are important support levels, and 779 and 768 are the lowest we'd like to see the market go. Now that we're back above the 2002 bear market lows, we need to hold them.

8300 and 8450 are the next big levels for the Dow (second chart) if it can close above 8000, and support is 7700, 7571 and 7437, with 7192 a critical level below that.

The Nasdaq (third chart) faces its next big test at 1665, and 1540-1550 and 1509 are good places to look for support.

In short, the rally continues to look pretty solid, but the bulls can't breathe easy yet.

Paul Shread is a Chartered Market Technician (CMT) and member of the Market Technicians Association. He is a co-author of the book "Dow Theory Unplugged" from W&A Publishing.

The first chart is mine and it will update. RtS

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From Briefing.com: Weekly Recap - Week ending 17-Apr-09The stock market used two late-session rallies on Wednesday and Thursday to close with gains for a sixth consecutive week -- S&P +1.5%, Dow +0.6%, Nasdaq Comp +1.2%, Russell 2000 +2.4%. The Financial sector led the way once again (+4.1%), with Goldman Sachs (GS), JP Morgan (JPM) and Citigroup (C) all reporting moderately better-than-expected first quarter results. In all, seven of the ten sectors that make up the S&P 500 showed gains.

Monday was a very slow, but positive session. Thanks to leadership from financial stocks, the S&P reversed an early 1.3% decline to finish with a modest gain.

After the close, Goldman Sachs used an announcement of a $5 billion common stock offering as an opportunity to report its quarterly results a day early. The company beat by a whopping $1.79 on much better-than-expected revenue of $9.43 billion (First Call consensus $7.09 billion). However, it's worth mentioning that this was the first quarter in which the company reported on the March cycle, and it reported weaker December numbers in the footnotes of its financial statements.

But shares of GS plunged 11.6% on Tuesday on the equity offering and profit taking as they had been rebounding since they set lows back in November, including a 13.4% rally over the previous two sessions. The market as a whole declined, with the S&P losing 2.0%. Goldman pushed the Financial sector lower, while disappointing retail sales data led some to second guess the prospects of retailers, putting an abrupt end to the good news we had seen in January and February. Total Sales declined -1.1% (consensus +0.3%) while Sales, excluding autos, fell -0.9% (consensus 0.0%).

Intel (INTC) became the next big company to report first quarter results after the close, beating by $0.08 on better-than-expected revenue ($7.14 billion vs. $6.98 billion consensus), gross margin (45.6% vs. 43.6% consensus) and tax rate (1% vs. ~27% expectation). The company said for Q2 it expects revenue to be flat sequentially, or ~$7.14 billion, vs. the $7.05 billion consensus, while gross margin is expected to remain in the mid-40s. It said on the conference call that the bottom in the PC market has been reached and believes the worst is now behind the company from an inventory correction and demand-level adjustment perspective.

Nevertheless, shares of INTC sold off the next day, losing 2.4% and helping the Nasdaq underperform. But the stock and the index both closed well off their worst levels, and the other major indices ended with solid gains as the stock market rocketed higher in the last hour of trade. Financials led the way once again. The sector reversed early weakness to trade with gains for the entire afternoon, but it wasn't until that last surge that financials were able to climb to their session high, finishing with a gain of 5.6%.

There was some notable economic data on Wednesday, though it didn't appear to have much of an impact on trading. The March CPI mirrored the PPI data from the previous day in that energy prices fell a surprising 3.0%. This is probably not sustainable given recent trends in commodity prices. The CPI core rate trend differed from PPI, however. The core rate increase of 0.2% marked the third straight month of such an increase. There is at least a partial explanation for this from likely one-time impacts. Separately, Industrial Production came in negative for a fifth straight time, declining 1.5% in March. The March number was worse than the expected 0.9% decline and, notably, it rounded out a quarter in which output dropped at an annual rate of 20%.

Thursday proved to be the biggest session of the week for the stock market. Despite a slow, choppy start, stocks climbed in afternoon trading and finished with healthy gains. The Nasdaq outperformed the other major indices as shares of large-cap tech stocks rebounded from their losses in the prior session. Financial stocks also closed higher, but they lagged the broader market. Before the open, JP Morgan reported a beat of $0.08 on better-than-expected revenue ($25.0 billion vs. $23.0 billion consensus).

The reason for the slow start was disappointing housing data. Starts dropped 10.8% to a 510,000 annual rate from 572,000 in February. The level is not as low as the 488,000 dismal January number, but still the second lowest of this cycle. The March level is well below expectations of about a 540,000 level and below the three-month average of 539,000. Housing Permits fell 9.0% to a 513,000 annual rate, the lowest level of the current cycle and below the 547,000 average of the three prior months.

That brings us to expiration Friday, where stocks spent the session trading in mixed fashion, despite better-than-expected earnings reports from a trio of heavy hitters.

Google (GOOG) beat by $0.23 in Q1 as paid clicks increased ~17% y/y and the company lowered it operating expenses to $1.52 billion from $1.65 billion in the prior quarter. However, shares gave up initial gains as management made cautious comments about slowing revenue growth, saying it is still in uncertain territory in terms of the economy as users are buying less and advertisers are lowering their bids, and reminded analysts that the second and third quarters are seasonally weaker.

Citigroup beat by $0.16 as revenue came in better-than-expected ($24.8 billion vs. $22.0 billion consensus). However, shares also gave up their initial gains as the company said it didn't believe its improvement in credit costs in the quarter would continue, and said it would not change the conversion price of its upcoming preferred/common stock exchange offering ($3.25) despite the stock trading above $4. Shares ended down 9% to $3.65.

Finally, General Electric (GE) beat by nickel despite missing on the top line ($38.4 billion vs. $39.8 billion consensus). GECS revenues fell 20% y/y to $14.4 billion, but despite profit falling 58% the segment earned $1.1 billion in the quarter and the company said it remains on track to be profitable for the full year. It also said that estimated stress test results showed that the company does not need to raise additional capital, even in the Fed's adverse-case scenario.

Earnings season will pick up even more next week, with dozens of companies reporting each day, including such heavy hitters as Bank of America (BAC) and IBM (IBM) on Monday (4/20) and Apple (AAPL), Boeing (BA) and Morgan Stanley (MS) on Wednesday (4/22). But it will be a much slower week for economic data, with the exception of Existing Home Sales on Thursday (4/23) and Durable Goods Orders on Friday (4/24). The last day of the week will also be important as the preliminary assumptions from the banking industry stress tests are expected to be released.

 
 Index       Started Week Ended Week  Change % Change YTD % 
 DJIA	       8083.38	  8131.33    47.95     0.6  -7.3 
 Nasdaq	        1652.54	  1673.07    20.53     1.2   6.1 
 S&P 500	        856.56	   869.60    13.04     1.5  -3.7 
 Russell 2000	468.20	   479.37    11.17     2.4  -4.0

09:15 am General Electric (GE)

General Electric (GE 12.27) reported first quarter earnings that topped analyst expectations, but the company saw revenue declines and lower profit in many of its segments.

For the quarter, GE reported earnings from continuing operations of $0.26 per share, $0.05 better than the First Call consensus of $0.21. Earnings of $2.8 billion were down 35% year-over-year.

Revenues slipped 9.0% year-over-year to $38.41 billion, shy of the $39.83 billion consensus.

GE said segment profit fell 27% in the quarter, as strong 19% growth at Energy Infrastructure was more than offset by a 58% decline at Capital Finance and a 45% decrease at NBC Universal.

"Revenues and profitability declined year-over-year in our financial services business and we continue to experience rising delinquencies," said CEO Jeff Immelt. "However, we have taken prudent actions to address these challenges, including tightening risk requirements, improving liquidity and reducing leverage. Also, questions about credit ratings have been resolved. We still have a strong rating and our outlook is stable."

Immelt said the company is aggressively managing its cost structure and will reduce its costs by more than $5 billion in 2009.

Shares of GE are down 0.8% in premarket trading.

08:50 am Citigroup (C)

Citigroup (C 4.01) reported a smaller-than-expected loss for the first quarter helped by cost controls and strong trading results, sending shares of the struggling bank higher in Friday's premarket action.

Citigroup reported a first quarter loss of $0.18 per share, $0.16 better than the First Call consensus that expected a loss of $0.34 per share. Citi's earnings per share figures reflect a January 2009 reset of the conversion price of $12.5 billion convertible preferred stock issued in January 2008. Citi said the reset of the conversion price reduced income available to shareholders by $1.3 billion, or $0.24 per share. Preferred stock dividends also reduced net income by another $1.3 billion.

Revenues rose 99.3% year-over-year to $24.8 billion, topping the $21.95 billion consensus.

Citi said operating expenses fell 23% and its workforce shrank by 13,000 in the quarter to 309,000.

The company said its results include $7.3 billion in net credit losses and a $2.7 billion net loan loss reserve build.

Citi's Tier 1 capital ratio declined sequentially to 11.8% from 11.9% in the fourth quarter, largely due to the consolidation of $82 billion of card-related securitization assets for regulatory capital purposes, largely offset by higher Tier 1 capital and a reduction in other risk-weighted assets.

Overall, CEO Vikram Pandit said he was "pleased with our performance" and that the company had its best overall quarter since the second quarter of 2007, but admitted that Citi "face(s) challenges in the coming quarter as we work through the weak economy."

Shares of C are on the rise in premarket trading, up nearly 7.5% about 45 minutes before the opening bell.

08:19 am Google (GOOG)

Google (GOOG 388.74) beat first quarter earnings expectations, but the company posted slower revenue growth as it faced tough economic headwinds.

For the first quarter, Google posted earnings of $5.16 per share, excluding items, $0.23 better than the First Call consensus of $4.93.

Revenues after deducting traffic acquisition costs (TAC) rose 10.1% year-over-year to $4.07 billion, in-line with the $4.08 billion consensus. Revenues actually dropped 3.6% sequentially, the first quarter-over-quarter drop in the company's history.

Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of its AdSense partners, increased approximately 17% over the first quarter of 2008 and increased approximately 3% over the fourth quarter of 2008.

Google also reined in its spending a bit in the quarter, as operating expenses, other than cost of revenues, were $1.52 billion in the first quarter, or 28% of revenues, compared to $1.65 billion in the fourth quarter of 2008, or 29% of revenues.

Shares of GOOG are currently down 0.6% in premarket trading.

[ReturntoSender]

InvestmentHouse Weekend Market Update 4/24/09:

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

- Good news saturation? Market still hungry for positive news and drives higher.
- NASDAQ, SP600 break to new post-November highs.
- Low volume move suddenly turns to higher upside volume.
- Kernels of economic positives continue showing up here and abroad.
- Stocks are moving higher, but not a lot are in buy position at the moment as new money chases many beyond good entry point.

More earnings and some of the indices start to break out.

Typically the market gets a week or two of earnings, figures the general gist, and then starts to head the other way after moving into earnings and continuing the move as the early returns come in. It is called the saturation point. Thus far, starting with the WFC pre-announcement and the BBBY earnings that start things off, the positive earnings results and outlooks have outweighed continuing government intervention issues and some guidance that in more instances than not is simply not that positive.

That continued last week with several key names in tech such as AAPL, MSFT and YHOO, retail (AMZN), and even autos (Ford) beat nicely. Their earnings overcame misses and weak outlooks from MS, UPS, RS, MRK and CAT's first quarterly loss in 17 years. In an ironic twist you may recall the President stumping at a CAT plant for his stimulus/spending/social engineering package, touting it would result in hundreds of jobs 'saved' at CAT. Last week CAT issued a statement that the stimulus package in its final form failed to be real stimulus, noting as we did back in February that China's stimulus package, if you are going the government spending route, was actually stimulus.

Despite some earnings issues, despite bank stress tests and concerns about the effect of released stress test results the indices, after a dive on Monday, mounted another rally. Not all finished positive for the week as SP500 and DJ30 broke their string of weekly gains at 6, but NASDAQ made it seven straight with its performance that saw a breakout to a new post-November high to close the week Friday. Even the small cap SP600 put in a new high for this bear market as the small caps, an important economic bellwether, try to shoulder into a leadership spot.

What was a low volume rise through late March and mid-April 'got volume' last week. It didn't start that well on Monday with a NASDAQ volume spike to the highest level of trade since the October low when the market gyrated in massive daily swings up and down. That did not look positive, but then again, most of the volume that day was due to JAVA and its takeover bid by ORCL. ORCL has no pride; it picks up the sloppy seconds but it has done quite well doing just that. Volume really started to come in Wednesday through Friday, however, as solid tech earnings helped propel and extended market higher.

As noted during the week, the action was modestly higher to modestly lower on the open, a lot of midday range-trading with dips to negative territory common, and then late the indices would climb. The earnings were not jacking the market higher on the open, instead just providing a bid. That made it look as if the indices were tired (they were) and that earnings results were wearing out their welcome.

Then LATE in the sessions the market would rally back to positive. Happened Tuesday, Thursday, and Friday. As noted Thursday, what is happening is that despite the indices logging 20+% gains off the lows 'chase money' is coming in on every dip. Good earnings fail to elicit a huge response? Use a dip to buy positions. There are many big hedge and other funds that were caught short by the upside move. They helped drive the move higher when they finally had to toss in the towel and cover, and now they are helping keep an extended market, near term at least, moving higher as they chase stocks that fall intraday and thus giving the characteristic late session rallies.

Nothing wrong with late session rallies; that shows big money is buying and that is bullish. The important thing as we said Thursday is to watch and see when the 'chase money' starts to fizzle out. As of Friday afternoon with the afternoon move it was not there yet though there was some late weakness that was likely due to pre-weekend profit taking by those already in the rally and taking gain on stocks such as, say PCLN or SINA as we were doing.

As noted above, we said that typically stocks get information overload or get the general theme of earnings season one to two weeks into the season and then the jig is up. This market is hardly typical in that it is an economic recession market, and a deep recession at that. Nothing typical about that, and as we have seen, money that missed the rally is not chasing the rally, keeping it going when it is pretty extended. The money helped prop up the market in a lateral move when it would likely have faded back to test the bottom of the range quicker. Again, it is still in the market as shown Friday after the MSFT earnings, it is not done yet.

So, is it totally 'different' this time? Dangerous words; when you hear the old 'it is different this time' you can be just about 100% sure the old patterns are about to reassert themselves. Look at the calendar. While earnings season starts in April, it does not really start until the end of the second week of the month. Thus it really is just the SECOND week of the season. Thus predictions that the earnings season will be different this time are likely a tad premature.

The breakout by NASDAQ Friday is nothing to discount, but it is also not proof that it or any other index will avoid testing back. Look at SOX; it was the early leader in the rally, not only making the first higher high but also the only highest high following the bear market selloff. It is currently going through a three week consolidation that has it trading in quite a large range. It has come back all the way to test its breakout over the mid-level peaks before moving up late in the week. SP500 has not even broken out of its trading range, just making it up toward the 875 level that is a mid-level resistance point, this despite all the rallying in financials.

That is one reason we were not loading up with more upside positions to end the week and actually picked up some downside positions, including some additional downside SP500 positions heading into the Friday close. That does not mean we think the rally will fail. As noted Thursday this is great overall action. We just recognize where the rally is in its cycle, where we are in earnings, and know that the 'chase money' won't likely overcome this resistance in SP500, at least on this round of the move. Thus we are looking for some downside again while good stocks that surged really far, really fast test back some and set up for another move higher.

TECHNICAL. Once again the intraday action was bullish with that second half session, and particularly last hour, rally after a modest start and intraday trading range. That shows big money funds that missed the early rally still putting money to work to beef up their upside portfolios, and big money moves are always important.

INTERNALS. Solid breadth again with 3:1 NYSE and 2.5:1 NASDAQ. Volume was up to average on NYSE and was again above average and stronger on NASDAQ. Trade has been low on most of the latter part of this move. That is not necessarily bad for a lateral consolidation where quieter action is preferred, but a lot of the upside action was occurring on lower trade. Thus when NASDAQ volume jumped last week on the upside, that was very bullish. Earnings from AAPL, YHOO, MSFT and others helped pump up the volume. On NYSE trade remains lackluster with a big spike two Fridays back when SP500 hit near the top of its current range and turned back. Outside of that volume has been mediocre at best and is a key reason we feel SP500 is going to test back in its range before it moves higher again.

CHARTS. As noted, NASDAQ broke to a new post November high, clearing once more the January peak, and this time doing it with a bit more flare, moving on strong volume and putting some mileage on that level. Still below the November peak, but that is now at the 200 day SMA so that is the next story to worry about. SP600 broke to a new post March high itself, at least on the close. The small caps are trying their hand at returning to the leadership role. SOX bumped into its 200 day SMA again on its high as the chips continue their three week lateral trading range, bouncing to the top of the range last week after holding the February peak. The early market leaders they are in a well-deserved consolidation and are indeed holding their gains as they recover from the run. Last there is SP500 and it managed to close the week breaking back over 850 that was holding it back, moving toward next resistance at 875 in the form of the late January peak. We were looking for a rollover as it broke below the 850 level Monday, but it did not hold as the general market move took it higher. Now we see what it does with 875; we are still looking at a fade again toward the bottom of the range, anticipating that the 'chase money' cannot break it out on this run.

LEADERSHIP. Energy started getting back into the game late in the week, adding some support to the market as industrial metals took most of the week off along with semiconductors. With those leaders taking a needed rest another group stepped up. Indeed it was more than just metals as industrials enjoyed a good end to the week along with some technology stocks moving on those tech earnings. Small caps in general are moving higher though it is interesting that some of the early small cap leaders (HMSY, EPIQ) are in full retreat, turning the reins over to others. In sum the market continues to find new leadership stepping up when one group needs a pause, the kind of rotation that signals an overall healthy market.

THE ECONOMY

Signs of slowing declines continue but do they mean recovery?

We have chronicled for a couple of months now, well in advance of any impact from the so-called stimulus bill, how the economy is showing signs of slowing the fall. That is not a recovery; that requires improvement. But of course the decline ahs to slow before a recovery can take place. Will it be a 'V', a 'U', a 'W' or an 'L' or hockey stick as some call it? Thus far we are still in the decline phase though it looks as if it is just before some kind of turn toward a leveling off or even some upside.

Shipping materials and shippers.

This past week saw corrugated box orders rise for at least on manufacturer. Cardboard boxes hold most of what we ship around the US, and if orders are indeed hitting year ago levels that is a large positive as it was one of the indicators we used in 2002 to hone in on an economic turn.

As for company news UPS in shipping, one that moves those cardboard boxes, said it sees no recovery until maybe 2010. Something to note about shipping companies: they have been bearish for three years now, starting with the 2006 holiday season when orders were lower and were not recovering. Were they early or just overly pessimistic? We had some good economic years during that time. Thus take what the shippers say with a grain though I can tell you they are in lockdown mode, i.e. they are only spending on the things that make the trucks roll, i.e. tires, gas and oil. So regardless of what reality is, that is their mentality and they are not spending money. Other businesses are in that same mentality, and they have to see tangible improvement before they start feeling better and then actually start spending money again.

Goods orders.

Durable goods orders fell 0.8% in March but that was almost twice as good as the -1.5% expected. February was revised lower to 2.1% from 3.4%, however, and revisions are what can make or break a turn. We are seeing mixed results in the revisions on the economic data, i.e. some up, some down. That is volatility that can indicate a change, but you want to see solid upside revisions to show a turn is really taking place versus still in the stage of feeling its way around.

Home sales.

The week saw home sales, existing and new, fade from the February gains. New home sales fell 0.6% versus gains in February, indeed big gains of 8.2% as the original 4.7% was revised upside. Existing home sales fell 3% versus the 4.95% February gain. A pause in housing though it is making use of those lower interest rates to show overall improvement. Looking at the housing stocks and you see a group that is preparing for a breakout. If they can make that move that is the best indicator for this sector. Improvement but not there yet.

Foreign indicators.

As noted last week, China's economy grew at 6.1%. Impressive for anyone else, but that was the slowest growth in over 10 years. Still, China said its stimulus was working and the economy was picking up momentum. Yee ha.

Europe observed that its overall PMI was showing 'signs of stabilization.' As with here in the US that means it is falling less than it was. Again, slowing does not equal a turn, though all trends slow before they turn. The question is whether this is THE slowdown to a turn or just an interim blip in a crappy manufacturing cycle.

German business confidence came in greater than expected last week. That was keeping me up at night; now I can sleep knowing they are more confident.

UK GDP fell 1.9% in Q1. That was the lowest since -2.4% in 1979 and it was worse than the -1.4% expected. The UK continues to languish, and while it is not the EU it shows the issues for Europe are bad and indeed most say worse than here.

SUM: there are signs that the world economies are slowing their decline. It helps when the credit markets are a bit better with LIBOR improving to 1.07% (3-month) last week as the decline finally got some wheels and is now close to the levels hit after all of the facilities were put in place last fall before the game plan changed and sent the credit markets back into freeze. It is interesting to not that Trump says that banks are NOT lending despite what the Fed and Treasury tell us. Our polls are mixes, but it is clear that there are still many issues with credit. It happens every recession: easy money caused by whatever source (bad management, government pressure, etc.) leads to bad loan decisions and in the aftermath the Fed cracks down, lenders get cold feet, and no money is lent. The credit market has to be healthy enough to respond to economic improvements or government policies that promote confidence. That is all you can hope for. Banks are not going to just dump money out as Congress wants; that is what caused the current problem. No, it takes a confidence in the future to get money lent and spent, and right now the government policies are not evoking confidence in banks or in small and medium businesses that make this economy work. Now your GE's are happy because the government programs basically subsidize their businesses, but they do not represent most of the economic activity in the US, particularly in jobs creation.

THE MARKET

MARKET SENTIMENT

VIX: 36.82; -0.33
VXN: 36.8; -1.15
VXO: 38.13; +0.22

Put/Call Ratio (CBOE): 0.83; -0.08

Bulls versus Bears:

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 doesn't have the cash to drive it higher.

This is a historical milestone in the making. Bulls are impressively low considering we are in general a very optimistic country. The few bulls is a positive indication because it means most everyone that is getting out is out and there is money on the sidelines. In other words the ammunition boxes are full and as the market recovers investors will start opening up the boxes and firing. Little by little they will be forced to put more money into the market and there will be some rushes higher in fear they are missing the train. You relish times when sentiment is so negative because it means some tremendous buys are setting up. This could indeed be the opportunity of a lifetime, and you take advantage of it by buying quality stocks and letting them work for you as long as they will. If we can hold them for years, great.

Bulls: 39.1%. Sharp decline from 43.2%. A bit of a cooling after the market rally revved up the bulls. 36.0% the prior week. Still over the 35% range considered bullish, but as noted this is not a bearish indication yet. Has to get up to the 60% to 65% level to be bearish. Dramatic rise from 21.3% in November 2008, the bottom on this leg. This last leg down showed us the largest single week drop we have ever seen, falling from 33.7% to 25.3%. Hit 40.7% on the high during the rally off the July 2008 lows. 30.9% was the March low. In March the indicator did its job with the dive below 35% and the crossover with the bears. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator. This is smashing that. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.

Bears: 34.5%. Not as large a gain , up from 34.1%. Halted the decline for a moment, falling from 37.1%. Well off the high on this run at 47.2%. Hit the 34's on the lows, falling from 38.5% and 46.2% in mid-December. Just slipped below the 35% level considered bullish for stocks. 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 on this move. 35% is the level that historically indicates excessive pessimism. 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: +42.08 points (+2.55%) to close at 1694.29
Volume: 2.477B (+3.42%)

Up Volume: 2.023B (+644.044M)
Down Volume: 555.239M (-523.806M)

A/D and Hi/Lo: Advancers led 2.54 to 1
Previous Session: Decliners led 1.59 to 1

New Highs: 18 (+4)
New Lows: 10 (+3)

NASDAQ CHART: Click to view the chart

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: +14.31 points (+1.68%) to close at 866.23
NYSE Volume: 1.733B (+10.64%)

Up Volume: 1.286B (+280.35M)
Down Volume: 408.993M (-146.243M)

A/D and Hi/Lo: Advancers led 3.23 to 1
Previous Session: Advancers led 1.5 to 1

New Highs: 11 (+5)
New Lows: 66 (+20)

SP500 CHART: Click to view the chart

DJ30

As with SP500 the blue chips are moving up to the top of their range marked by the October closing low at 8175. With all the financial rallying the large cap NYSE indices are still in their ranges, still trying to break even the first resistance.

Stats: +119.23 points (+1.5%) to close at 8076.29
Volume: 402M shares Friday versus 327M shares Thursday.

DJ30 CHART: Click to view the chart

MONDAY

Earnings continue. Will the market finally get the 'gist' and hit the earnings saturation point and test back? Will SP500 and DJ30 hit the top of their ranges and follow NASDAQ with the breakout or fade back? Will NASDAQ turn back after a breakout, the worst action you can see?

Mondays have generally tended to undercut some of the gains of the prior week but that pattern can change if the market character changes, and there was some character change last week with NASDAQ volume growing as it made a new post-November high. As noted it can reverse head and shoulders but that would require a failure of the new money and prior holders. We do anticipate a test of the breakout as some important names such as AAPL, RIMM and others test back after their long runs and now that earnings are out. We are looking to play that; RIMM looks particularly ripe and AAPL gapped higher Thursday and lower Friday in a reversal move.

SP500 and DJ30 are not nearly as strong as NASDAQ, and if the chips are coming back to test those two will likely come back to test in their ranges as well, the key being whether SP500 returns just to 850 or heads on down to 800ish again. 800 would be better as it sets up a better move and gives us more gain on our SPY plays, but the market does not always do what folks think is better.

We have a mix downside and upside plays this week. We are looking at some strong stocks to the downside; that may surprise some but if they show gaps lower, etc. they are ready to play to the downside. As for upside we have some plays that are setting up for moves, but if the overall market pulls back they likely continue their consolidations, etc. Moreover, a test allows some sectors that are consolidating already to finish up their bases, e.g. semiconductors.

In short, a pullback would really set up the next run nicely. Again, however, the market does what it wants to do and thus we are ready with new buys at this point as well as some downside. Friday we had some chances to take some upside positions, but Fridays, especially when the market is extended, are not our favorite entry points. Thus on a weak Monday we may get some more opportunities but we are also watching for what could be a more substantial test, particularly if NASDAQ stumbles after its break to a new high. It did that in late March, Early April, and twice mid-April: every time it hit a new high it sold back 2 to 3 sessions to test it.

Support and Resistance

NASDAQ: Closed at 1694.29
Resistance:
The 200 day SMA at 1770
1770 is the mid-October interim peak
1780 is the November 2008 peak
1947 is the October gap down point

Support:
1666 is the intraday January 2009 peak
1661 is the April 2009 prior peak
The January closing peak at 1653 (intraday)
The 18 day EMA at 1618
1623 is the early April peak
1620 from the early 2001 low
1603 is the December peak
1598 is the February 2009 peak, the last peak NASDAQ made
1587 is the March 2009 high is getting put to bed again
1569 is the late January 2009 peak
The 50 day EMA at 1555
1542 is the early October 2008 low
1536 is the late November 2008 peak
1521 is the late 2002 peak following the bounce off the bear market low
1505 is the late October 2008 closing low.
1493 is the October 2008 low & late December 2008 consolidation low

S&P 500: Closed at 866.23
Resistance:
866 is the second October 2008 low
878 is the late January 2009 peak
889 is an interim 2002 peak
896 is the late November 2008 peak
899 is the early October closing low
919 is the early December peak
944 is the January 2009 high

Support:
857 is the December consolidation low; cracking but not broken
853 is the July 2002 low
848 is the October 2008 closing low
846 is the April peak
842 is the early April peak
839 is the early October 2008 low
833 is the March 2009 peak
The 90 day SMA at 825
The 50 day EMA at 821
818 is the early November 2008 low
815 is the early December 2008 low
805 is the low on the January 2009 selloff. KEY Level
800 is the March 2003 post bottom low
768 is the 2002 bear market low
752 is the November 2008 closing low but it is not broken and done away with
741 is the November 2008 intraday low

Dow: Closed at 8076.29
Resistance:
The early April peak at 8076
The April peak at 8113
8141 is the early December low
8175 is the October 2008 closing low. Key level to watch.
8197 was the second October 2008 low
8375 is the late January 2009 interim peak
8419 is the late December closing low in that consolidation
8451 is the early October closing low
8521 is an interim high in March 2003 after the March 2003 low
8626 from December 2002
8829 is the late November 2008 peak
8934 is the December closing high
8985 is the closing low in the mid-2003 consolidation
9088 is the January 2009 peak

Support:
7965 is the mid-November 2008 interim intraday low.
7932 is the March 2009 peak
7909 is the early January low
7882 is the early October 2008 intraday low. Key level to watch.
7867 is the early February low
The 50 day EMA at 7801
7702 is the July 2002 low
7694 is the February intraday low
7552 is the November closing low. KEY Level.

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

April 28 - Tuesday
- Consumer Confidence, April (9:00): 28.8 expected, 26.0 prior
- Case/Schiller Home price index , February (10:00): -18.85 expected, -18.97% prior

April 29 - Wednesday
- Q1 GDP advance (8:30): -4.95 expected, -6.3% prior
- Q1 Chain deflator (8:30): 1.7% expected, 0.5%
- Crude oil inventories (10:30): 3.8M prior
- FOMC Monetary Policy Decision (2:15)

April 30 - Thursday
- Initial jobless claims (8:30): 640K prior
- Personal income, March (8:30): -0.2% expected, -0.2% prior
- Personal spending, March (8:30): -0.1% expected, 0.2% prior
- Employment cost index (8:30): 0.5% expected, 0.5% prior
- Chicago PMI, April (9:45): 34.0 expected, 31.4 prior

May 1 - Friday
- Michigan sentiment, revised for April (9:55): 61.5 expected, 61.9 prior
- Factory Orders, March (10:00): -0.7% expected, 1.8% prior
- ISM Index, April (10:00): 38.0 expected, 36.3 prior

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From Briefing.com: Weekly Recap - Week ending 05-Jun-09Helped by a strong rally on Monday, the major averages registered another positive week -- S&P 500 +2.3%, Dow +3.1%, Nasdaq +4.2%, Russell 2000 +5.7%. And with this week's gains, the Dow is now basically unchanged on the year (-0.2%), regaining most of its early 2009 losses.

The rally was led by the Industrials sector (+5.7%), followed closely by Technology (+4.3%) and Consumer Discretionary (+4.0%). Health Care (-0.4%) and Telecom (-0.8%) were the only two S&P sectors in the red.

Monday's strong rally actually began the previous Friday, when the stock market surged to fresh session highs in the last five minutes of trade. That momentum carried over into premarket trading Monday.

Stronger international markets also played a role, as PMI manufacturing data came out all over the world. Markets in China and Hong Kong rallied over 3% as the official figure showed expansion for the third straight month, while those in Europe rallied at least 2% as both the UK and Eurozone showed modestly better-than-expected numbers.

Finally, there was also pleasing U.S. economic data that morning. Most notably, Construction Spending surprisingly increased 0.8% month-over-month in April (consensus -1.5%), Personal Income increased 0.5% for the month (consensus -0.2%) and Personal Spending came in at a modestly better-than-expected -0.1% (consensus -0.2%).

The S&P gained 2.6% on the session, hitting fresh 2009 highs and closing above its 200-day moving average for the first time since December 2007.

One last event was the expected bankruptcy filing from General Motors (GM). The filing from the iconic manufacturer did not hamper Monday's rally on the thinking that concessions made by GM bondholders over the weekend would allow a new, more competitive company to emerge from bankruptcy sooner rather than later.

The moves in the major averages for the remainder of the week were more modest, though all four indices extended their multi-month highs on Friday before pulling back slightly.

Piece after piece of better-than-expected economic data played a part.

Tuesday brought Pending Home Sales, which showed a much larger-than-expected 6.7% month-over-month gain in April.

Thursday brought the first weekly drop in Continuing Jobless Claims in 20 weeks, as they came in at 6.735 million, down from 6.788 million the prior week and well below the 6.855 million consensus estimate. But while a step in the right direction, it's nothing to get overly excited about given that Federal Reserve Chairman Bernanke told the House Budget Committee on Tuesday that job losses are expected to remain significant in coming months.

Friday brought this week's most anticipated event, the employment report for May, and it didn't disappoint. Nonfarm Payrolls came in at -345,000, well below the -520,000 consensus estimate, while the prior two months saw positive revisions. The market surged premarket on the news, but its opening levels proved to be the highs of the session. Two reasons were the larger-than-expected jump in the Unemployment Rate (9.4% vs. 9.2% consensus) and the unexpected decline in Average Weekly Hours (33.1 vs. 33.2 consensus). The bottom line is the May report did not set a good stage for a meaningful pickup in consumer spending, even if it set the stage for an opening rally.

Looking ahead, next week is extremely thin in regards to catalysts. There once again are no notable earnings releases and the only important economic releases are the Trade Balance on Wednesday (6/10) and Retail Sales on Thursday (6/11). However, there will continue to be a number of companies presenting at industry conferences throughout the week, particularly Tuesday (6/9) and Wednesday.

 
 Index       Started Week Ended Week Change % Change YTD % 
 DJIA	       8500.33	  8763.13   262.80    3.1  -0.2 
 Nasdaq	       1774.33	  1849.42    75.09    4.2  17.3 
 S&P 500	        919.14	   940.09    20.95    2.3   4.1 
 Russell 2000	501.58	   530.36    28.78    5.7   6.2

08:37 am Apple (AAPL)

Apple (AAPL 143.74) plans to introduce a lower-cost version of its iPhone as soon as Monday, according to a Financial Times report.

The Financial Times, citing sources, reported that Apple plans to introduce either a $149 or $99 phone, down from the current low end of $199. The unveiling likely will come at Apple's annual Worldwide Developers Conference, which begins Monday in San Francisco.

The report indicates the new phone is likely to start production in July with the third version of the iPhone operating system.

Separately, The Wall Street Journal reports that Steve Jobs appears ready to return to the helm of Apple at the end of the month after taking a medical leave back in January.

Shares of AAPL are up more than 68% year-to-date.

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Amateur Investors Weekend Stock Market Analysis (7/11/09)

http://www.amateur-investor.net/Weekend_Market_Analysis_July_11_09.htm

Both the Dow and S&P 500 are exhibiting Head and Shoulder Top patterns in the near term. In addition both broke below their Neckline support areas this week as well. The next major support area for the Dow is at its 38.2% Retrace near 7986 calculated from the early March low to the mid June high. However it may try and rally back to its Neckline (black line) near 8275 or its 50 Day EMA (blue line) around 8350 before it drops back to the 7958 level.



As far as the S&P 500 its next major support area is at 846 which is the 38.2% Retrace calculated from the early March low to the mid June. However just like the Dow it could try and rally back to its Neckline (black line) near 894 or its 50 Day EMA (blue line) near 900 before it eventually drops back to the 846 level.



Meanwhile in the longer at this point it does look like the A Wave has completed in both the Dow and S&P 500 and the correction over the past 4 weeks is the development of the B Wave. Typically a B Wave can retrace anywhere from 38.2% to 61.8% of the A Wave. The chart of the Dow shows that the 38.2% Retrace is at 7958 (blue line) while the 50% Retrace (black line) is around 7675. Meanwhile the 61.8% Retrace would be at 7390 (brown line).



As for the S&P 500 its 38.2% Retrace is at 846 (blue line) with the 50% Retrace around 812 (black line). Meanwhile the 61.8% Retrace would be at 777 (brown line).



Keep in mind the above scenario is a more bullish outlook as once the B Wave completes then this would be followed by a C Wave higher as shown in the chart below. Remember this assumes that Wave 5 ended with the March low in both the Dow and S&P 500 as I talked about last week. Also notice in this type of pattern that it takes the shape of an Inverted Head and Shoulders pattern as well.




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From Briefing.com: 4:30 pm : Broad-based buying on the back of a large batch of better-than-expected earnings announcements sent all three major indices to their best levels in months. Though most of the move came in the first half of the session, stocks were able to hold steady in the afternoon and close just off of session highs.

Gains were strongest among materials stocks. Strong results from Mosaic (MOS 51.45, +3.03) won its shares support and helped lift the materials sector 3.4%, more than any other major sector in the S&P 500.

Financial stocks also made strong gains, though they were actually laggards in the early going. Large diversified banks (+0.1%) underperformed, but a positive reaction to the latest quarterly report from regional lender Fifth Third (FITB 8.01, +1.00) helped give the financial sector a 3.0% gain.

More than 150 companies posted their latest quarterly results between last evening and this morning. The bulk of announcements were better-than-expected, which helped drive broad-based buying. Industry heavyweights 3M (MMM 69.43, +4.76), Qualcomm (QCOM 47.40, -1.05), AT&T (T 25.48, +0.64), Ford (F 6.98, +0.60), SanDisk (SNDK 16.92, -2.07), eBay (EBAY 21.52, +2.07), and Diamond Offshore (DO 92.28, +4.38) all topped Wall Street's earnings estimates. However, each of those companies saw a decline in revenue, which suggests that companies are relying on cost cuts and demand has yet to fully stabilize.

Nonetheless, the Dow finished at its best level since January and the S&P 500 finished at its highest point since November. The Nasdaq last traded at its current level in October. What's more, the Nasdaq has finished higher in each of the last 12 sessions; it hasn't accomplished such a feat since 1992 when it gained in 13 straight sessions, according to CNBC.

Small- and mid-caps have also benefited from the broader market's recent bullish bias. In turn, the Russell 2000 is at its best level since November and the S&P 400 is back at levels not seen since October.

Medarex (MEDX 15.89, +7.49) led this session's advance by small-caps. Bristol-Myers Squibb (BMY 20.86, +0.57) agreed to acquire the company for $16.00 per share in cash. Bristol-Myers also unveiled better-than-expected earnings for its latest quarter and issued upside guidance for fiscal 2009.

Tupperware Brands (TUP 35.00, +4.25) was a primary leader among mid-caps after posting a positive earnings surprise of its own.

Commodities also benefited from broad-based buying, which pushed the CRB Commodity Index 1.8% higher in its best percentage gain since mid-June.

Amid participants' willingness to move into riskier holdings, Treasuries fell sharply out of favor. That pushed the benchmark 10-year Note nearly one point lower and lifted its yield back toward 3.7%. At its low, the Note was yielding more than 3.7%, which marked a high for this month.

There were only a couple of economic releases out this morning. Neither had a significant impact on trading. Initial jobless claims for the week ending July 18 totaled 554,000, which was up from the previous week, but essentially in-line with expectations. Meanwhile, continuing claims fell for a second straight week by coming in at 6.225 million. The surprise decline is being treated with caution since many suspect that the retreat in continuing claims was only the result of exhausted unemployment benefits.

In other economic news, existing home sales increased for the third straight month by coming in at an annual rate of 4.89 million units during June. That reflects a 3.6% month-over-month increase, which is the best monthly change since a 4.9% increase in February. DJ30 +188.03 NASDAQ +47.22 NQ100 +2.3% R2K +3.2% SP400 +2.8% SP500 +22.22 NASDAQ Adv/Vol/Dec 2085/3.08 bln/635 NYSE Adv/Vol/Dec 2155/1.39 bln/199

5:13PM Juniper Networks Earnings Conference Call - Update (JNPR) 26.55 +1.05 : Co sees 3Q09 EPS $0.19 to $0.21 vs $0.19 consensus; sees flat revs of $805 mln vs $789 mln consensus

4:32PM Lattice Semi beats by $0.02, beats on revs; guides Q3 revs above consensus (LSCC) 2.14 +0.14 : Reports Q2 (Jun) loss of $0.01 per share, excluding non-recurring items, $0.02 better than the First Call consensus of ($0.03); revenues fell 19.3% year/year to $46.9 mln vs the $43.9 mln consensus. Co issues upside guidance for Q3, sees Q3 revs of down 2% to plus 3%, which equates to ~$46.0-48.3 mln vs. $43.17 mln consensus.

4:29PM Microsoft now trading down over 2 points since the report (MSFT) 25.56 +0.76 : Gap support from earlier this month at ~$23.25-23.35. Last trade at $23.40

4:27PM RF Micro Device beats by $0.07, beats on revs; co expects sequential rev and earnings growth for Q2 (RFMD) 4.33 +0.25 : Reports Q1 (Jun) earnings of $0.07 per share, excluding non-recurring items, $0.07 better than the First Call consensus of ($0.00); revenues fell 11.6% year/year to $212.5 mln vs the $187.3 mln consensus. RFMD is experiencing improved order visibility in its primary markets and currently expects sequential revenue growth (consensus calls for 6.9% rev growth for Q2), driven by the increasing RF content opportunity in 3G smartphones and continued market share gains. RFMD currently anticipates sequential growth in EPS and strong cash flow in the September 2009 quarter. RFMD currently projects factory utilization rates in the September 2009 quarter will be in-line with factory utilization rates in the June quarter. Both CPG And MPG grew sequentially in excess of the growth rate of primary end markets, led by growth of more than 50% in both 3G front ends and smart grid applications. Co had gross margins of 37.0% in Q1 vs 33.0% YoY and 19.8% MoM.

4:19PM Micrel reports Q2 (Jun) results, beats on revs; guides Q3 revs above consensus (MCRL) 7.86 +0.19 : Reports Q2 (Jun) earnings of $0.06 per share, excluding stock based compensation, not comparable to the First Call consensus of $0.03 which includes stock based compensation; revenues fell 26.6% year/year to $51.8 mln vs the $48.6 mln consensus. Co issues guidance for Q3, sees EPS of $0.06-0.08, may not be comparable to $0.05 consensus; sees Q3 revs of $53.3-55.4 vs. $50.98 mln consensus. "In addition, second quarter bookings were also solid, with a book-to-bill ratio above one. Revenues and bookings in the quarter benefited from strong demand from markets in Asia, primarily related to the build-out of infrastructure to support 3G networks in China. I am also pleased with our operating execution and expense management in the quarter. As a result, net income dollars more than doubled on a sequential quarter basis, which reflects the operating leverage in our business model."

4:09PM Juniper Networks beats by $0.01, beats on revs (JNPR) 26.55 +1.05 : Reports Q2 (Jun) earnings of $0.19 per share, $0.01 better than the First Call consensus of $0.18; revenues rose 2.9% year/year to $786.4 mln vs the $767.3 mln consensus. JNPR's non-GAAP operating margin for 2Q09 increased to 18.1% from 16.4% in 1Q09 and decreased from 23.6% in the prior year second quarter. Capital expenditures as well as depreciation and amortization expense during the second quarter of 2009 were $45.2 million and $37.8 million, respectively. "We continue to take a disciplined approach to controlling operating expenses as we navigate this challenging economic period," said Kevin Johnson, Juniper's CEO. "With service provider sales relatively flat quarter-over-quarter, our sequential revenue increase was supported by double digit quarter-over-quarter growth in the enterprise market. A solid product portfolio, compelling value proposition, and improved sales and marketing execution are enabling us to expand and diversify our customer base."

4:08PM PMC-Sierra beats by $0.03, beats on revs (PMCS) 8.73 +0.42 : Reports Q2 (Jun) earnings of $0.13 per share, excluding non-recurring items, $0.03 better than the First Call consensus of $0.10; revenues fell 11.9% year/year but rose 20.1% sequentially to $123.2 mln vs the $119.9 mln consensus.

4:08PM Rambus misses by $0.02, reports revs in-line (RMBS) : Reports Q2 (Jun) loss of $0.23 per share, $0.02 worse than the First Call consensus of ($0.21); revenues fell 24.4% year/year to $27 mln vs the $27 mln consensus.

4:08PM Silicon Image reports EPS in-line, misses on revs; guides Q3 revs below consensus (SIMG) 2.68 +0.10 : Reports Q2 (Jun) loss of $0.06 per share, in-line with the First Call consensus of ($0.06); revenues fell 46.8% year/year to $37.3 mln vs the $41.2 mln consensus. Co issues downside guidance for Q3, sees Q3 revs of $44-46 mln vs. $49.33 mln consensus. "With our design win momentum, our goal is to achieve double digit revenue growth in the second half of 2009 when compared to the first six months. We also expect to start to experience growing adoption of the MHL standard,"

4:05PM MEMC Elec initially spiked $1.50 after earnings, $21.36 was the June high (WFR) : Last trade now at $21.15, only up ~$0.50

4:04PM Microsemi beats by $0.02, beats on revs; guides Q4 EPS above consensus, revs in-line (MSCC) 14.25 -0.42 : Reports Q3 (Jun) earnings of $0.21 per share, $0.02 better than the First Call consensus of $0.19; revenues fell 17.2% year/year to $107 mln vs the $105.9 mln consensus. Non-GAAP gross margin in Q3 was 47.2%, compared to 51.9% in 3Q08 and 47.1% in the second quarter of 2009. Non-GAAP operating margin was 20.0 percent in the third quarter of 2009 compared to 27.5 percent in the third quarter of 2008 and 17.2 percent in the second quarter of 2009. Co issues mixed guidance for Q4, sees EPS of $0.22-0.23 vs. $0.22 consensus; sees Q4 revs of $108-11 mln vs. $108.57 mln consensus.

4:02PM Advanced Energy misses by $0.03, beats on revs; guides Q3 EPS in-line, revs above consensus (AEIS) 11.85 +0.06 : Reports Q2 (Jun) loss of $0.38 per share, $0.03 worse than the First Call consensus of ($0.35); revenues rose 9.2% year/year to $35.6 mln vs the $33.9 mln consensus. Co issues mixed guidance for Q3, sees EPS of ($0.35)-($0.29) vs. ($0.29) consensus; sees Q3 revs of $40-45 mln vs. $39.23 mln consensus.

9:06AM On The Wires : Rudolph Technologies (RTEC) announces the receipt of multiple orders for its Wafer Scanner 3840 and NSX Series inspection tools from new and repeat customers in China and Taiwan...

8:16AM Ultratech misses by $0.01, misses on revs (UTEK) 13.23 : Reports Q2 (Jun) loss of $0.02 per share, $0.01 worse than the First Call consensus of ($0.01); revenues fell 42.0% year/year to $18.6 mln vs the $23.2 mln consensus.

8:06AM Trina Solar signs sales agreement with PROINSO (TSL) 28.70 : Co announced that it has commenced shipment under a long-term supplier agreement with PROINSO (''Proyectos Integrales Solares S.L.''), adistributor for solar photovoltaic equipments and a specialist in engineering services in Spain. Trina Solar is one of two suppliers to provide PROINSO with PV modules. Shipments for the second quarter of 2009 through 2010 are covered in the supplier agreement. The modules are expected to be used for solar projects in the United States and major European markets including Italy, Greece and Spain. Trina Solar expects to supply PROINSO with up to 25 MW and 50 MW of PV modules in 2009 and 2010, respectively. Prices and quarterly purchase volumes under this agreement are pre-determined through March of 2010. The Company made its first shipment in late June 2009.

7:10AM Celestica beats by $0.01, beats on revs; guides Q3 EPS in-line, revs in-line (CLS) 8.08 : Reports Q2 (Jun) earnings of $0.11 per share, excluding non-recurring items, $0.01 better than the First Call consensus of $0.10; revenues fell 25.3% year/year to $1.4 bln vs the $1.39 bln consensus. Co issues in-line guidance for Q3, sees EPS of $0.11-0.17 vs. $0.13 consensus; sees Q3 revs of $1.43-1.58 bln vs. $1.49 bln consensus.

7:08AM EMC Corp beats by $0.01, beats on revs; guides FY09 EPS above consensus (EMC) 14.41 : Reports Q2 (Jun) earnings of $0.18 per share, $0.01 better than the First Call consensus of $0.17; revenues fell 11.3% year/year to $3.26 bln vs the $3.2 bln consensus. Co issues guidance for FY09, sees EPS of $0.82 vs. $0.78 consensus; sees FY09 revs of $13.8 bln, including $200 million of revenues from Data Domain, may not be comparable to $13.49 bln consensus. Consolidated third-quarter revenues are expected to increase 2% to 3% from the second quarter 2009 excluding revenues from the acquisition of Data Domain, and are expected to increase 4% to 5% including revenues from the acquisition of Data Domain. "This marks another quarter of solid execution, and I am proud of the EMC and VMware teams around the world that produced these results. We are focused on four of the hottest and fastest-growing areas of IT spending - next-generation fully virtualized data centers; cloud computing; virtualized desktops and clients; and next-generation backup, recovery and archive solutions. This, together with our market leading products, solutions, services and proven go-to-market model gives us confidence that EMC will continue to gain market share this year. When IT markets resume to more normal spending rates, we expect EMC will return to generating double-digit revenue growth."

6:04AM Cabot Micro beats by $0.47, beats on revs (CCMP) 30.82 : Reports Q3 (Jun) earnings of $0.39 per share, $0.47 better than the First Call consensus of ($0.08); revenues fell 10.9% year/year to $86.4 mln vs the $66.1 mln consensus. "We are delighted with our strong financial performance this quarter, which we believe reflects a combination of improved underlying demand and inventory replenishment within the semiconductor industry, as well as continued successful execution of our strategies and key initiatives. Our flexible business model enabled our organization to rapidly ramp up to successfully meet the significant rebound in demand from our customers, while we continued to execute on cost saving initiatives resulting in our lowest level of quarterly operating expenses since fiscal 2006," said William Noglows, Chairman and CEO. "Given the historical volatility of the industry and our limited visibility into customer demand, we remain cautious regarding future industry demand."

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From Briefing.com: Weekly Recap - Week ending 21-Aug-09U.S. equity markets had shown little direction in the first two weeks of August, range trading near their 2009 highs. But volatility returned this week, with the major indices reversing a sharp Monday decline to close with gains. The S&P 500 added 2.2%.

All 10 sectors that make up the index advanced, led by Energy (+3.2%) and Health Care (+2.9%). In regard to the latter, Democratic leaders said this week they may attempt to pass health care reform that includes a public insurance option without Republican support, which had the effect of raising doubts on the reform effort, helping health care stocks rally.

Getting back to the broader market, China was in focus early this week. Following a 109% rally from October through the beginning of August, a 5.8% plunge on Monday -- which helped the S&P 500 close down 2.4% that day -- and another 4.3% decline on Wednesday brought the Shanghai Composite to a two-week correction of 20%.

At first equity markets around the world followed suit, as China would be an integral part of any global economic rebound. But as we've seen throughout the market's five-month rebound, buyers stepped in, specifically on Wednesday when the major indices quickly regained opening losses and then surged higher just before midday, though on no specific catalyst.

The buying effort was particularly evident in reaction to this week's economic data. We had negative housing data on Tuesday -- July Housing Starts 581,000 vs. 599,000 consensus; Building Permits 560,000 vs. 577,000 consensus -- and negative employment data on Thursday -- Initial Jobless Claims 576,000 vs. 551,000 consensus -- but equities closed modestly higher both days. Then on Friday, a better-than-expected Existing Home Sales figure (5.24 million vs. 5.00 million consensus) led to a 1.9% rally in the S&P 500.

So investors are effectively ignoring poor economic data while going long the positive data. The end result is all four of the major indices listed below made fresh 2009 highs on Friday.

Looking ahead to next week, economic data takes center stage. The housing numbers continue with the June S&P/Case-Shiller Home Price Index on Tuesday, Aug. 25 and July New Home Sales on Wednesday, Aug. 26. That day will also feature July Durable Goods Orders. All of this leads up to the Preliminary reading for second quarter GDP on Thursday, Aug. 27. The current consensus is for a revision to -1.4% from the Advanced reading of -1.0%.

 
 Index       Started Week Ended Week Change % Change  YTD % 
 DJIA	       9321.40	  9505.96   184.56    2.0    8.3 
 Nasdaq	       1985.52	  2020.90    35.38    1.8   28.1 
 S&P 500	       1004.10	  1026.13    22.03    2.2   13.6 
 Russell 2000	563.89	   581.51    17.62    3.1   16.4

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Amateur Investors Weekend Market Analysis (8/29/09)

http://www.amateur-investor.net/Weekend_Market_Analysis_Aug_29_09.htm

The table below shows the historical monthly returns of the Dow going back to 1896. As you can see the best performing months for the Dow have been in April, July, August and December. Meanwhile notice the worst performing months for the Dow have been in February, May and September with September clearing being the worst month by a wide margin.

Dow Monthly Performance since 1896 
      Positive  Negative % 	% 	 Average 
      Returns   Returns Positive Negative Return 
 Jan 	73 	40 	64.6 	35.4 	0.97 
 Feb 	57 	56 	50.4 	49.6   -0.29 
 Mar 	68 	45 	60.2 	39.8 	0.77 
 April 	63 	50 	63.0 	37.0 	1.22 
 May 	58 	55 	51.3 	48.7 	0.02 
 June 	56 	58 	49.2 	50.8 	0.25 
 July 	70 	44 	61.4 	38.6 	1.32 
 Aug 	73 	39 	65.2 	34.8 	1.25 
 Sep 	46 	66 	41.0 	59.0   -1.18 
 Oct 	64 	58 	57.1 	42.9 	0.19 
 Nov 	67 	45 	59.8 	40.2 	0.90 
 Dec 	79 	33 	70.5 	29.5 	1.38

With the S&P 500 gaining 56% since the March low and being up 6 months in a row the odds would favor a pullback in September as this has historically been a weak period for the market. As I talked about last week I mentioned there are two potential wave patterns as one is bearish and the other bullish thrpugh the end of the year.

The bearish pattern is that the current rally from the March low is the final Wave C of a larger ABC corrective rally which is nearing completion. If that is the case then the S&P 500 may peak somewhere in the 1048 to 1053 range. 1048 is calculated by taking 61.8% of Wave A's length (289) and adding that number (179) to the bottom of Wave B (869). Meanwhile 1053 is the 50% Retrace calculated from the peak of Wave 2 to the bottom of Wave 5.



In addition also notice the longer term upward trend line (black line) connecting the low made in the early 1990's recession to the low made in the previous recession in October of 2002 is around the 1050 level as well. So there does appear to be a significant resistance area in the 1048 to 1053 range. If we are nearing completion of an ABC corrective rally the key level to watch in the Fall would be the Wave B low of 869 (blue line in above chart). If that level were to be taken out then that would be a bearish development for the longer term.



As for the bullish case the latest rally from the March low could just be minor Wave "a" of C which will peak in the 1048 to 1053 range and then be followed by a pullback for minor Wave "b" of C. Once the pullback ends then minor Wave "c" of C will occur with a potential target price in the 1121 to 1158 range. 1121 is the 50% Retrace from the October 2007 high to the March 2009 low and is also near the longer term downward trend line (black line). Meanwhile 1158 would be if the length of Wave C equals the length of Wave A which was 289 points. In order for this bullish scenario to play out the S&P 500 should hold support around 956 which was the peak for Wave A.



Meanwhile keep a close eye on the China's market as it has pulled back to a key Retracement Level of 38.2% after rising 109% in 9 months. If it were to drop below the 38.2% Retrace then look for a deeper correction back to the 50% Retrace or 61.8% Retrace. Keep in mind if China's market continues to correct this may eventually spread to other markets in the world before much longer.



Finally when looking for stocks to invest in focus on those that are breaking out of a favorable chart pattern such as the Cup and Handle. SCLN is a stock we focused on back in June as it had developed a small 3 week Handle (H) after forming a Cup. Since breaking out it has doubled in price over the past few months.



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Amateur Investors Weekend Market Analysis (10/3/09)

http://www.amateur-investor.net/Weekend_Market_Analysis_Oct_3_09.htm

Some selling pressure has developed in the market after seeing a substantial oversold rally from mid March through late September. On a daily chart the S&P 500 is at a key support level near 1020 which is at its 50 Day EMA (blue line) and upward trend line (black line) connecting the March low with the July low. A solid drop below the 1020 level would signal a potential change in longer term direction for the S&P 500 which has been in an up trend since the March low.



In the longer term there are two possible scenario's that may develop. The first scenario is that the move from 667 to 1080 (+62%) in the S&P 500 is a completed ABC oversold rally which was preceded by a 5 Wave move down from October 2007 through mid March of 2009 in which the S&P 500 lost 58% of its value.



The current chart of the S&P 500 looks similar to that of the 1937-1938 time period as shown below. Notice from early 1937 through early 1938 the S&P 500 completed a 5 Wave pattern to the downside in which it lost 55% of its value. This was then followed by an ABC corrective rally in which the S&P 500 gained 62% in basically 8 months. Meanwhile after peaking in late 1938 the S&P 500 then trended lower over the next 3 1/2 years (points C to D) before bottoming in early 1942 after falling 45%.



The second scenario is a more bullish one as the entire move from 667 to 1080 could be just Wave A of a longer term ABC corrective rally which will be followed by a Wave B pullback before the final C Wave occurs. Typically a Wave B can retrace anywhere from 38.2% to 61.8% of the length of Wave A so that would lead to a range of 922 to 825 for Wave B. At this point the 869 level which was the July low (point b) looks like a key support level which is very close to the 50% Retrace of 873. Thus if the more bullish scenario were to develop I would expect Wave B to find support at or above the 869 level which would then be followed by Wave C at some point in the future.



An example of this pattern would be from the early to mid 1970's. In the chart below the S&P 500 lost 48% of its value from 1973 through late 1974 as it exhibited a 5 Wave pattern to the downside. This was then followed by a corrective ABC rally in which Wave A initially gained 48% before undergoing a Wave B pullback of 14% to its 38.2% Retrace. This was then followed by Wave C in which the S&P 500 gained an additional 30%. Thus the total gain from the late 1974 through late 1976 was just over 70%.



At this time it's not clear which one of these patterns may develop in the longer term however further upside or downside in the US Dollar (USD) may determine the outcome. As we have seen during the past few years the S&P 500 and USD have been generally trending in opposite directions. When the USD has rallied (points A to B) the S&P 500 has fallen (points C to D) and when the USD has come under selling pressure (points B to A) the S&P 500 has rallied (points D to C).



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From Briefing.com: 4:25 pm : The S&P 500 closed below its 50-day moving average for the first time since mid-July as sellers moved en masse ahead of tomorrow morning's advance third quarter GDP reading.

Stocks were mired in weakness for virtually the entire session as buyers stepped to the sidelines despite another batch of generally better-than-expected earnings. Stiff selling in overseas trade certainly didn't help the case for bulls, nor did disappointing new home sales data, which showed that new home sales for September fell 3.6% month-over-month to an annualized rate of 402,000 units. That was well below the rate of 440,000 units that was widely expected.

The disappointing report caused an immediate drop in stocks, though a premarket durable goods orders report that was largely dismissed. According to that report, durable goods orders were up 1.0% in September, in-line with expectations, while orders less transportation increased a stronger-than-expected 0.9%.

Partial to selling, participants pushed stocks to their worst loss since the start of the month and left the S&P 500 to trade below its 50-day moving average. The technical line initially provided some support, but persistent pressure took the stock market through the line and left it to finish near session lows.

Declines were steep and broad based as nine of the 10 major sectors posted losses.

Financials were among the worst performers this session. The sector dropped 3.2% amid ongoing weakness in bank stocks. Including this session's 3.2% decline, the KBW Banking Index has fallen more than 9% during the past four sessions.

Visa (V 76.57, +2.67) was one of the few financial issues to post a gain this session. The company garnered support after it posted last evening better-than-expected adjusted earnings of $0.74 per share.

Materials stocks were also wrought with weakness. The sector fell nearly 3.2% as the greenback gained 0.5% against a basket of major foreign currencies, causing weakness among basic materials stocks and commodities-related stocks.

With the dollar gaining ground for the fifth straight session, the CRB Commodity Index fell 2.0% in its worst single-session loss in one month. Both metals prices and energy prices weighed heavily on the CRB. Gold prices settled pit trade 0.5% lower at $1030.50 per ounce, below their 2008 high of $1033.90 per ounce, while crude oil prices dropped 2.8% to $77.44 per barrel following disappointing gasoline inventory data this morning.

Softer oil prices and broader market weakness took the energy sector to a 2.9% loss. Better-than-expected earnings from ConocoPhillips (COP 49.49, -1.41) did nothing for the sector.

Telecom stocks made up the only sector to advance. What's more, its 1.8% gain was the sector's best single-session advance in one month and came in the face of considerable weakness in the broader market. Its gain this session extended the previous session's advance. In the weeks preceding that point, telecom had been considerably underperforming the broader market.

Participation was strong this session. Specifically, nearly 1.7 billion shares exchanged hands on the NYSE. That's the highest level in more than one month and exceeds both the 50-day and 200-day moving average for trading volume.

Another round of Treasury auctions was met with solid turnout. An auction of 5-year Notes produced an above-average bid-to-cover ratio 2.6. Though Treasuries pulled back a bit following the announcement, weakness among equities helped Treasuries hold onto gains. In turn, the yield on the benchmark 10-year Note has fallen to roughly 3.4% from 3.5% in just two days.

Treasuries have performed well this week and stocks are now down more than 3% week-to-date, but both fixed income traders and equity market participants are turning their attention to the advance third quarter GDP report, which is a headline event for Thursday morning.

Advancing Sectors: Telecom (+1.8%)
Declining Sectors: Financials (-3.2%), Materials (-3.2%), Energy (-2.9%), Consumer Discretionary (-2.8%), Industrials (-2.2%), Tech (-1.8%), Health Care (-1.3%), Utilities (-1.0%), Consumer Staples (-0.4%)DJ30 -119.48 NASDAQ -56.48 NQ100 -2.4% R2K -3.5% SP400 -3.3% SP500 -20.78 NASDAQ Adv/Vol/Dec 411/2.75 bln/2290 NYSE Adv/Vol/Dec 322/1.68 bln/2779

6:46PM Teradyne beats by $0.03, beats on revs; guides Q4 EPS above consensus, revs above consensus (TER) 8.66 -0.48 : Reports Q3 (Sep) earnings of $0.14 per share, $0.03 better than the First Call consensus of $0.11. Co issues upside guidance for Q4, sees EPS of 0.12-0.17 vs. $0.12 consensus; sees Q4 revs of 255-270 vs. $251.91 mln consensus.

4:23PM Cadence Design beats by $0.04, reports revs in-line; guides Q4 EPS above consensus, revs in-line (CDNS) 7.03 -0.32 : Reports Q3 (Sep) earnings of $0.03 per share, $0.04 better than the First Call consensus of ($0.01); revenues fell 6.9% year/year to $216 mln vs the $214.8 mln consensus. Co issues guidance for Q4, sees EPS of $0.02-0.04 vs. $0.01 consensus; sees Q4 revs of $215-225 mln vs. $220.63 mln consensus.

4:21PM Ixia beats by $0.01, beats on revs (XXIA) 7.11 -0.59 : Reports Q3 (Sep) earnings of $0.02 per share, $0.01 better than the First Call consensus of $0.01; revenues fell 1.9% year/year to $46.4 mln vs the $45 mln consensus. "Ixia delivered solid revenues and executed on multiple fronts during the quarter, including the Catapult integration and the release of our next generation IxNetwork Layer 2-3 test solution," commented Atul Bhatnagar, Ixia's president and chief executive officer. "The integration of Catapult is nearly complete with unified sales and engineering teams operating effectively around the globe. In our first full quarter of operating Ixia and Catapult as one business, we experienced meaningful sequential growth in orders, both for our core wired products as well as for our wireless offerings. In addition, sales of our 10 Gigabit Ethernet products hit a new high and our Asia Pacific business rebounded nicely. On the cost side, we are starting to see some benefits from the restructuring plan announced in the second quarter and have moved quickly to realize cost synergies related to the Catapult business. Going forward, we will continue to focus on improving our operating results while also executing on critical initiatives to strengthen our position in the market, such as our recently announced acquisition of Agilent Technologies' N2X Data Network Testing Product line. This acquisition, when completed on or about October 30, 2009, will further fortify Ixia as a global leader in Converged Ethernet IP and LTE testing."

4:17PM Advanced Analogic Tech beats by $0.03, beats on revs; guides Q4 revs below consensus (AATI) 3.29 -0.02 : Reports Q3 (Sep) earnings of $0.02 per share, excluding non-recurring items, $0.03 better than the First Call consensus of ($0.01); revenues rose 2.8% year/year to $26.1 mln vs the $25.3 mln consensus. Co issues guidance for Q4, sees GAAP EPS of $(0.11)-(0.07), may not be comparable to ($0.02) consensus; sees Q4 revs of $19-23 mln vs. $23.93 mln consensus. The fourth quarter 2009 estimates include pre-tax quarterly share-based compensation expense in the range of $1.9-2.1 million.

4:17PM LSI Logic beats by $0.14, beats on revs; guides Q4 EPS above consensus, revs above consensus (LSI) 4.99 -0.13 : Reports Q3 (Sep) earnings of $0.18 per share, excluding non-recurring items, $0.14 better than the First Call consensus of $0.04; revenues rose 10.9% year/year to $578 mln vs the $555.7 mln consensus. Co issues upside guidance for Q4, sees EPS of $0.07-0.13, excluding non-recurring items, vs. $0.06 consensus; sees Q4 revs of $605-645 mln vs. $587.48 mln consensus. "With the economy demonstrating signs that a modest recovery is underway, our third quarter revenues exceeded our guidance range, supported by healthy sequential growth across our businesses overall. As businesses resume spending on information technology, we are now poised to realize the benefits of the winning recipe we have worked to put in place over the last several years."

4:13PM Newport beats by $0.06, beats on revs (NEWP) 7.47 -0.36 : Reports Q3 (Sep) earnings of $0.06 per share, $0.06 better than the First Call consensus of ($0.00); revenues fell 15.9% year/year to $88.3 mln vs the $87.1 mln consensus.

4:06PM First Solar beats by $0.05, misses on revs; guides FY09 revs in-line (FSLR) 151.58 +1.36 : Reports Q3 (Sep) earnings of $1.79 per share, $0.05 better than the First Call consensus of $1.74; revenues rose 38.0% year/year to $480.9 mln vs the $528.8 mln consensus. Co issues in-line guidance for FY09, sees FY09 revs of $1.975-2.025 bln vs. $2 bln consensus. Previous guidance was $1.95-2.0 bln.

4:04PM First Solar shares slide below 140 support which may act as technical resistance on any initial bounce (FSLR) 151.58 : FSLR printing 135. Previous Oct intraday lows stand @ 143.47.

12:04PM Semiconductors Hldrs Trust stabilizes at trendline support (SMH) 24.92 -0.07 : Noted the early relative strength in the Sector ETF but it was unable to build on those upticks. However, it has been able to work off the low after holding at trendline support (Click for chart). A continued hold at this support and a close at the mid to upper end of today's range would be a potential short term positive. Sustained gains above today's high (25.23) and its 50 day sma (25.40) would be needed thereafter to bolster the turnaround scenario.

9:54AM Semiconductors Hldrs Trust moves back into positive territory (SMH) 25.14 +0.14 : Noted the INTC test of its 50 day ema in the 09:31 update and after a very short term breach (50 day at 19.54, session low 19.48) it was able to stabilize helping to underpin the SMH. Also firmer are: ADI +0.3%, ALTR +0.6%, AMAT +0.7%, BRCM +0.4%, KLAC +0.7% (held at its 50 day), LLTC +0.8%, LSI +0.2%, MXIM +0.9%, NSM +1.4%, NVLS +1% (held at 20 day), TXN +3.4% (set new Oct high), XLNX +0.7%. ATML -0.2% is attempting to lift off its 200 day.

8:31AM Microsemi to close manufacturing facility, expects annual savings of $20 mln-$25 mln (MSCC) 14.05 : Co announces consolidation plans that will result in the closure of its manufacturing facility in Scottsdale, Arizona by April 2011. The co said that the action is part of its ongoing program to reduce inventory levels and improve its overall cost structure and business model as it grows in both new and existing markets. Microsemi expects that after the consolidation activities are completed in 18 months, annual savings benefiting operating income will range from $20 mln to $25 mln. The gross margin impact related to these savings would have equated to 400 to 500 basis points when applied to FY09 consensus revenue estimates. In the fourth quarter of fiscal year 2009, Microsemi expects to record one-time charges for restructuring and other reserves of between $24 mln and $26 mln for severance and related benefits, lease termination and facility closure costs. Additional consolidation costs of $3 mln may be incurred over the closure period. These costs will not impact the company's non-GAAP guidance for its fourth quarter of FY09. The co reiterates that the first quarter ending December 27, 2009 will be the final one in which transitional idle capacity will be used in describing financial performance.

8:00AM Silicon Labs beats by $0.07, beats on revs (SLAB) 41.38 : Reports Q3 (Sep) earnings of $0.67 per share, excluding non-recurring items, $0.07 better than the First Call consensus of $0.60; revenues rose 10.9% year/year to $125.9 mln vs the $123.8 mln consensus.

Advanced Energy Industries (AEIS) announces that it has entered into a strategic alliance with Shanghai Guangdian Electric Group. Through this agreement, SGEG will market AE's expanding line of Solaron grid-tie photovoltaic inverters in China.

7:06AM Advanced Energy beats by $0.08, beats on revs; guides Q4 EPS above consensus, revs in-line (AEIS) 12.77 : Reports Q3 (Sep) loss of $0.20 per share, $0.08 better than the First Call consensus of ($0.28); revenues rose 45.5% year/year to $51.8 mln vs the $45.5 mln consensus. Co issues mixed guidance for Q4, sees EPS of ($0.14)-($0.07) vs. ($0.15) consensus; sees Q4 revs of $56-$62 mln vs. $57.45 mln two analyst est

3:48AM United Micro beats by $0.04, beats on revs (UMC) 3.53 : Reports Q3 (Sep) earnings of $0.08 per ADS, $0.04 better than the First Call consensus of $0.04; revenues rose 11.1% year/year to $853 mln vs the $808.6 mln consensus. Gross margin during 3Q was 27.9%; operating margin was 15.4%. For 4Q09, co expects wafer shipments to decrease by approximately 0-3%, wafer ASP in US$ to rise by approx 0-3%, and a capacity utilization rate in the mid-80%. Co sees gross margin in mid-20%. The consumer segment is expected to grow modestly while the computer segment is expected to show some weakness. CapEx budget of $500 mln is expected.

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InvestmentHouse Weekend Market Summary 10/30/09

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

- GDP bounce a temporary elixir as the market rolls back over.
- Dollar rising on speculation of what the FOMC says next week.
- 2010 may be rather flat.
- Personal income and spending match expectations. Low expectations.
- Chicago PMI makes its move to positive.
- Michigan sentiment backslides as well.
- Market selling ahead of FOMC decision. Setting up the year end run?

Season change is still hitting the market.

October has a bad reputation in the stock market. While the market enjoyed nice gains to start the month, the action over the last two weeks turned the market negative for the month. Friday was a continuation of that selling, and the selling was intense. There were many reasons thrown around as to why the market was selling off, one being that it is the end of the fiscal year for many mutual funds and they were adjusting their positions and portfolios. There is no doubt that was part of the selling, but there is more to it. There has been a lot of action to the downside showing both volume and percentage losses, and there have been some serious breakdowns in the indices as well as some of the leadership groups. This is not just end-of-the-month shuffling, or end-of-the-year portfolio management. There is actual distribution as investors are getting rid of the stocks that they were buying on the way up.

There has been a lot of news out. We've come into a critical earnings season because in Q2 there were many unexpected earnings beat, but that was due to cost cutting on the bottom line. In Q3, investors were looking for top line growth, and there was some of that. Early on, stocks such as AAPL, INTC, and MSFT were rewarded handsomely for that. There is a decent list of very solid companies that reported top line growth.

It seems like the news cycle culminated on Thursday with the Q3 GDP, which beat expectations and came in at 3.5%. A lot of news was built in to that. There was economic news that was showing backsliding, and then there was the great GDP number, and the market rallied one day in the face of that sharp selling on Wednesday only to reverse on Friday. The market anticipated a lot of this news and rallied ahead of it, but a lot of that is now being taken off the table. There are profits being booked for the end of the year. After they are booked, the question is whether the money will move back in and rally the market to the end of the year.

As the dollar has declined, stocks related to the overseas trade (industrials, energy, commodities) have been moving higher. Over the past week, the dollar has rebounded. Other countries such as the United Kingdom, New Zealand, and Australia are raising or beginning to tighten their rates and pull in credit. That has strengthened their currencies. Are we doing that in the US? There is an FOMC policy meeting next week that culminates on Wednesday. Some anticipate that the Fed may start mitigating its language with respect to free and open credit. If that is the case, the dollar could continue to strengthen while stocks continue to fall. If that is the case, there will be issues with the market continuing to move higher, and the market has been pulling back in advance of that. After all this good news, and in anticipation of the Fed getting tougher with its statement, the dollar has rallied and stocks have fallen. That may reverse next Wednesday after the news is out and the market sees that the Fed is going to maintain an easy money policy.

This administration thinks that Japan made a critical mistake in the 1980's and 1990's. They believe that it raised rates too rapidly and its currency doubled in value, which choked off the recovery. That very well could be the case, but those are just two small factors in a much larger picture. One of the other things that the Japanese government did was spend a lot of money on propping up banks that should have fallen. It also spent a lot of money on stimulus packages for infrastructure and the like that did not really stimulate anything. Does that sound familiar? The current administration is worrying about the dollar and interest rates because it thinks those are the primary drivers. They are forgetting about other variables in the equation, however. All too often, administrations cherry pick what they want to trust and believe in (and not just Democrats; the Bush Administration did this as well). They do not look at the entire picture and factor in key variables. They are falling into a trap of thinking that if they devalue our currency and keep credit loose, we will recover.

I saw a cartoon just today that showed the President talking about how we did not want to repeat the same makes that Japan made in the 1980's. There are two men at a bar, and the American guy says, "What did the Japanese do in the 1980's?" The guy sitting next to him was a Japanese businessman, and he said, "Passed a lot of stimulus packages." We are attempting to do the right thing, but we are unfortunately forsaking what we do best, which is growing our economy. We need to encourage entrepreneurs to invest in the United States rather than funding the building of turtle crossings and the kind of things that do not create the jobs we need to lead the world economy in the future.

Friday turned out to be a continuation of the selling. This is leading up to the FOMC meeting on Wednesday which will determine - at least in the mind of the investors right now - which way the US will go with respect to its currency and interest rates. The statement will be something of a Rorschach test; everyone will see what they want to see in it. The bottom line is, with Bernanke doing what the administration wants, there will be easy money and there will be easy credit because they want to keep those home sales going and try to pick auto sales back up. Without the incentives, people are not interested in spending right now.

TECHNICAL

INTRADAY.

The intraday action was skewed as either very bearish or very bullish - as it was all week. On Friday, there was a lower open and the market sold lower all session. It tried to bounce along and find support in the last three hours of the day, and it did because it stemmed the decline. It still closed near the session low, however, and that is very bearish action. On Thursday, there was the higher to high that shows bullish action. On a day-to-day basis, it does not mean a lot in the current market. You have to look at the bigger picture. There is tremendous volatility jerking the market back and forth each session and that somewhat renders these intraday swings less meaningful. If there was a reversal, as seen in prior sessions in mid-October, that would be more meaningful.

INTERNALS.

Looking at a chart of the SP600 makes it easy to understand why the advance/decline line was not very weak once again. Advancers trailed decliners by 4.2:1 on NASDAQ and by -5.6:1 on the NYSE. The small caps are a part of the NYSE, and you can see they made the lower low and are leading the rest of the market to the downside. When the small and mid-caps make the strong move lower, there will be the kind of negative readings in breadth that are happening.

CHARTS

On SP500, there was high-volume on Wednesday, lower volume on the Thursday reflex bounce, and then crushingly heavy volume again on Friday as it tested the trendline and rolled back down on very strong volume. You will see the same thing on the NASDAQ. It came back up and kissed the 50 day EMA, and then rolled back over and sold on strong volume once again. The hallmark of the market the past two weeks has been the high volume on the intraday reversals. That showed that every time the market went up, sellers used it to dump shares, and then the breaks lower on high volume shows that the selling gained momentum. There is higher volume on the downside, which tends to beget more selling.

NASDAQ got a lower low intraday by just a hair. That does not mean a whole lot, but it is making steadier lows and will take out the early October low. That breaks the trend and changes the character of the move. There is similar action on SP500. It was breaking down, although it is still well above the early-October low. Even though it has broken its trend, it can consolidate and move on just as it did in June and July. It is not a terrible development on SP500, but it is not a good thing near term. SP600 actually made that new lower low after breaking its trendline and then not trying to give it a test. It looks like it is coming down to the 290 or perhaps 280 range from the June 2009 peak.

The SOX is in serious trouble as well. It has made a lower low already, and now it is in this range from 285 to just under 310. There is some good support in the 285 range, and I am looking for it to shoot down to that area and fill this gap in July putting it down at 270. That is another 26 points on the SOX which is a significant move on that index. It is very volatile, but it is still a significant move to the downside. There are some lower lows in place, and it is important to note that on the SP600 because those stocks are economic harbingers. If they are selling off, that says they do not think Q4 will be as good as Q3. It says that the Q3 stimulus plans were basically one-off events that did not stimulate any sustained economic activity. That corresponds to what history shows with these rebates and one-off stimulus proposals. This pump-priming in this respect simply does not work.

SP500 has made the break, but where is it going to go? 1,025 is support, and there is going to be an attempt. It may sidestep there because there was a lateral move before it fell. It held there in early October, so it may slow a bit when it gets there, but that is not likely the place where it will find a bottom on this selling. There is a stronger point of resistance at roughly 1,013 and that range of resistance runs down to roughly 980. There is the mid-August bottom and another support range from the same level in late July. That is a good support level and is also a very good pullback for this index. To drive that point home, let us take a look at the daily chart on the SP500 and do some Fibonacci work. The move in this last rally in October is coming back and has given up almost 100% of that move at 1,020. We can look at 1025 as being a level it is going to hit. At the 127% extension, there is good support, and that takes it to 1,000. 161% is at 971. It is a good range from just under 1,000 to 970 where you can see that SP500 will try to come down and likely try to hold the line.

The techs were in some trouble. They are still in trouble, but are not as bad off as the small caps. On NASDAQ, there is a pretty solid support range at the early August consolidation at 2,000. That is a definite possibility. You have to think of support more in a range than a particular point. There is a range that runs from roughly 1,960 up to 2,000, but there is also a spot at 1,930 in August. There are two significant support lines from way back running right through this level. This is the gap point from October 2008, and that will be a significant level. NASDAQ was at 1,930 in mid-August, and the lower part of the gap takes it down to just over 1,900. That is the range you are looking at to fill on this particular bout of selling.

As for the longer-term picture, if you looking at a weekly chart back to 2007, that is where the market peaked before this selloff. There is a trendline from that peak and coming along Q2 of 2008. It is not the greatest trendline, but it is nonetheless the main trendline off of that peak. There was a major breakdown, a bottom, and then there was the 60%+ rally back up. It started to struggle right under where the trendline is going. That is where the market started to struggle, so logically, it is a normal place for it to turn down and test. There was a big move down, a big move up. Now it needs to test, and it could go back down to the levels I spoke of, such as 1013 and all the way down to 975-980.

I will go back further to the 2000 peak. There was the rally back from that selloff and something of the double top within a bigger double top, and there was a trendline that formed on that selling. What happened after the market came up off this big rally? Remember, this was the large rally that is comparable to the one there was here, although this one is larger on SP500. There was stimulus - this was a different kind of stimulus that tends to create longer-lasting effects. Then there was the rally, but in 2004, there was a big goose egg as far as rallying further. The market moved laterally for almost the entire year, but it was ten months out of that year that the stock market moved laterally. We could expect that to happen now with the similar rally.

We have come up to resistance, and will the market shoot back up from here or move laterally? It might be a situation that, after the liquidity runs out at the end of the year, we will have a lateral move. What will be the catalyst to send things higher in 2010? The Obama Administration's White House economic advisors already said that the stimulus is going to run dry at the end of Q1 of 2010. One can expect that there will not be a lot to drive the market forward. They are hoping their stimulus will have primed the pump and will move things higher. That remains to be seen, but I would not be surprised if the market moves laterally for a lot of 2010 after a run to the close of 2009. If you buy and hold, that is tough, but if you are trading in a range, we can play some great stocks that move up and down. I like that actually. I can find stocks that I like that are active and that can really run inside of a solid range up and down. That is a 10-40 point range for stocks such as ICE, CME, BIDU (even though it was hit, it will be back), and they establish nice, steady ranges that we can trade up and down in. We can use the range parameters, support and resistance, and Fibonacci to help us pick the entry and exit points. That is not necessarily a bad thing. I kind of like them myself because I can make a ton of money in those and I can do it in a pretty predictable way.

LEADERSHIP

Financials are an interesting group right now, and one that does not look bad is MS; it had a nice pullback and looks solid. We are playing GS to the downside, and it looks like it has trouble. It is at a support range, but you get the idea that it has rolled over with a being umbrella and is heading lower. JPM is in the same situation and is starting to break down. There are also financial sector stocks that look good, such as ACF. It has a really nice pattern - a cup with handle, a breakout, and a test. In all this market selling, all it did was come back, test, and hold support. It is in excellent position. There are diamonds even in all the charred remains of the market after this last selling.

Energy is okay. It is not in great shape after the selling, but it is hanging in there. That is one of the sectors that can move up when things turn back up. I am looking at APA, APC, and CVX, and you can see that they look solid. That is not the case across the board. CHK has broken lower, but it is trying to hold at some support and may set something up. One that follows oil more closely is CNQ. It has had its dips, too, but it is not out of the picture. As for the industrials, DE, CAT, and ITW all look very solid.

As for the techs, AAPL is down but hardly out. It simply filled the gap and is trying to hold. It IS technology right now, and how it performs at the 50 day EMA will show what technology will do. MSFT is doing well in earnings with Windows 7. It had a gap up, a nice test, and is in a flag pattern. It is not all bad.

Metals are not great. Steel has been in trouble. RS is a steel fabrication company and it is not doing well. AKS is all the way back to its 200 day EMA, but FCX is not in that bad a shape. It looks a lot like the energy companies: down but hardly out.

Retail is also down but not out. COST looks solid, and URBN is still holding its trend higher. Not all are great; JOSB is breaking down. BBY is not bad. BBBY is not in great shape, but not bad. Leadership is still there, but we will see how it holds up as the indices continue to pull back and test. Once they do, we will see how they hold, see what is left standing, and see what we can ride higher to the end of the year on a liquidity run.

THE ECONOMY

Personal income just is not strong enough to propel continuing gains.

It was a week heavy on economic data, and Friday was no exception. There were big reports out that followed the GDP report on Thursday. Personal income and spending for September were out, but they are old data because they are incorporated into the GDP report that was released on Thursday. It was not any news other than it was parsed out and we could take a closer look at what the numbers were. Income was flat as expected. Personal spending fell 0.5% after the Cash for Clunkers went off the books.

Real disposable income fell for the fourth consecutive month. We are losing 0.5M + jobs each week, so incomes are not going to rise. The average hour workweek is not going up because they do not need more employees. If you take out the transfer payments - Social Security and those types of things - then you see that incomes fell 0.3%. They fell 0.3% in August as well, so there is a trend of declining incomes. If you have declining incomes, then there will not be ramped up consumption. We fooled it with the Cash for Clunkers; it got people to buy cars and it jumped things higher, but as seen time and time again, rebates for buying things do not work. Whether you give someone money and tell them to spend it, or give them a credit on a car, it only works temporarily. Car manufacturers are not ordering any more cars even though inventory is down because they do not think people will buy them. The durable goods report showed that. Inventories remain low and there are not many new orders coming in.

Chicago PMI turns 50.

The Chicago PMI came out (54.2 with 49 expected; 46.1 the prior month), and it is one of the key regional production reports. It was the first time over 50 since September of 2008. Chicago is finally coming around, but it has been pushed up by Cash for Clunkers because that is in their district. The outlooks were positive after they see the sales they had, but they are not ordering new cars, so take this with a grain of salt.

Production made a huge move up (63.9 from 47.2), as did Orders (61.4 from 46.3). There is activity going on, but it is not going to be the same without the stimulus that they were experiencing that caused these numbers to rise. While these are forecasts, they are based on what they just did with Cash for Clunkers.

Michigan sentiment somewhat depressed.

Michigan Sentiment came in (70.6 versus 69.4; down from 73.5 in September). Once again, confidence is falling, and these are not that great of numbers for Michigan. Confidence was down in the upper 40's from the conference board, and that is more typical of a recession. These are similar recession numbers for the Michigan report as well.

In summary, there were decent numbers out, but there were also troubling numbers and backsliding in the economy. Durables were fine, but new home sales were terrible. Existing home sales were fine, and the GDP looked good. There were problems with inventory levels and regional manufacturing (other than the Chicago) have been going back. We will see next week if they start coming back up and we will get another look at the national ISM as well. It was doing some backsliding last month and we will see if it picks back up or if this time it will slide below 50 again.

THE MARKET

MARKET SENTIMENT

VIX continue its explosion higher. It has now easily cleared the September and early September peaks as volatility, a.k.a. uncertainty and fear, ratchets higher. It is now at the June and July peak levels and its 200 day SMA. Given the explosive move and the index chart patterns that show more potential weakness as well as VIX' propensity to explode and show momentum once it breaks out, it could run to next resistance at 40.

VIX: 30.69; +5.93
VXN: 29.81; +4.41
VXO: 28.89; +5.25

Put/Call Ratio (CBOE): 1.21; +0.37

Bulls versus Bears:

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 doesn't have the cash to drive it higher.

Bulls: 48.3. Fell slightly from 49.5%. They are still holding up surprisingly well, indicating that there was indeed excessive belief that the rally would sustain itself. Bulls have held in the 48% to 50% range for several weeks now though that will start changing some now, and that is for the better in terms of a renewed upside move. Still well over the 35% level that is the threshold for what is considered a bullish climate. It does not mean things are necessarily bearish; that takes a reading in the 60% range. Hit a high of 47.7% mid-June on the run from the March lows. Again, to be seriously bearish it needs to get up to the 60% to 65% level. Dramatic rise from 21.3% in November 2008, the bottom on this leg. This last leg down showed us the largest single week drop we have ever seen, falling from 33.7% to 25.3%. Hit 40.7% on the high during the rally off the July 2008 lows. 30.9% was the March low. In March the indicator did its job with the dive below 35% and the crossover with the bears. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator.

Bears: 22.5%. Bears surprisingly show little strength despite the selling, barely moving from 23.1%. Bears have trended slightly lower the past several weeks but are mostly holding the line at this level. Now we expect them to jump, an upside positive. Hit a low of 21.3% on this leg. Rebounding some from the big drop 31.1% and 35.6%. For reference, cracking above the 35% threshold considered bullish. Hit a high on this run at 47.2%. 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: -52.44 points (-2.5%) to close at 2045.11
Volume: 2.546B (+10.06%)

Up Volume: 216.23M (-1.765B)
Down Volume: 2.397B (+2.078B)

A/D and Hi/Lo: Decliners led 4.18 to 1
Previous Session: Advancers led 2.34 to 1

New Highs: 24 (+5)
New Lows: 44 (+5)

NASDAQ CHART: Click to view the chart

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: -29.92 points (-2.81%) to close at 1036.19
NYSE Volume: 1.655B (+13.87%)

Up Volume: 80.547M (-1.213B)
Down Volume: 1.573B (+1.423B)

A/D and Hi/Lo: Decliners led 5.63 to 1
Previous Session: Advancers led 4.04 to 1

New Highs: 59 (+4)
New Lows: 45 (+9)

SP500 CHART: Click to view the chart

SP600 Chart: Click to view the chart

DJ30

The strongest of the market, the Dow is holding its 50 day EMA that it held on the early October test. A lower high but not in any real danger.

Stats: -249.85 points (-2.51%) to close at 9712.73
Volume DJ30: 327M shares Friday versus 248M shares Thursday. High volume as DJ30 holds the 50 day EMA.

DJ30 CHART: Click to view the chart

MONDAY

It was a hell of a week to finish out October, and maybe we can get a run toward the end of the year. That is a possibility. The liquidity is still there, but investors are waiting to see what the FOMC has to say about that liquidity. Once it is clear that the Fed is not going to reduce liquidity any time soon, things may turn back around. The dollar has been rallying because of the uncertainty of what the Fed will do. The Fed is not going the support the dollar and the Obama administration does not want it to support the dollar. It could tick right back down after the oversold rally that happened over the past week that contributed to the stock market pulling back.

That will be one of the keys this week, and the number will come out on Wednesday afternoon. Until that point, the market may continue to slide back. I do expect some bottoming coming ahead. We are looking at SP500 to test back to about 980 on the low. That is a logical area for it to do so, and it is not difficult to see it fall back another 50-60 points into Wednesday and the market start to bottom ahead of the FOMC. As it factored in the better earnings and better economic data moving into those numbers, now it has pulled off on worries that the Fed might tighten credit and thus impact the dollar to the upside. Once that is taken out of stocks, then they can start to move back up; indeed, they may start to move back up at some point ahead of the number on Wednesday.

If the Fed comes out and says it is going to tighten or give some substantive change to its statement that indicates it will start doing that, then all bets are off. The dollar is going to shoot higher and that will damage the stock market. Up to that point, I want to look around and see what is left in the carnage. Some sectors are still hanging on, but it is hard to call them great setups. What is still out there are a bunch of smaller issues that people do not really pay attention to but are quite solid. They could still produce some very good results to the upside for us. That gets a bit iffy if you are playing against the current. It is difficult to get into a lot of downside right now, but there are some setups that I am looking at to play 2-3 days to the downside, to make a quick move while we let our current downside positions run.

The last two weeks, we were taking a lot of positions off the table in anticipation of a heavier downturn. That is what has happened, so we have some cash and can be ready to move into some quick trades to the downside. Then we will be ready and see what happens from there. We can move to where the market heads after the FOMC meeting. If the Fed does what I expect, and it does not change its statement and what it is going to do with rates and the dollar, we can see the dollar slide and industrials, energy, etc. rebound and provide excellent upside opportunity.

That would play perfectly into the idea that there are mutual funds that are going to want to chase performance to the end of the year. Some of them closed out their fiscal year, but what a great way to get a start on the next year. Others have a calendar year, so they will want to catch up with these results as well. This kind of pullback that the market has right now will set up a great opportunity. If the SP500 gets down to 980, that is going to provide those mutual funds (and they have the big money) with a perfect entry point to buy, buy, buy and drive things up toward the end of the year. After that, it could be a different story when we get to 2010 and the economy actually slows down. Until then, it could be a nice run to the end of the year once we get this cycle of worry about the FOMC out of the way.

Support and Resistance

NASDAQ: Closed at 2045.11
Resistance:
2060 is the August peak
2070 is the September 2008 intraday low
The 50 day EMA at 2082
2099 is the mid-September 2008 closing low
The 18 day EMA at 2118
2143 is the October range low
2155 is the March 2008 intraday low
2167 from the July 2008 intraday low
2168 is the September 2009, intraday peak
2169 is the March 2008 closing low (double bottom)
2177 is a low from March 2008
2191 is the October 2009 peak
The March up trendline at 2192
2210 (from September 2008) to 2212 (the July 2009 closing low)
2275 - 2278 from the February 2008 and April 2008 lows

Support:
2016 is the early August peak
1984 from late September
1962 is the bottom of the August 2009 range.
1947 is the October gap down point
1897 is the October post gap intraday high.
1880 is the June peak
1862 is the July peak
1786 is the November intraday high
1780 is the November 2008 closing peak
The 200 day SM A at 1774
1773 is the May intraday peak

S&P 500: Closed at 1036.19
Resistance:
The August peak at 1040
1044 is the October 2008 intraday high
The 50 day EMA at 1047
The 18 day EMA at 1066
The March/July up trendline at 1068
1070 is the late September 2009 peak
1078 is the October range low
1080 is the September 2009 peak
1101 is the October high
1106 is the September 2008 low
1133 from a September 2008 intraday low
1185 from late September 2008
1200 from the July 2008 low

Support:
The early August intraday peak at 1018
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low
956 is the June intraday peak
944 is the January 2009 high
935 is the January closing high
932 is the July peak
930 is the May peak
919 is the early December peak is bending
The 200 day SMA at 919

Dow: Closed at 9712.73
Resistance:
9835 is the late September 2009 peak
9855 is the early September peak in its lateral range
The 18 day EMA at 9872
9918 is the September 2008 peak
10,120 is the October 2009 peak
10,365 is the late September 2008 low
10,609 from the Mid-September 2008 interim low
10,963 is the July 2008 low

Support:
The 50 day EMA at 9680
9654 is the November 2008 high
9625 is the October 2008 closing high
9620 is the August 2009 peak
9387 is the mid-October peak
9116 is the August low
9088 is the January 2009 peak
8985 is the closing low in the mid-2003 consolidation
8934 is the December closing high
8878 is the June peak
8829 is the late November 2008 peak
8626 from December 2002
The 200 day SMA at 8593
8588 is the May high
8581 is the July peak

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

November 02 - Monday
- Construction Spending, September (10:00): -0.2% expected, 0.8% prior
- ISM Index, October (10:00): 53.0 expected, 52.6 prior
- Pending Home Sales, September (10:00): -0.1% expected, 6.4% prior

November 03 - Tuesday
- Factory Orders, September (10:00): 0.9% expected, -0.8% prior
- Auto Sales, October (2:00)
- Truck Sales, October (2:00)

November 04 - Wednesday
- Challenger Job Cuts, October (07:30): -30.2% prior
- ADP Employment Report, October (08:15): -190K expected, -254K prior
- ISM Services, October (10:00): 51.5 expected, 50.9 prior
- Crude Inventories, 10/30 (10:30): 0.78M prior
- FOMC Rate Decision, 11/4 (2:15): 0.25% expected, 0.25% prior

November 05 - Thursday
- Productivity-Preliminary, Q3 (08:30): 6.5% expected, 6.6% prior
- Initial Claims, 10/31 (08:30): 520K expected, 530K prior
- Continuing Claims, 10/24 (08:30): 5750K expected, 5797K prior

November 06 - Friday
- Nonfarm Payrolls, October (08:30): -175K expected, -263K prior
- Unemployment Rate, October (08:30): 9.9% expected, 9.8% prior
- Average Workweek, October (08:30): 33.1 expected, 33.0 prior
- Hourly Earnings, October (08:30): 0.1% expected, 0.1% prior
- Wholesale Inventories, September (10:00): -1.0% expected, -1.3% prior
- Consumer Credit, September (2:00): -$10.3B expected, -$12.0B prior

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Amateur Investors Weekend Stock Market Analysis (11/7/09)

http://www.amateur-investor.net/Weekend_Market_Analysis_Nov_7_09.htm

Next week looks like a pivotal week for the major averages. The Dow has been acting the best lately as it found support right at its 50 Day EMA (blue line) and is attempting to make a run at its previous high just above 10100.



It looks to me one of two things may occur in the Dow. The bullish scenario is that it rises above its previous high and makes one more higher high with resistance coming in at 10350 (point A) which is the 50% Retrace from the October 2007 high to the March 2009 low.



Meanwhile the more bearish scenario is that the Dow will rally back to its previous high just above 10100 and then stall out leading to the potential development of a Double Top pattern similar to what has recently occurred in the Transportation Index (TRAN).




As far as the other major averages the Nasdaq has risen back above its 50 Day EMA (blue line) however it looks like it might be developing a potential bearish looking Head and Shoulders Top pattern. If that is the case I would look for the 2nd Shoulder to potentially develop near 2127 which is the 61.8% Retrace from the most recent high to the low made at 2024.



Meanwhile the S&P 500 has also risen back above its 50 Day EMA (blue line) however just like the Nasdaq it could be developing a potential bearish looking Head and Shoulders Top pattern as well. If that is the case I would expect the 2nd Shoulder to form in the 1073 to 1080 range. 1073 is the 61.8% Retrace from 1101 to 1029 while 1080 is where the 1st Shoulder resides at.



Keep in mind that doesn't mean these patterns will end up following through however it is something to be aware of over the next few weeks.

Finally further upside or downside movement in the market may depend on the action in the US Dollar (USD) as we continue to see an inverse relationship between the USD and the major averages. When the USD has fallen (points B to C) the S&P 500 has usually risen (points D to E) and when the USD has rallied (points C to B) the S&P 500 has generally fallen (points E to D).

Furthermore you can also see the USD has been stuck in a downward channel (yellow lines) since mid June which has been a positive for the major averages. This past week the USD once again tested the upper boundary of this channel (point F) and came under selling pressure which led to a rally in the market. The question is will it now make another move lower and eventually test the bottom of the downward channel or will it reverse and finally breakout of its downward channel which it has been unable to do for the last several weeks?



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InvestmentHouse Weekend Market Summary 2/12/10

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

We have DIVIDED the video into component parts: Market Overview, Technical Summary, Economy, and the Next Session. This allows you to choose the segments you are interested in without having to find the spot in a longer video. Click on the link to the portion you wish to view.

MARKET OVERVIEW

TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
Market Overview Video

TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
Technical Summary Video

TO VIEW THE ECONOMY VIDEO CLICK ON THE FOLLOWING LINK:
Economy Summary Video

TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
Next Session Video

- Market survives a week full of news and geopolitical intrigue.
- Greece was bad, but Friday EU GDP was disappointing and China again raised bank reserve requirements.
- China real estate, industrial capacity facing big Japan-like bubbles.
- Retail sector faces adversity, shows strength Friday.
- Market looks a lot like June and July 2009 so don't write it off just yet.

Earnings may be mostly over but there is no lack of news or intrigue.

Earnings were mostly over, but there was no shortage of news. The news was dominated by Greece and the PIIGS and whether there will be a bailout from significant countries in the European Union. That dominated the trade on the week and pressured the market considerably. Note that the market did not break down on the week; indeed, it drifted to the upside even with the bad news. Looking at a 60-minute chart of the week, you can see how the action unfolded. Typically, there were gaps up or down, but there were recoveries. There was a gap lower with a recovery on Wednesday, Thursday, and Friday. The market continued to show resilience in the face of negative news. Most of that negative news was outside of the US. The US had good earnings, and there were decent economic reports that showed a continued, steady (though not dramatic) improvement in the underlying economics. That has been enough, thus far, to hold the market together and keep it moving higher. Friday was an explosive news day taking everything into consideration. It was settled during the week that the EU, or the IMF, or a combination thereof would bail out Greece and, by extension, bail out the other PIIGS (Portugal, Ireland, Italy, and Spain). The issue was whether the rest of Europe could handle the bailout.

There was more water splashed on the situation on Friday when China increased the reserve requirements for its banks by 50BP. That is the second such increase within a month. The European Union's GDP was much lower than expected at 0.1% growth versus 0.3% expected and 0.4% in Q3. It is down 2.1% year-over-year. That is a significant drop as Europe is supposedly emerging and growing stronger coming out of the 2008 crash. That is obviously not the case. Germany's GDP was flat versus a 0.7% gain in Q3. Italy fell 0.2%. France was strong at least as far as EU terms are concerned rising 0.6% versus the 0.2% gain expected. This slowing of GDP growth in Europe is very serious. Europe never got over the problems of 2008. It papered over them, as did the US, trying to fill the chasm with printed Euros. It has never cured the problem, and cracks are starting to show up cracks that a lot of money printing and huge deficits are causing. They cannot hem in the underlying problem, and that is a major concern moving ahead in 2010. It may not show up until later in the US, but I am very concerned that it will eventually appear.

As noted earlier, it did not hamper the US markets. They did not go much of anywhere, but it did not break them down. There was a lot of bad news swallowed by them, and that is a good sign. Looking at the SPY intraday chart, Friday is an indication of the same. There was a big gap lower because there was serious news to deal with a rally, a selloff, and then a steady comeback. There was the same action on Thursday. It was both short covering and real buying. There was buying because at the end of the day, Berkshire was moving into the SP500. There had to be a lot of reshuffling with respect to market cap and what stocks were bought and sold. Berkshire was going in with a big market cap, taking the place of the stock that was coming out, so there had to be a lot of buying and selling. There was buying, but we also had the short covering along with that. Considering that the indices have been in a roughly five-week pullback, you can understand why there was a bounce into the end of the week in front of a three-day weekend. No one wanted to be caught on the wrong side of the fence with a long weekend and with all the issues still on the table. There was a nice bounce coming up, but when you look at the patterns, there are also good-looking stock patterns. They are down at the start, but vastly improved as the day went on. Again, that was a pattern for the week. The market was able to overcome bad news and weak starts to make some headway against the rather new short-term downtrend for 2010.

OTHER MARKETS

Dollar. With the trouble in Europe, there was a flight to safety in the dollar. That bolstered it and its continued trend to the upside. It was not a runaway move, however, because the dollar has moved into a significant resistance point from the June and July consolidation. It runs from roughly 79 to 81.50. Intraday, the dollar hit at 80.75 on the high, so it is right in the middle of that range and bouncing. Nonetheless, it put in another good day (1.3618 Euros versus 1.3692 Thursday). During the day, it was down below 1.36 Euros, trading in the 1.35 range. That is significant. 1.36 - 1.38 is the range it has bounced up and down in lately, and that is what the traders are watching. If it makes a breakout above that, then it has cleared this resistance and we are looking up at 82 - 83 as the next range. 84 is the next serious resistance for the dollar.
Click to view the chart

Oil. Oil had a difficult session. It had a good week, bouncing off the 200 day EMA and making a higher low above the December low. It sold back somewhat on Friday and was roughed up a bit given the strength in the dollar and given that oil inventories were higher than expected at 2.4M barrels. It had a bit of a rough day, but it was a modest setback. It bounced well off the low.
Click to view the chart

Gold. Gold had another session of flat trade after a good bounce for the week. It was slaughtered over a week ago with Chinese news and the problems in Greece. It recovered and held up very well on Friday even with more trouble out of Europe and China raising its bank reserves. It sold off a little but bounced back. It was a deflationary move when it tanked on the news, but it has recovered and shrugged it off on Friday. It is not that much of a deflationary story with this particular move. Nonetheless, the yellow metal is in a base it has come back. It tried to double bottom but failed. It has now come back and looks like it will make a lower high and continue back down to 1050 (where there is solid support from the October peak) and base out. It could be just over halfway through a longer base, and bases set the foundation for further gains. Thus, I do not see gold as an immediate buy given that it failed on this move. It is setting up for a break higher in the not-too-distant future, however.
Click to view the chart

Bonds. Bonds sold off despite the economic uncertainty coming out of Europe and the turmoil with bank regulation in China. On Friday, the 10 year bond closed down (3.69% versus 3.72% Thursday) as bonds rallied back given some of the uncertainty over in Europe. There was some of that factored in, but bonds were selling off overall. That is typically an indication that investors do not see much trouble down the road.

The US sold many treasury notes, as it has been doing, but they were not well-received auctions. They were not complete busts, as with some Greek auctions, but the US had to offer significantly higher interest rates than anticipated to lure buyers into the market. We raised the money we wanted to raise, but it will cost us more. That adds to the debt burden that every man, woman, and child in the US bears right now (roughly $125K by conservative GAO estimates). We are bringing in the money, but it is costing more, so our debt service goes up as well. We are engaged in a vicious cycle, and the bond market is showing the wear and tear since fewer people want our paper. We are not nearly as bad as some of the other countries. Some are already above 100% with respect to their debt-to-GDP ratio. We are not near that, so I suppose we are a bastion of economic sanity over here. Although, when you look at the rest of the western economies, that seems to be the case.
Click to view the chart

TECHNICAL

INTERNALS

Volume. Volume was up 5.5% to 2.1B on NASDAQ, and it rose 25% to 1.3B on the NYSE. I cannot put too much emphasis on that because a lot of that volume was late in the day with the SP500 rebalance. That is why volume jumped back above average on SP500. Do not take that to the bank, however. Even though it is an incongruity with a Friday trade before a three-day weekend, the SP500 rebalance was the culprit.

Breadth. The advance/decline line was tame. Advancers led 1.5:1 on NASDAQ, and it was a dead heat on the NYSE at 1:1. That is not too bad given that the Dow and SP500 closed down for the session.

CHARTS

NASDAQ. NASDAQ was able to break through its 10 day EMA on both Thursday and Friday after giving them up intraday. It closed at the 18 day EMA. There is better volume, but I am throwing that out even though that is on NASDAQ as well. It just does not tell us much. It is in the teeth of the November and December trading range, putting it just below the October peak. This is a very important resistance range, all the way up to 2205. The 50 day EMA is sitting there as well. There are a few layers of ice on top of NASDAQ. It looks as if it wants to break down again, but there are days were it is moving higher. Techs are trying to lead, and it very well could break out. Liquidity is still there. The Fed is still printing money even though Bernanke's testimony said they would stop at some point. The money is still hitting, but it is a matter of whether there is enough to push it through. If SP500 does not make it, NASDAQ has less of a chance.

SP500. The SP500 made a recovery during the week, and that was in the face of a lot of bad news. That can be viewed as a positive. It never did break over the 10 day EMA, which is the closest resistance in any downtrend. It tried to make the move, but it has not yet. It has not collapsed yet, however, so there is a positive. It is holding at the September peak, unable to make the break through at this juncture. This pattern is a bear flag. There is a selloff and a rebound that takes it to resistance. It took it to the October peak when it bounced in early February. It then collapsed down to the bottom of that range before bouncing this week and taking it up to resistance at the September peak. The question is whether it will collapse to the next lower rung at 1025 or make the break to the upside. Looking at the pattern, you would say no. Even though it did show resilience last week, the path still appears to be downside for the SP500. Will it hold 1050 or can it break through 1075? It is in an important range, and we will see how it plays out. If I were to throw a dart against the wall, I would say it will test a bit more, but you never know what the market will do, particularly when there are so many geopolitical events affecting the market on a daily basis.

SOX. The semiconductors were an important mover. They were the first to fall, and they were the first to try to bottom and start to bounce. They made it back up to a key level at the September and October twin peaks. They actually moved through the 50 day EMA intraday on Friday, only to give it up on the close. It also closed just below the top of the range represented by September and October. That is showing its own bear flag after making a lower low, but it did pop up to an interim high. It has broken the immediate trend, but it still has serious resistance to crack through. Many people are looking at semiconductors right now, and they had a good week. The question is whether they can continue after a week of decent gains or if they will fall back down. The overall bias in the entire market is somewhat down, and it will be tough for them to make the move. They were the leaders, however, and if anyone in any group will make a move, I would anticipate it being the semiconductors.

SP600. The SP600 had a decent bounce of its own, particularly to end the week. That took it up to the September peak and the 50 day EMA. That is a good move. It closed the high and did not back off at all. The small caps are the canaries of the economy, and we will see if they continue to improve as the numbers have been showing. If it does not follow the European model, then it could break higher and give us a good look and indication as to what will happen with our economy in the summer.

LEADERSHIP

Retail. On Thursday night, there were after-hours earnings in the casual dining area that were taking those stocks down, and that sector had been a solid leader in the market. I was concerned, with the after-hours selling, that it would bleed into Friday the market would lose a leadership group. BWLD had its wings plucked off and it crashed and burned. PNRA reported earnings and was down after hours, but after gapping lower, it reversed and closed higher. It is maintaining its uptrend. The buyers were ready to step in, and that is a very good sign. One of the other after-hours reports was CMG, and it gapped lower as well, but then it reversed and surged close to 4% on the session. That is big volume, and I am happy to see that one of the leadership groups in the market was still able to show strength in the face of adversity.

Energy. Energy continues to struggle. HAL has a bear flag. There was the same action in SLB on Thursday. CHK is a stock in natural gas that I still like. It is trying to hold at the 200 day EMA and make a higher low. These are not what you would call fantastic patterns to the upside, but they are possibilities for rebounds (at least with respect to CHK). We will see if HAL can make something positive out of a bear flag. Across the energy sector, the patterns are not good. They have work to do, and that is the case in many of the market sectors.

Metals. FCX double bottomed and bounced, finally showing some good volume to end the week. There is nothing wrong with that, although it is not taking off to the upside given the general sluggishness in the market. It performed very well considering what China was doing with the banks and the reserve requirements. Metals are tied to what happens in China and Brazil. Whenever China sneezes or does something to slow down its expansion, it shows up in the metals. AKS shows that steel is recovering, similar to copper, but the patterns are not fabulous. They are not the good patterns we were playing before the start of the New Year.

Agriculture. MOS broke through the 50 day EMA, and this is interesting. This is similar to FCX, CHK, and some of the other stocks that have come down and held the 200 day EMA and put in a double bottom and bounced. That is the one pattern that is working near term to the upside right now. It is that short double bottom over a key support level, mostly (and usually) at the 200 day EMA.

Financials. I have not looked at financials lately because they have not done anything. That can be something good given that a lot of the market was selling off. GS has been moving laterally for a couple of weeks after selling off sharply and jumping higher in early February. It has not done anything, but it has been holding up the SP500 because it has not sold off. All of the financials are in a similar situation. They sold down early in the month and have now rebounded some. They are trying to hang on but are struggling. JPM is showing the same kind of action.

Healthcare. Healthcare remains one of the strong areas, but it is sporadic. RMD is a position we picked up as it gapped over resistance, held on a test, and took off to the upside again on solid volume. We always look for that kind of solid, consistent play. AMED continued higher on Friday as well. They are showing gains. They are not runaway gains, but they are positive. Not all stocks in healthcare are performing well, although there are better setups across those sectors versus other areas of the market. That is because it is a more defensive area. I like healthcare because it is defensive as well as a growth area. You can still get great moves in upside even when the rest of the market turns a bit negative.

THE ECONOMY

China is learning the Greenspan lesson from 1999.

Please view the Economy Video at the following link:
Economy Summary Video

THE MARKET

MARKET SENTIMENT

VIX: 22.73; -1.23
VXN: 22.97; -0.46
VXO: 23.24; +0.15

Put/Call Ratio (CBOE): 0.91; +0.05

Bulls versus Bears:

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 doesn't have the cash to drive it higher.

Bulls: 34.1%. Sharp decline in bulls as the impact of the prior 4 week decline finally hit. Of course it hit just as the market bounced this past week. Still, it is now below the 35% level, down from 38.9%, and that is considered bullish for the market overall. After peaking at 53 on this move the bulls continue to run, falling to a new low post- July 2009. Once again bulls peaked out near the 50% level. Bulls have bumped at 50ish since late August 2009, falling to 45ish and then rebounding. Getting close to the 35% level that is the threshold for what is considered a bullish climate. Hit a high of 47.7% mid-June on the run from the March lows. Again, to be seriously bearish it needs to get up to the 60% to 65% level. Dramatic rise from 21.3% in November 2008, the bottom on this leg. This last leg down showed us the largest single week drop we have ever seen, falling from 33.7% to 25.3%. Hit 40.7% on the high during the rally off the July 2008 lows. 30.9% was the March low. In March the indicator did its job with the dive below 35% and the crossover with the bears. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator.

Bears: 26.1%. A commensurate rise in bears, jumping from 22.2%. Over 35% is considered bullish for the market, so still a ways off even though bulls are falling to a bullish level. Continuing the rise from 16%ish on the lows this leg where it held for several weeks. Peaked near 28% in November, falling short of the 35.6% hit in July 2009. For reference, cracking above the 35% threshold considered bullish. Hit a high on this run at 47.2%. 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: +6.12 points (+0.28%) to close at 2183.53
Volume: 2.162B (+5.45%)

Up Volume: 1.331B (-440.453M)
Down Volume: 808.504M (+482.233M)

A/D and Hi/Lo: Advancers led 1.47 to 1
Previous Session: Advancers led 2.88 to 1

New Highs: 63 (+8)
New Lows: 22 (+2)

NASDAQ CHART: Click to view the chart

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: -2.96 points (-0.27%) to close at 1075.51
NYSE Volume: 1.328B (+25.08%). Volume was up but thanks to the Berkshire addition to the index.

Up Volume: 550.91M (-291.498M)
Down Volume: 758.725M (+550.969M)

A/D and Hi/Lo: Advancers led 1.04 to 1
Previous Session: Advancers led 3.17 to 1

New Highs: 96 (+10)
New Lows: 38 (-1)

SP500 CHART: Click to view the chart

SP600 Chart: Click to view the chart

DJ30

Stats: -45.05 points (-0.44%) to close at 10099.14
Volume DJ30: 296M shares Friday versus 194M shares Thursday. SP500 rebalance volume my friends.

DJ30 CHART: Click to view the chart

TUESDAY

There will be plenty of economic data coming out, and you can bet there will be more data with respect to what is happening in Europe and China. The US will get a good look at what is going on with capacity utilization and industrial production. There will be minutes from the FOMC. There will be several regional PMI or manufacturing reports. That will give a good look into just how the US is proceeding. This is all after a three-day weekend, which is a very long time when you have so much information and intrigue swirling through the world. Asia and Europe will be open on Monday, so there is plenty of time for news to hit, and the market is extremely news driven right now.

The market still looks weak from our perspective. The SP500 and the bear flag it formed this past week could be viewed as a positive because it absorbed a lot of bad news and still rose. Looking at the overall pattern, however, this is a stair step lower. It is not even an ABCD pattern because there is not the sharp impulse move higher. It moved up, leveled off, and then just carried through the momentum to the peak. It is simply stair stepping right now, making lower highs and lower lows. It is at an important level, and it could make the break higher. They are showing resilience, and we could get a continued bounce higher if there is no bad news. A test up to the bottom of this old peak in January would be a very good indicator of how the market strength is. If it did, it would likely fail and come down for a deeper test. That is historically what the market does, but it does not necessarily have to do that. It can stair step down to the 1025 level or 1000 level and form a nice base in through March or April. That is just about the time that earnings are ready to come in for Q1, and then it could be ready to make a move higher.

The question is what news is out there to drive stocks higher at this point. We are through earnings, and they were not bad. There has been plenty of decent US economic news, but the market has sold off over the past month or so. Where will the good news come from with Europe in trouble and China trying to reign in its economy? The liquidity that has been driving the market is still out there. Ben Bernanke says it will be removed at some point, but he cannot afford to remove it now. He is a student of history, and he has seen what Japan did and what the US did during the Great Depression and the 1970's. He does not want to be saddled in the history books as the Fed Chief who pulled away the punchbowl too quickly before we were in a recovery. The problem is that he is not getting much help from the administration. Their policies will not do much to create the kind of booming economy that our free enterprise system works best with. He has his hands full with a difficult task. He will keep the liquidity open as long as he can because there is no sign of inflation. There is something of a deflation worry, as gold has been telling us. When the news hit out of Europe and China, when the negatives came in, gold went down instead of bouncing. People were afraid that there would be deflation, not inflation. Remember, gold is at its best when there is uncertainty and a worry of inflation. Worries of deflation spiked it out of a double bottom and it made a lower low. Given the news coming out of Europe (even though there will be a rescue), I am still leaning toward there being further downside before there can be a sustained bounce. By sustained bounce, I mean one that can have a real chance of breaking the January peaks. There can be that bounce I was talking about that moves up to those levels to test. Historically, that would be something seen in a deeper correction. We will have to watch for that.

We have some downside plays and will continue to look at them over the weekend. Since the market bounced back this past week, you can bet there will be more bear flags from stocks that were hit hard, recovered, but are stalling at a resistance level. We will be able to pick some downside plays in the event that the market continues lower. If that is the case, we will let our current downside plays run. We will also look for some upside because, as you have seen, there are great stocks in good position to move higher. We have had excellent gaps to the upside that have held, and the stocks are moving higher. There is a dichotomy in the market. It is not sure what it wants to do internally because there are stocks heading higher and stocks heading lower. We have not reached the point where there is a predominant negative or positive theme that drives all stocks one way or the other. Indeed, we are in a rather mild and ordinary correction after a whale of a run off the March lows. The closest thing we can look back to is the June and July correction after that initial run. If you look at this and compare it to now, they look very much the same. Step down, bounce, a lower low, and then a takeoff.

It still looks negative to me, but it still could come back. As in June and July, if it will hold, it will hold right where it has been at the September and October lows. They look very similar in pattern. They held at those prior lows and bounced off that. It has made significant lows, it has come back to test them, and it is either going to hold or break higher. We are in an important inflection point, and we will stay flexible. Keep buying stocks or positions (up or down) that are at good risk/reward levels. That means you have plenty of upside or downside, but you have a good stop point close at hand. Then, if it breaks, you can get out of dodge and look for bigger and better gain. We will try to play both sides of the fence to be ready for the break because, at some point, it will break. Without a doubt, the market does not move sideways forever. With the similar look right now from June and July, I want to be ready to take the ball either way. Once the market tips its hand, we will close out one side and move in the other direction. We can still make money even as the market bounces up and down in this range. Have a great weekend.

Support and Resistance

NASDAQ: Closed at 2183.53
Resistance:
2167 from the July 2008 intraday low
2168 is the September 2009, intraday peak
2169 is the March 2008 closing low (double bottom)
2177 is a low from March 2008
2191 is the October 2009 peak
The 50 day EMA at 2203
2205 is the November 2009 peak
2210 (from September 2008) to 2212 (the July 2009 closing low)
2218 is the August 2005 peak
2245 from July 2008 through 2260 from late 2005.
2275 - 2278 from the February 2008 and April 2008 lows
2292 is a low from January 2008
2319 from the September 2008 peak
2326.28 is the January high
2324-2370 is a range of resistance from early 2008
2382-2395 from 2008
2412-2415 represents a series of peaks and lows in 2007, 2008
2453 is the August 2008 peak

Support:
2155 is the March 2008 intraday low
2143 is the October 2009 range low
2099 is the mid-September 2008 closing low
2070 is the September 2008 intraday low
2060 is the August peak
2048 is the early October 2009 closing low
The 200 day SMA at 2032
2015 from an early August 2008 peak

S&P 500: Closed at 1075.51
Resistance:
1078 is the October range low
The 10 day EMA at 1078
1084 to 1080 (September 2009 peak)
The 50 day EMA at 1098
1101 is the October 2009 high
1106 is the September 2008 low
1114 is the November 2009 peak
1119 is the early December intraday high
1133 from a September 2008 intraday low
1150 is the January 2010 peak
1156 is the Sept 2008 low
1185 from late September 2008
1200 from the July 2008 low

Support:
1070 is the late September 2009 peak
1044 is the October 2008 intraday high
The August peak at 1040
The early October 2009 closing low at 1025
The 200 day SMA at 1024
The early August intraday peak at 1018
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low

Dow: Closed at 10,099.14
Resistance:
The 50 day EMA at 10,267
10,285 is the late December consolidation peak
10,365 is the late September 2008 low
10,496 is the November 2009 high
10,609 from the Mid-September 2008 interim low
10,963 is the July 2008 low

Support:
10,120 is the October 2009 peak
9829 is the September 2008 closing high
9918 is the September 2008 peak
9855 is the early September peak in its lateral range
9835 is the late September 2009 peak
9654 is the November 2008 high
9625 is the October 2008 closing high
9620 is the August 2009 peak
The 200 day SMA at 9531
9430 is the early October low
9387 is the mid-October peak

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

February 12 - Friday
- Retail Sales, January (08:30): 0.5% actual versus 0.3% expected, -0.1% prior (revised from -0.3%)
- Retail Sales ex-auto, January (08:30): 0.6% actual versus 0.5% expected, -0.2% prior
- Mich Sentiment, February (09:55): 73.7 actual versus 75.0 expected, 74.4 prior
- Business Inventories, December (10:00): -0.2% actual versus 0.2% expected, 0.5% prior (revised from 0.4%)
- Crude Inventories, 2/5 (11:00): 2.42M actual versus 2.32M prior

February 16 - Tuesday
- Empire Manufacturing, February (08:30): 18.00 expected, 15.92 prior
- Net Long-Term TIC Fl, December (09:00): $50.0B expected, $126.8B prior

February 17 - Wednesday
- Housing Starts, January (08:30): 580K expected, 557K prior
- Building Permits, January (08:30): 615K expected, 653K prior
- Export Prices ex-ag., January (08:30): 0.5% prior
- Import Prices ex-oil, January (08:30): 0.4% prior
- Industrial Production, January (09:15): 0.8% expected, 0.6% prior
- Capacity Utilization, January (09:15): 72.6% expected, 72.0% prior
- Treasury Budget, January (14:00): -$46.0B expected, -$91.9B prior
- Minutes of FOMC Meet, 1/28 (14:00)

February 18 - Thursday
- Continuing Claims, 02/6 (08:30): 4500K expected, 4538K prior
- Initial Claims, 02/13 (08:30): 430K expected, 440K prior
- PPI, January (08:30): 0.8% expected, 0.2% prior
- Core PPI, January (08:30): 0.1% expected, 0.0% prior
- Leading Indicators, January (10:00): 0.5% expected, 1.1% prior
- Philadelphia Fed, February (10:00): 17.0 expected, 15.2 prior
- Crude Inventories, 2/12 (11:00): 2.42M prior

February 19 - Friday
- CPI, January (08:30): 0.3% expected, 0.1% prior
- Core CPI, January (08:30): 0.2% expected, 0.1% prior

Don't miss our Market Summary each evening. It is part of "The Daily" which is available at InvestmentHouse.com. The Daily focuses on enhancing returns through strategic investing using various tools including stock options. The Daily is a must for anyone with an IRA or anyone that enjoys investing in individual stocks.

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Amateur Investors Weekend Market Analysis (5/8/10)

http://www.amateur-investor.net/Weekend_Market_Analysis_May_8_10.htm

It was a wild week with a 1000 point intra day drop on Thursday which wasn't a glitch as the media is portraying. In my opinion it's a warning shot that things are going to be extremely volatile in the future with wild swings in both directions.

As far as the Dow from a technical standpoint it appears to be developing a potential longer term Head and Shoulders Top pattern with a downward sloping Neckline. Furthermore the 1st Shoulder developed over a period of a few years so it's not impossible we could see a similar choppy pattern develop with the 2nd Shoulder as well if we are seeing a Head and Shoulders pattern developing.



Meanwhile from a Wave perspective the overall pattern looks similar to that of the late 1930's in which the Dow exhibited a 5 Wave pattern to the downside from the early 1937 top to the early 1938 bottom. This was then followed by a Triple Zig Zag correction which peaked right at the 61.8% Retrace from the early 1937 top to the early 1938 bottom. After the Dow peaked in late 1938 this was followed by a volatile 3 1/2 year correction (points Z to A) in which the Dow eventually retested its early 1938 low by early 1942.



As you can see from October of 2007 through March of 2009 the Dow exhibited a similar 5 Wave pattern to the downside. Meanwhile the move up from the March 2009 could easily be interpreted as a Triple Zig Zag pattern which peaked right at the 61.8% Retrace just like we saw in the late 1930's.

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From Briefing.com: 4:30 pm : The stock market extended its downtrend with another high volume selloff in the face of the second straight rally by they euro.

A negative tone permeated trade for the entire session, such that any attempts to trim losses were checked. In turn, the path of least resistance was downward. That left 99% of the S&P 500 to fall to a loss -- MasterCard (MA 205.50, +3.08) was one of the few names that made it out of the session unscathed.

Such widespread weakness not only left the stock market to close below its 200-day moving average for the first time since July 2009, but it also resulted in the stock market's worst single-session slide in more than one year. The S&P 500 is now down more than 10% from both its 52-week intraday high of nearly 1220 and its 52-week closing high of 1217, both of which were logged in late April. That marks the stock market first official correction since its surge from its multiyear low in March 2009.

Though this session's selloff was the worst in over a year, the S&P 500 is still six points above the lows that were set during the "flash crash" exactly two weeks ago.

With uncertainty wreaking havoc on trade, the Volatility Index spiked nearly 30% to a new 52-week high.

The action also brought in participants from the sidelines. In turn, trading volume on the NYSE surpassed 2 billion shares. Volume on the Big Board has averaged roughly 1.2 billion shares during the course of the past 50 days has averaged almost 1.3 billion shares per session. Part of the above-normal trading volume is owed to an increase in options activity ahead of tomorrow's options-expiration session.

The stock market's high-volume, high-volatility dive this session came without regard for a rally by the euro. Relative to the dollar, the euro had started the session in the red after it recorded a 1.5% gain against the dollar during the prior session. However, the euro swung to a gain of more than 1% amid speculation about an intervention into the currency by the European Central Bank. The euro eased back a bit and was quoted with a 0.6% gain against the greenback after the close.

Other headlines failed to have any positive influence over trade. News that a Wall Street Reform Bill will go to a floor vote was met with some frustration by market pundits and economic data generally disappointed as initial jobless claims for the week ended May 15 climbed 25,000 to 471,000, which was higher than many had expected. Continuing claims came in at 4.63 million to top what had been widely expected.

Leading economic indicators for April showed a 0.1% decline when a 0.2% increase had been expected. Leading indicators for the prior month showed a 1.3% increase.

The Philadelphia Fed Index for May came in at 21.4, which was up slightly from 20.7 in the prior month. Treasuries benefited considerably from this session's action. As such, the benchmark 10-year Note spiked more than one point to cut its yield to levels not seen since last November.

Advancing Sectors: (None)
Declining Sectors: Financials (-4.7%), Industrials (-4.6%), Energy (-4.4%), Materials (-4.4%), Consumer Discretionary (-3.8%), Tech (-3.6%), Health Care (-3.4%), Consumer Staples (-3.2%), Utilities (-3.2%), Telecom (-2.7%) DJ30 -376.36 NASDAQ -94.36 NQ100 -3.9% R2K -5.1% SP400 -4.3% SP500 -43.46 NASDAQ Adv/Vol/Dec 221/3.31 bln/2524 NYSE Adv/Vol/Dec 160/2.12 bln/2983

4:12PM Marvell beats by $0.01, beats on revs (MRVL) 17.97 -0.54 : Reports Q1 (Apr) earnings of $0.38 per share, excluding non-recurring items, $0.01 better than the Thomson Reuters consensus of $0.37; revenues rose 64.2% year/year to $856 mln vs the $845.3 mln consensus.

4:07PM Verigy beats by $0.08, beats on revs; guides JulQ above consensus (VRGY) 10.06 -0.49 : Reports Q2 (Apr) earnings of $0.05 per share, excluding non-recurring items, $0.08 better than the Thomson Reuters consensus of ($0.03); revenues rose 69.0% year/year to $120 mln vs the $114.5 mln consensus. Co issues upside guidance for Q3 (Jul), sees EPS of $0.12-0.17, excluding non-recurring items, vs. $0.06 Thomson Reuters consensus; sees Q3 revs of $140-150 mln vs. $129.3 mln Thomson Reuters consensus.

4:06PM Volterra Semi expands share repurchase program by $10 million (VLTR) 20.69 -0.97 :

4:05PM Dell beats by $0.03, beats on revs (DELL) 14.37 : Reports Q1 (Apr) earnings of $0.30 per share, excluding non-recurring items, $0.03 better than the Thomson Reuters consensus of $0.27; revenues rose 20.5% year/year to $14.87 bln vs the $14.27 bln consensus. Co said, "Overall, DELL expects a normal, seasonal sequential demand pick-up in the low single digits in its Q2. In addition, the company expects some components to remain in tight supply for the next couple quarters and some volatility in global currencies."

4:01PM Veeco Instruments: Epistar qualified Veeco's TurboDisc K465i GaN Metal Organic Chemical Vapor Deposition System for high volume LED production (VECO) 39.19 -1.94 :

Cisco (CSCO) announced its intent to acquire privately held CoreOptics, a designer of digital signal processing solutions for high-speed optical networking applications, for approximately $99 million in cash and retention-based incentives...

8:03AM NII Holdings: Motorola announces IOS agreement with NIHD (NIHD) 36.13 : Co teams with the Networks business of Motorola (MOT) by selecting its Intelligent Optimization Service to enhance network efficiency for the Nextel iDEN networks in Argentina, Brazil and Mexico. These agreements between Motorola Argentina S.A. and Nextel Argentina; Motorola Industrial Ltda. and Nextel Brazil; and Motorola de Mexico, S.A. and Nextel Mexico cover service to > 7 mln users across the three countries.

8:02AM Chipmos Technology reports April rev grew 6.5% MoM and 46.9% YoY to $44.1 mln (IMOS) 1.86 :

7:31AM Qualcomm and CK Telecom sign WCDMA subscriber unit and modem card/module license agreement (QCOM) 36.45 -0.26 : Co announced that they have entered into a subscriber unit and modem card/module license agreement. Under the terms of the royalty bearing agreement, co has granted CK Telecom a worldwide patent license to develop, manufacture and sell WCDMA and TD-SCDMA subscriber units and modem cards/modules. The royalties payable by CK Telecom are at co's standard worldwide rates.

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Amateur Investors Weekend Market Analysis (7/3/10)

http://www.amateur-investor.net/Weekend_Market_Analysis_July_3_10.htm

Currently the Dow is exhibiting a bearish Head and Shoulders Top pattern as it broke below its Neckline support area this week. The next support area would be around 9429 (blue line) which is the 38.2% Retrace calculated from the March 2009 low to the April 2010 high.



Keep in mind some are forecasting the end of the world in the coming years with predictions that the market is eventually going to drop back to levels seen in the 1970's. However if we take a look at longer term trend lines and Retracement Levels for the Dow there appears to be a significant longer term support area near 6000. First notice the 61.8% Retracement Level from the late 1974 low to the April 2010 high resides just below the 6000 level at 5775 (red line). Secondly notice the the downward trend line connecting the 2002 and 2009 lows (blue line) would eventually come into play around 6000 as well.



Meanwhile the entire pattern from the late 2007 high could be developing into a larger ABC type correction. Wave A went from 14200 to 6470 while Wave B peaked at 11258 in April. Meanwhile the recent drop from would be the early stages of Wave C which could turn into an elongated affair with a possible target in the 6000 to 5775 range as talked about above.



This pattern would fit in nicely with the 10 Market Rules as described by Bob Farrell especially Rule #8.

1. Markets tend to return to the mean over time
2. Excesses in one direction will lead to an opposite excess in the other direction
3. There are no new eras — excesses are never permanent
4. Exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways
5. The public buys the most at the top and the least at the bottom
6. Fear and greed are stronger than long-term resolve
7. Markets are strongest when they are broad and weakest when they narrow to a handful of blue-chip
names
8. Bear markets have three stages — sharp down (A), reflexive rebound (B) and a drawn-out fundamental
downtrend (C).
9. When all the experts and forecasts agree — something else is going to happen
10. Bull markets are more fun than bear markets.

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InvestmentHouse Weekend Market Summary

http://investmenthouse2.com/cntdirplus.asp?name=IHDaily&zid=2770189&eeid=XFcqVytdVygELD4ZXlAyUFpZGFAqWg==

- Perhaps market had priced in a weaker jobs report, but no other catalyst emerged to spur buyers.
- Jobs report sports lower unemployment rate but only because 650K job seekers gave up the search.
- Housing remains weak, jobs remain weak as manufacturing tries to hold up the entire economy.
- Heavily oversold market still in search of a bounce to test SP500's prior lows. Will the chips lead the bounce?

Stocks overcome weak jobs report, post gains, then give them up.

We were not expecting Friday to tell the entire story about the SP500's bounce to test the break below the prior 2010 lows. We were, however, at least expecting it to make a game of it and put in some work toward making its way up those lows.

Stocks started better, though just slightly. That early gain did not last, however, and stocks slid into a midday slump with all indices lower. Another upside attempt surfaced in the afternoon session and stocks drove back up to positive, holding the move with just 15 minutes left to the bell. Looked positive, but in the last five minutes selling hit and hit hard, pushing the indices back to negative across the board.

NASDAQ -9.5 (-0.46%); DJ30 -46 (-0.47%); SP500 -4.79 (-0.47%); SOX -0.45%; SP600 -0.80%; NASD 100 -0.35%. Very even declines across the board, outside of the small caps, and very modest volume as well.

The jobs report was all the buzz and it was basically a dud as the economy lost 125K jobs. The private sector gained 83K but with 450K new jobless claims each week the bleeding continues overall. Sure the unemployment rate fell to 9.5% from 9.7%, but that was due to 650K job seekers giving up and leaving the jobs pool. Thus the Administration's comments about the rate were simply hollow and indeed almost specious. Unemployment would drop like a stone if everyone gave up looking for work, but that doesn't mean the economy is in great shape and that everyone will be cared for. Absurd but that is what we are fed today by our fearless leaders.

OTHER MARKETS.

The Thursday dump lower by gold and the dollar abated some Friday, but they did not reverse. There was no sudden response after some positions were apparently unwound in gold and the euro on Thursday, suggesting other forces at work.

Dollar. The dollar tried to rally Friday and did . . . for awhile. It broke back over the 50 day EMA it gave up Thursday but by the close gave it up again along with a bit more ground (1.2548 versus 1.2522 Thursday). Thursday a short position in the euro was unwound. What we are also hearing is that the ECB's renewal of its loan facilities to EU banks at the same interest rate (1%), because it is shorter term and is expected to be a series of loans, is deemed to be a rate hike (e.g. 4 loan periods at 1% versus 1 longer one at 1%). Thus additional pressure on the dollar and strength in the euro.

Is the dollar's run over? The reason the dollar rose was the economic problems in Europe and the ECB's turn from just an inflation fighter to a stimulus maker. With the ECB willing to print a lot of money that made it just like the US Fed. Then it was a question of stronger economies given both central banks were willing to print what it deemed necessary. With the US economy on the upswing and the EU economies in turmoil, money flowed to the dollar. If that perception is no longer held, a very good reason for holding dollars over euro is not such a good reason anymore.
Click to view the chart

Bonds. After exploding higher on the week US bonds took a pause Friday (2.98% 10 year versus 2.95% Thursday). A big breakout as the bond market absorbed some less than stellar US economic data, though the manufacturing sector held fairly tough. Economic worries in Europe fueled the April to June run. Then bonds broke out again in June, fueled by the US worries as well. Will this cause a change in bond strength similar to the dollar weakening in the face of some European austerity?

Bonds could do that, but overall bonds are telling us that the US and world economies are not looking good. Bonds are a very solid leading economic indicator; history bears them out as a harbinger of economic tidings. Thus their surge higher even as the US economy supposedly continues to improve is the warning the US economy, whether dragged by the EU or not, is going to be under pressure.
Click to view the chart

Gold. Gold recovered some of the massive Thursday decline (1212.10, +5.40) but just a fraction as it moved up to the 50 day EMA but could go no further. That also puts gold just below the prior all-time high it broke in May and again in June. So what is happening here? A pause or a change in the weather pattern? Gold broke its near term trend started in March. This is its second sharp, big drop in 1.5 months, this second one coming right on the heels of a break to a new high, a break that failed to gain any real ground before this past week's dump lower.

I have talked of how the gold move was beyond deflation, that fear was the stronger emotion and was trumping deflation worries because if things got really bad even US bonds and the dollar would not be a good enough safe haven. Perhaps, however, deflation is the trump card. Gold has not collapsed but it has to make a strong recovery of its trend or it fades back into another base, maybe worse.
Click to view the chart

Oil. Oil remains in trouble as well. Friday it tried to recover some lost ground after popping its May to June trendline off the bottom of its range, but it failed, ending lower on the session (72.14, -0.11). It fell even further after hours. It rammed into some resistance at the end of the prior week as it bumped the bottom of the March range. Didn't think that would stop it but it has for now . . . along with a growing ledger of weaker economic data.
Click to view the chart

TECHNICAL PICTURE

INTERNALS

Volume. As you would expect volume peeled back on the Friday ahead of the July Fourth holiday weekend, falling to well below average. Down 38% on NASDAQ and 31% on NYSE. A bad two weeks in the market and no one had the stomach to do much on Friday and it showed in the volume.

Breadth. Rather ho-hum at -1.7:1 on NASDAQ and -1.4:1 on NYSE. As noted Thursday, breadth is not showing any divergence that would suggest things are getting better or worse: they are what they are, i.e. breadth is not providing any insider information.

CHARTS

SP500. SP500 tried to make the move higher and was positive at two separate times, but it could not hold the move and lost a half percent. Not much of a move on the heels of the dump lower the past two weeks that dropped SP500 120 points. As stated Wednesday and Thursday, the next important move for SP500 is the test of the break below the prior 2010 lows. That rebound and whether SP500 kisses it and fails or breaks back inside the range remains to be seen. For now with the market weakness you assume it fails as you assume the market will provide an oversold bounce from this two weeks of selling.

NASDAQ. Same look from NASDAQ as it undercut its 2010 lows as well, then tried to recover Friday, failing to hold that gain on the close. NASDAQ suffered just as hard a downdraft and now we watch for a rebound to test and see what course it strikes from there. As with the SP500, the assumption is lower, but you know what happens when you assume things.

SP600. The small caps broke support as well, but it did not make a low for the year. SP600 has performed better than its large cap brethren and thus it has defended from higher ground and has not broken to a new 2010 low. If small caps continue to hold up, that is a positive overall for the stock market and indeed the economy as the small caps are an economic predictor. Not as good as the bond market, but if the small caps are showing relative strength there is still some momentum in the economy.

SOX. The chips remain the most intriguing of the group. Unlike the other indices that have fallen out of bed to new lows for the year, SOX is not only above its 2010 low it is holding its fourth test of support at 330ish. That is a long term support level and SOX doesn't look ready to give it up. SOX could indeed lead the bounce back to the upside, whatever kind of bounce that is.

LEADERSHIP

Some leaders are showing the strain and fatigue of two weeks of market selling as they attempt to hold onto their uptrends. SNDK is hanging on but slipping, having broken its up trendline midweek and slipping Friday after bouncing back to test it. AKAM broke its up trendline as well, and though it held the 50 day EMA with a nice doji Thursday, Friday it was sliding lower. No volume, but unable to find any traction at that key level.

Chips. SNDK is a chip but a bit tired. What about the other semiconductors? XLNX is not breaking to a new high but it is in a nice base, using the pullback the past two weeks to test and set up a potential upside move. NVLS sold off as well, but it is quite interesting above support and in position for a good bounce. MCHP is similar. LRCX looks great for a bounce from the 200 day SMA. The chips are not necessarily ready to make a breakout to new highs, but they are set to lead a move higher if an oversold bounce erupts. SOX certainly looks to bounce higher off its support.

Industrials. CAT was down Friday after that nice tight doji Thursday just over the 200 day SMA, but the move did not take cat out of the picture. CAT is still in an ABCD pattern off that last surge higher from early June, and that leaves us enough room to play a nice upside move off of this pattern.

THE ECONOMY

TO VIEW THE ECONOMY VIDEO CLICK THE FOLLOWING LINK:
Economy Summary Video

Jobs report simply shows a very weak, mushy picture.

It is no wonder consumer confidence plunged over the past month: there are simply damn few jobs. No one is hiring because of the increase in taxes to come at year end when the 10 year tax cuts expire, the uncertainties with the healthcare bill and the 'unintended' taxes it will put on small businesses, the threat of cap and tax, and the talk of more taxes such as the VAT. Companies are hoarding cash, not spending it on new hires that could end up costing them more money thanks to government programs.

Thus the June report posted a net 125K loss though private payrolls did put in 83K to the upside versus 33K in May. Census workers fell 225K. Very mushy. The unemployment rate fell to 9.5% from 9.7%; some heralded this as positive, but with every such utterance the speaker only further proved his or her ignorance. The rate fell because 650,000 people gave up looking for jobs. As noted earlier, everyone can leave the job market and the rate will tumble. We just won't have anyone producing anything in the economy.

Manufacturing is the bright spot.

About all that is holding up the economy is manufacturing as it sported a less than expected 56.2 in June, but that is a quality number. Unfortunately it does not go any further than that.

Housing numbers continue to plummet, finally selling down as they wanted to originally until the credit was instituted and propped up prices. Without a sufficient recovery in jobs, however, once the props were pulled sales tumbles, prices tumbled, foreclosures jumped (31% of sales in Q1). Now finally housing may find its bottom. Quite interestingly, California prices are showing a solid rebound. California was one of the first to tumble, and before the government programs to prop up prices the California market had sold hard. It is now one of the better markets in terms of price gains.

Manufacturing is a great area to have strength. It benefits many other areas, e.g. trucking and railroads, and as reported back in March and then again in May, trucking activity is up significantly around manufacturing centers. There are tantalizing data points that show improvement, but with the overhang of taxes, healthcare, cap and trade, and who knows what else, businesses are not willing to really extend and go full bore with investment, R&D and new hires.

Thus we are going to be stuck in a lackluster recovery similar to the 1930's and the 1970's. You cannot spend your way to prosperity, at least you cannot print a bunch of money and claim to be spending your way to prosperity. If that were the case we would have the greatest surge in economic activity ever. A panel of small business owners unanimously stated today that cutting taxes and investment tax credits would be the way to spur growth. It always has. With effective tax rates of 50% to 60% (federal income, state income, federal excise, state excise, etc.), the lifeblood of our economy is being sapped. We need to get back to rewarding risk taking and achievement, not sitting on your butt awaiting your piece of the redistribution. How is that for a Fourth of July soap box speech?

THE MARKET

MARKET SENTIMENT

Some very interesting action in the VIX we have been talking about all week. Tuesday it gapped as the market gapped lower on the China news. It peaked Thursday intraday at the early June peak and reversed. Friday it gapped lower and closed near the low on the day. The import: as SP500 hit new lows for the year, VIX did not move to highs for the year. This action shows the highs have been hit for now and the market may just try to put in a quiet, and indeed quite unexpected, serious bounce. No one expects it to do so, but that is when you look for it, especially when you see this kind of action in the VIX even as the indices sold hard to new 2010 lows.

VIX: 30.12; -2.74
VXN: 32.19; -2.37
VXO: 29.7; -3.22

Put/Call Ratio (CBOE): 0.9; -0.36

Bulls versus Bears:

This past week the bearish number of investment advisors topped bullish advisors. That is a rare event and thus very noteworthy. It falls into our theme that the sentiment indicators have hit extremes and are at levels sufficient for at least a more sustained bounce in the indices.

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 doesn't have the cash to drive it higher.

Bulls: 41.1% for the second straight week as bulls became pensive. They rise as the market peaked on this last selloff and held steady as the selloff raged. Talk about an inverse relationship. Fell from 43.8%, 47.2%, and 56.0% before that. This move started at a low of 35.6% in February, the lowest it has been since July 2009. 35% is the threshold level suggesting bullishness. After peaking at 53 on this move the bulls lost some nerve, falling to a new low post- July 2009. Once again bulls peaked out near the 50% level. Bulls have bumped at 50ish since late August 2009, falling to 45ish and then rebounding. Hit a high of 47.7% mid-June on the run from the March lows. Again, to be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 33.3%. Unlike bulls, bears rose as some investors became more bearish during the market selling. Makes sense and now it is approaching the 35% level that is considered market bullish. Solid rise from the mid to upper 20's. Fell to 18.7% on the low. Hit a high of 27.8% level on the prior leg in February. Over 35% is considered bullish for the market; definitely at the lower end of the scale. Peaked near 28% in November, falling short of the 35.6% hit in July 2009. For reference, cracking above the 35% threshold considered bullish. Hit a high on this run at 47.2%. 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: -9.57 points (-0.46%) to close at 2091.79
Volume: 1.605B (-37.9%)

Up Volume: 494.425M (-481.473M)
Down Volume: 1.087B (-594.729M)

A/D and Hi/Lo: Decliners led 1.74 to 1
Previous Session: Decliners led 1.94 to 1

New Highs: 8 (-6)
New Lows: 136 (-117)

NASDAQ CHART: Click to view the chart

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: -4.79 points (-0.47%) to close at 1022.58
NYSE Volume: 1.102B (-30.95%)

Up Volume: 302.665M (-362.575M)
Down Volume: 782.483M (-114.726M)

A/D and Hi/Lo: Decliners led 1.41 to 1
Previous Session: Decliners led 1.44 to 1

New Highs: 84 (-5)
New Lows: 115 (-81)

SP500 CHART: Click to view the chart

SP600 Chart: Click to view the chart

DJ30

Stats: -46.05 points (-0.47%) to close at 9686.48
Volume DJ30: 199M shares Friday versus 263M shares Thursday.

DJ30 CHART: Click to view the chart

TUESDAY

Friday did even less to resolve the bounce to test versus bounce to break back to a new upside move issue as the short covering late in the session faded late. That leaves the market still oversold after the selloff, but even with that, most are still very negative on the market at this stage. Given the technical damage done that will have to be overcome (breaking back above the 2010 lows), many count it out. Given the action in the bond market that is understandable. Given the long run off the March 2009, a longer correction is understandable as well.

Thus the view is that after this selling any recovery is a bounce to test the selling. That has to be the assumption until proved otherwise.

That said, there are other interesting aspects supporting some upside move greater than a bounce to kiss the breakdown point. VIX as discussed above. Many quality stocks in position to bounce; perhaps not to breakout and run to new rally highs, but definitely in position to mount serious sustained moves.

All in all the market has not demonstrated it is ready to make a serious recovery attempt, and the bullish side of the ledger of reasons to rally is pretty thin. Thus while there will be a rebound to test, and while we are looking at some of these really solid stocks to make their rebounds, we are not looking for long term marriages unless they continue on and show us they want to stay hitched. There are some really good stocks in good setups that we will be ready to make some money with. Just how long we hold them depends upon what they and the indices do when the indices reach those prior 2010 lows. If they fail at that point we take the gain and then look to the downside to capture some more gain as we have with the SPY and DIA.

Support and Resistance

NASDAQ: Closed at 2091.79

Resistance:
2100 is the February 2010 low
2155 is the March 2008 intraday low
2167 from the July 2008 intraday low
2168 is the September 2009, intraday peak
2169 is the March 2008 closing low (double bottom)
2177 is a low from March 2008
2185 to 2195 represent support points for years: December 2004 peak, July to October 2005 consolidation, January, March and July 2008 lows, and October 2009 peak.
2205 is the November 2009 peak 2210 (from September 2008) to 2212 (the July 2009 closing low)
The 10 day EMA at 2169
2245 from July 2008 through 2260 from late 2005.
The 200 day SMA at 2253
The 50 day EMA at 2267
2275 - 2278 from the February 2008 and April 2008 lows
2273 to 2282 marks bottom of January 2010 lateral peak
2292 is a low from January 2008
2319 from the September 2008 peak
2320 to 2326.28 is the January 2010 high
2324-2370 is a range of resistance from early 2008
2382-2395 from 2008

Support:
2024 from November 2009
2020 to 2005 from the Q4 2009 peaks

S&P 500: Closed at 1022.58
Resistance:
1040 is the May 2010 low
1044 is the October 2008 intraday high AND the February 2010 low
The 10 day EMA at 1056
1070 is the late September 2009 peak
1078 is the October range low
1084 to 1080 (September 2009 peak)
1101 is the October 2009 high
1106 is the September 2008 low
The 50 day EMA at 1100
The 200 day SMA at 1112
1114 is the November 2009 peak
1119 is the early December intraday high
Bottom of the January 2010 consolidation 1131 to 1136
1133 from a September 2008 intraday low
1151 is the January 2010 peak
1156 is the Sept 2008 low
1170 is the prior March 2010 high
1174 is the May 2010 high
1181 is the April selloff low
1185 from late September 2008

Support:


1020 is the bottom of the late summer 2009 consolidation
946 from June 2009

Dow: Closed at 9686.48
Resistance:
9835 is the late September 2009 peak AND the February 2010 low
9855 is the early September peak in its lateral range
9918 is the September 2008 peak
9829 is the September 2008 closing high
The 10 day EMA at 9968
10,120 is the October 2009 peak
10,285 is the late December consolidation peak
The 50 day EMA at 10,300
The 200 day SMA at 10,361
10,365 is the late September 2008 low
10,496 is the November 2009 high
10,609 from the Mid-September 2008 interim low
10,730 is the January 2010 peak
10,920 is the recent May high
10,963 is the July 2008 low
11,100 from the 7-08 low
11,205 is the April closing high
11,734 from 11-98 peak

Support:
9774 is the May 2010 intraday low
9325 is a late 2008 interim peak
9034 from early 2009 peaks

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

June 28 - Monday
- Personal Income, May (08:30): 0.4% actual versus 0.5% expected, 0.5% prior (revised from 0.4%)
- Personal Spending, May (08:30): 0.2% actual versus 0.1% expected, 0.0% prior (no revisions)
- PCE Prices, May (08:30): 0.2% actual versus 0.1% expected, 0.1% prior (no revisions)

June 29 - Tuesday
- Case-Shiller 20-city, April (09:00): 3.81% actual versus 3.4% expected, 2.35% prior (no revisions)
- Consumer Confidence, June (10:00): 52.9 actual versus 62.0 expected, 62.7 prior (revised from 63.3)

June 30 - Wednesday
- ADP Employment Change, June (08:15): 13K actual versus 61K expected, 57K prior (revised from 55K)
- Chicago PMI, June (09:45): 59.1 actual versus 59.0 expected, 59.7 prior (no revisions)
- Crude Inventories, 06/26 (10:30): -2.01M actual versus 2.02M prior

July 01 - Thursday
- Continuing Claims, 06/19 (08:30): 4616K actual versus 4510K expected, 4573K prior (revised from 4548K)
- Initial Claims, 06/26 (08:30): 472K actual versus 458K expected, 459K prior (revised from 457K)
- Construction Spending, May (10:00): -0.2% actual versus -0.9% expected, 2.3% prior (revised from 2.7%)
- ISM Index, June (10:00): 56.2 actual versus 59.0 expected, 59.7 prior
- Pending Home Sales, May (10:00): -30.0% actual versus -10.5% expected, 6.0% prior
- Auto Sales, June (14:00): 4.0M expected, 3.9M prior
- Truck Sales, June (14:00): 5.1M expected, 5.2M prior

July 02 - Friday
- Nonfarm Payrolls, June (08:30): -125K actual versus -100K expected, 433K prior (revised from 431K)
- Unemployment Rate, June (08:30): 9.5% actual versus 9.8% expected, 9.7% prior
- Hourly Earnings, June (08:30): -0.1% actual versus 0.1% expected, 0.2% prior (revised from 0.3%)
- Average Workweek, June (08:30): 34.1 actual versus 34.2 expected, 34.2 prior
- Factory Orders, May (10:00): -1.4% actual versus -0.6% expected, 1.0% prior (revised from 1.2%)

July 06 - Tuesday
- ISM Services, June (10:00): 55.0 expected, 55.4 prior

July 07 - Wednesday
- Crude Inventories, 07/03 (10:30): -2.01M prior

July 08 - Thursday
- Continuing Claims, 06/26 (08:30): 4600K expected, 4616K prior
- Initial Claims, 07/03 (08:30): 460K expected, 472K prior
- Consumer Credit, May (15:00): -$2.5B actual versus -$3.0B expected, $1.0B prior

July 09 - Friday
- Wholesale Inventories, May (10:00): 0.4% expected, 0.4% prior

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InvestmentHouse Weekend Market Summary

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

- Stocks continue their oversold bounce, goosed by shorts concerned earnings may be stronger than originally anticipated.
- Interest rate hikes around the world boost investor interest in equities.
- Dollar, bonds behave as if rest of the world is starting to recover following that May scare the EU was imploding.
- Expiration, expiration, oversold bounce ready to drive stocks a bit higher this week.

Stocks push on, moving through their first test of the oversold bounce.

Stocks performed as expected on Friday. They continued their oversold bounce that really got under way on Wednesday with the big move, and coasted into the weekend with a decent gain Friday. Nothing huge, but a continuation of the rebound that started with the breakdown below the 2010 lows followed by the reversal. It was a false breakdown, and I love playing these. It reversed back to the upside and accelerated as it made the break on Wednesday. There could be many reasons for that. There was a view that some of the economies in the world were either improving or not as bad as originally felt in Q1 and Q2. That helped stocks tremendously starting midweek. There are also earnings next week starting in earnest. With such a large selloff on fears that the EU and US economies were stalling somewhat, there was the view that they may not be as bad as originally anticipated. We might get good results and good guidance for the future, and thus the shorts were nervous and covering. That helped the oversold bounce with a bit of juice from the possibility that earnings could be much better than expected.

I am not anticipating that earnings will be great, but I was anticipating the move higher. We were taking nice positions on the way up. As the market continues, we will let those plays continue to run. I am looking for a move back up toward the June peak, or the 200 day EMA if it can't make the June peak. You have to watch when you get in this range to see how much gas is in the tank. If there is a run up through expiration next Friday, that will give nice gain built into the positions we have been taking. We will be taking some of that gain off the table because I do not believe this is any major turn in the market. I still think there is plenty of basing that has to take place. I think the market is trying to base now, and to do so it would need to break up the six-month head and shoulders pattern. I think it is trying to do that, and I will be watching for it. If you get this kind of oversold bounce, you will get range trading back and forth. I am looking to play it up and down as it continues that move. Right now we are obviously in an upswing. I'll look for more to lock in some more profit, and after that we will have to see what happens. As of Friday the momentum to the upside remained. It was not frustrating investors yet, stocks continue to move upside, and many showed good momentum.

There was not a lot of news in the world on Friday, but the news that was there helped stocks. There were some countries raising interest rates, and that gave credence to the idea that the world economies were not as in bad of shape as originally thought. Stocks started higher on the session, they tested, and then they gradually melted up through the rest of the day. There was a last hour short-covering move for good measure to push stocks nicely positive. +1% NASDAQ, +0.6% Dow, +0.75% SP500, +1% SOX, +1.3% SP600. It was more of a growth day, but the gains were slowing down some from the early momentum. That is what one would expect. I still expect there might be some back and forth a bit of a stall that frustrated investors, and then a melt higher into the end of next week before the move runs out of gas.

OTHER MARKETS.

Dollar. The dollar was up on the session (1.2643 Euro versus 1.2703 Thursday). The dollar is well off its peaks near 1.21 hit a month back; it has had quite a slide. It was unable to hold a key support level, and now it is sliding back down to the next level. That level is the rising trendline off the bottom it made in late 2009. It is not in trouble, but it has lost some of its luster. Some of the other economies showed they are improving and were raising interest rates. The fear that was driving a lot of people into the dollar is not as rampant. The dollar has lost ground but has not lost its uptrend overall.
Click to view the chart

Bonds. Bonds have similarly lost some of their allure as a safe haven because the economies look to be improving at least the perception is that the economies are better off than we thought in Q1 and Q2. Bonds have lost some of their ground as money is moved out of safe havens (10 year US Treasury 3.06% yield versus 3.02% Thursday). It was not long ago that yields were down at the 2.8% level. Just as with the dollar, there has been a shift of sentiment regarding the problems with economies around the world. US bonds, while still sought, are not as highly prized because they feel equities can rebound. Looking at a chart on the bond, it is selling back but is hardly in trouble. Indeed, it has set up an ABCD pattern and could test that prior peak and bounce off that level. Also notice the trendline from April rising. The old support line and this trendline intersect just about where the bond is coming back. Technically speaking that would be a double layer of support, and one would expect a bounce attempt off of it. How it fares off that bounce attempt will tell us about bonds over the next few months. If it fails, they will continue to fall and we should expect to see stocks rise. That is interesting given it is midsummer and stocks usually don't perform that well. You do see technology start to perform now, and that would be something to keep an eye on.
Click to view the chart

Gold. Gold had a much better day. It rallied with a nice move to the upside ($1,210.00, +15.00). It may have been premature, but we used that to exit some of our GLD positions because it has moved back to the prior high before this last breakout. The GLD gapped, tested that level on the high, and then it backed off. With that action, I felt it would be best to take some of it off table and see what happens. We can always come back and pick up more gold when it is ready to make its move again. Gold had a decent day, but it had two serious breaks lower over the past month and a half. It is struggling to get back up to the prior high. We can look back and see the prior high to gold hit back in late 2009, and it is bumping up against that level right now after breaking back below it. Gold doesn't look as alluring right now. We will give it some time, let it base out, and see if it will produce another buy point for us. I still think we will be able to buy and it will run higher with all the money printed in the world. We just have to get the next best entry point.
Click to view the chart

Oil. Oil looks to be back on track. It was seriously on the ropes with concern about the US economy over the past few weeks. It was in real trouble over the concerns about the EU in May. It rebounded off the bottom of its range. The US concerns sent it reeling, but now it is making a solid recovery. Inventories fell sharply this past week over -4.5M barrels and that helped send the price higher. On Friday it was up again ($76.20, +0.75). A very solid move back over the trendline that may challenge the March range. It is taking its time, but it is in a trading range so you do have ups and downs. It made a higher low, it recovered its trendline, and it could move back up to the top of its range if the world economies continue to move higher: If there is good earnings and guidance, that would indicate that the world economies may actually need to continue using all the oil; thus there would be more demand. Rising demand plus limited quantities equals higher prices.
Click to view the chart

TECHNICAL PICTURE

INTERNALS

Volume. Volume was somewhat dramatic. It dropped rather precipitously, falling over 20% on NASDAQ to 1.5B shares and down 25% on the NYSE to 881M shares. Very light trade.

Breadth. Breadth was not bad at 3:1 on NASDAQ, 3.4:1 on the NYSE. It is still quite strong on these indices, and that was good to see. The moves were not huge, but they were broad. Stocks from all over the market moved higher. The SP600 was one of the big movers and was again a relative strength leader. You can understand why breadth was stronger. There are more small caps than large cap stocks. When they perform well the breadth looks good, and we like to see that because they are a harbinger of economic activity to come. If they improve and do well, then the economy will likely do well also.

CHARTS

SP500. SP500 broke through the 1070 level which was its first challenge on this oversold bounce. It has hit this point many times in the past, and it is also roughly that long-term support level and is back over that. It has not put too much distance on it, so it is not out of woods. I still anticipate it to rally back toward the 200 day EMA or the June peak. That would also correspond with the bottom of the January peak. That gives it some more room, but after this big surge, it may have to move laterally for a day or two before continuing higher to end the week. I want it to be up in this range by expiration Friday. We can bank some profits. We will have to see how it works, but thus far the oversold bounce the working as anticipated. Given the low volume, I cannot put more expectation on it other than an oversold bounce that is being fueled also by short covering moving into earnings season. Earnings season may be able to give it an extra goose and send it higher. From a technical standpoint, thus far a move up to the 200 day EMA or the June peak would be all we could squeeze out of this move without something else helping it along the way.

NASDAQ. NASDAQ posted a gain as well. It moved through its first test, moving back into this gap point. It has not been back here since it gapped down just over two weeks back. This is an important move. When it gets back to the top of this gap point, that would put it at 2220. That is only 24 points away, and we will have to see how it handles that. I am still looking for it to move up to the 200 day EMA, through it, and up toward the June peak as well. This entire range will be tough for it to move into. I will be watching to see when the momentum runs out. Volume was low again on NASDAQ. It has been low on the entire move higher; indeed, volume has been lower for all the indices.

SP600. It was good to see SP600 post +1.3% and pick up momentum. It broke through resistance, and they finally put mileage on their first test. They are at the 200 day EMA as well roughly the mid-range of the January peak. This will be where it gets tough for the SP600. From the 200 day EMA up to the June peak where there is a gapdown point as well as the March consolidation range. That is about all I can hope to squeeze out of this one as well unless something changes. I think there will still be more basing after this move with all of these. Maybe a breakdown. Some say there will be a breakdown, but that's one of the good things: Everyone is so pessimistic right now, it is a benefit for the market overall.

SOX. The SOX held the long term support the entire month of May and June, and then finally made the break higher. It cleared the 200 day EMA this week, and it is trying to move back up toward the mid section of its range. That would put it at the January peak, and that is where I am shooting on most of these. Other indices failed to get there, so I will be looking to see if the other indices make it to that level this time. That would give nice gains on our upside positions. We could clear out some and see where they go from there.

LEADERSHIP

Financial. JPM mimicked the SP500 with its break below the 2010 lows and then the reversal (the false breakdown). It is setting up a nice pattern: a surge, a test, and then another surge on Friday. I like what it is showing, and looks like it can build on this and continue higher. GS had a good day on Friday as well. There is a nice bounce trying to form a rounded bottom. Before it gives us a really good buy, it may come up toward this peak in late June at the 50 day EMA and test back a bit and then start back up. We would be looking for that as our entry point on this, and that would complete this rounded bottom. It is not just big names. FITB broke higher over a resistance level on Friday after stalling at that level on Thursday. Financials are looking better, and it will help SP500 if they are on the move. That, of course, helps the entire market.

Technology. AAPL is still trading in the middle of its three-month trading range. It has bounced right in the middle, it held the middle part of that level today where it gapped up in April, and it posted a modest gain. It is not adding much, but it is not detracting at this point either. GOOG had an interesting session because it announced it had renewed its license in China. It gapped to the upside, and BIDU struggled just a little as a result. It looks like GOOG may try to have an island reversal. It gapped lower in late June, sold off, has recovered and gapped back up through that same point. That will get more momentum to the upside, maybe up to the June peak at roughly 505. That might be an interesting play to watch on the technical move alone. AKAM came off its 50 day EMA and is continuing its recovery move. FFIV took a day off on Friday. After breaking out back up to a new 2010 high, a little bit of pause in normal. Technology is showing better action, and that is exactly what I want to see. It often improves in the summer months, and we will see if more leadership appears in the techs.

Retail. PNRA was one we moved into on Friday. It had rising volume in a low-volume market as it continues to move off the bottom of its trading range. It has a well-defined support level and started to move higher. I like what I see here. I was looking for a trade back up in its range near the June peak at 85; a nice move if we can ride that one back up to that point. We picked up some NFLX. It tested back like I wanted it to after the big Wednesday surge. It came back, held the near the 10 and 18 day EMAs and started to bounce. We moved into it on Friday thinking it has room to the upside after a little ABCD pattern and a test of the initial move off that pattern. PCLN continued higher. A very nice move here, clearing the 50 day EMA and not stopping at all. It looks very solid and like it will continue to the upside. It looks like it has put in its base and is ready to run. Next entry point would be when this breakout move stalls, tests back toward the gap point, and then continues to the upside. If it can do that, that's the next point you would be looking to take some positions. CMG is one we played on this strong move upside. It has yet to respond in the market recovery, and that makes it suspect. It could break either way, but it might end up breaking to the downside because it is not moving well at all as the market rebounded in the oversold bounce. It was up much stronger and longer than any of the other stocks. Maybe it is not unexpected that it has a longer recovery period and may actually need to form a new base.

Energy. Energy has rebounded over the past week as well. A lot of stocks are moving up in the range but haven't gotten that far. They are halfway up or not even that far. SU is a stock whose price depends very much on the price of oil. It is mimicking what oil is doing. APA bounced up, but it is still just not that strong. UNT has bounced as well but it is not that strong either.

Industrial. Industrials seem to be improving on the idea that the European and US economies may not be that bad off. Although the US economy may not be as good as was anticipated. This average is that they will be okay, and thus we see those industrial stocks that may sell in Europe and other foreign countries doing quite well. CAT added a very nice +2.5% Friday on top of the nice move Wednesday. Glad to have positions in CAT as it climbed higher. BUCY may try to break out over a three-month's base. A strong move this week clearing the 50 day EMA Friday. We should not move in here. We should watch for a bit further move higher and then a test. If it can hold and make a new upside move, that's when we would want to move in.

Leadership is still out there, but it is not blanketing the market. There are a lot of stocks that have sold off and are either making oversold bounces or have put in decent bases and are moving higher. Others are just continuing to the upside and having yet to slow down significantly. That is fine. We will look for new buy points on them and on those that come off the bottoms of their trading ranges. We have seen that when moving into stocks such as PNRA as it bounces off a well-defined support range.

THE ECONOMY

Latest rate hikes in South Korea and India bolster the idea world economies are recovering.

US dollar, bonds also suggest world economies are recovering.

If Europe is recovering, Fed may raise rates sooner than expected. After all, the only reason the Fed dropped its rate hike talk was because the EU implosion in May.

TO VIEW THE ECONOMY VIDEO CLICK THE FOLLOWING LINK:
Economy Summary Video

THE MARKET

MARKET SENTIMENT

Extreme bearishness hit ahead of this oversold rally. The AAII reported bearish sentiment at 57%, one of its highest levels ever. Investment advisors are getting bearish and less bullish, coming close to a crossover, always a significant move. It is clear that investors are very bearish and how they respond to this market bounce will give very good insight into just how pervasive the gloomy view is.

VIX. The VIX has traded down to the 200 day EMA as the market rebounded over the past week. The notable feature is that the SP500 and NASDAQ hit new 2010 lows, but volatility did not hit new 2010 highs. That was put in back in May with all the fear about Europe. That tells you that option traders are not pricing in the kind of volatility and fear they did in May, and they were expecting there to be more of a rally. We are getting that rally right now. We have had a heck of a rally on the indices with the Dow, for instance, putting in its best weekly move in a year. Will it continue? We have volatility at the 200 day EMA, and it is slowing down. The question is whether the market will be able to continue if volatility bounces. This is the point where there may be some struggling that frustrates investors and could lead them to believe that the oversold bounce has ended. I expect volatility to bounce a bit as the stock indices fade to start next week. That would be before a continued run into earnings and expiration Friday. We may get a head fake, a bounce, and then it can break through the 200 day EMA and come back down to the levels hit in April. The important thing is that the volatility did not move to a new high as the indices moved to a new low. That told us that the market was improving and there would be an oversold bounce. The question now is how far that bounce will go.

VIX: 24.98; -0.73
VXN: 25.99; -1.06
VXO: 23.54; -1.22

Put/Call Ratio (CBOE): 0.85; +0.04

Bulls versus Bears:

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 doesn't have the cash to drive it higher.

Bulls: 37.0%. Another drop and a fairly significant one, coming close to the 35% threshold level considered bullish for the market. Down from 41.1% where it held for two weeks. Fell from 43.8%, 47.2%, and 56.0% before that. This move started at a low of 35.6% in February, the lowest it has been since July 2009. 35% is the threshold level suggesting bullishness. After peaking at 53 on this move the bulls lost some nerve, falling to a new low post- July 2009. Once again bulls peaked out near the 50% level. Bulls have bumped at 50ish since late August 2009, falling to 45ish and then rebounding. Hit a high of 47.7% mid-June on the run from the March lows. Again, to be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 34.8%. Up from 33.3% as bears approach the 35% threshold level as well, not to mention a crossover with the bulls. Those crossovers are very bullish, but likely won't get there given the market rally. Solid rise from the mid to upper 20's. Fell to 18.7% on the low. Hit a high of 27.8% level on the prior leg in February. Over 35% is considered bullish for the market; definitely at the lower end of the scale. Peaked near 28% in November, falling short of the 35.6% hit in July 2009. For reference, cracking above the 35% threshold considered bullish. Hit a high on this run at 47.2%. 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: +21.05 points (+0.97%) to close at 2196.45
Volume: 1.56B (-22.13%)

Up Volume: 1.19B (-239.607M)
Down Volume: 407.575M (-164.594M)

A/D and Hi/Lo: Advancers led 3.05 to 1
Previous Session: Advancers led 2.32 to 1

New Highs: 26 (+7)
New Lows: 41 (-4)

NASDAQ CHART: Click to view the chart

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: +7.71 points (+0.72%) to close at 1077.96
NYSE Volume: 881.988M (-24.41%)

Up Volume: 718.195M (-224.021M)
Down Volume: 155.932M (-58.668M)

A/D and Hi/Lo: Advancers led 3.44 to 1
Previous Session: Advancers led 3.1 to 1

New Highs: 140 (+14)
New Lows: 30 (-10)

SP500 CHART: Click to view the chart

SP600 Chart: Click to view the chart

DJ30

Stats: +59.04 points (+0.58%) to close at 10198.03
Volume DJ30: 135M shares Friday versus 192M shares Thursday.

DJ30 CHART: Click to view the chart

MONDAY

There is a lot of economic data on the table. Retail sales and the FOMC minutes are out on Wednesday. Initial claims on Thursday. Regional manufacturing from New York, industrial production, the Philly Fed, and then the CPI and Michigan Sentiment on Friday. There is a lot of data in addition to the start of earnings season, and all of that can work to drive the market higher. The market has been moving to the upside on the false breakdown/oversold bounce based upon very high negative sentiment. AAII has an incredibly high negative reading with bears at 57%. That negative view of the market helped turn it from this breakdown. Now we have concerns from the shorts that the market may move higher because Europe may not be as bad as was thought. The rest of the world is not as bad as believed either given central banks are raising interest rates. Therefore, we could have some serious issues with respect to the market actually selling off near term.

That is no problem if you are moving to the upside. The question is how far it will go. We may have a stall out Monday. It may continue higher, but earlier in the week I expect there to be a pause in the move. I still expect the earnings momentum and concern by the shorts to drive the market higher indeed up toward the 200 day EMA and roughly in the June peak. After that I don't expect much more. We will be looking to take some profits at that point and see what the earnings bring. We would have had a very nice run into earnings, and the initial earnings may spur the market a bit higher. We will of course be more than willing to let our positions run higher.

At the same time as it makes the move up, we have several downside plays on the report I am looking at. I am just following them higher as they move to the upside and still are below resistance points. If they turn, they would make great downside plays. I will continue to look for other downside plays this weekend and through next week. If the market does run out of steam and turn back over, it will trade right back down in its range and we can play that move. It is either going to sell off to the bottom of the range and bounce to continue the base, or it will break down and fall back down near 1000 or back into the 900's as some are predicting. It will do one of those, thus downside place will be advantageous to us. We will take what we can to the upside, and when the move starts to peak out, close a lot of them or reduce the size of our positions. Then when they fall, we can take the rest off the table, or if they move we will let them.

Often the reason we leave parts of positions on the table is because what I believe is not necessarily what the market will do. I try to anticipate tops and bottoms, but it is difficult to pick them. The market will often move up higher than you think it will. It will continue to rally and rally, and the positions you leave on the table really start to return the huge moves. We all like to think we are omniscient and can tell when the market will top and bottom, but we cannot. We can just read the technical signals, get into positions when they are good, and then ride them. What we will do is take some gain off the table at this point when it looks like the move is slowing down. Then if it continues higher, that is great. We will let those positions run and look for new opportunity to get into more. I don't think it will. If it does roll over, we will take care of our upside positions and play the downside as well while the market continues to trade in this range. That is what I think it will do. I don't believe necessarily that this head and shoulders will fully consummate. In other words, I do not think it will give us a decline that is equivalent to the amplitude from the neckline to the top of the head.

We are going to continue to let our positions run. We will look for a few more opportunities to the upside on quality stocks that have pulled back a bit such as NFLX and then started to move to the upside. We do not want to take a lot of positions in this move. We already have half our move under our belt. I want to let these positions we took on Tuesday and Wednesday rally for us and then take gain. I do not want to take a bunch of positions to the upside near the peak and have it turn back on us. We will truncate our buys to the upside, we will put on more downside plays as we see them develop, and we will be ready for the market if it turns over. I still have to view this as an oversold bounce. Lower volume on the move, very big topping pattern for the entirety of 2010. The odds are we will get a bounce that will stall out and roll back over. That is my game plan for now, but it is subject to change as always, based on what the market shows. We will always follow the market and take what it gives. Have a great weekend.

Support and Resistance

NASDAQ: Closed at 2196.45

Resistance:
2205 is the November 2009 peak 2210 (from September 2008) to 2212 (the July 2009 closing low)
2221 is the gap down up side point from June.
2245 from July 2008 through 2260 from late 2005.
The 50 day EMA at 2250
The 200 day SMA at 2253
2275 - 2278 from the February 2008 and April 2008 lows
2273 to 2282 marks bottom of January 2010 lateral peak
2292 is a low from January 2008
2319 from the September 2008 peak
2320 to 2326.28 is the January 2010 high
2324-2370 is a range of resistance from early 2008
2382-2395 from 2008

Support:
2185 to 2195 represent support points for years: December 2004 peak, July to October 2005 consolidation, January, March and July 2008 lows, and October 2009 peak.
2184 is the June gap bottom side.
2177 is a low from March 2008
2169 is the March 2008 closing low (double bottom)
2168 is the September 2009, intraday peak
2167 from the July 2008 intraday low
2155 is the March 2008 intraday low
2100 is the February 2010 low
2024 from November 2009
2020 to 2005 from the Q4 2009 peaks

S&P 500: Closed at 1077.96
Resistance:
1078 is the October range low
1084 to 1080 (September 2009 peak)
The 50 day EMA at 1094
1101 is the October 2009 high and the recent May and June 2010 interim peaks
1106 is the September 2008 low
The 200 day SMA at 1112
1114 is the November 2009 peak
1119 is the early December intraday high
Bottom of the January 2010 consolidation 1131 to 1136
1133 from a September 2008 intraday low
1151 is the January 2010 peak
1156 is the Sept 2008 low
1170 is the prior March 2010 high
1174 is the May 2010 high
1181 is the April selloff low
1185 from late September 2008

Support:
1070 is the late September 2009 peak as well as several other peaks and valleys even in 2010
1044 is the October 2008 intraday high AND the February 2010 low
1040 is the May 2010 low
1020 is the bottom of the late summer 2009 consolidation
946 from June 2009

Dow: Closed at 10,198
Resistance:
10,260 from the May and June 2010 interim peaks
The 50 day EMA at 10,260
10,285 is the late December consolidation peak
The 200 day SMA at 10,365
10,365 is the late September 2008 low
10,496 is the November 2009 high
10,594 is the June 2010 peak
10,609 from the Mid-September 2008 interim low
10,730 is the January 2010 peak
10,920 is the recent May high
10,963 is the July 2008 low
11,100 from the 7-08 low
11,205 is the April closing high
11,734 from 11-98 peak

Support:
10,120 is the October 2009 peak
9829 is the September 2008 closing high
9918 is the September 2008 peak
9855 is the early September peak in its lateral range
9835 is the late September 2009 peak AND the February 2010 low
9774 is the May 2010 intraday low
9325 is a late 2008 interim peak
9034 from early 2009 peaks

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

July 06 - Tuesday
- ISM Services, June (10:00): 53.8 actual versus 55.0 expected, 55.4 prior

July 07 - Wednesday

July 08 - Thursday
- Continuing Claims, 06/26 (08:30): 4413K actual versus 4600K expected, 4637K prior (revised from 4616K)
- Initial Claims, 07/03 (08:30): 454K actual versus 460K expected, 475K prior (revised from 472K)
- Crude Inventories, 07/03 (11:00): -4.96M actual versus -2.01M prior
- Consumer Credit, May (15:00): -$9.1B actual versus -$3.0B expected, -$14.9B prior (revised from $1.0B)

July 09 - Friday
- Wholesale Inventories, May (10:00): 0.5% actual versus 0.4% expected, 0.2% prior (revised from 0.4%)

July 13 - Tuesday
- Trade Balance, May (08:30): -$39.5B expected, -$40.3B prior
- Treasury Budget, June (2:00): -$70.0B expected, -$135.9B prior

July 14 - Wednesday
- Retail Sales, June (08:30): -0.2% expected, -1.2% prior
- Retail Sales ex-auto, June (08:30): 0.0% expected, -0.8% prior
- Export Prices ex-ag., June (08:30): 0.6% prior
- Import Prices ex-oil, June (08:30): 0.5% prior
- Business Inventories, May (10:00): 0.2% expected, 0.4% prior
- Crude Inventories, 07/10 (10:30): -4.96M prior
- Minutes of FOMC Meeting (2:00)

July 15 - Thursday
- Initial Claims, 07/10 (08:30): 449K expected, 454K prior
- Continuing Claims, 07/03 (08:30): 4425K expected, 4413K prior
- PPI, June (08:30): -0.1% expected, -0.3% prior
- Core PPI, June (08:30): 0.1% expected, 0.2% prior
- NY Fed - Empire Manu, July (08:30): 18.0 expected, 19.57 prior
- Industrial Production, June (09:15): 0.0% expected, 1.3% prior
- Capacity Utilization, June (09:15): 74.2 expected, 74.1% prior
- Philadelphia Fed, July (10:00): 10 expected, 8.0 prior

July 16 - Friday
- Core CPI, June (08:30): 0.1% expected, 0.1% prior
- CPI, June (08:30): 0.0% expected, -0.2% prior
- Net Long-Term TIC Fl, April (09:00): $83.0B prior
- Michigan Sentiment, July (09:55): 74.5 expected, 76.0 prior

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Amateur Investors Weekend Stock Market Analysis (8/28/10)

http://www.amateur-investor.net/Weekend_Market_Analysis_August_28_10.htm

At this point looking at monthly charts of the major indices which filters out all of the daily volatility shows Head and Shoulder Top patterns in all three of the major averages.

The Dow has a key support area just above the 9400 level which is along the downward sloping Neckline (black line) and coincides with the 38.2% Retrace (blue line) from the March 2009 low to the April 2010 high. Thus 9400 will be a key level to watch in the Fall as the next support area below that would be at the 50% Retrace near 8900 (red line).



The Nasdaq is also exhibiting a Head and Shoulders Top pattern with its key support level near 2050 which coincides with its downward sloping Neckline (black line) and 38.2% Retrace (blue line) from the March 2009 low to the April 2010 high. If the 2050 level were to be taken out in the Fall then the next support level would be at the 50% Retrace near 1900 (red line).



Finally the S&P 500 is also exhibiting a Head and Shoulders Top pattern as well with the key support area near 1000 which is along the downward sloping Neckline (black line) and is close to the 38.2% Retrace (blue line) calculated from the March 2009 low to the April 2010 high. If the 1000 level were to be taken out in the Fall then the next support level would be at the 50% Retrace near 940 (red line).



Historically the Fall has been a weak period for the market going way back to the late 1890's so we shall see if the Neckline support areas mentioned above are tested at some point in September or October.

[ReturntoSender]

Amateur Investors Weekend Market Analysis

http://www.amateur-investor.net/Weekend_Market_Analysis_Sept_25_10.htm

Early in the Summer I talked about Market Performance prior to a Presidential Election Year. As the table below shows there has been a Bullish bias ever since the early 1940's with not one losing period which is pretty amazing. The lowest return was 5.7% in 1946 while the highest return has been 41.8% in 1986. Also notice 16 out of the 17 occurrences (94%) had at least a 10% gain with an average return of 20.5% for the time period from November through August.

 
 Dow Performance prior to a Presidential Election Year since 1900 
                     Time Period (November-August) 
  Date 	  Monthly      Date 	Monthly  Return 
 	   Close       Close 	 
 Oct-02     66.05      Aug-03     53.19   -19.5 
 Oct-06 	   92.91      Aug-07 	 72.28 	 -22.2 
 Oct-10 	   84.77      Aug-11     79.25    -6.5 
 Dec-14 	   54.58      Aug-15     81.2     48.8 
 Oct-18     82.46      Aug-19    104.75    27.0 
 Oct-22 	   96.11      Aug-23     93.46    -2.8 
 Oct-26 	  150.76      Aug-27    189.79    25.9 
 Oct-30 	  184.40      Aug-31    139.4    -24.4 
 Oct-34 	   93.40      Aug-35    127.9     36.9 
 Oct-38 	  151.75      Aug-39    134.4    -11.4 
 Oct-42    114.10      Aug-43    136.60    19.7 
 Oct-46    169.20      Aug-47    178.90     5.7 
 Oct-50 	  225.00      Aug-51    270.30    20.1 
 Oct-54 	  352.10      Aug-55    468.20    33.0 
 Oct-58 	  543.20      Aug-59    664.60    22.3 
 Oct-62 	  589.90      Aug-63    729.30    23.6 
 Oct-66    807.10      Aug-67    901.30    11.7 
 Oct-70 	  755.60      Aug-71    898.10    18.9 
 Oct-74    665.50      Aug-75    835.30    25.5 
 Oct-78 	  792.50      Aug-79    887.60    12.0 
 Oct-82    991.70      Aug-83   1216.20    22.6 
 Oct-86	1,877.70      Aug-87   2663.00    41.8 
 Oct-90  2,442.30      Aug-91   3043.60    24.6 
 Oct-94  3,908.10      Aug-95   4610.60    18.0 
 Oct-98  8,592.10      Aug-99  10829.30    26.0 
 Oct-02  8,397.03      Aug-03   9415.82    12.1 
 Oct-06  12,080.73     Aug-07  13357.74    10.6 
 Oct-10      ? 	      Aug-11     ? 	    ? 
 			Avg Return  20.5%

Thus the question is will this consecutive winning streak continue or will it not work this time around? Meanwhile they are already ahead of schedule with ramping the market into this historically bullish time period as the S&P 500 is up 9.5% in September.

Looking at some chart patterns we have one potentially bullish pattern and one bearish pattern from the early July low. The bullish count is that we are seeing an "ABC" Zig Zag pattern from the March 2009 low as Wave A peaked at 1220 in late April. Meanwhile the drop from 1220 to 1011 was the bottom for Wave B which is now being followed by the early stages of Wave C. The potential target for Wave C would range from 1353 to 1381. 1353 would be 61.8% of Wave A (553 points) which equals 342 points added to the bottom of Wave B (1011) so that = 1353. Meanwhile 1381 is the longer term 78.6% Retrace calculated from the October 2007 high to the March 2009 low. This pattern would be confirmed by a rise above the previous late April high of 1220.

Finally once the "ABC" pattern completes then another major sell off occurs from 2012 through 2013 as the next Fed induced bubble bursts and wipes out everyone once again.



This pattern has happened in the past from the late 1960's through the late 1970's as three different times significant sell offs followed completion of each "ABC" pattern.



Meanwhile there is also one bearish pattern as we could just be seeing a minor "abc" type Zig Zag pattern off of the early July low of 1011. If the length of "c" = the length of "a" that yields a value of 1158.



Once the minor "abc" Zig Zag pattern completes then Wave 3 of (5) would begin. This pattern would be confirmed if the S&P 500 drops back below the early July low of 1011.



Finally the Volatility Index (VIX) which made a big move higher in May and June has now formed a Triangle pattern and is set to make another run higher or lower depending on which way it breaks out.

Naturally from a historical perspective the bullish scenario, as alluded to above, would have a higher probability of occurring due to the pre Presidential Election Year positive bias that has existed since the early 1940's. However like anything else eventually one of these times it isn't going to work and the consecutive winning streak well be broken.

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Monday Morning Outlook: DJIA Solidifies Hold on 11,000
Investors may be waiting on midterm elections, Fed action
by Todd Salamone 10/16/2010 11:21 AM

http://www.schaeffersresearch.com/commentary/observations.aspx?ID=102925

The Dow Jones Industrial Average inched ahead this past week, thanks to a modest rally on Wednesday, and maintained its perch north of 11,000. Looking ahead, Todd Salamone, Senior Vice President of Research, sees evidence that hedge funds are moving back into the market, which he interprets as bullish, but also warns of potentially stiff technical resistance just above current levels. Next, Senior Quantitative Analyst Rocky White examines the money flowing into (and out of) equity mutual funds and bond funds. Not to keep you in suspense, but investors are fleeing equities and parking their money in bonds. Rocky concludes that this adds up to "a huge amount of sideline money with the potential to propel this market higher." Finally, we wrap up with a look at some key economic and earnings reports slated for release this week.

Recap of the Previous Week: 'A Case for Further Action'
Schaeffer's Editorial Staff

The fall rally slowed to a walk this week. Earnings reports were cheery enough, but with the midterm elections just over two weeks away, investors may have checked into wait-and-see mode. They're also waiting on the Federal Reserve to disclose exactly what it plans to do to reboot the economy. Chairman Ben Bernanke clearly signaled that intent in a major speech on Friday, when he said "there would appear ... to be a case for further action," but he didn't spell out any details. Fed action is expected after the election.

The beginning of the week was nearly comatose. The Dow gained a barely measurable 0.03% on Monday, and another 0.09% Tuesday, for a combined advance of 14 points. The minutes from the latest meeting of the Federal Open Market Committee (FOMC), released Tuesday afternoon, were the only apparent news driver. Those minutes disclosed that the Fed is considering another round of quantitative easing, which was not exactly stop-the-presses news. More sobering: Fed staff trimmed their growth targets for 2010 and 2011.

Wednesday's session was far more lively, as earnings season heated up and the Street was cheered by upbeat results in three key sectors. Banking giant JPMorgan Chase & Co. (JPM), railroad company CSX Corp., (CSX) and the chip maker Intel Corp. (INTC) all wowed investors with better-than-expected results. The Dow spent much of the day in triple-digit gain territory above 11,100, but eventually settled for a very satisfactory 76-point win, or 0.69%, and finished at 11,096.

The high spirits were quickly dashed by a round of disappointing economic data Thursday, including an unexpected rise in jobless claims, and renewed pressure on the banking sector. The foreclosure crisis, which had been festering for months, came to a head this week after 50 state attorneys general announced they were investigating the practices of the mortgage servicing industry. Banking stocks tumbled. Although the bulls spent much of the day in retreat, the Dow pared most of its losses late in the afternoon. When the smoke cleared, the Dow had dropped an imperceptible 0.01%.

Gloom continued to hang over the banking sector on Friday. That mood was echoed by a small decline in the University of Michigan consumer sentiment survey, and a disappointing revenue report for General Electric Co. (GE). The gloom clearly outweighed the good news: Google (GOOG) reported smashing earning, lifting techs; retail sales were strong; and the Fed's Bernanke confirmed that the central bank is studying another round of quantitative easing. The Dow shed 0.29% for the session, but the Nasdaq Composite (COMP) climbed a healthy 1.37%. For the week, the Dow managed a 0.5% gain, the S&P 500 Index added 0.9%, and the COMP took the week's honors by advancing 2.8%.

What the Trading Desk Is Expecting: Are Hedge Funds Coming Back?
By Todd Salamone, Senior Vice President of Research

"One notable difference that we are seeing now relative to the two prior ventures into the 1,120-1,130 area (on the SPX) since June is indications that hedge funds are seeing value around current levels. This was not even close to being evident in June and early August, according to our option activity analysis... This would suggest to us a higher-probability chance of a breakout, as investors with an investment time frame beyond a day or week counter the actions of day traders and high-frequency traders playing the short-term, mean-reversion game."
--Monday Morning Outlook, Sept. 18, 2010

"...we continue to see evidence of hedge fund accumulation via our analysis of buy-to- open put volume on two of the three broader exchange-traded funds that we track. In addition, expiration of traditional options is only two weeks away. In the absence of an event that triggers a sell-off in equities, we could see another short-covering rally related to out-of-the-money put options expiring in the next 10 trading days."
-- Monday Morning Outlook, Oct. 2, 2010

"Hedge Fund Investors Turn Bullish on Stock Market"
--Reuters headline, Oct. 13, 2010



Regular readers of Monday Morning Outlook may not be surprised by the Reuters headline. In our analysis of buy-to-open option activity on major exchange-traded funds (ETFs), the increasing put volume relative to call volume amid market strength was, and continues to be, a strong indication that hedge funds are in accumulation mode. With retail mutual fund investors largely disengaged from the stock market, it is likely that hedge fund managers are dictating the market's direction.

Therefore, the buy-to-open put/call volume ratio on ETFs such as the SPDR S&P 500 ETF Trust (SPY), iShares Russell 2000 Index Fund (IWM), and PowerShares QQQ Trust (QQQQ), continues to be one of our main focuses as we move through earnings season and into other market-moving events in early November, such as the midterm elections and the Federal Open Market Committee meeting.

Of particular interest is that hedge fund managers could be in the early stages of equity accumulation, after an absence that lasted from May through much of August. Per the chart below, note how low the 20-day buy-to-open put/call volume ratio was prior to turning higher at the beginning of September. Our theory is that the lower this ratio, the less exposed hedge funds are to equities (and vice versa when the ratio is high). So, even though we are seeing evidence that hedge funds are becoming more bullish, the ratio is not at levels that would suggest they are "over-the-top" bullish, suggesting there is a healthy degree of buying power from this group at present.

Daily SPX chart since January 2009 with 20-day BTO put/call ratio for the SPX, QQQQ, and IWM


Some professional traders continue to express caution as it relates to the current level of the CBOE Market Volatility Index (VIX) and the term structure of VIX futures. This concern – which has been apparent in the market for weeks - suggests that there is still the potential for short covering, the unwinding of hedges, or sideline money that can drive stocks higher.

Additionally, our research suggests the perceived "low level" of the VIX is not reason to be concerned. For example, we monitor the VIX with respect to the S&P 500 Index's (SPX) 20-day historical volatility, and refer to the percentage that the VIX is trading above the SPX's 20-day historical volatility as the "VIX premium." When the VIX is trading below the SPX's 20-day historical volatility, we refer to this scenario as the "VIX discount."

During the past couple of years, when the VIX and SPX 20-day historical volatility converge, it has presented a buying opportunity, like the buy signal that occurred in early September. At the other extreme, when the VIX reading is double the SPX's 20-day historical volatility, the market has become vulnerable to correction. At present, and per the chart below, the "VIX premium" is not yet flashing a caution signal.



While we have a bullish bias, what do we see as immediate risks to the market? First, next week is the first week of a five-week option expiration cycle. Since 2006, the probability of these weeks producing a positive return is lower than that of the first week of a four-week expiration cycle and all other weeks.



Another risk is that potentially stiff overhead resistance on the SPX lies just overhead in the 1,200-1,230 area. The 1,205 level is the site of the longer-term, 80-month moving average, which contained the September 2001 low on a monthly closing basis and, when breached on a monthly closing basis in June 2002 and September 2008, signaled major trouble ahead. Moreover, this trendline acted as resistance for several months in 2004 and again in April of this year. Moreover, 1,230 is the site of a 61.8% Fibonacci retracement of the 2007 peak and March 2009 low.

With technical resistance looming overhead as earnings season gets into full swing, midterm elections just around the corner, lots of buzz surrounding another round of quantitative easing, the next several weeks could prove to be extremely pivotal.



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Indicator of the Week: Mutual Fund Flows
By Rocky White, Senior Quantitative Analyst

Foreword: Despite the strong rally over the last several weeks, mutual fund investors do not seem to believe in the rally. The Investment Company Institute (ICI) says money has been flowing out of U.S. domestic equity funds for 23 weeks in a row. This is evidence that the retail investor is very skeptical of this market. The 2008 crash and then the "flash crash" in May have caused a lot of uneasiness. That's why money is flowing out of equity funds and into bonds, which are perceived to be safer.

12-Month Fund Flows: Below is a long-term chart of the S&P 500 Index (SPX) along with the amount of money flowing into equity mutual funds (green line) and bond mutual funds (red line). Money naturally poured out of equity funds in 2008 when the market crashed. Twelve-month flows turned positive early this year, but turned negative again after September made five straight months of outflows.

Where's the money going? Clearly, much of that is heading into bond funds. More money is flowing into bond funds now than flowed into equity funds at the peak of the dot com bubble. Is that worrying for bond holders?

12-month equity flows versus 12-month bond flows and the SPX


Monthly Fund Flows: Below is another chart that helps illustrate what's going on. It shows the monthly inflows and outflows of equity and bond funds. Since 2009, we've seen 11 months of equity outflows and 10 months of inflows. The SPX, up about 75% since the March 2009 low, has been very strong during this period. Despite this market strength, mutual fund investors do not want any part of this market.

This indicates a huge amount of sideline money with the potential to propel this market higher. When this money does finally find its way into equities it can happen very quickly. Don't be left behind or you'll be missing out on some huge gains.

12-month equity flows versus 12-month bond flows and the SPX


This Week's Key Events: Full Speed Ahead for Earnings Season
Schaeffer's Editorial Staff

Here is a brief list of some of the key events this week. All earnings dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.

Monday
* The Federal Reserve will report industrial production numbers for September, while the National Association of Home Builders will issue its October Housing Market Index, a measure of builder confidence. Citigroup Inc. (C), Halliburton Co. (HAL), Hasbro Inc. (HAS), McMoRan Exploration Co. (MMR), Apple Inc. (AAPL), IBM Corp. (IBM), VMware Inc. (VMW), and Zions Bancorporation (ZION) will report earnings.

Tuesday
* The Commerce Department will release housing starts and building permits data for September. American Electric Power Co. Inc. (AEP), Bank of America Corp. (BAC), The Bank of New York Mellon Corp. (BK), The Coca-Cola Company (KO), EMC Corp. (EMC), Goldman Sachs Group Inc. (GS), Harley-Davidson Inc. (HOG), Illinois Tool Works Inc. (ITW), Johnson & Johnson (JNJ), Lockheed Martin Corp. (LMT), The New York Times Co. (NYT), Occidental Petroleum Corp. (OXY), Parker-Hannifin Corp. (PH), Peabody Energy Corp. (BTU), State Street Corp. (STT), Supervalu Inc. (SVU), UnitedHealth Group Inc. (UNH), Weatherford International Ltd. (WFT), Altera Corp. (ALTR), Boston Scientific Corp. (BSX), Intuitive Surgical Inc. (ISRG), Juniper Networks Inc. (JNPR), SLM Corp. (SLM), Tupperware Brands Corp. (TUP), Western Digital Corp. (WDC), and Yahoo! Inc. (YHOO) are scheduled to issue their quarterly reports.

Wednesday
* We'll get the usual weekly report on U.S. petroleum supplies, along with the Fed's Beige Book for October. Scheduled to report earnings are Abbott Laboratories (ABT), BlackRock Inc. (BLK), The Boeing Co. ( BA), Comerica Inc. (CMA) Delta Air Lines Inc. (DAL), Eaton Corp. (ETN), Genzyme Corp. (GENZ), Manpower Inc. (MAN), Media General Inc. (MEG), Stanley Black & Decker Inc. (SWK), US Airways Group Inc. (LCC), U.S. Bancorp (USB), Wells Fargo & Co. (WFC), E*Trade Financial Corp. (ETFC), eBay Inc. (EBAY), Netflix Inc. (NFLX), Seagate Technology plc (STX), and Xilinx Inc. (XLNX).

Thursday
* The Labor Department will release the weekly new jobless claims figures. Meanwhile, the Conference Board will report on September leading indicators, and the Philadelphia Fed will provide a look at manufacturing in its region in October. In the earnings spotlight will be Alaska Air Group Inc. (ALK), AT&T Inc. (T), BB&T Corp. (BBT), Caterpillar Inc. (CAT), Freeport-McMoran Copper & Gold Inc. (FCX), Cirrus Logic Inc. (CRUS), Danaher Corp. (DHR), Eli Lilly & Co. (LLY), Entergy Corp. (ETR), Fifth Third Bancorp (FITB), Goodrich Corp. (GR), The Hershey Co. (HSY), Huntington Bancshares Inc. (HBAN), ITT Educational Services Inc. (ESI), JetBlue Airways Corp. (JBLU), Patriot Coal Corp. (PCX), Philip Morris International Inc. (PM), PNC Financial Services (PNC), PPG Industries Inc. (PPG), Southwest Airlines Co. (LUV), SunTrust Banks Inc. (STI), The Travelers Companies Inc. (TRV), Union Pacific Corp. (UNP) United Parcel Service Inc. (UPS), W.R. Grace & Co. (GRA) Xerox Corp. (XRX), Amazon.com Inc. (AMZN), American Express Co. (AXP), Capital One Financial Corp. (COF), The Cheesecake Factory Inc. (CAKE), Chipotle Mexican Grill Inc. (CMG), The Chubb Corp. (CB), Citrix Systems Inc. (CTXS), NCR Corp. (NCR), and SanDisk Corp. (SNDK).

Friday
* There are no major economic reports scheduled for Friday. Honeywell International Inc. (HON), KeyCorp (KEY), Schlumberger Limited (SLB), and Verizon Communications Inc. (VZ) will report earnings.

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From Briefing.com: Weekly Recap - Week ending 19-Nov-10The S&P 500 ended flat as a sharp drop on Tuesday was offset by a large gain Thursday. Speculation that China will raise rates, concerns regarding the state of Ireland and a successful IPO from General Motors all influenced trade during the week.

Trading was mixed, with 5 of the 10 sectors gaining. None of the sectors posted a gain or loss in excess of 0.9%.

In corporate news, General Motors (GM +3.8%) returned to the public market with great acclaim after an IPO (post-bankruptcy) that raised more than $20 bln for the company.

The M&A market remains active. Caterpillar +3.6% is buying Bucyrus (BUCY +28.1%) for $7.6 bln, a 32% premium. EMC (EMC +0.5%) is buying Isilon Systems (ISLN +28.4%) for 2.25 bln, a 29% premium.

Several retailers reported earnings this week as third quarter earnings reporting season winds down. Target (TGT +3.9%), Lowe's (LOW +1.8%), Home Depot (HD -0.7%), TJX (TJX +0.7%), Staples (SPLS +5.7%) and Gap (GPS +1.0%) all posted upside quarterly results. Wal-Mart (WMT +0.5%) posted in-line results but provided upside guidance. Sears Holdings (SHLD -7.9%), however, missed both EPS and revenue estimates.

Separately, Dell (DELL +3.5%) reported better than expected earnings and Cisco (CSCO -2.7%) announced a $10 bln share repurchase plan.

In economic data, retail sales brought good news. Total retail sales increased 1.2% in October (Briefing.com consensus +0.7%) on top of an upwardly revised 0.7% increase in September. Excluding autos, retail sales jumped 0.4% (Briefing.com consensus +0.4%) versus a 0.5% gain in September. All in all, the Retail Sales report is another key data point that suggests the U.S. economy is on a growth path that holds potential to produce some positive surprises.

The Consumer Price Index increased 0.2% in October (Briefing.com consensus +0.3%) while core CPI, which excludes food and energy, was unchanged (Briefing.com consensus +0.1%) for the third straight month.

On a year-over-year basis, CPI is up just 1.2%. Core CPI is up only 0.6%, which is the smallest increase in the history of the index, which dates to 1957, according to the Bureau of Labor Statistics

Housing starts dropped 11.7% to 519,000 (Briefing.com consensus 600,000) and were revised 3.6% lower for September to 588,000. Building permits were up 0.5% in October to 550,000, yet that was below the Briefing.com consensus estimate of 570,000.

Separately, the latest initial claims report might not have produced much of a surprise relative to the consensus estimate, yet it has provided surprisingly good news for the labor market as claims held below the 450,000 level for the second straight week.

Initial claims rose 2,000 to 439,000 (Briefing.com consensus 442,000) for the week ending November 13. This is still an elevated level, but the sustained move below 450,000 without any special factors contributing to it is a reminder that the labor market is growing less stressed.

In overseas news, Shanghai markets dropped 5% in one session at the end of the previous week, and had a session this week where the market lost 4% on speculation of an increase in rates. On Friday, China once again raised its banking reserve requirement.

Meanwhile, Ireland remained in focus on speculation regarding a possible bailout for the country. According to reports, Ireland is in ongoing talks with the ECB, EU and IMF about a possible aid package

The treasury market had a busy week, with the 10-year yield spiking to 2.87% from 2.79%. Just two weeks ago rates were as low as 2.49%. Several Fed officials have expressed opposition to the latest quantitative easing efforts.

The dollar rose 0.4% and commodities fell 1.6%.

 
 Index	  Started Week	Ended Week  Change  % Change  YTD % 
 DJIA	    11192.58	11203.55    10.97      0.1    7.4 
 Nasdaq	     2518.21	2518.12     -0.09     -0.0   11.0 
 S&P 500	     1199.21	1199.73	     0.52      0.0    7.6 
 Russell 2000  719.27	 724.36      5.09      0.7   15.8

8:06AM Kulicke & Soffa announced that Jonathan Chou will join K&S as Sr VP and CFO, effective Dec 13, 2010 (KLIC) 5.93 : Co announced that Jonathan Chou will join K&S as Senior Vice President and Chief Financial Officer, effective December 13, 2010. Mr. Chou will reside in Singapore. In this role he will succeed Michael Morris, who will advise the Company on transition matters until January 21, 2011.

1:41AM Cisco Systems authorizes up to $10 bln in additional stock repurchases (CSCO) 19.61 : Co announces the board authorized up to $10 bln in additional repurchases of its common stock. Co's board had previously authorized up to $72 bln in stock repurchases. There is no fixed termination date for the repurchase program. From the inception of the repurchase program in September 2001 through the close of co's first quarter fiscal year 2011 on October 30, 2010, the co had repurchased and retired 3.2 bln shares at an average price of $20.83 per share for an aggregate purchase price of ~$67.5 bln, with a remaining authorized amount of $4.5 bln.

09:36 am Sunpower downgraded to Underperform at Wedbush; tgt lowered to $7: . Wedbush downgrades SPWRA to Underperform from Neutral and lowers their tgt to $7 from $11 following disappointing 2011 guidance issued Thursday in conjunction with the company's analyst event. They remain concerned about SunPower's cost structure relative to industry peers.

09:39 am DELL Raises Operating Guidance (DELL)

Dell (DELL 13.95 +0.29) reported third quarter earnings of $0.45 per share, excluding non-recurring items, $0.12 better than the Thomson Reuters consensus of $0.33.

Revenues rose 19.4% year-over-year to $15.39 billion versus the $15.76 billion consensus.

The company raised its operating income guidance and reaffirmed its revenue guidance at mid-point for fiscal year 2011. The company sees operating income growing 23% to 28% to approx. $3.66 billion to $3.81 billion, above the $3.53 billion consensus, up from growth of 18% to 23% previously, sees fiscal year 2011 revs at mid-point of 14% to 19% growth to approx. $60.31 billion to $62.95 billion, in-line with the $62.38 billion Thomson Reuters consensus.

Large Enterprise rev was $4.3 billion, up 27% year-over-year. Public revenue was $4.4 billion, a 20% increase (including Perot); small and medium biz rev +24% to $3.7 billion; consumer rev +4% to $3 billion. Commercial and enterprise sectors continue to be solid. Q3 gross margin 19.5% vs. the 17.5% consensus.

The company, "With solid demand in our commercial segments, we executed well and that led to record profitability for the co and especially in our important enterprise solutions and services business."

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From Briefing.com: Weekly Recap - Week ending 21-Jan-11Most of the major indices fell during the holiday-shortened week, with the S&P 500 declining 0.8% as earnings came in mixed and concerns increased that China will raise interest rates.

The 10 sectors showed mixed results, with three settling lower, four showing modest gains of 0.2% or less, and three showing stronger gains. Utilities led to the upside, rising 1.1%.

Materials (-3.2%) led to the downside. The sector's decline came after China reported robust GDP growth. That increased fears that the country will need to raise interest rates again to prevent its economy from overheating, forcing commodity prices lower.

Turning to fourth quarter earnings reports, the bulk of major financial firms reported quarterly results this week. Several disappointed investors. Bank of America (BAC, -6.6%) fell after reporting a loss of $0.04 per share, excluding nonrecurring items, missing the consensus estimate of $0.06. Citigroup (C, -4.7%) swung to a profit but missed estimates. However, Goldman Sachs (GS, -5.0%), Wells Fargo (WFC, -0.7%) and Morgan Stanley (MS, +3.6%) all beat expectations.

Outside of financials, General Electric (GE, +4.9%) posted better-than-expected earnings and forecasted increasing profits in the coming years. Meanwhile, IBM (IBM, +3.7%) beat expectations as revenue increased 6.6% y/y. Those earnings helped the Dow (+0.7%) outperform this week.

Tech giant Apple (AAPL, -6.2%) reported another strong quarter as revenue spiked 70.5% y/y, easily surpassing estimates. But news that CEO Steve Jobs is taking an indefinite medical leave limited buying interest in the stock. Google (GOOG, -2.0%) reported strong earnings as revenue increased 28.6% y/y. At the same time, the company said that CEO Eric Schmidt is stepping aside and co-founder Larry Page will take the reins. Mr. Schmidt will still be with the company as executive chairman. On a similar note, Hewlett-Packard (HPQ, +2.1%) implemented a shakeup of its Board. The move follows the controversial decision to fire its previous CEO Mark Hurd.

The body of U.S. economic data continues to paint a picture of recovery, though there was a limited amount of releases. Fewer people filed for unemployment insurance and existing home sales came in well above estimates. The reports failed to have much of an impact on the stock market.

The coming week brings a bevy of earnings reports, including 13 Dow components.

 
 Index	  Started Week	Ended Week  Change % Change  YTD % 
 DJIA	    11787.38	11871.84    84.46     0.7    2.5 
 Nasdaq	     2755.30	 2689.54   -65.76    -2.4    1.4 
 S&P 500	     1293.24	 1283.35    -9.89    -0.8    2.0 
 Russell 2000  807.57	  773.18   -34.39    -4.3   -1.3

8:00AM Zoran raises Q4 EPS, rev guidance above consensus (ZRAN) 8.74 : Sees Q4 EPS of ($0.30)-(0.33), ex-items, vs ($0.41) Thomson Reuters consensus and ($0.39)-(0.43) previously; revs $68.8 mln vs $62.12 mln Thomson Reuters consensus and $60-65 mln previously. "We are seeing design momentum beginning to build within DTV and have recently secured two top-tier wins for our SoC and FRC solutions, one of which will be shipping to the European market. Typically, 80 to 90 percent of design wins for products that will ship Q4 2011 and 2012 are awarded in the current design cycle. As we move through this critical cycle, with our new universal platforms addressing the higher-end segments of the DTV market, we are very optimistic that our ongoing designs for customers will translate into additional top-tier design wins."

10:56 am GE Reports Strong Q4; Guides FY11 Revs Above Estimates (GE)

General Electric (GE 19.42 +0.99) reported fourth quarter earnings of $0.36 per share, $0.04 better than the consensus of $0.32.

Revenues rose 0.8% year-over-year to $41.4 billion vs the $39.9 billion consensus.

On the conference call the company issued FY11 guidance seeing total revenues of +0-5%, which calculates to $150.2-157.7 billion, well above the $144.3 billion consensus

The company "Industrial segment revenue was up 4%, with Industrial organic growth of 6%. Fourth quarter orders grew 12% year-over-year, with a 20% increase in equipment and a 5% expansion in services. Overall orders in Energy Infrastructure grew 4%. Total company backlog in the quarter increased $3.1 billion to a record $175 billion.

Within the GE Capital segment, Q4 net income of $1.1 billion was up $1.0 billion from a year ago, with volume growing 30% in the quarter. Losses and impairments declined $0.3 billion from the third quarter of 2010 to $2.5 billion, and the company saw improvement in delinquencies across the businesses.

Cash generated from GE Industrial operating activities totaled $4.6 billion in the quarter and $14.7 billion for the year. At year-end, they had $79 billion of consolidated cash and equivalents. Strong fourth-quarter industrial margins (ex. NBCU) of 17.5%, up 10 basis points year-over-year.

10:38 am AMD CEO Search to Continue (AMD)

Advanced Micro Devices (AMD 7.69 -0.33) reported fourth quarter earnings of $0.14 per share, excluding non-recurring items, $0.03 better than the consensus of $0.11.

Revenues rose 0.2% year-over-year to $1.65 billion modestly above the $1.63 billion consensus.

The company reported gross margin of 45%, which was in-line with the company's preannouncement.

The company issued guidance seeing first quarter revenue to be flat to slightly down quarter-over-quarter, compared to the -5.4% consensus decline.

On the conference call, the interim CEO stated that the CEO search remains underway, but they could not comment much further until it is complete. He highlighted debt reduction from fabless business model, success of Bulldozer chip, and transition to a dual graphics combination platform.

09:39 am GOOG Beats Q4 Expectations; Shakes up Mgmt (GOOG)

Google (GOOG 626.77) reported fourth quarter earnings of $8.75 per share, excluding non-recurring items, $0.66 better than the consensus of $8.09.

Revenues rose 28.6% year-over-year to $6.37 billion above the $6.06 billion consensus. International revenues were up 52% year-over-year.

The company reported third quarter paid clicks increased 18% year-over-year, above the expectations of approximately 15%. The company also reported that costs per click increased 5% year-over-year, in-line with the expectations of roughly 5%. In' rev +52% YoY.

The company also announced management changes. Beginning April 4, Larry Page, Google Co-Founder, will take charge of Google's day-to-day operations as Chief Executive Officer. Sergey Brin, Google Co-Founder, will devote his energy to strategic projects, in particular working on new products. Eric Schmidt will assume the role of Executive Chairman, focusing externally on deals, partnerships, customers and broader business relationships, government outreach and technology thought leadership. Internally, he will continue to act as an advisor to Larry and Sergey.

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From Briefing.com: 4:35 pm : Stocks were hit hard at the open by sellers who were focused on disappointing guidance from Cisco and Akamai Tech, rather than a better-than-expected initial jobless claims report, but the major averages rallied when it became clear that buyers remain in control.

This morning's sell-off was a broad based affair, but it didn't last much more than half an hour. Once stocks stabilized, a buy-the-dip mentality became apparent as participants pushed back in for fear of missing out on further gains. Overall share volume was not completely impressive -- it did break above 1 billion shares on the NYSE for the first time in seven sessions -- but watching the tape today left little doubt that bullish participants continue to call the shots.

Even though the broader market rallied, sellers barely let up on Cisco (CSCO 18.92, -3.12) and Akamai (AKAM 40.75, -7.24). The 15% loss suffered by AKAM was its worst single-session slide in more than a year and left shares at a six-month low. As for CSCO, its 14% drop was its worst in three months and caused shares to set a new 52-week low. Weakness in CSCO proved a principal cause in the Dow's failure to find higher ground, ultimately snapping its eight-session streak of gains.

The rest of the earnings picture was rather mixed as Molson Coors (TAP 45.48, -2.09) and Sprint Nextel (S 4.60, +0.25) both missed the consensus earnings estimate, but PepsiCo (PEP 63.36, -1.06), MetLife (MET 47.27, -0.33) and Prudential (PRU 65.00, +1.87) posted upside surprises. Whole Foods (WFMI 60.05, +6.30) surged after it complemented an upside earnings estimate with increased guidance.

There was some volatility to late trade. Stocks seemed to gyrate with every word of Egypt's President Mubarak, who indicated in a speech that he will not leave office until September, despite calls from his citizens for him to step down immediately. Mubarak's refusal in the face of protests carries potential for geopolitical upset.

Participants got their first dose of data in a few days with the release of initial jobless claims for the week ended January 29. Initial claims totaled 383,000, which is less than Briefing.com consensus of 410,000 and only the second time since July 2008 that initial claims came in below 400,000.

Wholesale inventories for December increased 1.0%, but that news was of little concern to participants. News that the Treasury Budget for January featured a smaller-than-expected $49.8 billion deficit was also shrugged off.

Treasuries resumed their descent this session, but the yield on the benchmark 10-year Note remains below 3.70% after its rally in the prior session. Results from today's 30-year Bond auction proved less inspiring. The auction drew a bid-to-cover of 2.51, dollar demand of $40.2 billion, and an indirect bidder participation rate of 43.1%.

Advancing Sectors: Energy (+0.9%), Telecom (+0.5%), Industrial (+0.4%), Materials (+0.3%), Consumer Discretionary (+0.2%), Health Care (+0.1%), Utilities (+0.1%)
Unchanged: Financial
Declining Sectors: Consumer Staples (-0.5%), Tech (-0.5%)DJ30 -10.60 NASDAQ +1.38 NQ100 +0.1% R2K +0.4% SP400 +0.6% SP500 +0.99 NASDAQ Adv/Vol/Dec 1347/2.51 bln/1244 NYSE Adv/Vol/Dec 1570/1.02 bln/1390

09:49 am CSCO Guides Q3 EPS Below Consensus (CSCO)

Cisco (CSCO $19.40 -2.64) reported second quarter earnings of $0.37 per share, $0.02 better than the Thomson Reuters consensus of $0.35. Revenues rose 6.1% year-over-year to $10.4 billion versus the$10.23 billion consensus.

The company said, "The quarter played out as we expected. Our strategy of tightly integrating our multiple products through an architectural approach is working, and we are delivering innovation in each major product family," said John Chambers, chairman and CEO, Cisco. "As a company, we are going through a period of transition as we move aggressively in the market with our architectural strategy..."

On the conference call, the company provided guidance as follows: In the third quarter, the company expects to see earnings in the range of $0.35 to $0.38 versus $0.40 Thomson Reuters consensus; sees revenues +4-6% year-over-year versus +4.7% Thomson Reuters consensus (equates to ~$10.8-11.0 billion versus $10.85 billion Thomson Reuters consensus). In the fourth quarter, the company expects to see earnings in the range of +8-11% year-over-year +7.9% Thomson Reuters consensus (equates to ~$11.7-12.0 billion versus the $11.7 billion Thomson Reuters consensus)... In fiscal year 2011, the company sees revenues at low end of prior guidance for +9-12% year-over-year versus +8.6% Thomson Reuters consensus.

09:42 am Initial Claims Level Drops Below 400,000; Snowstorms May Have Played a Role

The initial claims level declined to its lowest level since July 2008. Claims fell from 419,000 for the week ending January 29 to 383,000 for the week ending February 5. The Briefing.com consensus expected the initial claims level to fall to 410,000.

The current initial claims level is now only about 60,000 claimants higher than levels normally found during times of full employment. We do not expect to see a significant reduction in the initial claims level from this point forward until payroll growth puts a significant dent in the total number of unemployed.

While the DOL has not released any information, there could be some slight bias in the initial claims data due to severe snowstorms that affected much of the Midwest and Northeast in the beginning of February.

The "true" initial claims level, therefore, could actually be slightly higher than the reported number. We will not know for sure if the snowstorms had any effect on the claims level for another couple of weeks.

The continuing claims level declined from 3.935 million for the week ending January 22 to 3.888 million for the week ending January 29. The Briefing.com consensus expected continuing claims fell to 3.900 million.

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From Briefing.com: Weekly Recap - Week ending 29-Apr-11The S&P 500 gained 1.9% as most companies continue to top earnings expectations and first quarter GDP grew at a slightly faster-than-expected pace. As stocks gained, the dollar fell, gold hit a new record and oil prices rose to a fresh multiyear high.

Buying interest was broad-based with all 10 sectors advancing at least 1%.

Commodity prices rallied, with silver spiking 3.8%, crude advancing 1.2% and gold gaining 3.7%. Meanwhile, the dollar index fell 1.2%. Year-to-date gold is up 10%, oil is up 24% and silver has rallied 55%. Meanwhile, the dollar has fallen 7.7%.

The week was extremely earnings heavy, with nearly 150 S&P 500 companies releasing their quarterly results. 3M (MMM) hit an all-time high following its upside report and forecast.

Amazon.com (AMZN) rallied to a new record following its earnings beat. Exxon Mobil (XOM) garnered attention after posting a $11 bln quarterly profit, which was slightly ahead of estimates.

Research In Motion (RIMM) took a pounding as the maker of BlackBerry devices lowered its profit forecast.

About 300 S&P 500 components have reported first quarter earnings, 74% have posted an upside surprise. Earnings are now expected to grow 16% this quarter, an increase from the 11.5% estimate at the beginning of the quarter.

In economic news, first quarter GDP rose at a seasonally adjusted annual rate of 1.8%, slightly ahead of the Briefing.com consensus of 1.7%. An increase in imports, a slowdown in personal spending growth and a decrease in federal government spending resulted in the deceleration of GDP growth relative to prior quarters.

The FOMC left the benchmark unchanged at between 0.00% and 0.25%, as expected. The Federal Reserve trimmed its 2011 growth forecast range by about 40 basis points. On a positive note, the Fed also decreased its unemployment expectations, now forecasting a range of between 8.4% and 8.7%.

 
 Index	  Started Week	Ended Week  Change  % Change  YTD % 
 DJIA	    12505.99	 12810.50   304.51	2.4  10.6 
 Nasdaq	     2820.16	  2873.54    53.38	1.9   8.3 
 S&P 500	     1337.38	  1363.61    26.23	2.0   8.4 
 Russell 2000  845.38       865.29    19.91	2.4  10.4

10:18AM LDK Solar reports its intention to offer, subject to market and other conditions, U.S. dollar-denominated senior notes (LDK) 11.48 +0.32 : LDK Solar intends to use the net proceeds of the offering to repay certain of its existing indebtedness with remaining maturities of up to one year.

2:23AM Advanced Semi beats by NT$0.07; beats on revs (ASX) 5.90 : Reports Q1 (Mar) EPS of NT$0.65 vs NT$0.58 Thomson Reuters consensus; revs increased 23% YoY to NT$46.01 bln vs NT$43.28 bln consensus.

09:51 am MEMC Elec upgraded to Buy at Wunderlich; tgt raised to $16: . Wunderlich upgrades WFR to Buy from Hold and raises their tgt to $16 from $12 saying the co is developing its own line of super-efficient solar panels that are certain to impact 2012 revenue in a positive way. They believe having its own panel line will make WFR a more attractive takeover contact.

09:52 am Apple target raised to $415 at Argus following last week's results: . Argus notes AAPL delivered its usual terrific results in fiscal 2Q11, but the strong showing did not boost the stock. While iPhone sales rose to record levels, making AAPL the largest mobile phone vendor by rev, iPad unit sales slipped sharply on a sequential basis. The co's desktop Mac computers also declined more than it modeled, though the sequential decline in mobile Macs was moderate. Firm notes that the iPhone had some middling quarters before global growth sent the product into hyperdrive. Firm thinks a similar trajectory awaits the iPad, and on that basis it's raising its target price to $415 from $375.

10:16 am RIMM Lowers Q1 EPS Guidance (RIMM)

Research In Motion (RIMM $48.60 -7.99) lowered its first quarter earnings guidance to $1.37 to $1.45, below the previous guidance of $1.47-1.55 and below the Thomson Reuters consensus $1.48.

This shortfall is primarily due to shipment volumes of BlackBerry smartphones that are now expected to be at the lower end of the range of 13.5-14.5 million forecasted in March and a shift in the expected mix of devices shipped towards handsets with lower average selling prices.

Gross margin for the first quarter is expected to be similar to the 41.5% previously guided. This mix shift is also expected to result in revenue that is slightly below the range of $5.2-5.6 billion guided on March 24, Thomson Reuters consensus $5.43 bln.

Expected shipments of BlackBerry PlayBook in the quarter continue to be in line with our previous expectations and we have not experienced any significant supply disruptions in Q1 due to the impact of the Japan earthquake.

RIM expects to achieve full year fully diluted earnings per share of approximately $7.50 (consensus $7.53), which reflects anticipated strong revenue growth in the third and fourth quarters of the fiscal year driven primarily by the launches of new BlackBerry smartphone products and prudent cost management.

10:08 am MSFT Tops Q3 Expectations (MSFT)

Microsoft (MSFT $25.89 -0.82) reported third quarter earnings of $0.61 per share, including a $0.05 tax benefit primarily related to an agreement with the IRS to settle a portion of their audit of tax years 2004 to 2006, $0.05 better than the Thomson Reuters consensus of $0.56.

Revenues rose 13.3% year-over-year to $16.43 billion versus the $16.19 billion consensus.

Microsoft Business Division revenue grew 21% year-over-year. Server & Tools revenue grew 11% year-over-year, the fourth consecutive quarter of double-digit growth. Online Services Division revenue grew 14% year-over-year primarily driven by increases in search revenue.

Bing's US search share increased to 13.9% this quarter. Entertainment & Devices Division grew 60% year-over-year, fueled by Kinect for Xbox 360, the fastest-selling consumer electronics device in history, continued strong Xbox 360 console sales and growth of Xbox Live.

Microsoft reaffirmed its operating expense guidance of $26.9 billion to $27.3 billion for the full year ending June 30, 2011. Microsoft also offers preliminary FY12 operating expense guidance of 3% to 5% growth from the mid-point of fiscal year 2011 guidance, or $28.0 billion to $28.6 billion.

"Office had another huge quarter, again exceeding everyone's expectations, and the addition of Office 365 will make our cloud productivity solutions even more compelling. We continue to see strong adoption of our cloud-based services among the Fortune 500."

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From Briefing.com: Weekly Recap - Week ending 06-May-11The stock market gave up some of the past weeks' gains as commodities got clobbered and the dollar rallied on fears of slower global growth. On the upside, U.S. private companies added the most jobs since February 2006 and the drop in oil prices will be a positive for consumers.

Commodities took a beating this week, with the CRB Index shedding 9.0%, crude tumbling 14.1% and silver plummeting 27%. The decline in silver was largest weekly percentage fall on records dating back to 1984. After this week's sell off, the 1.4% year-to-date gain of the CRB Index is less than the 6.6% gain of the S&P 500.

The dollar rallied as commodities fell, advancing 2.5% in its best weekly gain since August. The euro showed the most weakness. ECB President Trichet made more dovish than expected comments and there were reports that Greece may be leaving the euro currency.

The selling interest in U.S. equities was focused on the energy and materials sectors. Energy plunged 7.0% and materials gave up 3.4%. Defensive sectors outperformed on a relative basis with healthcare up 0.6% and Utilities advancing 0.3%. Healthcare is now the best performing sector year-to-date, up 12.4%.

In economic news, the April employment report showed solid job growth as private employers created more than enough jobs to offset the decline in government payrolls. Overall payrolls increased 244,000, well above the Briefing.com consensus of 175,000. Private payrolls were up 268,000, topping the Briefing.com consensus of 200,000 and the highest level since February 2006.

There was a discrepancy between the payroll numbers and the unemployment rate, however. The unemployment rate, which is based off a household survey, showed an uptick to 9.0% from 8.8%.

 
 Index	  Started Week	Ended Week  Change  % Change  YTD % 
 DJIA	    12810.50	 12638.70  -171.80    -1.3    9.2 
 Nasdaq	     2873.54	  2827.56   -45.98    -1.6    6.6 
 S&P 500	     1363.61	  1340.20   -23.41    -1.7    6.6 
 Russell 2000  865.29	   833.34   -31.95    -3.7    6.3

8:45AM Lam Research prices $750 million of convertible notes (LRCX) 47.56 : Co announces that it has priced its private offering of $750 million in aggregate principal amount of convertible senior notes, an increase from the $700 million in aggregate principal amount previously announced. The notes will be issued in two tranches of $375 million each due in May 2016 and May 2018, respectively, and will be sold to qualified institutional buyers. The 2016 Notes will bear interest at a rate of 0.50% per year, and the 2018 Notes will bear interest at a rate of 1.25% per year, in each case, payable semi-annually.

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From Briefing.com: Weekly Recap - Week ending 13-May-11The stock market traded in a range-bound fashion, ending the week with a slight loss. Commodities posted slight gains and the dollar rallied.

Trading action within the S&P 500 was mixed, with half of the 10 sectors posting a gain. Defensive sectors outperformed, with consumer staples up 2.1% and utilities climbing 1.8%. The financial sector led the way lower, shedding 2.1% with notable weakness in heavyweight banks. The financial sector is now in negative territory for the year.

In corporate news, Cisco's (CSCO) earnings report and guidance once again disappointed investors. Shares of the tech giant gave up 3.9%. Shares of Cisco are down 34% of the past 12 months, making it the third worst performing S&P 500 component.

Microsoft (MSFT) made an $8.5 bln cash offer to acquire Skype in a move to expand the software giant's presence in the VoIP market.

Disney (DIS) shed 3.6% after posting disappointing earnings.

Economic data were in-line to slightly disappointing, though not enough to move expectations.

Initial claims for the week ending May 7 fell 44,000 to 434,000 (Briefing.com consensus 423,000) while continuing claims for the week ending April 30 held fairly flat at 3.756 mln (Briefing.com consensus 3.700 mln).

In brief, the latest claims reading is still on the wrong side of 400,000, yet the market appears to be somewhat patient with the idea that more improvement will be seen as more time expires between the weekly reading and the unusual factors in April that biased things in a negative manner.

Retail sales and inflation data largely met expectations.

 
 Index	  Started Week	Ended Week  Change  % Change  YTD % 
 DJIA	    12638.70	 12595.70  -43.00     -0.3    8.8 
 Nasdaq	     2827.56	  2828.47    0.91      0.0    6.6 
 S&P 500	     1340.20	  1337.77   -2.43     -0.2    6.4 
 Russell 2000  833.34	   835.67    2.33      0.3    6.6

3:10PM Rambus receives decisions from Court of Appeals for the Federal Circuit: In MU case, Court affirmed Rambus spoliated documents, dismissal sanction vacated and case remanded (RMBS) 16.30 -2.97 : Co announced that the Court of Appeals for the Federal Circuit (CAFC) has issued its decisions in cases with Hynix Semiconductor and Micron Technology (MU). In the ruling in the Micron case, the CAFC affirmed the district court's determination that Rambus spoliated documents, but vacated the court's dismissal sanction and remanded the case for further consideration by the U.S. District of Delaware Court. In its ruling in the Hynix case, the CAFC vacated the district court's spoliation findings where it had found that Rambus had not spoliated documents. The CAFC further vacated the court's final judgment, and remanded the case to the U.S. District Court for the Northern District of California (NDCA) for reconsideration. "We are very disappointed with the decisions in these cases... We are hopeful when the district courts reconsider these decisions, they will find, as we believe, there was no bad faith and no prejudice." Rambus management will discuss this decision during a special conference call today at 2:00 p.m. PT.

10:52 am SPWRA Guides Q2 Revs Below Consensus (SPWRA)

Sunpower (SPWRA $21.27 -0.11) reported first quarter earnings of $0.15 per share, $0.02 worse than the Thomson Reuters consensus of $0.17.

Revenues rose 30.0% year/year to $451.4 million versus the $478.6 million consensus.

For the second quarter, the company expects to see revenues at $500 million to $550 million versus the $597.35 million Thomson Reuters consensus.

"Revenues and inventory levels in the first quarter were impacted by the pause in business activity in Italy, as several projects awaited clarity on the new tariffs... Italy's new feed-in-tariff, announced earlier this month, follows the trend across Europe of favoring rooftop solar investment. SunPower's high efficiency systems and flexible dealer/partner network positions us effectively to respond to the uncapped rooftop market in Italy and other countries. As a result, we are in the process of optimizing our portfolio allocation geographically and across our downstream channels for the remainder of 2011. We expect to complete this process in the near future and plan to revise our 2011 guidance before the end of the second quarter to reflect the recent changes in Italy."

09:48 am ESLR Q1 Revs Miss Expectations (ESLR)

Evergreen Solar (ESLR $1.07 -0.34) reported a first quarter loss of $0.93 per share, incl. items and may not be comparable to the Thomson Reuters consensus of ($0.55).

Revenues fell 55.0% year/year to $35.3 million versus the $52.2 million consensus.

09:42 am NVDA Guides Q2 Revs Above Consensus (NVDA)

NVIDIA (NVDA $18.84 -1.66) reported first quarter earnings of $0.27 per share, $0.08 better than the Thomson Reuters consensus of $0.19.

Revenues declined 4% year/year to $962.0 million versus the $947.79 million Thomson Reuters consensus.

Reports first quarter gross margin of 50.4% versus consensus of 49.06%.

For the second quarter, the company expects revenue up 4% to 6% from the first quarter, which equates to $1.00 billion to $1.02 billion versus the $992.46 million Thomson Reuters consensus.

GAAP gross margin is expected to be 50.5 to 51.5 percent. GAAP operating expenses are expected to be between $332 and $336 million. GAAP tax rate is expected to be 14 to 16 percent.

"Our core GPU businesses are solid, with expanding revenues and margins. And this quarter, our Tegra mobile business took off," said Jen-Hsun Huang, NVIDIA president and chief executive officer. "With the Tegra super chip and the Icera wireless communication processor, we will offer our customers the two most important processors of the mobile computing revolution. We look forward to completing the Icera acquisition shortly."

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From Briefing.com: Weekly Recap - Week ending 27-May-11U.S. equity markets managed to shake off eurozone debt fears to close little changed on the week. The S&P 500 declined 0.2% while small-cap indices like the Russell 2000 (+0.9%) outperformed.

Seven of the 10 S&P sectors finished negative on the week, with the declines led by defensive sectors such as utilities (-1.7%), health care (-1.2%) and consumer staples (-1.0%). Of the three outperformers, materials (+2.1%) and energy (+2.0%) showed strong gains.

The market ended last week worried about the eurozone debt crisis, and picked up where it left off on Monday. U.S. equity markets fell sharply after Standard & Poor's cut its ratings outlook on Italy from stable to negative and following weaker-than-expected manufacturing PMI data in both China and Europe.

But U.S. markets stabilized on Tuesday and experienced modest rebounds on Wednesday, Thursday and Friday to close around unchanged on the week.

The headlines out of Europe initially sent the euro lower this week, but it also rebounded, albeit in volatile trade. The subsequent weakness in the dollar did not have it usual effect on the commodity market, however. Metals traded higher, but energy and agricultural futures experienced mixed, directionless trade.

Treasuries continued to extend higher, with the exception of some profit-taking on Wednesday, aided by three longer-term auctions that experienced strong demand. The U.S. Treasury sold $99 billion in 2-, 5- and 7-year Notes, with each auction experiencing strong bid-to-cover ratios as the combination of weak U.S. economic data and the eurozone debt crisis has investors piling into the relative safety of Treasuries.

This week's economic calendar was thin ahead of the long weekend. New Home Sales surprised to the upside in April, but that merely offset the weak Existing Home Sales figure. The market shrugged off weak Durable Goods Orders in April due to strong upward revisions in March, but could not look past an increase in the Initial Claims level to 424,000. If claims remain elevated next week, it may suggest that the labor market recovery is weakening.

U.S. markets are closed Monday for Memorial Day. For the remainder of the week, new developments in Europe and employment data in the U.S. will be in focus. In addition to the jobless claims report, the May employment report will be released on June 3. It remains to be seen whether that will be enough to offset the summer doldrums.

 
 Index	  Started Week	 Ended Week  Change  % Change  YTD % 
 DJIA	    12512.00	  12441.58  -70.42     -0.6    7.5 
 Nasdaq	     2803.32	   2796.86   -6.46     -0.2    5.4 
 S&P 500	     1333.27	   1331.10   -2.17     -0.2    5.8 
 Russell 2000  829.06	    836.26    7.20	0.9    6.7

7:06AM Tessera Tech announced that its wholly owned subsidiary Tessera, has filed a complaint against Sony Corporation alleging breach of contract (TSRA) 17.40 : Co announced that its wholly owned subsidiary Tessera, Inc. has filed a complaint against Sony Corporation in the California State Court of Santa Clara County alleging breach of contract, breach of the covenant of good faith and fair dealing, and seeking declaratory relief. "Under our Agreement with Sony, we have the right to examine and audit Sony's records regarding amounts due, as we typically have with all our licensees... We are bringing this suit because Sony has not paid all of the royalties owed to us under the contract."

7:02AM Research In Motion says purported class action lawsuit is without merit (RIMM) 43.57 : Co confirmed it intends to vigorously defend against a purported class action lawsuit filed against the Company and certain of its officers in the United States District Court for the Southern District of New York. The lawsuit alleges that during the period from December 16, 2010 through April 28, 2011, the Company and certain of its officers made materially false and misleading statements regarding the Company's financial condition and business prospects, and seeks unspecified damages on behalf of an alleged class of purchasers of the Company's common shares during this period. RIM believes that the allegations are without merit.

07:28 am Skyworks: Oppenheimer is positive on acquisition of power mgm't co AnalogicTech: . Oppenheimer notes, last night, SWKS announced the acquisition of power mgm't company AnalogicTech for $6.13/shr. The AATI announcement is hot on the heels of Skyworks' pending acquisition of SiGe and offers a similar value proposition by adding complementary products and a good growth profile, while immediately accretive. But also like SiGe, there's a need to drive operational improvement to meet Skyworks' levels. Overall OpCo is positive and like the fit and sales leverage, but it'll keep an eye on execution given the close timing of two fixer-upper acquisitions.

07:09 am Broadcom added to Top Picks list at FBR Capital: . FBR Capital is adding BRCM to their Top Picks list as they remove MSCC. Firm says investors remain focused on wireless, specifically baseband growth opportunities and connectivity market share sustainability trends. In short, they believe Broadcom remains positioned to someday be the world's second-largest baseband supplier, behind Qualcomm, with the 3G/4G multi-mode baseband market likely to coalesce around Qualcomm (QCOM), Broadcom, Intel (INTC), and potentially ST-Ericsson (ERIC) or Marvell (MRVL). Cellular represents a large growth opportunity as Broadcom pushes into 4G more aggressively by 2013. Near term, they think baseband shipments seasonally improve in 2H11, and as new GSM customers in China ramp.

09:18 am MRVL Guides Q2 EPS Above Consensus (MRVL)

Marvell (MRVL $14.56) reported first quarter earnings of $0.29 per share, $0.01 worse than the Thomson Reuters consensus of $0.30.

Revenues fell 6.3% year/year to $802 million versus the $825.6 million consensus.

The company reported first quarter non-GAAP gross margins of 58.5% versus the 59% consensus.

"The results for our first quarter reflected the typical seasonality of our consumer centric end markets... Even at this low point in the revenue cycle, we were an industry leader in profitability for both operating and cash flow margins, demonstrating the strength of our long-term business model. We remain confident that the investments we are making such as in TD-SCDMA and SSD will result in improved results throughout the year."

During the conference call, the company issued second quarter non-GAAP earnings of $0.37, give or take a couple of pennies (consensus is $0.34) and expects revenues to be $870 million to $910 million versus the $875.4 million consensus.

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From Briefing.com: 4:20 pm : A positive response to recent efforts to shore up Greece's fiscal woes helped stocks eek out their first weekly advance in seven weeks.

Both domestic equities and Europe's bourses bounced in response to news this morning that Greece has appointed a new finance minister and that German and French officials support quick implementation of plans to address the country's fiscal woes. However, Moody's reminded investors about the precarious fiscal conditions that exist among countries in the eurozone periphery by announcing that Italy's debt rating is on review for possible downgrade.

Although stocks were able to open on a strong note, support waned as the session progressed. The downward drift took the tech-rich Nasdaq to a modest loss, but the S&P 500 was able to sustain a modest gain, which proved to be enough to give the broad market average a weekly gain of less than one point. Still, that's the stock market's first weekly advance since April.

A 0.9% gain made financials the best performing sector of the session. Telecom, which advanced 0.8%, wasn't far behind. Energy and tech were at the other end of the spectrum; both sectors shed 0.3%. Energy was hurt by a 2% drop in oil prices to about $93 per barrel, while weakness in the tech sector was largely attributable to sharp losses among semiconductor stocks, which fell 1.4% as a group.

Research In Motion (RIMM 27.75, -7.58) was dumped aggressively today. The company's downside guidance took the stock to its lowest level in more than four years.

Participants were dealt a small dose of data today. The Consumer Sentiment Survey for June from the University of Michigan came in at 71.8, which is less than the reading of 73.5 that had been broadly expected among economists polled by Briefing.com. Leading Indicators for May increased by 0.8%, which is greater than the Briefing.com consensus call for a 0.4% increase.

Share volume surged this session, but not because investors rushed in from the sidelines. Rather, quadruple-witching options expiration increased the number of shares traded among regular participants.

Advancing Sectors: Financials (+0.9%), Telecom (+0.8%), Consumer Discretionary (+0.7%), Consumer Staples (+0.6%), Utilities (+0.6%), Industrials (+0.4%), Health Care (+0.2%)
Unchanged: Materials
Declining Sectors: Energy (-0.3%), Tech (-0.3%)DJ30 +42.84 NASDAQ -7.22 NQ100 -0.3% R2K +0.1% SP400 +0.2% SP500 +3.86 NASDAQ Adv/Vol/Dec 1294/2.40 bln/1241 NYSE Adv/Vol/Dec 1867/1.60 bln/1121

QLogic (QLGC) announced it has been selected to provide its 12000 Series switches and 7300 Series adapters for the Department of Energy National Nuclear Security Administration's Tri-Laboratory Linux Capacity Cluster 2.

8:00AM Chipmos Technology reports May revenue +8.1% MoM at $57.0 mln (+6.0% YoY) (IMOS) 8.89 :

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Monday Morning Outlook: Beware the Mean-Reverting Market
One major buy signal -- and four possible risks to the bullish case
by Todd Salamone 7/2/2011 1:30 PM

http://www.schaeffersresearch.com/commentary/observations.aspx?ID=106980&trackback=recapezine

It was a remarkably efficient week on Wall Street, as traders celebrated positive developments out of Greece and a much-needed round of reassuring domestic data. In fact, after five straight days of nonstop gains, it was almost as though the past two months of miserable market action never even happened. So, wonders Todd Salamone, what's not to like, from a contrarian perspective?

Well... at least four things, as it turns out. While several sentiment indicators are pointing to healthy amounts of cash on the sidelines, Todd highlights a few possible risks investors need to be aware of during the short term. Next, Rocky White takes a look back at second-half seasonality, and explains why President Obama's third year in office could ultimately be a boon for the bulls. Finally, we wrap up with a preview of the holiday-shortened week ahead, as well as a few sectors of note.

Notes from the Trading Desk:
By Todd Salamone, Senior VP of Research

"The good news for the bulls, as we discussed last week, is that the widespread pessimism we are seeing is very similar to that which has existed at various correction lows since the market bottomed in early 2009. Said another way, the risk to the bears is the tremendous unwind potential from short-covering activity, or sideline money suddenly reemerging. This risk is heightened as long as the major market indexes stay in the black on a year-to-date basis, and hold above their respective long-term moving averages."
-- Monday Morning Outlook, June 18, 2011

"On the sentiment front, numerous indicators are displaying the kind of heavy-handed pessimism that has coincided with previous buying opportunities. Now, this doesn't count for much until the overall price action improves -- but it does suggest we have some wood for the fire should we start to bounce."
-- Monday Morning Outlook, June 25, 2011

The Fed's "QE2" bond-buying program and the first half of the 2011 calendar year are now behind us. Actions to address the sovereign debt issues in Europe and a stronger-than-expected ISM report in the U.S. drove stocks to five consecutive days of impressive gains. In the blink of an eye, the Nasdaq Composite (COMP - 2,816.03) moved comfortably back into the black for 2011, while the S&P 500 Index (SPX -1,339.67) rallied strongly from the powerful combination of support at its 200-day moving average and its year-to-date breakeven level.

Plus, as we move into the second half of 2011, seasonality is very favorable for market participants (be sure to see Rocky White's commentary on the next page).

So, if you're a contrarian investor, what's not to like? After all, the major market indexes pulled back to (successfully) test technical support -- creating a lot of anxiety among investors in the process -- and the ensuing rally has been so sharp, and so sudden, that you have to believe many have been left behind.

In fact, the benchmark indexes enter the week trading just below areas of resistance that we have been highlighting since April, when the S&P Midcap Index (MID - 995.05) made its first-ever run at the 1,000 millennium mark. At that time, we also noted that the SPX was knocking on the door of its 2009 "double low" in the 1,333 area, and the Russell 2000 Index (RUT) was revisiting its June 2007 all-time high in the 850 area.



And here we are again, near these same resistance areas. But what we find interesting, as described in the table below, is that the sentiment backdrop is one that suggests there is enough sideline money and short-covering potential to drive a sustained move through these areas relative to two months ago. Said another way, there was more money betting on a breakout above these key areas on the SPX, MID and RUT three months ago than there is now.

For example, one tool we use to measure hedge-fund positioning in the equity market is the 20-day buy-to-open put/call volume ratio on the major exchanged-traded funds (QQQ, IWM, and SPY). The higher this ratio is, the more invested hedge fund managers are, as they typically buy puts on these broad-based exchange-traded funds to hedge long equity positions as they accumulate shares. In late April, this ratio stood at 3.70, and was beginning to roll over. Admittedly, at this point, the ratio was not very high with respect to previous peaks, which might provide a clue as to why the ensuing correction was more modest than prior pullbacks. At present, this ratio is at 2.37 and beginning to turn higher. Our interpretation is that hedge fund managers are moving back into equities from an underweight position, and that relative to April 2011, there's more cash for these hedge funds to put to work at present.



Another tool we use to measure sentiment is the 10-day customer-only, equity-only, buy-to-open put/call volume ratio, using data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). When this ratio is high, it's evidence that there is persistent negativity, and a sign of growing bearish speculation in the marketplace. We've found that it's best to buy stocks when this ratio hits a relative high and begins to turn lower, as this rollover is a sign that the heavy pessimism has hit a climax -- which can precede powerful rallies. After hitting a near two-year high last week, this ratio has started to turn lower, which could be a major buy signal.



Below is a table that summarizes the sentiment backdrop at present relative to the end of April, including indicators described above. Certainly, you can make a case that there's more cash on the sidelines at present to drive stocks through overhead resistance levels.



So, what are the near-term risks to the bullish case we discussed above?

1. We enter the holiday-shortened week with MID just below 1,000, the RUT right below 850, and the SPX above 1,333 but squarely at 1,340 -- the site of peaks in February, April and June. As of yet, these indexes have not been able to sustain a convincing move above these levels.

2. The market is fresh off five consecutive up days -- which, in a mean-reverting market environment, suggests an increased risk of a downside move as technical traders take profits around resistance levels.

3. The CBOE Market Volatility Index (VIX - 15.87) closed below the significant 16 level on Friday. The VIX has tended to bounce higher after pulling back to this area in 2011, as investors view this as a good time to acquire portfolio insurance at a "cheap" cost. Should the VIX rally, stocks will likely move lower. Then again, there may not be as many investors looking to hedge this time around as compared to previous trips down to this level, given there is a lot of sideline cash and more shorts in the market relative to the recent past.

4. The first session after a three-day weekend can be volatile. Given the super-low-volatility uptrend in the market this past week, an added dose of volatility would support the case for a trend reversal.

Have a safe and fun-filled Fourth of July weekend.

Indicator of the Week: Second Half of the Year & Third Year of the Presidential Cycle
By Rocky White, Senior Quantitative Analyst

Foreword: We are now halfway through 2011 -- and for the first time since 2007, the Dow Jones Industrial Average (DJIA) was positive through the first six months of the year. This bullish price action isn't too surprising, considering this is the third year of the Presidential cycle. The table below reveals that the third year has an amazing streak of 15 straight positive years, going all the way back to 1950.



One theory for the positive price action is increased campaign efforts during the third year of the cycle, as incumbent politicians start passing legislation to boost the market, which (theoretically) helps them in their re-election bids. The average return in those years is 17.7%, which is far better than the average returns in any other year of the cycle. This week, let's take a look at the historical data to see what we can expect in the second half of this year.

The Second Half & the Presidential Cycle: Below is a table that breaks down the annual data by first and second half. One interesting note is that the third year -- unlike each of the others -- typically has more bullish returns during the first half, with the second-half returns falling more in line with other, more typical years. In fact, out of the 15 returns, only twice has the second half of the year outperformed the first half (1951 and 2003).





When the First Half is Positive: Below is a table showing how the second half of the year has played out historically, depending on whether the first half of the year was positive or negative. A positive first half has typically correlated with more bullish returns in the second half. In fact, the returns in the second half of the year are significantly better when the first half is positive, as opposed to when the first six months are negative.



Finally, here is a table showing the first- and second-half breakdown for every third year of the Presidential cycle since 1951. While 2007 was negative in the second half, look at the prior five instances of the third year of a Presidential cycle. On two occasions, there were double-digit gains during the second half, and on one other occasion, there was a gain of 9%. That's pretty much the kind of market action we're hoping for in the second half of 2011.



This Week's Key Events: Traders Brace for an Onslaught of Jobs Data
Schaeffer's Editorial Staff

Here is a brief list of some of the key events this week. All earnings dates listed below are tentative and subject to change. Please check with each company's respective website for official reporting dates.

Monday
* The equities market is closed Monday in observance of Independence Day.

Tuesday
* The economic calendar kicks off Tuesday with factory orders for May, while Gravity Co. (GRVY) is expected to report earnings.

Wednesday
* On Wednesday, the ISM services index for June is due out, along with the regularly scheduled weekly report on mortgage applications from the Mortgage Bankers Association (MBA). On the earnings front, we'll hear from A. Schulman (SHLM), DragonWave (DRWI), Ocz Technology Group (OCZ), and Unify Corp. (UNFY).

Thursday
* Employment data takes the spotlight on Thursday, with the day's docket featuring ADP's private-sector payrolls report for June, as well as the Labor Department's usual update on weekly jobless claims. Crude inventories will also hit the Street one day later than usual, due to the July 4 holiday. Quarterly earnings are expected from Helen of Troy (HELE), International Speedway (ISCA), Semileds Corp. (LEDS), WD 40 Co. (WDFC), and Zep Inc. (ZEP).

Friday
* Ahead of Friday's opening bell, all eyes will be on the Labor Department's nonfarm payrolls report for June. Later in the session, traders will also hear about May's wholesale inventories. PriceSmart (PSMT) and Greenbrier Companies (GBX) are slated to wrap up the week's roster of earnings reports.

[ReturntoSender]

InvestmentHouse Weekend Market Summary:

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

- After lagging, tech and chips take the lead as the rally continues, at least for techs, energy, and other leaders.
- Earnings are mixed, no positives on Europe or the budget deal (no negatives either), so the leaders continue higher.
- The issue that won't die: big companies don't hire because they cannot do that and maintain profits growth.
- Monday blues once more? Indices approaching the top of the range, but the leaders, and some new additions, are running nicely.

MARKET SUMMARY

Nothing to drive the market on Friday, but techs and leaders rally nonetheless.

Friday was an up day for a lot of our positions, but it was a mixed day in the market overall. Technology and the semiconductors continued to lead to the upside with their recovery rally. There is a nice one ongoing in the semiconductors. The NYSE indices struggled, but just modestly. A lot of this was due to the earnings of a few key players, one of them being CAT. It burned a lot of its nine lives on this rally as it reported results that missed the mark. It was complaining that costs were rising and imploring the administration to provide some clarity as to what will happen ahead.

They were not necessarily talking about the debt issue; they were talking about clarity with respect to regulation. A lot of regulations have been passed but have not been implemented yet, or they have not even had the regulations written. Businesses cannot do anything. They may have a lot of money, but they do not want to spend it. They would be foolish and breaching their fiduciary duty to their investors if they spent money without knowing what the regulations hold. Thus we are seeing this slowdown. I will talk more about this later because I keep hearing commentary about it that is absurd.

Earnings were out, and they were mixed. There was really no other economic news out. Europe was quiet, and I suppose it will come around again on Monday. The debt ceiling negotiations stalled as Boehner said there was no deal and supposedly he walked away. The President came out after the market closed and held a "press conference" where he basically derided the republicans saying they do not want anything. I thought that was rather ironic after he said he is not interested in pointing fingers or naming blame. In the first 15 minutes of his press conference, that was all he did. He talked about the lack of leadership in the Republican Party, but you have to ask where the leadership is from the President. Whether republican or democrat, the President is supposed to be the negotiator who can bring the different sides together.

He talks about the country being tired of Congress and the administration not being able to get anything done. One of the things we are most tired of is them calling each other out all the time. The worst is when they claim to disapprove of the exact thing they are doing. It has really become absurd. I just love it when both sides say that the American people want them to do "X". They say Americans want them to raise the debt ceiling and solve the problem in any way they can. Nope. The American people want them to stop spending our money. That is what poll after poll says, and they have to figure out the way to do it. Obviously they are not there yet. But I digress.

Things were mixed. Earnings were mostly driving the market, but they were not really pushing things given that there were some big misses and big gains. You can understand why the markets were mixed. Tech had good earnings throughout the week. Sans INTC and a few other cloud computing companies, they performed quite well. MCD performed well again, blowing away its worldwide comparisons. It posted 7.7% growth versus the 3.8% prior. Unbelievable growth from MCD and the McCafe with its drinks. I have to admit that I have added to MCD's bottom line because I like the drinks they are pouring over there. I probably added to my waistline as well, although I do order non-fat milk.

Futures were not looking that great early on, but that is often the case with such a big surge. We had a nice rally on Tuesday, a pause Wednesday, and a resumption of a move higher on Thursday. It is good to have a little softness after a pause when the market is rallying back to the upside. It allows stocks to build into the session. That is what I said in the morning alert, and that is what happened. Yes, they trended lower into the first half hour of the day, but then they rebounded. In the case of NASDAQ and the semiconductors, they moved positive. All of the indices moved back to the upside. A nice benefit of the day and having a good uptrend established. That uptrend is off of a mid-range support level in the trading range.

Remember, we are watching this because often a bounce at an important support level in a trading range or in a pattern (such as a triangle) will lead to a breakout. The indices surged up off of that higher low, and now we will see if they can make the breakout. They are doubters, and I am a doubter. I still say it has a trading range until it proves otherwise. I am a "show-me" sort of guy. I am into the technical more than the fundamentals, although I do like to play the technical patterns on fundamentally sound stocks. It is a combination, but I will never buy a stock just because it is a "great value."

I see it as a trading range but with the possibility of a breakout. That kept us riding a lot of our positions today even though they were up 2-3 days straight and the indices are approaching their former highs. That is okay with me because we may get the breakout. We may also have a problem on Monday. Monday's have been downers with the debt issues and with the EU coming out with new problems every Monday. This afternoon after the market closed, the President was bad-mouthing everybody he could think of with respect to the deficit deal. These are always problems we have to deal with, but as I'll talk about in leadership, our positions were running well. Why take them after the table? Particularly since we have already banked quite a bit of gain on this nice move we were playing on the rally. Getting back to the intraday action, there was a selloff and recovery. While it did not keep a lot of the indices positive, they did not suffer on the day.

SP500, +0.1%; NASDAQ, +0.85%; Dow, -0.35%; SP600, -0.2%; SOX, +2.5%; NASDAQ 100, 1%.

NASDAQ 100 was doing quite well with the likes of GOOG pushing it higher. Very solid moves for technology and, again, the semiconductors leading the way. These were laggards of late, but now they are trying to make their move. The semiconductors have inverted head and shoulders forming in several patterns and ready to make the move higher. This is very much akin to the mid-summer 2010 action on the SP500 and many other stocks where we had inverted head and shoulders form after a selloff. That led to a break higher. There are definitely some positives in terms of leadership.

OTHER MARKETS

Dollar: 1.4364 versus 1.4379 Euro. Overall, the DXY0 fell. Why? The dollar fell against the other currencies while it was up slightly against the Euro. It is struggling mightily against all currencies now, and it really broke lower when the EU announced it was bringing more money to Greece. That broke the index down Wednesday and Thursday. It broke its trend, and the dollar will fall now. It may continue to fall if we cannot get the budget deal, and that will force the Fed into action. The government may not be able to do anything, but the Fed will. The Fed would rather wait until we get a budget deal and then step in with QE3, but Congress and the President are not playing along. They both want what they can get out of this. Maybe the government will shut down a bit. It might not be good for the market, and we may have repercussions on Monday. We will see. We have been having problems all through this negotiation, and the market has continued to the upside.
Click to view the chart

Bonds: 2.96% versus 3% 10 year US Treasury. It was rebounding a bit from steep selling that started on the European bailout. The bonds still remain in the upper reaches of their trading range after breaking the downtrend back in early 2011. Now they are trying the hold up and bounce, but it is not a pretty pattern. It is gotten ugly and choppy. It is not the picture of strength. If it was a stock, you surely would not want to put your money in it right now. Looks like it could fall back down because we have had an attempt at a new high that failed. Lower MACD. It is definitely losing momentum on this rally in bonds.

That would make sense if the economy is recovering, if the Fed is not going to produce a lot more money, and if we get a decent budget deal that would cut the deficit and cap spending. But it does not look like that is happening right now. I guess the market is figuring it will. Bonds are struggling and unable to move higher. That would make sense if things were going to "get better" in the economy. That would push bonds lower and interest rates higher, which is the way it usually works when an economy is recovering. That makes this rise in bonds peculiar, but we know our economy is not recovering. I have been talking about for the last several months.
Click to view the chart

Gold: $1,601.30, +14.30. Gold got back in the game again. It has been moving laterally, consolidating this strong, two-week run that started July. It broke to a new all-time high and it is absolutely normal for it to consolidate. Up one day and down the next. It is consolidating, and that is what happens. I still expect it to break higher. It could still come back near term, but overall the trend is up for gold. Just as CAT said, the gold investors are a lot of the people who run companies and everyday people; they do not know what is going to happen with these regulations, new bills, and spending. That is why gold is running up on fear as well as fear of inflation.
Click to view the chart

Oil: $99.87, +0.74. Oil also managed another gain. Very solid as it breaks through the 50 day EMA and makes a higher high on this recovery. Golly, Beaver, it does not look too good for oil prices staying low. Energy stock prices are running higher across the board as well. It could be a similar pattern like we saw in May and June. Something of an ABCD to the downside, although it did not really form it. Here we have a stock selloff, a rebound, a higher low, and a higher high. It is all still contained within this peak that was hit the second week of June. There is the selloff and the ABCD pattern. This is to the downside. If it would hold, oil would stall out around $100-101 and then fall back to the downside. $100 is an important level for oil. We will see if that holds it again and sends it lower. If it is to work, it will work fairly quickly and oil will fall to the downside. We will see. Oil stocks are belying that theory, running higher as oil sets up this potentially downside pattern.
Click to view the chart

TECHNICAL SUMMARY

INTERNALS.

Volume. It was a very interesting day. Volume plunged again. It is Friday, late July, mid-summer, and people are getting those last vacations in before school starts. It was down 30% on NASDAQ and down 25% on the NYSE.

Breadth. The advance/decline line is not even worth mentioning. It was flat on both NASDAQ and the NYSE.

CHARTS

SP500. SP500 is approaching its July peak, but it is having a bit of trouble with its February peak. It broke through it in July and could not hold it, and now it is back and having a bit of an issue once more. It does not have too much further to get through to the highs of the trading range at 1371. It closed at 1345, so that puts it around 25-points off. Room to run, but remember volatility. It does not look like it will make it to that other point. Plus it has some issues with respect to the financials. If financials do not help out, it will be hard for the index to make a breakout.

NASDAQ. NASDAQ has gone from laggard to saintly leader. It really has performed well, showing a nice reversal doji off of the 50 day EMA. Mid-range of the pattern and running right toward the top of its range as well. It hit a high at 2888 back in early May. It closed at 2858, so that gives it about 30 points to the upside. That is about what it put in on Friday. We might see a reversal here. It is still range trading. Yes, it made that higher low, and that higher low can have consequences just as elections can have consequences. We have heard that from both sides of the aisle over the last several months. We will see if the consequence is a breakout or if it just gave us another nice bounce to the upside that we can bank some profit on and then it reverses. If it does not make it through here, you can bet we will take more gain off the table. Then we will play it to the downside until the range can prove it can make the breakout.

Even if it does break out here, watch out. We have a lot of false breakouts and false breakdowns. You have to watch out for those in this market. We will be keeping an eye on the VIX as well. If it hits bottom and they start to stagger around a bit, then we may just have that reversal we were looking for.

SP600. Not much of a move. Basically flat on the day. It made a good recovery off the early selling. It remains right in the upper reaches of its range, but it is struggling. It has a higher low as well, but it has just a wad that is the technical term of resistance immediately overhead. One is from April and another is from early-May. Another is from late-May/early-June, and then there is the old high in early-May that was matched and slightly broken in early July. That is that false breakout. In any event, it is trying to bounce but is struggling.

I want to see the small caps break out, and I am not sure they will. Again, this is a "show me" time. We are still in a trading range, and we have been for months. Until things change and it shows something is going to stick, I am going to stick with my trading range mantra.

SOX. SOX makes it more interesting. It is making a nice bounce. It had a false breakdown this week of its own, and it reversed off of that. A lot of those semiconductors stocks are putting in interesting patterns at the bottom of their selloffs. Classic positioning to move higher. Many of them have earnings coming this week. If they are solid, they have room to run to the upside and provide leadership in a continued move for the market. The question is whether they will break the market out in other words, break the other indices out of their ranges. I do not think so, but I could be wrong.

I will take whatever the market gives me. If they make the breaks, that is fine. I am willing to play some of these to the upside simply because they have sold off, they formed up good patterns at the bottom of their bases, and they are moving to the upside nicely. They have room to run. The bad news has been built into them pretty much. I am looking for upside from them and the leadership that could take the other indices to the top of the range. We will have to reevaluate after that because at that point it gets problematic.

LEADERSHIP

Industrial. The big news on the day was CAT. Earlier I said it burned several of its nine lives on this rally as it gapped lower on that earnings miss. That was disappointing. There are reasons for it, but we will see how it affected the others in the sector. CMI is still working laterally in this three-week range, trying to make a higher low and break to the upside. I have been contemplating a play here. It is a possibility, but there is a lot of resistance at 112. When it is trading near 107, that does not give it a lot of leg room to the upside. It had one big move, but really the range is defined by this gap up point in late April. That is defining this move, and that is where it will find resistance in other words, around 114. You can make a trade off of that, and it is at a good support level. It would be tough to get a 3:1 ratio out of that. Just throwing that out there. I am contemplating it, but it is tougher to make that play.

DE has already been beaten down. It did not dive on the news, but it is not exactly a pattern for your mother. As I often say, maybe it can be for your mother-in-law. JOYG is doing just fine. It is up to a prior peak right now, testing it. MACD is about where it was before, so it looks very rangy right now. You would not want to move into it. Obviously if you got in on this false breakdown, if you had the courage to get in, then you did well. It really was not that bad of a move. If we had been on the ball, we would have caught it. There is a gap point here, the bottom gap, the upper gap line, and it broke into that and then reversed right back up. It would have been a good play.

That is what I am talking about with the false breakdown. If you see something like that, particularly at gap points or other areas that have been intense support before, then that is great. If it makes the reversal, you can be in on it. The beautiful thing is, you see this break and you might have thought you missed it. Then it came back and fully tested and gave you the shot to get back in. Keep that in mind, and I promise I will continue to do that as well and try not to miss those easy ones like on JOYG.

Technology. AAPL continues the move. We covered up some of our positions in the stock, and now the stock is rising higher. We will see what happens when it gets to that gap up high on earnings and then decide what we will do with those. It is still moving up, showing strength. No complaints with what GOOG is doing for us. It is moving higher and getting close to the early-2011 peaks.

BRCM had an inverted head and shoulders breaking to the upside. KLAC was the same type of action. SNDK gapped to the upside on Friday. BRKS is not doing much for us. Not much of a pattern to play, but then again, what do you see? We have a gap point. It has undercut it, but it has reversed over that. If you get a test back that holds in this general area again or maybe the 200 day EMA, BRKS is one to watch to perhaps take off to the upside. KLIC may be an ABCD. Big move. Look how the D-point held roughly right at the gap point. Very interesting. It is something to consider as well, at least to keep an eye on. It had a big gap on Friday. If it comes back a little and then holds, it could be an interesting play to try that ABCD pattern. It has a move up to 1275 on the high from 1030. It is a decent bounce.

Energy. GLF made us some money today. Great earnings. What a classic cup-with-handle pattern. Look at the break on Thursday in anticipation, and then the gap Friday. Sometimes, as Andy Schleck said yesterday in the Tour de France, it is "No guts no glory." That is why we stepped in with some positions right before the close along with some we already had from a long time ago. We had a nice break to the upside. HAL continues its run, showing a doji on Friday. That can suggest it has a near-term pullback after a solid run to the upside. But it had the breakout, the test of the breakout, and a solid run. You do not really want to cut that one off. Maybe we take some gain on it as it continues. It is looking great.

CRR is continuing its move to the upside. A huge move for us thus far. WTI is breaking to a new closing high. It is moving well for us. I do not want to step in its way. SPN is moving higher as well, posting a nice move this week and a break to a new closing high for this move on Friday with great volume. MACD is leading the way, breaking out as well. That is what you want to see. There is no divergence there. It is showing you what it should be showing. Very nice as energy continues to lead.

Healthcare/Medical. Healthcare looks good. EXAS is rallying nicely this week. It tested the breakout, rebounded, and now it put in a closing high. Now we will see if it can continue the move to the upside. ISRG had a big week on strong earnings, gapping to the upside. It was off a bit on Friday, but it is a breakaway gap. You always watch breakaway gaps for continuing in the direction of the gap once they finish their consolidation. We want to watch ISRG to see if it can complete its gap and continue higher.

I put ZOLL on last night. It looked as if it was ready to continue its gap move. It was coming off the 50 day EMA, and it showed a good volume reversal on Wednesday when it did that. We were ready, and Friday it made the move higher. We were ready to move in. BIOS had a good week. It set up beautifully, came back to test, and a massive breakout on Thursday. It was off a bit on Friday, but who cares? Lots of leadership leading the market to the upside.

Retail. AMZN had a decent week. It was up but struggling a bit. It has had a big run and it is consolidating. No problem with that. PNRA might be interesting for a break higher. It is one to consider as it is testing nicely after breaking out of its trading range. How many stocks have we seen break out of the trading range and move higher? We just looked at several of those in the energy sector.

Financial. I made reference to the financials earlier and how they are in trouble, but they had a good week. JPM was flat on Friday, but it is right at a significant resistance level. These will be important for these stocks in the coming week. WFC had a nice week, but it is up at its 200 day EMA as well. It has moved well for the last month and a half. We will see if it can continue. They need to pitch in to help the SP500. MS gapped higher on earnings on Thursday. It has had a good move, and it cleared key resistance. This is an important move for MS, and if it moved more than at a snail's pace, I would be telling you to watch to play the trend reversal. It has broken out. Now we look for a test back down into the 23-range, and then a move back to the upside. If it wants to move back up, this could be an outstanding trade. Just watch for the test that comes back. When it holds in that area and takes off, that is when you want to move in.

THE ECONOMY

The issue that won't die: are companies obligated to hire just because they are making money?

Keep hearing the argument companies have a 'moral obligation' to hire or at least not lay off workers. They are no longer growth companies. They have old, mature products and services that are their cash cows, that make them all their money. They are not in expanding markets. The only way they can grow profits and keep stock prices rising is to cut costs. Employees are costs.

The way the US has ALWAYS created new jobs is not subsidizing big companies and thus crowding out the small businesses that have better ideas, but ENCOURAGED an environment where small companies with better ideas could compete and take out the former growth companies.

Examples: DELL, AAPL, INTC, CSCO, MSFT pushed the old typewriter companies, copy companies, publishing companies, etc. aside. Indeed these companies that do not continue to innovate and create new markets will turn into mature income companies versus growth. MSFT is there already.

TO VIEW THE ECONOMY VIDEO CLICK THE FOLLOWING LINK:
Economy Summary Video

THE MARKET

SENTIMENT INDICATORS

VIX. Volatility is on the downswing given that the indices have been moving higher. That makes a lot of sense. It is trading in a range as have stocks. Stocks have been trading in a range and volatility is matching. We had a peak a week ago, and that is when the market bottomed at that 50 day EMA on NASDAQ and the SP500 and bounced. Now it is heading lower, but it has not hit the bottom of the range yet. That tells me there is still more upside to this move as long as nothing extraneous comes along to dump the apple cart over. Like, say, a total breakdown in government.

In any event, it looks like volatility is saying we still have a move higher up into the ranges with respect to SP500 and NASDAQ. They could move up and bump the top of the range then maybe stall out. Again, they have the potential to make a breakout. Volatility is not necessarily telling us that because it is proceeding down. When it gets to the lows, you can bet the indices will be at the highs of the rally. Unless there is something to break it out like a budget deal or really good news, then it will likely turn back down and trade lower in the range once more.

VIX: 17.52; -0.04
VXN: 19.17; -0.54
VXO: 17.25; -0.11

Put/Call Ratio (CBOE): 0.84; +0.08

Bulls versus Bears:

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: 46.2% versus 44.1%. Continuing the steady rise after bottoming in late June. Took out the early June high at 45.2% though still well below the very high 60% readings spanning December through early May 2011. The 5 year high is 62.0. The crossover level at 29% bulls from July 2010 is long gone. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 21.5% versus 22.6%. Bears are continuing their decline, now roughly at the average level for the period November through early April. In April they fell sharply but the market sold and they climbed to a high to start July. Trending lower since. The 35% level is considered bullish for the market overall. For more 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: +24.4 points (+0.86%) to close at 2858.83
Volume: 1.665B (-29.54%)

Up Volume: 1.21B (-370M)
Down Volume: 422.74M (-276.8M)

A/D and Hi/Lo: Decliners led 1.03 to 1
Previous Session: Advancers led 2.11 to 1

New Highs: 84 (-8)
New Lows: 21 (-5)

NASDAQ CHART: Click to view the chart

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: +1.22 points (+0.09%) to close at 1345.02
NYSE Volume: 691M (-24.65%)

Up Volume: 1.52B (-2.13B)
Down Volume: 1.71B (+959.49M)

A/D and Hi/Lo: Advancers led 1.07 to 1
Previous Session: Advancers led 3.6 to 1

New Highs: 148 (-58)
New Lows: 40 (0)

SP500 CHART: Click to view the chart

SP600 Chart: Click to view the chart

DJ30

Stats: -43.25 points (-0.34%) to close at 12681.16
Volume DJ30: 136M shares Friday versus 188M shares Thursday.

DJ30 CHART: Click to view the chart

MONDAY

We have a lot of economic data next week. There will be Consumer Confidence on Tuesday, and new home sales. Durable orders come in on Wednesday. Thursday brings the jobless claims. On Friday there is the first iteration of the Q2 GDP. Remember when estimates were 2.5% to 3%? My, how time have changed. 1.6% is expected. Some very sage economists say we will be extraordinarily lucky to make 1.6% on our first iteration with GDP. We will also have the Chicago PMI. It jumped up again in the prior month, and July will be very important. Michigan Sentiment rounds things out on Friday.

There will also be issues with respect to what the President said on Friday. He made the comment that the market will open on Monday and they will be looking for some kind of answer over the weekend. He has called the heads of Congress to his office tomorrow morning to explain to him just what they are going to do. Not to offer anything not to take some leadership and say "Here's what I think we need to do." It is just tell them to come up with a solution. Whatever. Maybe that is his style. I do not really care, I suppose, other than that he is not showing leadership. He is just perpetuating the name calling and finger pointing. If there is anything we do not want, it is that. We want them to do what they were elected to do. That is what the House is trying to do. I do not know what the democrats want to do other than what they always want. They think they are doing the right thing, but I do not think it is helping us right now since we have problems like what CAT is showing. But I digress.

We will have to deal with Monday, and we could have a down start to the week. I just did not want to cut off the runs we were having in the positions we had as indices were stretching toward the prior peaks. The leaders are showing excellent action. I did not want to cut any off particularly since we have already taken a lot of gain on them.

We have Europe to worry about on Monday, as always. We have the debt picture to worry about as always, and then we have earnings. The good thing is we have leaders running quite nicely. I went through a long list of them tonight to show you that they are moving very well. Maybe there will be a shock to the market. The market may wake up on Monday and think that we will not get a deal, we will default, and then the sky is falling. I do not think the sky will fall at all, however. I have always said that if we cut our spending and show real restraint, then we could show the rest of the world we are serious about cutting debt versus increasing our spending limit by $2-3T and just spending some more.

I suppose reasonable minds will differ on that. We just have to deal with what the market reality is. Again, it looked solid heading into the weekend. The leadership was really impressing me. If the leaders continue to move, obviously the market will follow. If they start to struggle, obviously market will pull back. I think we will get a continued move up to the top of the range in the indices. After that, we may have a problem. As I showed you earlier, they are closing in on those highs just as volatility is heading back down toward its lows.

Volatility is a little over halfway down to its recent lows, just as indices are above halfway up to the tops of their range. I think we will get more of a bump higher. I will not say all bets are off then, but at that point the market probably struggles a bit and falls back. Maybe it is able to make the breakout as this higher low at support would suggest. History says that puts it in the higher probability of a breakout. I'll take that if we get it. If there is any sign of trouble, as far as on the debt front or with Europe, some investors will hedge their bets. Some of the big money will start hedging and start taking some profits at the top of the range. If that is the case, we will take some profits, too. We have had a bounce. If it cannot break out, then we will take the profits and let it fall back town.

As I have said all along, we are in a range. We have gotten a lot more out of this range than I ever thought we would. Maybe we do ultimately get the breakout on this move, and maybe not. It has to show it to us. By looking at the VIX, looking at where the indices are, and looking at what is happening with Congress, you have to surmise that there would be a stumble. On the other hand, there is that leadership that has been performing superbly. Can they continue to do that after such a long run? Keep in mind that not all the leadership has made such a long run. They have broken out and tested and are starting back up. They are in excellent shape.

We have the scales of the market, and we will see which one wins out. We have a lot of gain, and we have taken a lot of gain. We will take more if need be. If not, we will let it run and take partials as it comes. We will be ready to play it either way. I hope you are ready to have a great weekend and then another interesting week in the stock market and the game of world finance.

Support and Resistance

NASDAQ: Closed at 2858.83
Resistance:
2862 is the 2007 peak
2879 is the July 2011 peak
2888 is the May 2011 peak
2956 from November 2000
3026 from October 2000 low
3042 is the May 2000 low

Support:
2841 is the February 2011 peak
2825 is the 2007 closing peak.
2816 is the early April peak.
2796 is the February gap down point
The 50 day EMA at 2769
2762 is the February low
2759 is the May low
2723 to 2705 is the range of support at the bottom of the January to May trading range
2706 to 2705 is the April 2011 low and the February 2011 and consolidation low (bottom of the trading range)
The 200 day SMA at 2695
2686 is the January 2011 closing low
2676 is the January 2010 low
2645-2650ish from December 2010 consolidation
2603 is the March 2011 intraday low (post-Japan low)
2580 is the November 2010 closing high
2569 is the November gap up point through the April 2010 peak

S&P 500: Closed at 1345.02
Resistance:
1344 is the February 2011 peak is being challenged again
1357 is the July 2011 peak
1364 is the March 2007 low
1370 is the August 2007 low
1371 is the recent May 2011 peak

Support:
1340 is the early April 2011 peak
1332 is the early March peak
1325-27 is the March 2008 closing low and the May 2006 peak.
1318.51 is the May low
The 50 day EMA at 1315
1313 from the August 2008 interim peak
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1295.50 is the 61% Fibonacci Retracement
The 200 day SMA at 1281
1275 is the January 2010 low, early January 2011 peak
1255 is the late December 2010 consolidation range
1249 is the March 2011 low (post-Japan)
1235 is the mid-December 2010 consolidation low
1227 is the November 2010 peak
1220 is the April 2010 peak

Dow: Closed at 12,681.16
Resistance:
12,876 is the May high
12,754 is the July intraday peak
13,058 from the May 2008 peak on that bounce in the selling

Support:
12,605 is the mid-May 2011 high
12,391 is the February 2011 peak
The 50 day EMA at 12,385
12,283 is the March 2011 peak
12,110 from the March 2007 closing low
12,094 is the April 2011 low
The 200 day SMA at 11,944
11,893 from March 2008 closing low
11,867 from the August 2009 high and peak on that bounce in the selling.
11,734 from 11-98 peak
11,555 is the March low
11,452 is the November 2010 peak

Economic Calendar

July 18 - Monday
- Net Long-Term TIC Fl, May (09:00): $23.6B actual versus $30.6B prior
- NAHB Housing Market , July (10:00): 15 actual versus 14 expected, 13 prior

July 19 - Tuesday
- Housing Starts, June (8:30): 629K actual versus 570K expected, 549K prior (revised from 560K)
- Building Permits, June (8:30): 624K actual versus 609K expected, 609K prior (revised from 612K)

July 20 - Wednesday
- MBA Mortgage Index, 07/16 (7:00): 15.5% actual versus -5.1% prior
- MBA Mortgage Purchas, 07/16 (7:00): -5.1% prior
- Existing Home Sales, June (10:00): 4.77M actual versus 4.93M expected, 4.81M prior
- Crude Inventories, 07/16 (10:30): -3.727M actual versus -3.124M prior

July 21 - Thursday
- Initial Claims, 07/16 (8:30): 418K actual versus 411K expected, 408K prior (revised from 405K)
- Continuing Claims, 07/9 (8:30): 3.698K actual versus 3700K expected, 3748K prior (revised from 3727K)
- Philadelphia Fed, July (10:00): 3.20 actual versus 0.0 expected, -7.70 prior
- Leading Indicators, June (10:00): 0.3% actual versus 0.3% expected, 0.2% prior (revised from 0.8%)
- FHFA Housing Price I, May (10:00): 0.4% actual versus 0.8% prior

July 26 - Tuesday
- Case-Shiller 20-city, May (9:00): -4.4% expected, -3.96% prior
- Consumer Confidence, July (10:00): 56.0 expected, 58.5 prior
- New Home Sales, June (10:00): 320K expected, 319K prior

July 27 - Wednesday
- MBA Mortgage Purchase Index, 07/23 (7:00): +15.5% prior
- Durable Orders, June (8:30): 0.4% expected, 2.1% prior (revised from 1.9%)
- Durable Orders -ex Transportation, June (8:30): 0.5% expected, 0.7% prior (revised from 0.6%)
- Crude Inventories, 07/23 (10:30): -3.727M prior

July 28 - Thursday
- Continuing Claims, 07/16 (8:30): 3688K expected, 3698K prior
- Initial Jobless Claims, 07/23 (8:30): 415K expected, 418K prior
- Continuing Claims, 07/16 (8:30): 3688K expected, 3698K prior
- Pending Home Sales, June (10:00): -3.0% expected, 8.2% prior

July 29 - Friday
- GDP- First iteration for Q2 (8:30): 1.6% expected, 1.9% prior
- GDP Deflator, Q2 (8:30): 2.0% expected, 2.0% prior
- Employment Cost Index, Q2 (8:30): 0.5% expected, 0.6% prior
- Chicago PMI, July (9:45): 58.0 expected, 61.1 prior
- Michigan Sentiment - Final, July (9:55): 63.8 expected, 63.8 prior

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From Briefing.com: Weekly Recap - Week ending 29-Jul-11The major indices tumbled on concerns regarding the inability of Congress to reach a deal on raising the debt ceiling and sluggish second quarter GDP growth. Roughly one third of S&P 500 companies reported earnings this week, though the market's focus was on the debt situation.

All 10 sectors within the S&P 500 ended in the red. Industrials tumbled 6%, materials gave up 5% and energy shed 4.6%.

Despite the lack of debt deal, selling pressure in the equity market and risk of a debt downgrade, the 10-year Treasury surprisingly rallied, with the yield ending the week at 2.80%, a decrease of 18 bps. Equities have been taking the brunt of the punishment on the uncertainty regarding the U.S. debt situation.

Prediction market InTrade places only a 7% chance the debt ceiling will be raised prior to July 31. There is an 82% chance for the ceiling to be increased by the end of August, so the market is pricing in a chance that the deal could be reached prior to the Aug. 2 deadline.

In economic news, second quarter GDP rose just 1.3% (Briefing.com consensus +1.7%) on the heels of a downwardly revised and scant 0.4% increase in the first quarter.

With respect to second quarter GDP, the growth scales were tipped higher by positive contributions from exports, nonresidential fixed investment, private inventory investment, and federal government spending that was offset partly by negative contributions from state and local government spending.

Real PCE was up just 0.1% after a 2.1% increase in the first quarter and contributed 0.07 percentage points to the overall change in real GDP. Real final sales of domestic product, however, were up 1.1% after increasing less than 0.1% in the first quarter. Real final sales is GDP less the change in inventories.

The latest initial claims report brought a measure of good news. Claims for the week ending July 23 dropped by 24,000 to 398,000. That is the first week below 400,000 since early April; importantly, there were no special factors behind the improvement.

In corporate news, it was a busy week in terms of earnings reports. Roughly one third of S&P 500 posted their quarterly results and now about 70% of companies have reported. About 68% of companies have posted earnings ahead of analyst expectations.

 
 Index     Started Week  Ended Week  Change  % Change  YTD % 
 DJIA	    12681.10	 12143.20  -537.90    -4.2    4.9 
 Nasdaq	     2858.83	  2756.38  -102.45    -3.6    3.9 
 S&P 500	     1345.02	  1292.28   -52.74    -3.9    2.8 
 Russell 2000  841.82	   797.03   -44.79    -5.3    1.7

12:41PM NXP Semi announced 5 mln share stock repurchase program (NXPI) 19.08 -1.46 :

KEMET Corporation (KEM) announced its KEMET Power Solutions High Voltage SM Series capacitors. Designed to meet robust performance standards required in higher reliability industrial applications, the KPS family of devices utilizes leadframe technology to isolate the multilayer ceramic component from the printed circuit board.

6:51AM Silicon Motion earnings correction: Beats by $0.09 (SIMO) 10.84 : Last night we compared GAAP EPS to the non-GAAP consensus; the comment should have read: Reports Q2 (Jun) non-GAAP EPS of $0.29 per share, $0.09 better than the Capital IQ Consensus Estimate of $0.20; revenues rose 16.4% year/year to $50.5 mln vs the $45.6 mln consensus. Co issues upside guidance for Q3, sees Q3 rev down 5% to up 5% QoQ, which calculates to ~$48.0-53.0 mln, vs. $47.5 mln Capital IQ Consensus Estimate. Co raises guidance for FY11, sees FY11 rev growth of 40-50% (up from 30-40%), which calculates to ~$185.4-198.6 mln vs. $184.26 mln Capital IQ Consensus Estimate... the prior comment has been removed.

09:27 am Novatel Wireless upgraded to Buy at Brigantine; tgt $6: . Brigantine upgrades NVTL to Buy from Hold and sets target price at $6 ahead of its scheduled June quarter earnings report on Thursday, August 4, while making modest adjustments to their estimates. The firm expects the company to meet or beat their $117 mln 2Q11 sales estimate, the mid-point of the company's $112-122 mln guidance. Firm notes Verizon noted the sale of 1.2M 4G LTE devices in 2Q11, and they suspect Novatel's MiFi represented the plurality with smartphones and USB modems sharing, but none with simple majority share. In conjunction with expected increase in device sales, they believe Novatel should see improved sales of embedded modems to PC OEMs.

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My only assumption right now is that we have yet to bottom. Three reasons. First there is still too much bullishness in the II Poll. A lasting bottom is unlikely to happen until we see more bears than bulls in this contrarian indicator:

http://www.schaeffersresearch.com/streetools/market_tools/investors_intelligence.aspx



Second, even if we are in the process of bottoming it's only been a few months so far getting to where we are. While we may bottom sooner than at many times in the past its highly likely we have not done it yet. I would expect a retest of the 2009 lows:



Third, I still expect the S&P 500 will hit a low on it P/E of 5 or 6 like it did in the 20's, 30's and 80's. That fits nicely in to a retest of those lows.

http://en.wikipedia.org/wiki/P/E_ratio



If things unfold as I believe they will then investors who have cash on hand will be afforded a nearly once in a lifetime opportunity to buy stocks as cheap as they have ever been on a P/E basis. While it may take many years for stocks to ever become as overbought as they were in 1999 and early 2000 surely that will eventually come to pass as well. So buys made at the next bottom could potentially be excellent long term buy and hold opportunities compared to any other time in the last 12 years.

I will most likely be trading myself though rather than holding.

RtS

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Gold Bull Market Crosses the 1,000 Day Mark
Thursday, August 18, 2011 at 11:01AM

http://www.bespokeinvest.com/

A bull market is defined as a rally of at least 20% that was preceded by a decline of at least 20%. The current gold bull market -- in which the metal is up 158.67% -- has now crossed the 1,000-day mark (it currently sits at 1,008 days). The last 20% decline for gold came from September 22nd, 2008 through November 13th, 2008 when the metal fell 22.04%. As shown below, the median gold bull market since 1975 has lasted 418 days, so the current bull is well over double the median. The median gain seen during gold bull markets since 1975 has been 64.03%, so the current bull is about 2.5 times the median.

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InvestmentHouse Weekend Market Summary

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

- Zero jobs is not as bad as feared, but no 'whew, it could have been worse' rally.
- Average workweek falls in a very bad sign.
- Fed preparing for the worst: tells Citi to prepare a contingency plan.
- Fed's rumored 'Twist' stimulus unable to spark any market upside as Fed seeks to push 10 year bond to 1.5%.
- White House scaling back Obama speech expectations leading one to wonder why so much fanfare in the beginning.
- Indices are heading to the recent lows but many quality stocks held up well Friday.
- Technical picture warning of more downside, but you cannot forget the Fed is out there, leaking its 'Twist' strategy Friday.

Unimpressive jobs report cannot even generate a 'glad it wasn't worse' rally.

Zero jobs created in August was not the negative print that was feared, but it was not good enough to generate a "whew, that was a relief" rally. Futures were already lower ahead of the report. When it hit that there were no jobs created and that the average workweek dropped, investors were not in good humor. Futures dumped lower and gold shot higher. The dollar actually strengthened despite weak economic data because the rest of the world fears that the U.S. may be headed for another recession. If the U.S. does that, then what the heck does that mean for Europe? It is in much worse shape.

Bonds rallied, of course. Stocks fell sharply at the open. They tried to bounce through lunch, and then sold off to a new session low in the afternoon before some late short covering ahead of the long weekend developed. That pushed the indices up off of their lows to close. SP500 finished just off of its lows with the late bounce that pushed it to the upside. Gee, that makes everyone feel great. The indices were down over 2%.

SP500, -2.5%; NASDAQ, -2.6%; Dow, -2.2%; SP600, -3.6%; SOX, -2.4%.

Pretty much a thorough butt-kicking or a beating about the head and shoulders. Some of you may remember the days when Ayatollah Khomeini died and the children walked through the streets of Teheran beating themselves about the head and shoulders. I do not believe this is worth going to that extreme, but it is definitely not a pleasant day to be long, or with a lot of SP500 positions, or with financial stocks this week or for the first two days of September. Indeed, these first two days are the worst start for September since 1974. Do you remember what happened in 1974? Of course. That was one of the worst recessions we had since Great Depression that was, of course, before this last recession. We are popping off those kinds of numbers, and it kind of makes you proud. At least we are number one in something, right?

Of course I am being very facetious. This is a terrible jobs report. There are 17M people out there with no work. The numbers are actually more than that; those are just the people who are out looking. A lot of people are not looking for work anymore. The unemployment rate stayed at 9.1%. It did not spring up, but it certainly is not heading lower anytime soon.

The jobs data took front stage for the session, but there were other news stories that were not too positive for investors. The Fed was telling Citi that it needed to come up with a contingency plan in the event that the economy slipped back into recession. Wow, nothing like being positive about the future. It is good to see that the Fed is planning ahead given that most of the agencies and federal bureaucracy did not prepare very well ahead of the housing crash. Indeed, many of them stuck their heads in the proverbial sand Barney Frank, Mr. Schumer, and Mr. Cuomo in New York just to name a few. They felt there was nothing that had to be done.

I cannot say the Bush Administration was clean on this either, even though they were warning about the insolvency level of Fannie Mae and Freddie Mac. Many people felt that had to do with their dislike of these quasi-government institutions and that they were trying to get rid of them. After all, President Bush touted that homeownership was at its highest level ever and that this was a great thing. It would have been great if the mortgages were valid and the federal money we put into this was being lent to good risk. It was not. So it was not a good thing that people who could not afford homes were in homes and not paying any money on them. And they never did, apparently, regardless of whether they had a no-money-down, interest-only loan or not.

A rumor hit during the session. PIMCO, Bill Gross, and others who are very reputable said that the Fed was planning what they call a "Twist" strategy or form of stimulus to come out sometime in November. The next meeting for the Fed is on November 20th, and the President speaks on November 7th. It will be some time after November 7th, though probably not all the way to the 20th. We may not make it that far. That is a bit tongue-in-cheek, but you get my drift. The Fed may not be able to resist issuing something before then since it let this leak on Friday before Labor Day.

What is the "Twist"? The Fed the looking to buy long-term Treasury securities and sell short-term Treasury securities. The idea being to sell those, take the profits, and buy the long end and trying to compress the two. They want to pull the long end down toward the short end which they are holding near zero. That had a bit of an effect on bonds initially. We are hearing that the Fed wants to push the 10 year interest rate down to 1.5%. This dovetails supposedly with a strategy by the Obama Administration where everyone will refinance at a very low 4% (or lower) rate. Everybody.

This all makes creepy, Orwellian sense as Big Brother tries to take over every major aspect of our lives. We all have cars. There is Healthcare, and they are trying to take that over as well. Homes are the biggest asset that most people own (although it is a wasting asset as some people in the office would say). Then we can debate about food with the ethanol subsidy and telling us what to eat. They have taken care of all the main areas in our lives other than sex. Of course, the Supreme Court has taken care of sex with the Bowers case and the like but I will not go there. You get the idea.

We are being dominated and controlled by the federal government. I think we fought a war back in the 1770's to keep a big government made up of a few people from telling us how to live our lives. My, how times have changed. Give us 230 years and we are willing to throw it all away and let the government do whatever it wants to us. It makes you think. I wish more people would. But, of course, I digress.

OTHER MARKETS

Dollar: 1.4192 versus 1.4271 Euro. The dollar shot to the upside. The dollar has put in a week of rallying in spite of the belief that the Fed will have to come forth with a new form of Quantitative Easing. Nonetheless, the dollar rallied because Europe is very much in trouble. The stories continue to come out on how weak it is.

I do not think it was covered this week as much, but Europe could be very different than we know it in a very short time. Just about every economy is ready to fold except Germany. Germany cannot hold the line against all the debt swirling out there. I believe Germany will have to make a decision to either save itself or try to save Europe and risk losing itself.

The dollar is rebounding. Still in its range, but it is showing some strength as the greenback plays, believe it or not, the safe haven despite all the weak economic data. It is a refuge for foreign money. I believe we are see the impact of European wealth being transferred into U.S. demand institutions banks, checking accounts, and the like as the M2 growth shows. Thus there is more demand for the greenback as Euros are converted to dollars.
Click to view the chart

Bonds: 2% versus 2.14% 10 year U.S. Treasury. Bonds exploded to the upside with a new high on Friday. Bonds have taken off to the upside. As the Fed announced its "Twist" program, you can see why. Even though it will be selling the short end, it will be buying the heck out of the long end. There you go. It is creating that cycle of recycling money and trying to pull those interest rates lower. You can see bonds exploding higher in anticipation of the announcement of that program.
Click to view the chart

Gold: $1,876.90, +47.80. Gold exploded higher as well. Not a new high on the run but heading that way. Yes, with the announcement of a project such as "Twist," you can see how gold would be of interest to investors. There is also the fact that the U.S. created zero jobs in August. That would be of interest to gold people as well. It is a safe haven in a time of fear. Also we are planning on inflation as the Fed will come forth with some other stimulus that will devalue the dollar and increase the likelihood of inflation. That makes gold a more valuable store of wealth.
Click to view the chart

Oil: $86.33, -2.60. Oil was down hard for the second day. It really lost it on Friday after a nice bounce up to resistance, but this is what you would expect. ABCD pattern starting to break lower from that D point. Other markets were dramatically impacted by the jobs report and the notion that the Fed will have to do something. There was also the notion that was somewhat articulated by people in the know such as PIMCO.
Click to view the chart

THE ECONOMY

Cannot explain away the problems with the jobs report.

TO VIEW THE ECONOMY VIDEO CLICK THE FOLLOWING LINK:
Economy Summary Video

TECHNICAL SUMMARY

INTERNALS.

Volume. Volume was down. It fell almost 10% on NASDAQ to 1.5B shares. It was down 6% on the NYSE to 896M.

Breadth. Breadth was substantially negative at -5.5:1 on the NASDAQ and -4.7:1 on the NYSE. Stocks were roundly thrashed in terms of price, but the volume was fairly light as the market took a breather I will call it a breather to be nice ahead of the Labor Day weekend.

CHARTS

SP500. SP500 closed down for the second day, -2.5%. A solid turn back from this ABCD I have been talking about. We are looking for a trade back down to the August lows as the initial bottom for this pattern. Then the question is what happens there? There is a significant base from the summer of 2010. If these August lows are violated again, we go down and test the 1040 level on SP500. That is a pretty significant support level. It will be tested, and we will see if it can hold that level. But again, the first target is a move to the downside. Technically that is the negative move that you see. Financial stocks are one of the reasons the SP500 is falling.

NASDAQ. NASDAQ struggled as well, -2.5%. It gapped to the downside, through the upper channel of the gap from August. That is a significant move. It gapped below it and then it came up, tested right at that level on the intraday high, and rolled over. It has filled the gap. We have had a gap below an important level, but it managed to hold at the lower channel of the gap. We will see if it can bounce there. I do not think it would want to do that other than maybe to hang out of for a day or two before falling down to the prior August lows. Why is that? Because NASDAQ is in an ABCD downside pattern as well. That is why we were playing the QID. Given this pattern, I figured NASDAQ was going to do some more selling. As with SP500, technically it is set up to do the same and fall back down to its 2010 base.

SP600. SP600 did not escape the selling. The small caps were down sharply, over 3.5%. Also heading back toward the August lows and their ABCD pattern as well.

SOX. The semiconductors performed a bit better than the small caps, gapping lower and heading back toward their August lows. The semiconductors never made it out past those August highs. They are very weak as a group, although there are some stocks inside the group showing relative strength. We will be talking about those in the leadership section.

LEADERSHIP

I want to run through some leadership names to give you an idea of why I think there is some decent relative strength. At the same time, most of the market is getting pretty much run over and refried. AAPL has set up something of a double bottom with handle. I did not like this action on Friday, but it gapped to a doji over the 50 day EMA, and that is not bad action. If it had another point here on the bottom, we could say it was something of a triangle trying to make a higher low. I will just say that anyway; it is trying to make a higher low above a key level at the 50 day EMA. That makes AAPL very interesting for maybe another bounce to the upside. POT gapped lower, filled it gap from late August, and then it reversed to the upside. It did not quite make it positive, but you get the drift. Nice double bottom action off the trading range bottom. It may be ready for another buy to the upside as well.

JDA formed a nice flag after the breakout. It is testing the breakout from this downward-pointing wedge. Very nice action. HOTT has a nice flag pattern. Strong surge through August and a nice flag has formed at the 20 day EMA. LULU is not beautiful, but it has filled this gap and is showing a doji. Relative strength here. The market is getting torched, but these guys are hanging in there. SINA is in a triangle pattern. It gapped out of it and has come back to test with a nice doji right on that trendline. There is some strength here.

Financial. I do not see strength here. JPM gapped to the downside. WFC also gapped to the downside. Not pretty at all.

I would like to look at a few names that we have not seen much of lately. ASH was down on Friday, gapping downside, but it held right at the early-August lows. We may have an inverted head and shoulders setting up. A little higher MACD. You could play it off of this bounce, and it could be a good runway to something a bit better. We are seeing this pattern in many places. DIOD has an inverted head and shoulders. Look at the MACD improving as it made the lows. Relative strength, changing momentum. Very interesting.

There are others showing the same pattern. We will see if they can develop into something. The interesting aspect is that the indices are technically set to fall further, but there are stocks using this to set up patterns. We could see those patterns break to the upside in the not-too-distant future if the indices test and hold those August lows (or near them) and the Fed comes out with something positive. Then you get the pop to the upside. As we have seen, liquidity tends to trump when it comes to financial instruments. Why? The money is put right into them and they rally.

THE MARKET

SENTIMENT INDICATORS

VIX. VIX bounced up 6% on Friday. Not a huge move given amount of selling. That suggests that perhaps the move is overdone and maybe it will not be a significant selloff or at least a selloff that takes the indices to a new low beyond the early-August lows that sat on top of the Summer 2010 base. We will see. This could ratchet back up. Even if it does, it still has this box at the top; a rectangle is forming. That will be some resistance that will keep it from making the break. You could also argue a flag or pennant forming. Maybe that will break to the upside, but there simply was not much of an increase in volatility on Friday, on a day when there was some significant +2% selling on all of the indices.

VIX: 33.92; +2.1
VXN: 33; +1.64
VXO: 33.72; +2

Put/Call Ratio (CBOE): 1.44; +0.36

Bulls versus Bears:

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: 40.9% versus 40.9%. A little bounce and the bulls regain some nerve. Not much, but some. Still a significant drop after stubbornly holding the line (47.2% three weeks back). Moving toward that late June low near 38% Fibonacci Retracement. Hit 49.5% a month back. Highs from April and December (60% readings spanning December through early May 2011). The 5 year high is 62.0. The crossover level at 29% bulls from July 2010 is long gone. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 36.6% versus 33.3%. After the huge surge from 23.7% a more moderate but still significant move. Why? Because bears are over the 35% threshold considered a bullish indicator. For more 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: -65.71 points (-2.58%) to close at 2480.33
Volume: 1.56B (-9.72%)

Up Volume: 105.86M (-211.42M)
Down Volume: 1.47B (+20M)

A/D and Hi/Lo: Decliners led 5.49 to 1
Previous Session: Decliners led 3.82 to 1

New Highs: 11 (-11)
New Lows: 111 (+79)

NASDAQ CHART: Click to view the chart

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: -30.45 points (-2.53%) to close at 1173.97
NYSE Volume: 896M (-6.28%)

Up Volume: 192.42M (-373.55M)
Down Volume: 3.65B (+30M)

A/D and Hi/Lo: Decliners led 4.67 to 1
Previous Session: Decliners led 2.53 to 1

New Highs: 43 (-8)
New Lows: 56 (+45)

SP500 CHART: Click to view the chart

SP600 Chart: Click to view the chart

DJ30

Stats: -253.31 points (-2.2%) to close at 11240.26
Volume DJ30: 175M shares Friday versus 178M shares Thursday.

DJ30 CHART: Click to view the chart

TUESDAY

Next week things quiet down a bit. There is no Monday action in the U.S. Of course we will have to worry about what happens in Europe. I have some bad memories coming back from Labor Day of 2000 and other years where a gutting of the market started after that. We will see. As noted, the indices are set up to fall. We will see how far they go.

There is not a lot on the agenda for next week outside of the usual jobless claims, crude inventories, etc. Consumer credit will be interesting. It is expected to fall, and we will see just how much. Wholesale inventories will be an interesting read as well. We will see if they rise because of no sales or fall because they are just not producing. It is one of those cases of the glass being half full or empty depending on what the economy is doing at the time.

In any event, it looks like the indices are ready to technically send you to the downside. That is what I am anticipating. We picked up some downside plays on Thursday ahead of the jobs report. We did that on Wednesday as well. We anticipated that there might be some carnage. We were a little concerned about a "whew" relief rally, but that obviously did not happen. Now we are looking for the ABCD downside pattern to consummate itself down at the early-August low. After that we will just have to see what the market is going to do.

It could rebound and try to rally, which would be a strong indication at that point. If the sellers cannot follow through below those August lows, there is a pretty good chance that the market will rally. We will be watching how the other stocks I have been talking about perform such as AAPL and POT (clear leaders), or these other stocks that are showing inverted head and shoulders to see if they can start back to the upside. They are showing relative strength. They could prove to be new leaders. You have to like that. What happened in the summer of 2010? In August the Fed came out of Jackson Hole and sort of talked about some Quantitative Easing. Then it announced it a bit later and the market was taking off in advance.

We have some stocks setting up in patterns where they could assume the mantle of leadership and start running higher. That is what we like to see. That is why we troll all of these areas to see what is out there. There are stocks showing this strength that could turn into leadership if we get the bounce after this next selloff by the indices.

What is our game plan? We are playing the downside move. We are going to have more downside plays over the weekend that we can initiate. They are not too far gone and can make us money on a move down to SP500 and NASDAQ's August lows. There are stocks out there that can still make us nice money to the downside as the indices make that move. We are also putting on some more upside plays. These are the plays I have been talking about that are showing relative strength, that are using the selling to set up again in their patterns. We could get that pullback and make the money yes, we will take the money when we get to our targets. Then we will see if we get bounce to the upside. If we do, we will be ready and will make those plays.

We have been doing a pretty good job of playing these ranges and catching the moves back and forth. Judging by the brokerage accounts I am seeing and what people are saying, they are also doing pretty well. I want to keep that going. You are able to do this by staying a step ahead and planning a step ahead of what is going on.

We always have to watch what the market does. We do not want to say "I think the market will do X" and get in front of it. You will often be wrong. We have to plan on what the market may do and play the probabilities. You want to put the probabilities in your favor. You do that by being ready with plays that have a good return versus the amount you are risking on the stop-loss. Then if the market does move as anticipated or moves in the second or third anticipated way then we are ready to make the play. We can adjust and adapt quickly, make the plays, and make money.

It is not a pleasant prognosis right now. We have a President and staff glued in the 1930's. They believe that is the way to go. History has shown that it is not the way to go. Many regimes have collapsed that have been based on centralized government planning, massive regulation, and taking money from the rich to give to the poor. It is hard to stay upbeat and focused, but the way to do that is to beat them at their own game. Make money by anticipating what they will do and how the market will react. That is what we have been doing, and we have been making great money. Get the last laugh and get your revenge that way. I guarantee you when we get a different environment and a different, positive environment will come then we will make tremendous amounts of money off of what we are making right now. We will use that capital to make even more money when we get a strong trend.

Enjoy your Labor Day weekend to the fullest with family and friends. Enjoy life. What we are seeing now is a transient thing. There are people running things who do not understand our country and what makes it great, but that will change. Then we will resume our mantle of greatness because we have the most perfect asset in the world: The American entrepreneur. That is you. Just keep doing what you are doing, and we will work our way out of this.

Have a great Labor Day weekend!

Support and Resistance

NASDAQ: Closed at 2480.33
Resistance:
2512 is last week's gap down point
2532 is the early August gap down point
2540 is the early November 2010 lower gap point
2555 is the mid-August 2011 peak
2569 is the November gap up point through the April 2010 peak
2580 is the November 2010 closing high
2593 is the November intraday high
2599 is the June 2011 low
The 50 day EMA at 2600
2603 is the March 2011 intraday low (post-Japan low)
2645-2650ish from December 2010 consolidation
2676 is the January 2010 low
2686 is the January 2011 closing low
The 200 day SMA at 2705
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
2759 is the May low
2762 is the February low
2796 is the February gap down point
2816 is the early April peak.
2825 is the 2007 closing peak.
2841 is the February 2011 peak
2862 is the 2007 peak
2879 is the July 2011 peak
2888 is the May 2011 peak

Support:
2469 is the November 2010 low
2331 from October 2010 low and the August 2011 low
2305 from the August 2010 peak (summertime base)
2139 is the May and June 2010 low
2123 is the August 2010 gap down point
2100 from the August 2010 lows

S&P 500: Closed at 1173.97
Resistance:
1178-1180 is the October 2010/November 2010 consolidation low
1196 is the November 2010 consolidation peak
1209 is the mid-August 2011 high
1220 is the April 2010 peak
1227 is the November 2010 peak
The 50 day EMA at 1232
1234 is the August 2011 low
1235 is the mid-December 2010 consolidation low
1249 is the March 2011 low (post-Japan)
1255 is the late December 2010 consolidation range
1275 is the January 2010 low, early January 2011 peak
The 200 day SMA at 1284
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1313 from the August 2008 interim peak
1318.51 is the May low
1325-27 is the March 2008 closing low and the May 2006 peak.
1332 is the early March peak
1340 is the early April 2011 peak
1344 is the February 2011 peak is being challenged again
1357 is the July 2011 peak
1364 is the March 2007 low
1370 is the August 2007 low
1371 is the recent May 2011 peak

Support:
1131 - 1127 from August 2010 base peak.
1119 is the early August closing low
1109 is the mid-September gap up point
1101 is the August 2011 low
1099 from the mid-July interim peak
1040 from the August 2010 lows and May/June 2010 lows
1011 is the summer 2010 low

Dow: Closed at 11,240.76
Resistance:
11,452 is the November 2010 peak
11,555 is the March low
The August low at 11,700
The 50 day EMA at 11,708
11,734 from 11-98 peak
11,867 from the August 2009 high and peak on that bounce in the selling.
11,893 from March 2008 closing low
The June low at 11,897 (closing)
The 200 day SMA at 11,996
12,094 is the April 2011 low
12,110 from the March 2007 closing low
12,283 is the March 2011 peak
12,391 is the February 2011 peak
12,876 is the May high
12,754 is the July intraday peak
13,058 from the May 2008 peak on that bounce in the selling

Support:
11,178 from November 2010
10,978 is the bottom of the November 2010 consolidation
10,750 from September 2010
10,720 is the August closing low
10,705-710 from January 2010 peak
10,694-700 from August 2010 peak
9938 is the August 2010 low

Economic Calendar

August 29 - Monday
- Personal Income, July (8:30): 0.3% actual versus 0.4% expected, 0.2% prior (revised from 0.1%)
- Personal Spending, July (8:30): 0.8% actual versus 0.5% expected, -0.1% prior (revised from -0.2%)
- PCE Prices - Core, July (8:30): 0.2% actual versus 0.2% expected, 0.2% prior (revised from 0.1%)
- Pending Home Sales, June (10:00): -1.3% actual versus -1.4% expected, 2.4% prior

August 30 - Tuesday
- Case-Shiller 20-city, June (9:00): -4.52% actual versus -4.7% expected, -4.59% prior (revised from -4.51%)
- Consumer Confidence, August (10:00): 44.5 actual versus 52.0 expected, 59.2 prior (revised from 59.5)
- FOMC Minutes, August. 9 (14:00): Several members feel more QE is necessary but 3 dissented against pushing rates to 0% through 2013.

August 31 - Wednesday
- MBA Mortgage Index, 08/27 (7:00): -9.6% actual versus -2.4% prior
- Challenger Job Cuts, August (7:30): 47.0% actual versus 59.4% prior
- ADP Employment Change, August (8:15): 91K actual versus 100K expected, 109K prior (revised from 114K)
- Chicago PMI, August (9:45): 56.5 actual versus 53.0 expected, 58.8 prior
- Factory Orders, July (10:00): 2.4% actual versus 1.8% expected, -0.4% prior (revised from -0.8%)
- Crude Inventories, 08/27 (10:30): 5.281M actual versus -2.213M prior

September 1 - Thursday
- Initial Claims, 08/27 (8:30): 409K actual versus 407K expected, 421K prior (revised from 417K)
- Continuing Claims, 08/20 (8:30): 3735K actual versus 3630K expected, 3753K prior (revised from 3641K)
- Productivity-Revised, Q2 (8:30): -0.7% actual versus -0.5% expected, -0.3% prior
- Unit Labor Costs - Revised, Q2 (8:30): 3.3% actual versus 2.4% expected, 2.2% prior
- ISM Index, August (10:00): 50.6 actual versus 48.5 expected, 50.9 prior
- Construction Spending, July (10:00): -1.3% actual versus 0.0% expected, 1.6% prior (revised from 0.2%)
- Auto Sales, August (15:00): 3.93M prior
- Truck Sales, August (15:00): 5.56M prior

September 2 - Friday
- Nonfarm Payrolls, August (8:30): 0K actual versus 70K expected, 85K prior (revised from 117K)
- Nonfarm Private Payrolls, August (8:30): 17K actual versus 110K expected, 156K prior (revised from 154K)
- Unemployment Rate, August (8:30): 9.1% actual versus 9.1% expected, 9.1% prior
- Hourly Earnings, August (8:30): -0.1% actual versus 0.2% expected, 0.5% prior (revised from 0.4%)
- Average Workweek, August (8:30): 34.2 actual versus 34.3 expected, 34.3 prior

September 6 - Tuesday
- ISM Services, August (10:00): 51.0 expected, 52.7 prior

September 7 - Wednesday
- MBA Mortgage Index, 09/03 (7:00): -9.6% prior

September 8 - Thursday
- Initial Claims, 09/03 (8:30): 400K expected, 409K prior
- Continuing Claims, 08/27 (8:30): 3700K expected, 3735K prior
- Trade Balance, July (8:30): -$51.5B expected, -$53.1B prior
- Crude Inventories, 09/03 (11:00): 5.281M prior
- Consumer Credit, July (15:00): $5.0B expected, $15.5B prior

September 9 - Friday
- Wholesale Inventories, July (10:00): 0.7% expected, 0.6% prior

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From Briefing.com: Weekly Recap - Week ending 21-Oct-11After another volatile week, stocks are closing the week out with a strong +1.9% gain, bringing the S&P 500 +1% vs. last Friday's close. Although earnings season picked up this week, the market remains preoccupied with Europe and the steady stream of back-and-forth headlines from various "officials" that flow out of the region. While a definitive plan remains to be seen, market participants seem to be giving policymakers the benefit of the doubt that they are making progress towards one. This weekend brings the first of two upcoming EU summits, although EU leaders have managed to lower expectations for this meeting and a plan is not expected until the follow-up summit midweek next week.

This week's swings have been heavily influenced by Europe. The markets sold off Monday and early on Tuesday, with weak Chinese data and a Goldman (GS) earnings miss weighing. However, late Tuesday stocks rallied on reports that Germany and France were looking to increase the size of the EFSF. Wednesday was less eventful, and then yesterday stocks saw another late-day rally. That strength is continuing today after reports indicated that Germany and France are on the same page with regard to a European bailout plan.

Outside of Europe, earnings remained the next most important topic of interest during the week. Overall the Q3 earnings season has gotten off to a decent start, with about 70% of companies beating EPS estimates. However, the stock reactions to the reports have been more mixed. It is reasonable to expect the percentage of companies beating expectations to decline somewhat as we progress through earnings season, as the size of companies reporting tends to decline.

Some earnings highlights from the week include the following:

Monday afternoon IBM (IBM) beat and raised EPS expectations but also reported a slight miss on the top line. The stock fell 4% on Tuesday and is down 3.5% on the week vs. a 1.2% gain in the S&P 500. Apple (AAPL) surprised the Street on Tuesday afternoon when it missed Q3 EPS estimates and issued an upside Q4 outlook. The company usually blows out estimates and gives very conservative guidance. iPhone 4 sales came up short as consumers held off for the iPhones 4S, released late last week.

Looking at the financials, Monday was a tale of two banks. Citi (C) reported a solid quarter which sent the stock 7% higher, while Wells Fargo (WFC) missed and fell 8%. On Tuesday morning, BofA (BAC) reported a noisy quarter while Goldman Sachs (GS) missed expectations and reported its second ever quarterly loss as a public company. Ironically, both stocks rallied and the financial sector led the broader market higher that day with a 4.8% gain. In general, forward estimates have come down for the money center banks, but seasonal loan growth and continued favorable loss trends have allayed some fears.

Industrial companies have further eased fears that we are on the verge of a recession. W. W. Grainger (GWW), Parker Hannifin (PH), CSX (CSX), Union Pacific (UNP) and this morning Honeywell (HON) all provided relatively upbeat outlooks.

There are hundreds of earnings reports due out next week, including results from Caterpillar (CAT), Netflix (NFLX), Amgen (AMGN), United Steel (X), UBS (UBS), F5 Networks (FFIV), Rightnow Technologies (RNOW), Broadcom (BRCM), Novellus (NVLS), Aflac (AFL), Akamai (AKAM), Triquint Semi (TQNT), Visa (V), Moody's (MCO) and Potash Corp (POT), among others. Please view our earnings calendar for a full schedule of dates/times and related expectations.

 
 Index	   Started Week   Ended Week   Change	%Change  YTD % 
 DJIA	     11644.49	  11808.79     164.30	  1.4	 2.0 
 Nasdaq	      2667.85	   2637.46     -30.39	 -1.1	-0.6 
 S&P 500	      1224.58	   1238.25	13.67	  1.1	-1.5 
 Russell 2000   712.38	    712.42	 0.04	  0.0	-9.1

8:01AM Jabil Circuit authorizes a repurchase of up to $100 mln shares of common stock (JBL) 19.30 :

10:57 am Seagate Tops First Quarter Earnings Expectations (STX)
Seagate (STZ $20.19 +0.09) reported first quarter earnings of $0.34 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.31.

Revenues rose 4.2% year/year to $2.81 billion versus the $2.9 billion consensus.

The company announces the European Commission announced on October 19, 2011 that they have approved under the EU Merger Regulation, Seagate's proposed acquisition of Samsung's hard disk drive assets. The company will continue to work with other regulatory bodies to secure additional approvals in the coming weeks. Seagate believes the transaction will close by the end of calendar year 2011.

10:15 am General Electric Reports In-line Earnings (GE)
General Electric (GE $16.33 -0.30) reported third quarter earnings of $0.31 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $0.31. During the quarter, GE gave notice of redemption for the preferred stock held by Berkshire Hathaway, and subsequently redeemed the shares on October 17, 2011 for $3.3 billion. As expected, the redemption resulted in a $0.08 per share one-time impact. GAAP EPS was $0.22.

Revenues were unchanged from the year-ago period at $35.37 billion (+12% ex-NBCU).

For its fiscal year 2012, the company expects operating EPS growth in the double digits versus estimates calling for growth of 15.2% over fiscal year 2011 consensus.

Industrial orders grew 16% year/year, which is the fourth straight quarter of double-digit growth. GE also announced more than $3 billion in new customer wins across its Energy business during the quarter. GE's third quarter Industrial segment revenues were $23.4 billion, up 19%. GE's Industrial segments experienced double-digit revenue growth both domestically and internationally with international revenues up 25% driven by strong double-digit growth in Brazil, Russia, China, India, Canada, Mexico and the Middle East.

"GE Capital executed across all of its businesses, earning $1.5 billion after tax, an increase of 79% year/year. We grew GE Capital volume to $43 billion, up 15%. GE Capital's margins remained strong at 5.4% year-to-date and the business continues to benefit from the credit cycle recovery. GE Capital continued to strengthen its capital ratios and liquidity during the quarter. GECC and GECS Tier 1 common ratios were up to 11.0% and 9.6% and we have reduced leverage across the portfolio."

Total segment profit was up 15% to $4.7 billion. Margins declined from a year-ago primarily driven by Wind pricing in Energy. GE expects Industrial margins to improve sequentially in fourth quarter. At quarter-end GE had $91 billion of consolidated cash. GE's cash position enabled the co to repurchase $1 billion of common stock during the third quarter and has enabled $3.7 billion in stock repurchases since the buyback program was restarted in the third quarter 2010.

10:10 am Microsoft Reports In-line Earnings for the First Quarter (MSFT)
Microsoft (MSFT $26.82 -0.22) reported first quarter earnings of $0.68 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.68.

Revenues rose 7.3% year/year to $17.37 billion versus the $17.19 bln consensus.

The Microsoft Business Division reported $5.62 billion in first quarter revenue, an 8% increase from the prior year period which included the launch of Office 2010. The Server & Tools segment posted $4.25 billion in first quarter revenue, a 10% increase over the prior year period and the sixth consecutive quarter of double-digit revenue growth. Windows and Windows Live Division revenue was $4.87 billion, a 2% increase over the prior period, in line with the PC market.

The company offers updated fiscal 2012 operating expense guidance, including Skype and the associated acquisition-related expenses, of $28.6 billion to $29.2 billion. "We saw customer demand across the breadth of our products, resulting in record first-quarter revenue and another quarter of solid EPS growth."

Last night, Altera (ALTR $36.31 +3.28) reported third quarter earnings of $0.57 per share, $0.02 worse than the Capital IQ consensus of $0.59, while revenues fell 4.7% year/year to $522.5 million versus the $542.8 mln consensus. The company issued downside guidance for the fourth quarter with revenues of down 7-11% QoQ to apporxmately $465.0-485.9 million versus the $532.90 million consensus and gross margin 69.5-70.5%. "Customer reaction to changing global macroeconomic conditions reduced industry demand. Despite this near-term deceleration we saw further growth from our 40-nm products and are very pleased with the successful launch of our 28-nm FPGAs."

Aixtron (AIXG $12.75 -0.53) was downgraded to Hold from Buy at Kaufman Bros and the firm lowered their tgt to $14 from $22 to reflect demand weakness and competitive challenges. The firm says, while most analysts have adjusted forecasts for the GCL order cancellation, some estimates have not been revised. They believe these outliers are artificially elevating consensus estimates and they don't expect the stock to move higher until these expectations have been reset at lower levels.

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From Briefing.com: Weekly Recap - Week ending 23-Dec-11Although the traditional "Santa Claus rally" period didn't officially start until today, Santa came early this year with a greater than 3.5% gain in equities on the week, which recoups last week's loss and then some. The S&P is now roughly flat on the year as we approach the final week of 2011.

While the action was constructive, this week was relatively quiet in terms of news flow. The week did start with a big piece of international news - the death of North Korea's dictator Kim Jong Il. That event caused initial uncertainty across Asia as his son Kim Jong Un stepped into control. However, after initial weakness on Monday, most Asian markets spent the rest of the week advancing along with their western counterparts.

After a lackluster Monday performance, markets got a substantial lift on Tuesday following encouraging German sentiment data and a better-than-expected Spanish bond auction. After Tuesday's 3% gain, stocks edged higher on Wednesday and Thursday, amid relatively light corporate news flow and generally encouraging economic data. On Thursday, initial jobless claims data, the Michigan sentiment revision and leading indicators data all beat expectations, although the revision to Q3 GDP came in below expectations. Last night, Congress agreed to a two-month extension of the payroll tax cut and unemployment benefits, temporarily lifting some domestic political uncertainty. This morning, while the Nov. durable goods data beat expectations, spending came in below expectations and excluding aircraft, the durables orders weren't as strong as the headline number. However, markets managed to see follow-through strength to end the day higher by 0.7%.

Corporate news flow was light throughout the week. Oracle's (ORCL 26.06, +0.37) disappointing earnings report sent its stock down 12% on Wednesday, while American Greetings (AM 12.97, -0.42) fell 24% in the two days following its earnings report. There were a few pieces of M&A news announced, with WCA Waste Corp (WCAA 6.62, +0.23) being acquired by Macquarie Infrastructure Partners II for $6.50 per share in cash, representing a 33% premium. Delphi Financial (DFG 44.13, +0.12) gained more than 70% after announcing it would be acquired by Tokio Marine. Finally, Akamai (AKAM 31.93, +0.30) gained 15% after announcing it would acquire privately held content delivery company Cotendo for approximately $268 million.

 
 Index     Started Week  Ended Week  Change  % Change  YTD % 
 DJIA	    11866.39	 12294.00   427.61     3.6    6.2 
 Nasdaq	     2555.33	  2618.64    63.31     2.5   -1.3 
 S&P 500	     1219.66	  1265.33    45.67     3.7    0.6 
 Russell 2000  722.05	   747.98    25.93     3.6   -4.6

4:05PM ON Semiconductor enters into a $325 mln revolving credit facility (ONNN) 7.60 +0.14 : Co announced that it has entered into a senior revolving credit facility with a group of lenders. The facility enables the co to borrow up to $325 million under revolving loans. The new facility has a five year term that expires in December of 2016. Fees and interest expense under the revolving credit facility can vary based on the co's total leverage ratio. Based on the co's current total leverage ratio, the facility is expected to bear interest at LIBOR plus 175 basis points if drawn. If the facility is undrawn, as it is currently, there is a yearly commitment fee of 35 basis points. This can vary as well based on the total leverage ratio.

8:02AM SunPower announces Agreement to Acquire Tenesol SA from TOT for $165.4 mln in cash; Total has agreed to purchase 18.6 million shares of SunPower common stock in a private placement at $8.80 per share, a 50 percent premium to SunPower's December 22, 2011 closing price (SPWR) 5.86 : Co announced that it has signed a definitive agreement to acquire Tenesol SA, a global solar provider headquartered in La Tour de Salvagny, France. Tenesol, a wholly-owned subsidiary of TOT, has operations in 18 countries and solar panel manufacturing facilities in France and South Africa. Under the terms of the agreement, SPWR will acquire Tenesol from TOT for $165.4 mln in cash. Concurrently with the closing of the acquisition, TOT has agreed to purchase 18.6 mln shares of SunPower common stock in a private placement at $8.80 per share, a 50 percent premium to SunPower's December 22, 2011 closing price. The transaction has been approved by an independent committee of SunPower's board of directors and is expected to close early in 2012 following the satisfaction of customary closing conditions. SPWR expects the acquisition will positively affect its financial position in 2012. After the sale of Tenesol, Total will own ~66% of SunPower's common share.

6:16AM Qualcomm announced earlier FCC approval of sale of $1.925 bln 700 mhz spectrum licenses to AT&T (T) (QCOM) 54.37 : Co announced that the FCC has approved the sale of its Lower 700 MHz D and E Block unpaired U.S. spectrum licenses to AT&T (T). The sale by Qualcomm to AT&T of the licenses for $1.925 bln was originally announced in December, 2010. The proposed transaction has been pending subject to the satisfaction of the conditions of closing. In connection with the announcement of the transaction in 2010, AT&T indicated that, as part of its longer term 4G network plan, it intends to deploy this spectrum as supplemental downlink, using carrier aggregation technology. This new technology is designed to deliver substantial capacity gains by enabling unpaired spectrum to be used in conjunction with paired spectrum for 4G services.

Last night, Qualcomm (QCOM $55.15 +2.98) reported fourth quarter earnings of $0.80 per share, $0.02 better than the Capital IQ Consensus of $0.78. while revenues rose 39.6% year/year to $4.12 billion versus the $4.0 billion consensus. The company issues upside guidance for the first quarter with EPS of $0.86-0.92 versus the $0.85 consensus and revenues of $4.35-4.75 billion versus the $4.25 billion consensus. The company issued mixed guidance for fiscal year 2012 with EPS of $3.42-3.62 versus the $3.48 consensus and revenues of $18.0-19.0 billion versus the $17.29 billion consensus.

Last night, ON Semiconductor (ONNN $7.60 +0.52) reported third quarter earnings of $0.24 per share, excluding non-recurring items, in-line with the consensus of $0.24, while revenues rose 49.5% year/year to $898 million versus the $898.6 million consensus. The company issued guidance for the fourth quarter with revenues of $740-780 million, includes impact from Thialand floor of $60 million, may not be comparable to the $834.95 millionconsensus.

Last night, Sierra Wireless (SWIR $6.14 -1.22) reported a third quarter loss of $0.03 per share, incl. items, may not be comparable to the Capital IQ Consensus of $0.03, while revenues fell 15.0% year/year to $146.8 million versus the $152.45 million consensus. The company issued downside guidance for Q4, sees EPS of $0.05-0.10 vs. $0.14 Capital IQ Consensus Estimate; sees Q4 revs of $145-150 mln vs. $166.51 mln Capital IQ Consensus Estimate.

10:11 am Rambus Up Sharply After Announcing A Patent Agreement With BRCM (RMBS)
Rambus (RMBS $8.44 +1.12) is trading sharply higher this morning after announcing a patent license agreement after the close yesterday.

Late yesterday, the company announced it has signed a patent license agreement with Broadcom (BRCM). This agreement covers the use of Rambus patented innovations in a broad range of integrated circuit (IC) products offered by Broadcom. In addition, the two companies have settled all outstanding claims, including resolution of past use of Rambus' patented innovations. The term of this patent license agreement is five years. Other terms of the agreement are confidential.

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From Briefing.com: Weekly Recap - Week ending 06-Jan-12Although the stock market was able to come back from an early slide, its inability to push into positive territory left it to chop its way into the close for a lackluster finish.

The December payrolls report initially provided a lift to premarket sentiment. It featured a headline unemployment rate of 8.5%, which is down from the 8.6% in the prior month and less than the 8.7% that had been widely anticipated. Moreover, nonfarm payrolls climbed by 200,000, which exceeds the increase of 150,000 that had been expected. Private payrolls increased by 212,000 to exceed the consensus call for an increase of 170,000.

However, stocks were hit with selling pressure once the session opened. As was the case in the two previous sessions, stocks were able to stabilize and gradually work their way higher, but a lack of leadership prevented the broad market from overcoming resistance at the flat line.

Although the stock market was unable to close the week on a positive note, it displayed resilience in the face of a weaker euro, which fell about 0.6% to what is basically a new 16-month low of $1.27.

Recent market action may not have been all that exciting, but a strong gain on Tuesday helped the stock market book a weekly gain of 1.6%. For some prognosticators, that makes for a promising start to 2012, which many believe will still be driven by global financial and economic conditions, especially those in Europe. The Presidential election is also in the mix, as are corporate earnings. Earnings season gets its unofficial start early next week.

Trade this week began on Tuesday since domestic markets were closed on Monday in observance of New Year's Day. Stocks put together their best performance of the week by advancing about 1.6%, but the S&P 500 was unable to overcome resistance at its multi-month closing high of 1285.

Manufacturing data from China, India, a couple of corners of Europe provided encouragement to buyers. Even domestic manufacturing proved pleasing -- the December ISM Manufacturing Index improved to 53.9 from 52.7 in November so that it exceeded the reading of 53.4 that had been widely expected.

Construction spending for November increased by 1.2%, which bested the 0.5% increase that had been generally expected after a downwardly revised 0.2% decline during October.

Minutes from the most recent FOMC meeting proved unsurprising by stating only that domestic economic activity recently expanded moderately. Although the pace economic activity is expected to pick up, some committee members communicated that current and prospective conditions could warrant additional policy accommodation.

Trade on Wednesday had a flat finish as concerns about financial conditions in Spain and uncertainty over the financial flexibility of Hungary brought the negative themes of 2011 back into focus. Also in the mix were cautious comments from officials in China regarding the country's economic outlook.

On Thursday the Nasdaq made a nice gain, but the broad market mustered only a modest gain after working its way up from a marked loss in morning trade. A weaker euro and rising debt yields in Europe -- signs of the same old concerns about financial and economic conditions there -- dampened the mood of many traders, but the negativity was partly tempered by an ADP Employment Change that reported private payrolls increased by 325,000 during December. An increase of 180,000 had been generally expected.

Weekly initial jobless claims count declined by 15,000 week-over-week to 372,000, which is on par with the 375,000 initial claims that had been widely anticipated. The ISM Services Index for December did little to surprise by coming in at 52.6, which is only slightly less than the 53.0 that had been broadly forecasted. December same-store sales were also of little influence, due to their underwhelming results.

4:52PM Motorola Mobility sees Q4 revs of $3.4 bln vs. $3.9 bln CIQ Estimates with modest profitability on a non-GAAP basis (MMI) 38.46 -0.15 : Co announced preliminary results for Q4 2011. Although the co has not finalized its financial results for Q4, it estimates sales of $3.4 billion with modest profitability on a non-GAAP basis. These estimates include shipments of ~10.5 mln mobile devices, of which ~5.3 mln were smartphones. MMI's Q4 results were impacted by the increased competitive environment in the Mobile Device business and higher legal costs associated with ongoing Intellectual Property litigations. The co estimates sales of $900 mln for the Home business in Q4. MMIwill issue its Q4 2011 earnings results at ~3:00 p.m. U.S. Central Time on Thursday, January 26, 2012. As previously announced on August 15, 2011, MMI and Google (GOOG) entered into a definitive agreement for Google to acquire Motorola Mobility for $40.00 per share in cash.

4:25PM TranSwitch lowers Q4 revs guidance to roughly $6.3 mln vs. 7.0 mln CIQ Est, down from prior guidance of $7.0 mln (TXCC) 3.51 -0.05 : Co lowers Q4 2011 revenue guidance to be roughly $6.3 mln compared to the guidance provided on November 1, 2011 of roughly $7 million principally due to a contractual dispute on a service agreement with a North America customer. The co expects to report complete Q4 and full year 2011 financial results in early February 2012 and will announce details when they are available. "We continue to make progress on our strategic plan of creating value through innovative products for HD multimedia connectivity and processing," said Dr. M. Ali Khatibzadeh, President & CEO of TranSwitch. "With the introduction of HDwire), the fastest video transport technology for flat-panel displays, TranSwitch substantially increases its addressable market.

09:06 am RF Micro Device downgraded to Perform at Oppenheimer: . Oppenheimer downgrades RFMD to Perform from Outperform and removing their $9 tgt. RFMD cut Dec.-quarter guidance, pointing to stronger than earlier expected weakness in China and MPG. They expect RFMD to be weak as expectations and ests reset lower and mgm't works to rebuild investor confidence. While they still see positives in its new products and diversification strategy, it's difficult to assess the timetable needed for this to come to fruition and to fill the current China sales gap (which comes shortly after the NOK gap). Until they get a better feel for this and that RFMD's issues don't run deeper than communicated, they're stepping to the sidelines.

09:06 am Intel downgraded to Neutral at Sterne Agee; tgt $26: . Sterne Agee downgrades INTC to Neutral from Buy and sets target price at $26. The firm believes 2012-2014 could see headwinds in its core PC market with ARM/Win8 and lower ASPs. They believe 1) Major PC OEMs are moving 10-15% of mix to ARM PC platforms in 2012-13 away from x86 and Smartphone-Medfield is not material enough. They believe QCOM offers a better opportunity as it is best positioned to capitalize on Smartphone growth and incremental PC TAM with Win8 PC.

10:29 am S&P Tech Sector Down Modestly
The tech sector is trading slightly lower today, but ahead of losses in the broader market. Semiconductors are showing relative weakness in the tech space, however, with the Philly Semi Index trading 0.3% lower. NXPI (-3.0%) is a notable laggard in the chip index. Among other major indices, the S&P 500 is trading 0.4% lower, while the NASDAQ is trading 0.2% lower and the QQQ is 0.1% lower on the session. Among tech bellwethers, ORCL (+0.7%) is showing strength, while GOOG (-1.0%) is a notable underperformer.

In earnings last night, RFMD (-20.6%) lowered Q3 rev guidance below consensus and GPN (-2.8%) posted a mixed Q2 and raised guidance. This morning, KITD (+5.8%) raised its 2012 outlook.
Among rumors, we are hearing renewed CREE (+0.1%) takeover chatter making the rounds.
Among notable analyst upgrades this morning, SNDK (+2.6%) was upgraded to Buy at Sterne Agee and VOD (-0.2%) was upgraded to Buy at Goldman. Among downgrades, Sterne Agee downgraded INTC (-0.8%) to Neutral, Oppenheimer downgraded RFMD (-20.6%) to Perform, and MOTR (-10.0%) was downgraded to Neutral at JP Morgan.

10:18 am RF Micro Device Down 21% After Q4 Sales Miss Expectations (RFMD)
RF Micro Device (RFMD $4.47 -1.17) is trading 21% lower after reporting that revenue fell short of expectations late yesterday.

After the close yesterday, the company reported that revenue for the December 2011 quarter was approximately $225 million (Capital IQ consensus $250 mln). In RFMD's Cellular Products Group (CPG), revenue was approximately $179 million, as sales of 2G components to China-based customers for entry-level handsets were below expectations.

In RFMD's Multi-Market Products Group (MPG), revenue was approximately $46 million, reflecting broad weakness in MPG's end markets. The Company noted customer demand softened during the December quarter, with end-of-quarter 2G demand significantly below customer forecasts. RFMD expects gross margin for the December 2011 quarter will decline approximately 9 points sequentially, due to the lower revenue, lower factory utilization, and inventory reserves.

Sales of RFMD's components for 3G/4G smartphones increased sequentially approximately 16% during the December 2011 quarter. Bob Bruggeworth, president and CEO of RFMD, said, "RFMD is navigating broadly lower demand in 2G handsets and softness across MPG's markets. Despite this challenging macro environment, RFMD is winning new business with industry-leading products and technologies, and we fully expect to grow in fiscal 2013, supported by market share gains, new product launches, and expanding relationships with both channel partners and customers." In the March 2012 quarter, RFMD anticipates normal seasonality in the handset industry and in MPG's end markets.

10:55 am Best Buy Showing Gains After Reporting Comps and Reaffirming Guidance (BBY)
Best Buy (BBY $23.95 +0.51) is trading almost 3% higher this morning despite reporting negative December comps. The company reaffirmed fiscal year 2012 guidance this morning as well.

Earlier, the company reaffirmed fiscal year 2012 earnings of $3.35 to $3.65 per share versus the $3.40 Capital IQ Consensus Estimate as it announces Dec rev flat YoY at $8.4 bln, with comps -1.2%.

The company's Domestic segment generated $6.5 bln in revenue for fiscal December, an increase of 0.4 percent when compared with the prior-year period, with comps -0.4% (internatinal comps -1.7%). Domestic segment areas of comparable store sales growth included tablets and mobile phones within the Computing & Mobile Phones revenue category, eReaders within the Consumer Electronics revenue category, and the Appliances revenue category. Tablets and eReaders each delivered low triple-digit comparable store sales gains during the month. Mobile phones had a 20 percent comparable store sales increase during the month, driven by strong smart phone sales.

These increases were more than offset by comparable store sales declines in other areas, including gaming within the Entertainment revenue category and digital imaging within the Consumer Electronics revenue category. Gaming and digital imaging both experienced low double-digit declines in comparable store sales. The co noted that televisions experienced a mid single-digit comparable store sales decline within the Consumer Electronics revenue category. The co also noted that overall Domestic segment inventory levels finished fiscal December in line with its expectations.

"Based on our performance in December we continue to expect to achieve our annual guidance, despite customer traffic that was lower than expected until the last week before Christmas, which resulted in December rev that was slightly lower than our expectations."

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From Briefing.com: Weekly Recap - Week ending 09-Mar-12Stocks staged their third straight advance on the back of a better-than-expected jobs report to eke out another weekly advance -- its ninth in 10 weeks.

Market participants were generally pleased to learn that the jobs picture continues to improve, but excitement was limited by the belief that such a trend could make it less necessary for further economic or monetary stimulus. The headline unemployment rate remains at 8.3%, as had been broadly predicted, but nonfarm payrolls increased in February by 227,000 while nonfarm private payrolls jumped by 233,000. Respective increases of 206,000 and 220,000 had been broadly expected.

Little attention was paid to news that the trade deficit increased in January to $52.6 billion, which is greater than the $48.2 billion deficit that economists surveyed by Briefing.com had generally expected to follow December's upwardly revised deficit of $50.4 billion.
Although stocks started the session in positive territory, it took some time to muster enough strength to make a meaningful move higher. Even after they did, though, the effort to run higher was stymied by resistance at the S&P 500's multi-year closing high of 1374.

Stocks hugged that line for several hours before retreating in response to headlines that the ISDA ruled that a credit event occurred with respect to Greece. The decision wasn't entirely surprising and came a day after Greece conducted a debt swap that was met with strong demand.

Gains among stocks may have been checked late in the day, but the S&P 500 still managed to settle high enough lock in another weekly gain. Although it amounted to only 0.1%, it still stands as the ninth positive weekly performance in 10 weeks.

Traditionally a defensive holding, the greenback gained about 1% against a basket of major foreign currencies today. Its move was especially pronounced against the euro, sterling pound, and Japanese yen. The dollar's advance really gained momentum with the release of the monthly payrolls report.

A generally positive tone helped take the Volatility Index back below 17 for some time. It settled narrowly above that line, but remained near multi-month lows.

Trade this week actually started on a weak note amid concerns that global economic growth would be adversely impacted by China's 2012 growth forecast of 7.5%, which stands as its lowest target since 2004.

Market participants were hardly encouraged by better-than-expected domestic data that featured an ISM Service Index reading of 57.3 for February. A reading of 57.0 had been expected to follow the 56.8 that was printed in the prior month. Separately, factory orders fell during January by 1.0%, but that was still less severe than the 1.9% drop that had been widely expected.

BP (BP 46.69, -0.42) announced early this week that it has struck a $7.8 billion settlement for claims filed following the Gulf oil spill in 2010. The payment will be made from the $20 billion compensation fund set aside by the company.

Trade on Tuesday was relatively dramatic in that the S&P 500 fell 1.5% to suffer its worst one-day drop in almost three months. The action came on the heels of weak action abroad, where markets remained concerned about the implications of slower growth in China and news that eurozone GDP declined by 0.3% in the fourth quarter, unrevised from its preliminary reading. The disconcerting macro picture came as the stock market began to show fatigue during its run to a new multi-year high in the preceding week.

Widespread weakness and concern that stocks were possibly setting up for a correction caused the Volatility Index to spike more than 15%, putting it back near its monthly high.

Stocks didn't take long to recover from their sell-off, although the mid-week dose of data wasn't all that exciting.

The latest ADP Employment Change indicated that private payrolls climbed by 216,000 in February, on par with the increase of 218,000 that had been broadly expected. The February figure marked an improvement over the upwardly revised increase of 173,000 private payrolls reported for January.

Fourth quarter productivity was revised upward to reflect an increase of 0.9% to narrowly exceed the increase of 0.8% that had been broadly forecasted. However, unit labor costs were also revised higher, but the 2.8% increase was considerably more than the 1.1% increase that had been widely anticipated.

Consumer credit climbed to $17.8 billion in February from a downwardly revised $16.3 billion in the prior month. Economists polled by Briefing.com had forecasted, on average, a decline to $12.0 billion.

Although data did little to drive action, Financials were a source of leadership as they rebounded from their slump in the prior session. The Consumer Discretionary sector also shined, such that American Eagle (AEO 15.54, +0.91) rallied hard despite a disappointing quarterly report and forecast.

General Electric (GE 19.04, +0.01) benefited from news that management continues to expect double-digit revenue growth in global growth regions. Apple (AAPL 545.17, +3.18) shares responded negatively to the company's unveiling of its latest iPad, but on Thursday it shrugged off news that the Justice Department claims that the company colluded to raise electronic book prices.

Stocks built on their mid-week rebound with a broad-based move that provided the second half of the best back-to-back performance for the S&P 500 in more than three months.

Consumer discretionary plays performed well once again as Hot Topic (HOTT 10.01, +0.15) and Coach (COH 77.31, +0.52) climbed. Shares of HOTT hit a multi-year high in response to stronger-than-expected earnings, upside guidance, and a dividend hike. Shares of COH were carried to a record high following encouraging comments from company management.

AIG (AIG 28.25, -0.06) faltered in the face of it all after it was learned that the Treasury Department filed to offer more than 200 million common shares of the company. Shares of the insurance giant had displayed strength earlier in the week amid news that the company sold $6 billion worth of ordinary shares of its Asia subsidiary AIA in an effort to repay its federal government bailout.

There weren't any surprises at the latest European Central Bank meeting, which culminated with the ECB's target interest rate still at 1.00%. The Bank of England also opted to stand pat on its policy, which has an interest rate target of 0.5% and an asset purchase program of 325 billion pounds.

The latest weekly jobless claims count totaled 362,000, which is up 8,000 from the prior week and slightly more than the 355,000 claims that had been broadly expected.

..Nasdaq 100 +0.4%. ..S&P Midcap 400 +0.9%. ..Russell 2000 +1.3%.

 
 Index	  Started Week  Ended Week   Change  %Change   YTD % 
 DJIA	    12977.57	 12922.02   -55.55     -0.4    5.8 
 Nasdaq	     2976.19	  2988.34    12.15	0.4   14.7 
 S&P 500	     1369.63	  1370.87     1.24	0.1    9.0 
 Russell 2000  802.42	   817.00    14.58	1.8   10.3

8:34AM Sanmina-SCI calls for partial redemption of 8.125% senior subordinated notes due 2016 (SANM) 11.03 : Co is calling today for redemption on April 9, 2012 $100.0 mln in aggregate principal amount of its 8.125% Senior Subordinated Notes due 2016. The aggregate principal amount of the Notes currently outstanding is $250.0 mln.

Altera (ALTR $37.80 +0.58) lowered their guidance for the first quarter. The company said its initial guidance for the first quarter was for a 5 to 9 percent sequential revenue decline, largely the result of program timing in the military vertical market and continued softness in sales to wireless customers. As the quarter has progressed, the company has experienced somewhat more pronounced and broader than anticipated inventory adjustment related weakness and now believes that first quarter revenue will be 7 to 9 percent lower than fourth quarter levels. This calculates to approximately $416.59- $425.75 million versus the $426.95 million Capital IQ consensus. The company continues to expect that revenue in the second quarter of 2012 will be above first quarter levels. Quarter-to-date book to bill remains above 1.0. First quarter results will be released after the market close on April 19, 2012.

Texas Instruments (TXN $32.24 -0.36) lowered its first quarter EPS guidance to $0.25-0.29 from $0.26-0.34 prior guidance excluding $0.10 in acquisition costs versus the $0.32 Capital IQ Consensus Estimate. The co also lowered its first quarter revenue guidance to $2.99-3.11 billion from $3.02-3.28 billion prior guidance versus the $3.16 billion consensus. The company said the reductions are due to lower demand for Wireless products.

09:29 am LSI Logic initiated with a Buy at Maxim Group; tgt $11: . Maxim Group initiates LSI with a Buy and price target of $11 saying they believe the company is well positioned with share gain opportunities in HDD SoC, Flash controller, PCIe markets, and new product cycles associated with the Romley server ramp.

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InvestmentHouse Weekend Market Summary

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

- Two-day bounce falters and stocks fade leaving some indices at support, others grasping.
- China GDP rumor a complete miss as GDP misses expectations.
- Internals continuing to match prices in their day to day volatility.
- CPI continues to advance, eating up real earnings.
- Bank earnings lavished with praise but who couldn't make money borrowing for 0% for a guaranteed 3% or better?
- Michigan Sentiment falls on energy concerns, but expectations are still quite good.
- The mixed Friday finish (in terms of support) hold out some upside possibilities, and earnings could rally stocks, but if not, the indices certainly look heavy.

Just a little Friday nervousness or prepping for a downside week ahead?

The market was pensive Friday, at least early on. The China GDP rumored to ring up a 9 handle did not even make expectations. It fell to 8.1% versus the 8.4% expected and the 8.9% in February. A cool three-year low. It dampened the animal spirits, the market lost its bid, and it fell. After a two-day rebound off the five-day decline, stocks lost a bit of nerve ahead of the weekend. More nervousness before the weekend, than we thought, would pop up given many issues were already gone with North Korea's missile breaking up right after launch. Not a lot of excitement out there. Maybe there is a worry about Europe over the weekend. It continues to struggle, no doubt. We found out that the Spanish banks borrowed a surging 227B euro, up from 152B. That basically matches the Italian borrowing, which is not a good sign. The banks are cash strapped. They need help, and there is your nervous trade in the U.S. given Europe is such a big partner with us.

Stocks were having a bit of trouble pre-open. Futures started lower and continued down into the bell. They tried a little bounce, but it did not last for long. Michigan Sentiment came in weaker than expected at 75.7. That was off from 76.2 in March. Expectations were still good, so things kind of washed. I will talk more about CPI and other economic issues, but I will note that, thanks to the rise in inflation, real earnings were down -0.4%. That is significant. It is hard to continue to spend when your earnings go the other way.

The market had a tough day of it. It has been down pretty hard, it rallied pretty hard for a couple of days, and Friday it was down again with losses over 1%. That day to day volatility remains.

SP500, -1.25%; NASDAQ, -1.45%; Dow, -1.05%; SP600, -1.38%; SOX, -1.82%.

A down day again, and significantly so. What does this mean? I have talked about day-to-day volatility with bigger upside moves and downside moves. They are becoming more frequent. You have an up day and a down day, or two up days and a few big down days. And they are large; the advance/decline line is swinging in big numbers. We are not seeing 2:1 or 1.5:1, but big moves. That internal volatility, the price volatility, as well as the rounded tops in the patterns are still worrisome and it looks as if they could turn lower once more. They certainly did that on Friday, but it was also a mixed market as to how they closed, at least in terms of support. SP500 and NASDAQ held the 50 day EMA. On the other hand, the SP600 and the DJ30 either fell back from or broke through the 50 day EMA. SOX fell back from its 50 day EMA, and that is an important one for the rest of the market.

OTHER MARKETS

Dollar. 1.3076 euro versus 1.3194 euro. With worries about Europe once again, the dollar moved up. It was getting a little money thrown its way. It is holding up quite well, trying to set up and bounce again. Trouble in Europe spells stronger dollars. That helps us out on our import prices, and it helps us on inflation. We are not importing as much inflation because that drives the prices price of oil down. That is always helpful given we fail to produce here, and we prefer to pay extraordinary amounts overseas and send our money elsewhere. But that is another story altogether. Kind of.

Bonds. 1.99% versus 2.06% 10 year U.S. Treasury. More trouble in Europe means more money to U.S. bonds. Yeehaw, here we go. The irony of it is that trouble in Europe could ultimately lead to the Fed being a little more lenient with its Quantitative Easing stance. It is perhaps a double push for bonds running them to the upside.

Gold. 1,660.00, -20.60. As the dollar rose, gold had a tough time of it. It closed sharply lower on the day, but it is still in this lateral range. It is interesting. Gold broke above the prior range, and now it has been bouncing around laterally ever since. It has almost set up another range within a range. I did say "almost." The way it is trading is very interesting. Still stretching out laterally.

Oil. 102.84, -0.85. Oil prices were lower. Oil is still holding decently. It has a big flag pattern that formed off of the breakout from the prior four-month trading range. It has broken down into that range, but we will see if it makes the break upside. It is running into resistance. It has bumped into the tops of that prior base. It is having a bit of trouble, and that will help. It helps us all because we do not have as much outlay for oil. Of course, $103 is not that much lower, but I suppose that every bit helps.

TECHNICAL SUMMARY

Volume. NASDAQ, +0.75, 1.458B; NYSE +0.73%, 691M. Volume edged to the upside on Friday the 13th, but it was not much. Not a huge jump in volume, but we have definitely seen more volume on the down days than on the up days. That is just the way it has been. That shows, net/net, more selling than buying right now. We will look at the charts in a moment and see how that all ties in.

Breadth. NASDAQ, -3.5:1 versus +2.8:1 Thursday; NYSE -3.3:1 versus 4.6:1 Thursday. Breadth is the same situation I have talked about with the day-to-day volatility. On NASDAQ, the up day on Thursday was not as strong as the down day. NYSE was not as sharp a decline, especially when compared to the 4.6:1 on Thursday. It is a bit of a mixed picture. The overriding picture is the size of the moves. We are up over 3:1 and 4:1, when we were lucky to get above 2:1 prior to this recent bout of volatility.

THE CHARTS

SP500. You can see the five days down and the two-day bounce back above the 50 day EMA. Now a fall back to the 50 day EMA. Down, up, and then a key test here. Very key. If it holds, that is great; it can then move back to the upside. On the other hand. It has that rounded pattern to it with declining MACD. It would go against my feelings and what the stock market is generally telling us that it would continue to the upside. On the other hand, it has not changed its character because it refuses to give up the 50 day EMA on any consistent level. A lot of traders are calling for Dow 1327 as the next support. That would it right at the late-January peak. We will see. It definitely looks bearish to me, but my feelings do not move the market. We are setting up and preparing ourselves along the lines that we will be able to take advantage of a fall if we get it.

DJ30. DJ30 was down. It fell back through its 50 day EMA. Two days up, now back through the 50 day EMA and coming up to this trendline. It has a confluence. You have a horizontal support, and you have this trendline advancing to the 12,800 level. We will see what happens next week. I am not holding my breath for this one to hold. There is a little head and shoulders action. We picked up some DIA puts on the day as the index fell back away from the 20 day EMA and back through the 50 day EMA.

NASDAQ. NASDAQ is another index that has not changed its character. Yes, it is down to the 50 day EMA for the first time in about four months, but it is holding. It bounced off of that level, it faded on Friday, but it is still above the 50 day EMA. It can still make its move, but it is very similar to the SP500 in that it has this one hump, the second hump, and then trying to put in a higher low. NASDAQ has AAPL, PCLN, and GOOG. Of course GOOG did not help today with that strange stock split it put out on Thursday. Nonetheless, they are performing well and holding the index higher. We will see whether NASDAQ can be the holdout and the index that makes the difference to the upside again, or if it just holds out and then cracks and falls and drops with everything else.

SP600. SP600 showed similar action kind of. The small caps were already below the 50 day EMA. They bounced up and could not retake it, and then they faded from that level on Friday. They did not even get back up to the February peaks that we were looking at for a potential head and shoulders. Maybe we have a lower shoulder and it just rolls over. We will probably be looking at an IWM play to the downside. That would be a small cap put play on that ETF.

SOX. SOX is doing the same thing that SP600 is. It rallied up to the 50 day EMA, virtually stalled there, and then rolled over on Friday. It did not make the February peak either. That does not mean it will not fall just because it did not make it back up to that level. Not at all. It has put in a bear flag below the 50 day EMA break. It looks like it wants to fall back to the downside. That would not be good for the market. Where the SP500 goes, a lot of stocks tend to move with it.

LEADERSHIP

Metals. Metals were struggling. BHP has set up a downtrend. Look at these triangles, one stacked on the other, heading to the downside. Looks like it is rolling back down right now. FCX bounced sharply on Thursday, and it was backing off on Friday. But it has not necessarily shown that it is rotating back down. If China will be weak, it suggests that we will have weakness again in FCX.

The steel stocks did a little backtracking. AKS was down on the day, but that was after a good rebounded up through Thursday. They are not out of the picture completely. It is mixed in metals right now. Some to the upside and some to the downside. Overall they are struggling. They would have to pull something out of the hat to really get things turned back around.

Technology/Semiconductors. AAPL is having troubles. It broke through the 20 day EMA on the close for the first time in quite some time. GOOG had its strange two for one stock split. It issued a third class of shares that gave no voting rights. The owner said they would not dilute their power at all. It is kind of a two for one, but not really. We will call it the revenue miss that resulted in that 4% decline on the day. That sounds good.

Semiconductors are having a bit of trouble. LRCX was putting in a lower high and a lower MACD. It is struggling a bit. NVLS is holding the 50 day EMA. It is trying to make a stand, very similar to the stock market indices as well. SNTC fell back from a bear flag test of the 10 day EMA.

Financial. Financials reported some good earnings. They did not have great results on the session. JPM was down -3.6%. Still above the 50 day EMA, however, so maybe it will just retrench a bit. WFC is talked about by some analysts as supposedly the greatest bank ever seen. The talk is that it is making all the rights decisions and doing the right maneuvers. But come on. A trained monkey could borrow money for 0% and then turn around and get a 3-5% return on bonds. It is tough out there for those banks. WFC was down, but it is also still above the 50 day EMA. STT is at the 50 day EMA as well. It is trying to hold on to support and break back to the upside.

Financial Services. Money is flowing into some financial areas. MA was up 1.5% on the day. V was up 1.75% with a good two-day bounce going in. DFS looks like it wants to make a break higher as well. All these credit services are doing just fine.

Healthcare/Medical. Health care as been getting money all along. It was down a bit on Friday. It tried to rally. CELG faded but is still in a very good pattern. ESRX looks as if it wants to continue to move to the upside. ARAY posted a nice 1.5% gain on Friday when most of the market was lower. Money is still working its way into the health care/medical area.

Chinese. China is still looking good even with the lower GDP. YNDX held quite well on the day. It still looks as if it wants to break to the upside. BIDU was flat. It did not go up much. It could not hold the gain on the early part of the session, but it was still a solid end of the week for BIDU. You have to like that.

There was bad news on the Chinese economy, and yet the Chinese stocks are still showing good movement and good relative strength. Perhaps that is a positive. We will see bottoming in the Chinese stocks. It is showing signs that that is what it wants to do. It has been down for a long while. Very interesting. These Chinese shares that are traded in the U.S. could give us some insight into just what the Chinese stock market will do.

THE ECONOMY

CPI rise cutting wages to negative growth.

While prices are still considered 'in control' with a 0.3% overall CPI rise, in line with expectations and less than February's 0.4%, a steady price rise has its impacts.

Particularly true when the core keeps rising. Even taking out gasoline (up 1.7%), the core is closing in on the overall CPI's gains. Not a good sign at all as the pressure for some more serious inflation spikes is there.

Of course inflation has very deleterious effects on citizens. As prices clime real wages have to rise more in order for consumers just to stay even. Real wages are not keeping ahead, they are not even keeping even. No, they are again negative, now 4 out of the last 5 months.

Real wages fell 0.4% in March and there is nothing to suggest they will start gaining ground. The consumer loses in so many ways. Prices are up while staying in cash you see your wealth decline just by holding the same number of dollars. Then you have to take those dollars that are worth less and pony up more of them to pay for goods and services. The consumer quickly gets decimated in an inflationary environment.

THE MARKET

SENTIMENT INDICATORS

VIX: 19.55; +2.35
VXN: 21.44; +2.1
VXO: 19.28; +2.51
Put/Call Ratio (CBOE): 0.96; +0.1

Bulls versus Bears

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: 48.4% versus 50.5%. Back to where it was three weeks ago as Bulls more or less flat line just as the market flat lines. Not excessive, not low, not telling us much. 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: 21.5% versus 22.6%. Bears are fading and bulls are fading. Do you call that apathy? Was 23.6% three weeks back and that was down from the 25% to 26% level it held for weeks. Getting a bit worrisome but nothing screaming a major dive is coming. 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: -44.22 points (-1.45%) to close at 3011.33
Volume: 1.458B (+0.76%)

Up Volume: 199.1M (-990.9M)
Down Volume: 1.28B (+1.016B)

A/D and Hi/Lo: Decliners led 3.48 to 1
Previous Session: Advancers led 2.77 to 1

New Highs: 57 (+7)
New Lows: 39 (+17)

SP500/NYSE

Stats: -17.31 points (-1.25%) to close at 1370.26
NYSE Volume: 691M (+0.73%)

Up Volume: 472.95M (-2.717B)
Down Volume: 3.02B (+2.685B)

A/D and Hi/Lo: Decliners led 3.28 to 1
Previous Session: Advancers led 4.62 to 1

New Highs: 46 (-16)
New Lows: 30 (+13)

DJ30

Stats: -136.99 points (-1.05%) to close at 12849.59
Volume DJ30: 141M shares Friday versus 119M shares Thursday.

MONDAY

There is a heavy economical calendar starting on Monday with Retail Sales. Seeing how the afternoon earnings are negative yet again for consumers, how will they be able to maintain their consumption? They were down for three to four months in a row (inflation adjusted), bounced to flat, and now are down back to -0.4 after Friday's report. We are losing buying power as we go forward. That is not great for retail sales, but March could still have been positive. We had an early Easter, and they were saying they were getting good sales. When you couple that with the warm weather, we could have a nice report. We saw that in the Same Store Sales.

Empire Manufacturing will be important. It is out before the market. Then we have the usual housing news out on Monday as well as on Tuesday. There is Production and Capacity on Tuesday. Then on Wednesday we have basically nothing before Thursday's Jobless Claims, the Philly Fed, and Existing Home Sales that day as well.

There are some important reports, no doubt. The market needs some good news to keep going. Why? It looks top heavy to us right now. There are many reasons: The rounded patterns, the falling MACD, the day-to-day volatility of the prices, as well as the internals. And there are some key stocks in the market that are still heavy. We are not necessarily seeing crashes lower, but we are having trouble holding on to gains. Perhaps earnings can be the silver bullet that pushing the indices back to the upside once more before they fall. After all, we were looking for a little more bounce than the two days that we get Wednesday and Thursday. It is a bit disappointing that we are not getting a further setup. Then again, things typically are not perfect setups in the market.

We can expect some more volatility right now, bouncing back and forth as the market tries to determine where it wants to head. Again, my gut tells me it will head lower now with these setups. As noted, we picked up some downside plays on Friday from the DIA, for instance. We are looking to play to the downside. If things start off rocky next week, we will not hang around much longer with the upside. We have expiration coming on Friday. We have to keep that in mind. We have earnings coming out every day. They will pick up speed. We have to keep that in mind as well. There are many pitfalls and possible rescues out there for the market. Right now, I am not sure if the market will take them positively. But it would be a change of character if it started taking things on the negative side.

Again, the market has not broken necessarily. We have some indices in serious trouble (like the DJ30), but the overall leader has been NASDAQ, and it has not broken its 50 day EMA. Perhaps we get salvation yet again with bids coming back to the market. We can handle that, no problem. We just do not expect it. Then again, the market is in a state of change right now. It looks like it wants to transition to the downside. Even in those situations, you will get sharp upside moves as we saw on Wednesday and Thursday. Some good news will come out, the market will be a bit too oversold, and it will need to bounce. At these times before a new trend is established or the old trend reestablishes itself, then you need to watch out for the change. But we are getting a bunch of volatility right now, and that can lead to the ultimate change. It has not done it yet.

Again, people keep coming back and buying this market because they think things are getting better. If that is what they want to think, so be it. Whatever the market does, the market does. We are hedging some of our bets right now because the indices do not look that great. We have some leading stocks that have been peeling back, and money has been shifting a little more defensively. And then we have that doggone increased volatility from day to day.

We will see more next week. We will see if it does fall. We have a bunch of good upside positions in good shape. As long as they hold, the upside has a very good possibility. But if they start to crack again, we will have to take care of those positions and expand the downside as we have been doing. Have a great weekend, and I will see you on Monday.

Support and Resistance

NASDAQ: Closed at 3011.33
Resistance:
3042 from 5/2000 low
3026 from 10/2000 low
3134 is the March 2012 post-bear market peak
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
3000 is the February 2012 post-bear market high
The 50 day EMA at 2985
2910 is the recent 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
2862 is the 2007 peak
2841 is the February 2011 peak
2816 is the early April 2011 peak.
2754 is the October 2011 high
The 200 day SMA at 2719
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
2686 is the January 2011 closing low
2676 is the January 2010 low and the December 2011 peak
2645-2650ish from December 2010 consolidation
2643 is the September 2011 high
2612 is the late August 2011 peak
2603 is the March 2011 intraday low (post-Japan low)
2599 is the June 2011 low and NASDAQ
2593 is the November intraday high
2580 is the November 2010 closing high
2555 is the mid-August 2011 peak
2535 is the November island reversal gap point
2441 is the November 2011 low

S&P 500: Closed at 1370.26

Resistance:
1378 is the February 2012 peak
1422.38 is the Post-bear market high (March 2012)
1425 from May 2008 closing highs
1433 from August 2007 closing lows
1440 from November 2007 closing lows

Support:
1371 is the May 2011 peak, the post-bear market high
The 50 day EMA at 1369.51
1357 is the July 2011 peak
1344 is the February 2011 peak
1340 is the early April 2011 peak
1332 is the early March 2011 peak
1318.51 is the May 2011 low
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
The 200 day SMA at 1272
1267 is the December 2011 peak
1258 is June 2011 intraday low
1255 is the late December 2010 consolidation range
1249 is the March 2011 low (post-Japan)
1235 is the mid-December 2010 consolidation low
1231 is the late August 2011 peak
1227 is the November 2010 peak
1220 is the April 2010 peak
1209 is the mid-August 2011 high
1196 is the November 2010 consolidation peak
1178-1180 is the October 2010/November 2010 consolidation low
1158 is the November 2011 low
1131 - 1127 from August 2010 base peak.
1119 is the early August closing low
1109 is the mid-September 2010 gap up point
1101 is the August 2011 low
1099 from the mid-July interim peak
1075 is the October 2011 intraday low

Dow: Closed at 12,849.59
Resistance:
12,876 is the May high
The 50 day EMA at 12,925
13,056 is the February 2012 high
13,058 from the May 2008 peak on that bounce in the selling
13,668 from 12-2007 peak
13,692 from 6-2007 peak
14,022 from 7-07 peak

Support:
12,754 is the July intraday peak
12,391 is the February 2011 peak
12,284 is the October 2011 peak
12,258 is the December 2011 peak
The 200 day SMA at 12,131
12,110 from the March 2007 closing low
12,094 is the April 2011 low
The June low at 11,897 (closing)
11,734 from 11-98 peak
11,717 is the late August 2011 peak
The August low at 11,702
11,555 is the March low
11,452 is the November 2010 peak
11,178 from November 2010
10,978 is the bottom of the November 2010 consolidation
10,750 from September 2010
10,720 is the August closing low
10,705-710 from January 2010 peak
10,694-700 from August 2010 peak

Economic Calendar

April 10 - Tuesday
- Wholesale Inventories, February (10:00): 0.9% actual versus 0.5% expected, 0.6% prior (revised from 0.4%)

April 11 - Wednesday
- MBA Mortgage Index, 04/07 (7:00): -2.4% actual versus 4.8% prior
- Export Prices ex-ag., March (8:30): 0.5% actual versus 0.5% prior
- Import Prices ex-oil, March (8:30): 0.5% actual versus 0.0% prior (revised from -0.1%)
- Crude Inventories, 04/07 (10:30): 2.791M actual versus 9.009M prior
- Treasury Budget, March (14:00): -$198.2B actual versus -$193B expected, -$188.2B prior

April 12 - Thursday
- Initial Claims, 04/07 (8:30): 380K actual versus 355K expected, 367K prior (revised from 357K)
- Continuing Claims, 03/31 (8:30): 3251K actual versus 3350K expected, 3349K prior (revised from 3338K)
- PPI, March (8:30): 0.0% actual versus 0.3% expected, 0.4% prior
- Core PPI, March (8:30): 0.3% actual versus 0.2% expected, 0.2% prior
- Trade Balance, February (8:30): -$46.0B actual versus -$53.0B expected, -$52.5B prior (revised from -$52.6B)

April 13 - Friday
- CPI, March (8:30): 0.3% actual versus 0.3% expected, 0.4% prior
- Core CPI, March (8:30): 0.2% actual versus 0.2% expected, 0.1% prior
- Michigan Sentiment, April Preliminary (9:55): 75.7 actual versus 76.1 expected, 76.2 prior

April 16 - Monday
- Retail Sales, March (8:30): 0.3% expected, 1.1% prior
- Retail Sales ex-auto, March (8:30): 0.6% expected, 0.9% prior
- Empire Manufacturing, April (8:30): 17.5 expected, 20.2 prior
- Net Long-Term TIC Fl, February (9:00): $101.0B prior
- Business Inventories, February (10:00): 0.5% expected, 0.7% prior
- NAHB Housing Market Survey, April (10:00): 29 expected, 28 prior

April 17 - Tuesday
- Housing Starts, March (8:30): 700K expected, 698K prior
- Building Permits, March (8:30): 710K expected, 717K prior
- Industrial Production, March (9:15): 0.2% expected, 0.0% prior
- Capacity Utilization, March (9:15): 78.5% expected, 78.4% prior (revised from 78.7%)

April 18 - Wednesday
- MBA Mortgage Index, 04/14 (7:00): -2.4% prior
- Crude Inventories, 04/14 (10:30): 2.791M prior

April 19 - Thursday
- Initial Claims, 04/14 (8:30): 375K expected, 380K prior
- Continuing Claims, 04/07 (8:30): 3275K expected, 3251K prior
- Existing Home Sales, March (10:00): 4.62M expected, 4.59M prior
- Philadelphia Fed, April (10:00): 10.3 expected, 12.5 prior
- Leading Indicators, March (10:00): 0.2% expected, 0.7% prior

[ReturntoSender]

From Briefing.com: Weekly Recap - Week ending 01-Jun-12Dow -274.88 at 12118.57, Nasdaq -79.86 at 2747.48, S&P -32.29 at 1278.04

Domestic markets were closed on Monday in observance of Memorial Day so trade this week started on Tuesday, when stocks advanced more than 1% amid speculation that plans for new spending in China were a sign of further stimulus from the country. Comments that political leaders in Greece want to remain with the euro also stirred a positive response.

Data on Tuesday came with little consequence. The Consumer Confidence Index for May fell to 64.9 from a downwardly revised 68.7 in the prior reading. The University of Michigan had posted the strongest Consumer Sentiment Survey in four years just one week before.

Sentiment among market participants soured by Wednesday, when the major equity averages fell in excess of 1% in response to renewed worries about the health and fate of the eurozone. Rumors regarding European bank recapitalizations were shrugged off.

News of a 5.5% drop in pending home sales during April failed to improve the mood since a 0.6% increase had been broadly expected.

The flow of data picked up on Thursday, but the underwhelming nature of the numbers forced the S&P 500 down to the 1300 line before buyers stepped in to provide support.

First quarter GDP was revised downward to reflect growth of 1.9%. Many economists had thought that the 2.2% increase featured in the preliminary reading would be revised to reflect growth of 2.0%.

Market participants were given a preview of the jobs picture via the latest ADP Employment Change. It showed that private payrolls increased during May by 133,000, which is less than the increase of 157,000 that had been expected, on average, among economists polled by Briefing.com.

The latest weekly initial jobless claims count increased to 383,000, which is more than the tally of 368,000 that many had come to expect following several straight weeks with initial claims staying near 370,000.

Trading volume on the NYSE surged to more than 1 billion shares on Thursday, which marked the final day of May. During the course of the month the S&P 500 sank more than 6% for its worst monthly performance since September.

Participants were compelled to sell on Friday by another round of disappointing data.

As if to compound concerns about the eurozone’s fiscal, financial, and economic conditions, a batch of banal PMI numbers were released by Europe after a lackluster PMI reading from China. They were followed by one of the worst US payrolls reports of the past year.

Official numbers indicate that nonfarm payrolls increased in May by 69,000, which is far less than the increase of 150,000 that had been expected, on average, among economists polled by Briefing.com. Nonfarm private payrolls increased by a mere 82,000, which is also hardly half of what had been broadly forecasted – the Briefing.com consensus had called for an increase of 168,000.

What’s more, the headline unemployment rate ticked up to 8.2%. Most economists expected it to remain at 8.1%.

Manufacturing data also proved uninspiring as the ISM Index declined during May to 53.5 from 54.8 in the prior month, missing the reading of 54.0 that had been expected for the latest reading.

Generally on par with what had been projected, personal spending and income increased in April by 0.3% and 0.2%, respectively, while core personal consumption expenditures increased by 0.1%. Construction spending increased during April by 0.3%, which is less than the 0.5% increase that many had come to expect.

While the data likely increased the probability of further Fed action, including another round of quantitative easing, it failed to prevent a steep sell-off. The efforts of sellers resulted in the worst one-day percentage drop for the S&P 500 since December, and left it to trade at a multi-month low beneath its 200-day moving average. The broad market measure hasn’t closed below that key technical line since the very end of 2011.

Gold garnered strong buying interest as traders turned defensive. The yellow metal’s price pushed up from an early morning loss to a session high of $1624 per ounce before it closed with a 3.6% gain at $1621.40 per ounce. Prior to today’s surge, gold was mired near the multi-month lows that had followed a few weeks of selling.

In contrast, oil prices extended their downtrend by dropping 3.9% to close pit trade at $83.17 per barrel. Along the way they logged their lowest level in more than seven months at $82.27 per barrel.

Oil’s slide played a part in Energy’s many poor performances this week. The sector fell more than 2% on Friday, and roughly 4.5% for the week.

Defensive in nature, Telecom and Utilities had the best week in that they were the only two major sectors that limited weekly losses to less than 1%.

Treasuries, a favorite safe haven among investors, traded higher once again. In fact, the yield on the benchmark 10-year Note dropped to a record low near 1.44% amid aggressive selling in the early going. It gradually eased up from that mark as trade progressed.

The dollar forfeited and early gain to end the session with a loss of about 0.2% against a basket of major foreign currencies, namely the euro, which rallied to a 0.5% gain against the greenback. The euro’s bounce came after it briefly fell beneath $1.23 to set its lowest level in nearly two years.

Although the Volatility Index eventually eased back, it pushed up to a 2012 high narrowly above 26 amid the stock market’s initial flush.

..Nasdaq 100 -2.6%. ..S&P Midcap 400 -3.2%. ..Russell 2000 -3.1%.
Index Started Week Ended Week Change % Change YTD %
DJIA 12454.83 12118.57 -336.26 -2.7 -0.8
Nasdaq 2837.53 2747.48 -90.05 -3.2 5.5
S&P 500 1317.82 1278.04 -39.78 -3.0 1.6
Russell 2000 766.41 737.42 -28.99 -3.8 -0.5


4:09PM Kulicke & Soffa repays remaining subordinated convertible notes; company now debt free (KLIC) 9.94 -0.58 : Co announced it has repaid the entire remaining balance of its 0.875% Convertible Subordinated Notes, at the June 1, 2012 maturity date. The Notes had a remaining outstanding principal balance of approximately $110.0 mln at par plus interest. Kulicke & Soffa expects annual expenses relating to these Notes to be reduced by approximately $8.0 mln. Bruno Guilmart, Chief Executive Officer, stated "Eliminating the remaining debt obligation is the latest signal to underscore the strength of our balance sheet and business model. With a remaining net cash position of $316 million, we will continue to strategically invest in product development and efficiency improvements to expand our market leadership and further strengthen our competitive advantage, while also pursuing areas that can reduce the cyclicality in our business."

2:43PM EXFO (Halted, will resume trading at 15:10) lowers Q3 guidance (EXFO) 6.16 +0.05 : Co lowers Q3 guidance, sees GAAP EPS below prior guidance of $0.01-0.05 vs $0.04 Capital IQ Consensus Estimate; lowers rev to $60 mln from $68-73 mln vs $70.15 mln Capital IQ Consensus. "Challenging macro-economic conditions, coupled with the tightening of capital spending among network operators during the first half of calendar 2012, have rendered EXFO's end-markets very difficult for the short term. Europe turned out to be more impacted than expected, the anticipated pick-up of spending in the Americas did not materialize - especially with Tier-I operators - while spending in China has been sluggish. We believe this is not a co-specific issue, but rather a short-term industry spending pattern, since the requirement for wireline and wireless operators to invest in their networks in order to attract growing data revenue remains intact. We see a growing funnel of serious opportunities, but unfortunately they are being delayed and are taking longer to close."

8:50AM Microsoft announced for Q4 of FY12, MSFT will defer an estimated $450 mln to $550 mln of revenue in association with the Windows Upgrade Offer (MSFT) 29.20 : Co announced the availability of the Windows Upgrade Offer. In association with the Windows Upgrade Offer, Microsoft will defer revenue from eligible sales under the program to the earlier of the fulfillment date or the program's expiration date. For Q4 of FY12, MSFT will defer an estimated $450 mln to $550 mln of revenue. The deferral only impacts the timing of revenue recognition and will not impact cash flows from operations.

8:37AM QuickLogic prices public offering of units consisting of common stock and warrants at $2.50 per unit (QUIK) 2.98 : Co announced the pricing of its underwritten public offering of an aggregate of 4,500,000 newly issued shares of common stock, $0.001 par value, together with warrants to purchase up to 2,025,000 shares of common stock. The common stock and warrants will be sold in units, with each consisting of (i) one share of common stock and (ii) a warrant to purchase 0.45 of a share of common stock, at a price of $2.50 per Unit. The warrants are exercisable any time after the date of issuance until the 5-year anniversary of the date of issuance, and will be exercisable at a price of $2.98 per share. The Company expects to receive gross proceeds of $11.25 mln.

8:27AM Lam Research and Novellus (NVLS) merger obtains final regulatory approval (LRCX) 37.30 : Cos announced that they have now secured all of the approvals required to proceed with the planned merger of the two companies. The transaction is expected to close after market trading hours on June 4, 2012, subject to customary closing conditions.

OmniVision (OVTI $14.20 -1.99) reported fourth quarter earnings of $0.20 per share, excluding non-recurring items, $0.02 worse than the Capital IQ Consensus of $0.22, while revenues fell 15.4% year/year to $218.5 million versus the $205.39 million consensus. The company issued mixed guidance for the first quarter EPS of $0.16-0.27, excluding non-recurring items, versus the $0.27 consensus and revenues of $235-255 million versus the $219.20 million consensus. "For the second consecutive quarter, we are pleased to report revenues that exceeded the high-end of our guidance as demand for our image sensors continued to strengthen..As we enter fiscal 2013, our focus on developing new technology remains a key element of our growth strategy, and we are as committed as ever to regaining our business momentum." GAAP gross margin for the fourth quarter of fiscal 2012 was 22.5%, as compared to 24.2% for the third quarter of fiscal 2012 and 30.7% for the fourth quarter of fiscal 2011. The sequential decrease in fourth quarter gross margin reflected the unfavorable impact of a decrease in revenues recorded on the sale of previously written-down inventory combined with an increase in inventory valuation allowances.

10:26 am Technology sector trading lower on broad market declines

The tech sector is trading lower today, along with broad losses in the overall market. Semiconductors are also showing relative weakness with the Philly Semi Index trading 2.0% lower. AMD (-5.2%) is a notable laggard in that chip index, while LCRX (+0.0%) is showing relative strength. Among other major indices, the SPY is trading 1.5% lower today, while the QQQ and the NASDAQ are trading 1.6% lower on the session. Among tech bellwethers, FB (-3.8%) is showing notable weakness. In earnings last night, OTVI (-11.6%) posted a Q4 miss, while Apple (AAPL)

In news, QUIK (-24.8) priced a public offering of units consisting of common stock and warrants at $2.50 per unit and also reported a disappointing quarter.

In Broker Research, SYNC (-12.5%) was downgraded to Hold at Stifel Nicolaus. ZNGA (-3.2%) was upgraded to Neutral from Underperform at Sterne Agee. TSM (-3.0%) was downgraded to Underperform from Hold at Jefferies. HPQ (-4.7%) was downgraded to Hold from Buy at Jefferies There are no notable names in tech scheduled to report quarterly results today after the close.

09:50 am Omnivision shares plunge over 11% following miss on earnings

OmniVision (OVTI $14.19 -1.97) reported fourth quarter earnings of $0.20 per share, excluding non-recurring items, $0.02 worse than the Capital IQ Consensus of $0.22, while revenues fell 15.4% year/year to $218.5 million versus the $205.39 million consensus. The company issued mixed guidance for the first quarter EPS of $0.16-0.27, excluding non-recurring items, versus the $0.27 consensus and revenues of $235-255 million versus the $219.20 million consensus. "For the second consecutive quarter, we are pleased to report revenues that exceeded the high-end of our guidance as demand for our image sensors continued to strengthen..

As we enter fiscal 2013, our focus on developing new technology remains a key element of our growth strategy, and we are as committed as ever to regaining our business momentum." GAAP gross margin for the fourth quarter of fiscal 2012 was 22.5%, as compared to 24.2% for the third quarter of fiscal 2012 and 30.7% for the fourth quarter of fiscal 2011. The sequential decrease in fourth quarter gross margin reflected the unfavorable impact of a decrease in revenues recorded on the sale of previously written-down inventory combined with an increase in inventory valuation allowances.

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From Briefing.com: Weekly Recap - Week ending 06-Jul-12Although stocks closed lower by 0.9% today, they finished the week less only about 0.6% below last Friday's close. After trading substantially lower on the disappointing employment data this morning, and drifting lower throughout the day, stocks managed so show some improvement in the final hour.

The biggest factor in today's trade was the disappointing employment data. June nonfarm payrolls came in at 80K vs. the 100K Briefing.com consensus. The unemployment rate was reported at 8.2% vs. the 8.2% Briefing.com consensus. Futures saw an immediate downside reaction to the weaker than expected data, and recovery attempts since then have been limited.

In U.S. corporate news, Seagate Technology (STX 24.95, -0.12) finished lower by 0.5% after it issued disappointing guidance for its fiscal fourth quarter. Peer Western Digital (WDC 31.02, +0.34) closed higher by more than 1% after a late-day rebound... Informatica (INFA 31.39, -11.98) is down by 28% after it issued downside second quarter guidance, citing a changing macroeconomic environment in Europe... In other news, Deutsche Bank (DB 33.65, -1.79) finished lower by 5% following reports that a German financial regulator is looking into the company with regard to Libor.

Technology was the worst performing sector, down 1.5% vs. the broad market decline of 0.9%, with the Informatica and Seagate warnings weighing. Materials, Industrials and Energy also underperformed. Defensive sectors such as Utilities and Staples outperformed, with losses of 0.1-0.2% on the day.

Overnight, Chinese stocks rose 1% on the central bank easing there. However, outside of China, other Asian markets had a lackluster response. There was weakness in Japanese stocks, with the Nikkei falling 0.7%, while Hong Kong saw a flat close in its equity market. Comments from Japan's Finance Minister, who suggested the government could run out of money as soon as October if a bond bill is not passed, may have also weighed on Japanese stocks.

European markets moved lower on the U.S. jobs data too, finishing with sizable losses. Germany's DAX closed down 1.9% while the UK's FTSE is flat. Spanish bond yields rose back toward the 7.0% level. Spain's 10-year yield is +24 basis points to 6.93% this morning, while Spain's IBEX is the worst performing European index today, down 1.5% vs. a 0.3% decline in the STOXX 600.

Looking back at the rest of the week, we'd note that it started with the return of ‘Merger Monday' with 4 major deals announced. Bristol-Myers Squibb (BMY 36.00, +0.05) announced it would acquire Amylin (AMLN 30.07, +2.50) for $31.00/share in cash, representing an aggregate purchase price of ~$5.3 bln and 10% premium to Friday's closing price for AMLN. Dell (DELL 12.56, -0.07) announced it would acquire Quest Software (QSFT 27.86, -0.02) for $28.00/share confirming months of speculation, representing a slight premium to Friday's closing price. Ingram Micro (IM 17.01, -0.14) announced it will acquire Brightpoint Inc. (CELL 8.89, +3.48) for $9.00/share representing a 66% premium to Friday's closing price for CELL. Finally, Germany's Linde Group will acquire Lincare Holdings (LNCR 41.36, +7.34) for $41.50/share in cash, which was a 22% premium to Friday's close. The S&P inched out at 0.3% gain on Monday.

Tuesday there was an early close in the markets due to the Independence Day holiday on Wednesday. The S&P managed to rise 0.6% following better than expected report on factory orders in the US. The energy sector was the biggest outperformer, gaining 2.4% alongside strength in crude oil, which surged 4.6% following more reports stating that delivery of mlns of barrels of crude oil from Iran to China may be at risk following freight dispute.

On Thursday, the S&P fell 0.5% despite three major central banks taking action to help economic growth. China cut interest rates for the second time in a month as its benchmark rate dropped 25 bps to 3.0%. The ECB cut its benchmark rate by 25 bps to 0.75%, but fell short of announcing any further LTRO programs. The BoE increased it's asset purchase program by GBP 50 bln in a move that had been telegraphed by members for the past two weeks. Finally, Retailers reported June Same Store Sales. Overall June results came in below expectations with fourteen retailers missing estimates—the most since May of last year (six companies beat).

Next week, the focus shifts to earnings season, with Alcoa (AA 8.66, -0.25) reporting results Monday afternoon. Alcoa is down 3% this morning, after Nomura cut its Q2 earnings estimates ahead of Monday's report, citing a weaker aluminum market.

 
 Index     Started Week  Ended Week  Change  % Change  YTD % 
 DJIA	    12880.09	 12772.47  -107.62    -0.8    4.5 
 Nasdaq	     2935.05	  2937.33     2.28     0.1   12.8 
 S&P 500	     1362.16	  1354.68    -7.48    -0.5    7.7 
 Russell 2000  798.49	   807.14     8.65     1.1    8.9

12:35PM Semiconductor Hldrs ETF continues to display relative weakness (SMH) 31.25 -0.98 : The sector has been drag throughout the day with it recently setting a new session low of 31.25 leaving it back near the mid-point of its June recovery rally at 31.20. The next level of interest below if follow through develops is at the bottom of last week's bull gap at 31.08 -- KLAC -5.8%, ASML -4%, INTC -2.1%, TSM -1.7%, BRCM -3.2%, XLNX -3.2%, ADI -3.1%, ARMH -2.9%, ALTR -3.4%, ASML -4.1%.

PoLight, together with Semtech (SMTC) announced the availability of the first driver dedicated to the TLens platform.

Seagate Tech (STX $24.25 -0.84) announced selected preliminary financial results for its fourth fiscal quarter of 2012, which ended on June 29, 2012. Seagate expects to report record revenue of approximately $4.5 billion versus the $4.87 billion Capital IQ consensus) and non-GAAP gross margin of 33.6%. These preliminary results compare to the Company's previous expectations for revenue of at least $5 billion and non-GAAP gross margin of at least 34.5%. Seagate expects to report record unit shipments for the June quarter of approximately 66 million, reflecting approximately 45 exabytes of storage capacity and maintaining approximately 42% market share. During the quarter the company paid $1.2 billion to redeem over 45 million ordinary shares and exited June with 396 million basic shares outstanding. Cash, cash equivalents, restricted cash and short term investments totaled $2.2 billion at the end of the June quarter. "Seagate expects to report another record quarter of revenue in the June quarter, however we did not meet our expected revenue and margin plan," said Steve Luczo, Seagate chairman and chief executive officer. "The June quarter's shortfall was due primarily to two factors. First, we did not achieve our planned market share growth as we reduced shipments in response to the industry's faster than expected recovery from their supply chain disruption. Second, we experienced an isolated supplier quality issue that affected one of our enterprise product lines. This product issue impacted enterprise product unit shipments by approximately 1.5 million units and drove our non-GAAP gross margin below our targeted plan. While this disruption to our business was disappointing, we acted quickly and conservatively by suspending shipments of the affected products. We have resolved the issue and have resumed fulfilling our supply commitments to customers." Luczo continued, "Based on the macro-economic concerns indicated by a broad base of customers, we are approaching the September quarter conservatively and aligning our business for a relatively flat addressable market and modest improvements in our product mix. We are adjusting our production and inventory planning accordingly, and we expect average selling prices and margins to remain relatively stable in the September quarter. We also continue to expect to exit the calendar year with non-GAAP gross margins exceeding 30%."

09:19 am Seagate Tech downgraded to Neutral at Robert W. Baird: . Robert W. Baird downgrades STX to Neutral from Outperform and lowered their tgt to $27 from $33 following co's revision to expected FQ4 results. They continue to view co as well-positioned to benefit from HDD industry consolidation and valuation argues for downside support. But with a much more uncertain macroeconomic environment, they prefer to step to the sidelines and view risk/reward as balanced at current levels.

10:09 am Tech Sector trading lower as many tech company's issue downside guidance

The tech sector is trading lower today, trailing losses in the broader market. Semiconductors are also showing relative weakness with the Philly Semi Index trading 1.9% higher. LRCX (-4.2%) is a notable laggard in that chip index. Among other major indices, the SPY is trading 1.2% lower today, while the QQQ and the NASDAQ are trading 1.1% lower on the session. Among tech bellwethers, only FB (+0.7%) is showing strength, while IBM (-1.9%), ORCL (-1.8%), and INTC (-1.8%) are all under notable pressure.

In earnings last night, XRTX (+16.3%) posted a mixed Q2 and guided inline with consensus. Elsewhere, there were several warnings in the tech sector. INFA (-30.2%) issued Q2 guidance that came in well below Street ests. STX (-2.6%) and APKT (-13.6%) also cut guidance. In news, reports suggest that AMZN (-0.1%) is working on an Android-based smartphone. There were no notable analyst upgrades this morning. While in downgrades, INFA (-30.2%) was downgraded at BofA/Merrill, Jefferies, and Deutsche Bank, STX (-2.6%) was downgraded to Neutral at Robert W. Baird and ADP (-1.5%) was downgraded to Outperform at Raymond James.

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From Briefing.com: Weekly Recap - Week ending 19-Oct-12

Dow -205.43 at 13343.51, Nasdaq -67.25 at 3005.62, S&P -24.15 at 1433.19

http://finance.yahoo.com/marketupdate/update

Today's session was dominated by the sellers as disappointing third quarter earnings continued to roll in. Equities opened lower, and spent the majority of the session sliding to fresh lows. The sell-off came to an end once the S&P 500 hit the 1,430 level 90 minutes ahead of the close. The index then staged a minor bounce during the final hour before closing with a loss of 1.7%.

The technology sector was the weakest performer, Advanced Micro Devices (AMD 2.18, -0.44) reported a loss of $0.20, which was $0.04 worse than the Capital IQ consensus estimate. In addition, the company's revenue of $1.27 billion was in-line with Capital IQ analyst expectations. Also of note, the second largest manufacturer of microprocessors issued downside guidance for the fourth quarter, and announced restructuring plans in order to improve profitability. AMD shares settled lower by 16.8%.

Marvell Technology (MRVL 7.56, -1.26) slid 14.3% after lowering its third quarter guidance. The company now expects revenue to fall between $765 million and $785 million. This is down from the previous range of $800 million to $850 million, and below the Capital IQ consensus estimate of $815.58 million. The management commented on the lowered expectations by saying that "the continued slowdown in the global economy during the third quarter is resulting in a weaker PC market than previously anticipated." The guidance cut was met with a slew of downgrades as Credit Suisse, Credit Agricole, JP Morgan, Lazard, Jefferies, Deutsche Bank, and FBR Capital all lowered their rating of the semiconductor manufacturer.

On the upside, SanDisk (SNDK 44.02, +1.16) advanced 2.7% after beating on earnings and revenues. The flash memory maker reported earnings of $0.48, which was $0.14 ahead of the Capital IQ consensus estimate. Meanwhile, the company's revenue of $1.27 billion was ahead of the $1.22 billion expected by the Capital IQ consensus. Additionally, Piper Jaffray upgraded the stock to ‘overweight' from ‘neutral' following the earnings release.

Looking at industrials, General Electric (GE 22.03, -0.78) slipped 3.4% after reporting earnings and revenues below Capital IQ consensus. However, the management noted that the company is performing well, and is on track to deliver double-digit earnings growth in 2012.

Caterpillar (CAT 83.86, -2.76) slid 3.2% after reporting a 6.0% increase in retail sales of machines during September. The rate appears to be slowing as sales growth during the previous two months was reported at 13.0% in August and 14.0% in July. Note that Caterpillar will report its third quarter results before Monday's open.

On the upside, freight carrier Forward Air (FWRD 32.54, +1.93) gained 6.3% after beating Capital IQ earnings estimates by $0.01, and reporting in-line revenue at $143.5 million. In addition, the company issued in-line guidance for the fourth quarter as it expects its earnings to fall between $0.48 and $0.52. Following the report, Wolfe Trahan upgraded the stock to ‘outperform' from ‘peer perform.'

Staffing firm ManpowerGroup (MAN 39.53, +3.55) surged 9.9% after beating top and bottom line expectations. In addition, the company raised its fourth quarter guidance above Capital IQ consensus.

Quick service restaurants saw weakness following disappointing earnings from McDonald's (MCD 88.72, -4.14) and Chipotle (CMG 242.97, -42.96).

McDonald's dropped 4.5% after its earnings of $1.43 fell short of the Capital IQ consensus estimate of $1.47. Meanwhile, the company's revenues were reported at $7.15 billion, which was in-line with the Capital IQ consensus.

Meanwhile, Chipotle plunged 15.0% after missing on both earnings and revenues. The management commented on the upcoming quarter by saying they do not expect food inflation to be an issue. Following the earnings report, Wedbush downgraded the stock to ‘neutral' from ‘outperform' with a $270 price target. Peers Buffalo Wild Wings (BWLD 83.92, -2.21), Panera Bread (PNRA 161.85, -7.69), and Starbucks (SBUX 45.68, -1.72) all registered losses between 2.6% and 4.5%.

The Dow Jones Transportation Average shed 1.4%, and outperformed the remaining industrials. Kansas City Southern (KSU 78.43, +1.05) was the lone advancer among the twenty transportation stocks. The rail operator settled higher by 1.4% after reporting earnings of $0.82, which was $0.03 below Capital IQ consensus estimates. Meanwhile, the company's third quarter revenue of $577.4 million was in-line with the Capital IQ consensus. Peers CSX (CSX 21.10, -0.26), Norfolk Southern (NSC 65.64, -1.06), and Union Pacific (UNP 123.77, -1.57) all lost between 1.2% and 1.6%.

Overseas Shipholding Group (OSG 3.25, -0.29) was the weakest transportation component. The oil tanker operator slid 8.2% after trading near its all-time low of $3.13.

Existing home sales for September hit an annualized rate of 4.75 million units, which is stronger than the rate of 4.70 million units that had been generally expected by the Briefing.com consensus. The pace for September is down from the prior month rate of 4.83 million units.

Third Quarter Earnings Season Enters Full Force

The first busy week of the Q3 earnings season has concluded, featuring many bellwethers in the financial, technology and industrial sectors. As expected, earnings are down year over year. Meanwhile, last quarter's trend of most companies beating earnings expectations and missing sales estimates has held up.

Banks once again came in with relatively solid results, due in part to the Fed's accommodations. Financials have reported modest sequential improvements amid meager economic growth.

However, disappointing reports from high profile, large cap names like Intel (INTC 21.26, -0.40), IBM (IBM 193.36, -1.60), Google (GOOG 681.79, -13.21), Microsoft (MSFT 28.64, -0.85), General Electric (GE 22.03, -0.78), and McDonald's (MCD 88.72, -4.14) have since stolen the headlines and added to bearish sentiment.

So far, earnings from the 117 companies in the S&P 500 that have reported third quarter results are down approximately 4.0% year-over-year. Roughly 63.0% have beat earnings expectations while only 38.0% of companies have beat sales estimates. At the same juncture last quarter, about 68.0% of companies had beat earnings expectations while 42.0% beat sales expectations.

Looking to next week, about 700 companies covered by Briefing.com are expected to report Q3 results, including more than 150 companies in the S&P 500. Apple (AAPL 609.84, -22.80) will report on Thursday afternoon.

Weekly Recap: Stocks Rise Ahead of Friday's Sell-off

On Monday, equities got off to a slow start as the major averages spent the first 90 minutes near their respective unchanged levels. The day's economic data was mixed, and did little to move the markets. After early indecision, the three indices rose to their session highs, and maintained those levels into the afternoon. The S&P 500 saw brief afternoon weakness before late-day buying lifted the index to a gain of 0.8%. Financial stocks showed strength after Citigroup (C 37.16, -1.26) beat its earnings expectations by $0.07 and reported revenue of $19.4 billion.

Tuesday's session opened on a higher note after reports indicated Spain may be willing to ask for access to precautionary credit. The reports were followed by comments out of Germany which suggested the country's officials believe additional hurdles remain in Spain's way. Separate reports indicated the old continent's other troubled sovereign, Greece, is far from reaching an agreement with the Troika on its next bailout tranche. The European news did little to curb optimism as buyers lifted the major averages to midday highs, which were maintained into the close. As a result the S&P 500 registered a gain of 1.0%. Citigroup advanced 1.6% after announcing Chief Executive Officer, Vikram Pandit, and President and Chief Operating Officer, John Havens, have resigned. The resignations were effective immediately and the company's board elected Michael Corbat as the new CEO.

Wednesday's session began on a negative note after two technology bellwethers reported disappointing earnings. However, the cautious sentiment was short-circuited when the housing starts report revealed its highest reading since 2008. The major averages reacted by staging a steady climb to their respective session highs. A brief afternoon stumble followed, but the move was promptly retraced as the S&P 500 returned to its prior level, and closed higher by 0.4%. The technology sector was the worst performing group in the S&P 500 and Intel (INTC 21.26, -0.40) slipped 2.5% despite beating its earnings and revenue expectations.

On Thursday, stocks opened modestly lower after the weekly initial claims report missed expectations by 28,000. The early weakness was erased before midday as the major averages rallied to their respective session highs. However, the slim gains were short-lived as disappointing quarterly results from Google (GOOG 681.79, -13.21) hit the wires early and weighed on the markets. The tech-heavy Nasdaq saw the biggest impact, as the index tumbled to fresh session lows before closing with a loss of 1.0%. Google fell 8.0% after its earnings were reported at $9.03, which fell $1.63 short of the Capital IQ consensus estimate. Meanwhile, revenues came in at $11.87 billion, which represents a shortfall of about $540 million when compared to the Capital IQ analyst forecast.

 
 Index     Started Week  Ended Week  Change % Change  YTD % 
 DJIA	    13328.85     13343.51   14.66     0.1    9.2 
 Nasdaq	     3044.11      3005.62  -38.49    -1.3   15.4 
 S&P 500	1428.59      1433.19    4.60     0.3   14.0 
 Russell 2000  823.09	   821.00   -2.09    -0.3   10.8

Microsoft (MSFT $29.10 -0.40) reported first quarter non-GAAP earnings of $0.65 per share, $0.02 better than the Capital IQ consensus of $0.63, while GAAP EPS of $0.53 versus the $0.56 Capital IQ consensus, while revenues fell 7.9% year/year to $16.01 billion, may not compare directly to the $16.42 billion consensus. Non-GAAP revs were $17.4 bln, including Revenue deferred for Windows Upgrade Offer, Windows 8 Pre-sales, and Office Offer. Microsoft reaffirms fiscal year 2013 operating expense guidance of $30.3 billion to $30.9 billion. These financial results reflect the deferral of $1.36 billion of revenue and $0.13 of diluted earnings per share, due to the Windows Upgrade Offer, pre-sales of Windows 8 to OEMs prior to general availability, and the Office Offer.

Riverbed Technology (RVBD $22.75 +2.09) reported third quarter earnings of $0.28 per share, excluding non-recurring items, $0.03 better than the Capital IQ consensus of $0.25, while revenues rose 15.2% year/year to $218.6 million versus the $216.74 mln consensus. Revenue grows 10% sequentially and 15% over prior year. Cash and investments grew by more than $100 million and totaled more than $670 million at September 30, 2012."

Google (GOOG $703.18 +8.10) reported third quarter earnings of $9.03 per share, excluding non-recurring items, $1.63 worse than the Capital IQ consensus of $10.66, while revenues rose 19.3% year/year to $11.33 billion versus the $11.87 bln consensus. Paid Clicks -- Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of Network members, increased ~33% YoY and increased ~6% QoQ. Cost-Per-Click -- Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased ~15% YoY and ~3% QoQ. Motorola revenues were $2.58 billion ($1.78 billion from the mobile segment and $797 million from the home segment), or 18% of consolidated revenues in the third quarter of 2012. As of September 30, 2012, cash, cash equivalents, and short-term marketable securities were $45.7 billion.

Lattice Semi (LSCC $3.50 -0.01) reported third quarter net of breakeven, in-line with the Capital IQ consensus of ($0.00), while revenues fell 13.2% year/year to $70.9 million versus the $70.84 mln consensus. The company issued downside guidance for the fourth quarter with revenues of $69.5-72.3 versus the $73.78 million consensus Estimate. Gross margin percentage is expected to be approximately 51-55%. Total operating expenses are expected to be approximately $43 million, including approximately $5.5 million in restructuring charges.

SanDisk (SNDK $46.50 +3.56) reported third quarter earnings of $0.48 per share, $0.14 better than the Capital IQ consensus of $0.34, while revenues fell 10.1% year/year to $1.27 billion versus the $1.22 billion consensus. The company also reports Q3 gross margin of 31% vs 44% last year, and Operating margin of 12.9% vs 29.4% last year. The company stated "Our retail business delivered strong results in Q3 and we believe we gained share across all major geographies worldwide on the strength of the SanDisk brand... Our results also reflect a solid recovery in our mobile embedded business and we made good progress toward expanding our SSD product roadmap. We believe we are well positioned to build on our business momentum and improved industry fundamentals to deliver strong sequential growth in the fourth quarter."

09:17 am Google down 8% yesterday
Google (GOOG $703.55 +8.55) reported third quarter earnings of $9.03 per share, excluding non-recurring items, $1.63 worse than the Capital IQ consensus of $10.66, while revenues rose 19.3% year/year to $11.33 billion versus the $11.87 bln consensus. Paid Clicks -- Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of Network members, increased ~33% YoY and increased ~6% QoQ. Cost-Per-Click -- Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased ~15% YoY and ~3% QoQ. Motorola revenues were $2.58 billion ($1.78 billion from the mobile segment and $797 million from the home segment), or 18% of consolidated revenues in the third quarter of 2012. As of September 30, 2012, cash, cash equivalents, and short-term marketable securities were $45.7 billion.

09:11 am Riverbed shares rise 10% following better than expected earnings
Riverbed Technology (RVBD $22.90 +2.21) reported third quarter earnings of $0.28 per share, excluding non-recurring items, $0.03 better than the Capital IQ consensus of $0.25, while revenues rose 15.2% year/year to $218.6 million versus the $216.74 million consensus. Revenue grows 10% sequentially and 15% over prior year. Cash and investments grew by more than $100 million and totaled more than $670 million at September 30, 2012."

09:08 am Microsoft shares fall by 2% following disappointing earnings as consumers await Windows 8
Microsoft (MSFT $29.00 -0.50) reported first quarter non-GAAP earnings of $0.65 per share, $0.02 better than the Capital IQ consensus of $0.63, while GAAP EPS of $0.53 versus the $0.56 Capital IQ consensus, while revenues fell 7.9% year/year to $16.01 billion, may not compare directly to the $16.42 billion consensus. Non-GAAP revs were $17.4 bln, including Revenue deferred for Windows Upgrade Offer, Windows 8 Pre-sales, and Office Offer. Microsoft reaffirms fiscal year 2013 operating expense guidance of $30.3 billion to $30.9 billion. These financial results reflect the deferral of $1.36 billion of revenue and $0.13 of diluted earnings per share, due to the Windows Upgrade Offer, pre-sales of Windows 8 to OEMs prior to general availability, and the Office Offer.

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From Briefing.com: 4:20 pm : Equities showed indecision in the early going as trade hovered around the flat line for the first 90 minutes before the S&P 500 slid to a session low near 1350. The level provided some support for the benchmark index which managed to cross into positive territory before sellers retook control and drove it back down to session lows. However, the average received a considerable bid in the final minutes of the session and ended with a loss of 0.2%.

Financial stocks felt the brunt of yesterday's sell-off. As the nation's leaders discuss ways to avoid falling off the fiscal cliff, bank stocks will be especially sensitive to hints of a possible agreement. Today, major financials saw gains. Bank of America (BAC 9.09, +0.10), Citigroup (C 35.21, +0.19), and Morgan Stanley (MS 16.26, +0.17) advanced between 0.5% and 1.1%.

Looking at technology bellwethers, Apple (AAPL 525.62, -11.26) slid 2.1% to extend its recent slide. Since its September highs, the stock has lost over 25% in value as it searches for its next level of support. Meanwhile, Intel (INTC 20.03, +0.07) advanced 0.4% to snap its nine-day losing streak. The stock has lost nearly 10% since the start of November.

Networking companies continued seeing strong earnings. Yesterday, Cisco Systems (CSCO 17.94, +0.28) rallied after its quarterly report. Today, NetApp (NTAP 30.20, +3.07) surged 11.4% after beating on the bottom line. The networking company exceeded earnings expectations by $0.03 and reported in-line revenue. Following the report, Raymond James upgraded shares of NetApp to ‘outperform' from ‘market perform.'

In other earnings news, Wal-Mart (WMT 68.72, -2.59) reported third quarter earnings of $1.08 on $113.93 billion in revenue. The retail giant's bottom line beat the Capital IQ consensus estimate by $0.01, while the revenue missed expectations. The company's guidance was mostly in-line as it expects fourth quarter earnings between $1.53 and $1.58. Wal-Mart lost 3.6% in response to this morning's results while peer, Target (TGT 62.44, +1.06), gained 1.7% after its in-line quarter.

Stocks in the materials space traded largely in-line with the broader market. However, weakness among steel producers weighed on the sector. AK Steel (AKS 3.63, -0.39) fell 9.7% after the company announced the pricing of $500 million in senior notes set to mature in 2018 and 2019. In addition, AK Steel priced 22 million shares of common stock at a public offering price of $4.00 per share. Looking at other steelmakers, Steel Dynamics (STLD 12.29, -0.42) and Reliance Steel (RS 53.71, -0.79) settled lower by 3.3% and 1.5%, respectively.

The Dow Jones Transportation Average traded in-line with the remaining industrials. The bellwether complex shed 0.2% as 12 out of the 20 transportation stocks saw losses. This morning, United Continental (UAL 19.51, -0.47) experienced technical difficulties which resulted in some flight delays. United lost 2.4%, while rivals Alaska Air (ALK 40.88, +0.36), JetBlue Airways (JBLU 5.03, +0.05), and Southwest Airlines (LUV 8.84, +0.08) all gained between 0.9% and 1.1%. Airline stocks displayed relative strength after yesterday's sell-off weighed on the group and caused Delta and JetBlue to lose near 6.0% each.

A number of economic data points were reported today. Most notably, the Philadelphia Fed Survey slipped to -10.7 for November. This follows October's reading of -1.9 while economists polled by Briefing.com had expected that the Survey would improve to a reading of 0.0.

The latest weekly initial jobless claims count totaled 439,000, which was higher than the 388,000 that had been expected by the Briefing.com consensus. The tally was ahead of the revised prior week count of 361,000. As for continuing claims, they rose to 3.334 million from 3.163 million.

October consumer prices increased by 0.1%, which was in-line with the Briefing.com consensus forecast of a 0.1% increase. Today's reading follows prior month's 0.6% increase. In addition, core prices rose by 0.2% which was slightly hotter than the generally expected increase of 0.1%.

Separately, the Empire Manufacturing Survey for November registered a reading of -5.2, which was up from the prior month's reading of -6.2. Economists polled by Briefing.com had expected that the Survey would slip to -8.5.

Tomorrow, September net long-term TIC flows will be reported at 9:00 ET. In addition, October industrial production and capacity utilization will both be announced at 9:15 ET. Also note that November options are set to expire tomorrow.DJ30 -28.57 NASDAQ -9.87 SP500 -2.17 NASDAQ Adv/Vol/Dec 951/1.97 bln/1507 NYSE Adv/Vol/Dec 998/779.4 mln/2092

3:30 pm : Commodities ended the day lower. Natural gas futures were volatile as usual and after whipping around to its LoD of $3.69 and then to its HoD of $3.83, the energy component ended today's session 2% lower at $3.77/MMBtu.

Dec crude oil sold off hard, dropping about $2/barrel to its lowest level of the day (LoD was $84.71/barrel). By the time today's floor trading session ended, crude oil was 1% lower at $85.45/barrel.

Precious metals also ended today's session in the red. Both gold and silver tanked about an hour after floor trading began, hitting their lowest levels of the day. Dec gold finished 1% lower today at $1713.90 and Dec silver finished 0.6% lower at $32.63/oz.DJ30 -72.53 NASDAQ -19.50 SP500 -6.95 NASDAQ Adv/Vol/Dec 845/1658.6 mln/1603 NYSE Adv/Vol/Dec 800 /550 mln/2283

4:16PM Applied Materials beats by $0.03, beats on revs; guides Q1 EPS below consensus, revs below consensus (AMAT) 10.30 -0.05 : Reports Q4 (Oct) earnings of $0.06 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.03; revenues fell 24.4% year/year to $1.65 bln vs the $1.57 bln consensus. Co issues downside guidance for Q1, sees EPS of $0.00-0.06 vs. $0.11 Capital IQ Consensus Estimate; sees Q1 revs of $1,402-1.650 bln vs. $1.76 bln Capital IQ Consensus Estimate.

"We see improving business conditions entering 2013, with orders projected to increase after bottoming in the fourth quarter."

-- Backlog decreased by $215 million to $1.6 billion and included negative adjustments of $42 million.
-- Gross margin was 38.4 percent on a non-GAAP basis, down from 41.6 percent, reflecting the decrease in net sales. GAAP gross margin was 35.6 percent.
-- Operating expenses were $518 million on a non-GAAP basis, down from $543 million, with the decrease primarily reflecting an adjustment in compensation accruals. GAAP operating expenses were $1.09 billion.

4:07PM Marvell reports EPS in-line, revs in-line (MRVL) 7.41 +0.02 : Reports Q3 (Oct) earnings of $0.20 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.20; revenues fell 17.8% year/year to $781 mln vs the $774.18 mln consensus.

*Non-GAAP gross margin for the third quarter of fiscal 2013 was 52.3 percent, compared to 53.6 percent for the second quarter of fiscal 2013 and 56.8 percent for the third quarter of fiscal 2012.

*Co states: "Our results in the third quarter were affected primarily by the slowdown in PC demand. Despite the near-term softness in PCs, we are focused on growing our overall storage business through share gains in HDDs and growth in SSDs. We remain confident in our investments and multiple long-term growth opportunities. We also remain committed to returning cash to our shareholders through our share repurchase and dividend programs."

2:47PM STMicroelectronics comments on today's speculations: 'confirms its strong denial on the existence of a project which can compromise the unity of the company' (STM) 5.47 -0.08 : Following today's Bloomberg article, ST (STM) confirms its strong denial on the existence of a project which can compromise the unity of the company. Also, such a project has never been presented to the ST Supervisory Board. There is full alignment between the management of the company and the Supervisory Board of directors.

9:56AM Apple: AAPL slide continues as shares break to new November lows, now in play @ 531.55 (AAPL) 532.21 -4.67 :

8:34AM Advanced Energy announced that it has acquired Solvix SA, a privately held company based in Villaz-Saint-Pierre, Switzerland; financial terms not disclosed (AEIS) 11.65 : Co announces that it has acquired Solvix SA, a privately held company based in Villaz-Saint-Pierre, Switzerland. A manufacturer of power supplies for the surface treatment and thin films industry, Solvix brings a plasma-based sputtering and cathodic arc deposition applications to AE's existing product portfolio. With the addition, co will also establish a European engineering and development center for its thin-film industrial products business, in keeping with its strategy to move closer to its customers.

8:02AM Cisco Systems announces intent to acquire Cloupia for approximately $125 mln in cash and retention-based incentives (CSCO) 17.66 :

8:01AM Veeco Instruments files Form 12b-25 notification of late filing of 10Q (VECO) 29.08 : Co states: We are currently reviewing the timing of revenue recognition of MOCVD systems and related upgrades. The accounting issues do not relate to product performance or customer acceptance of our products. The systems which are the subject of these transactions were delivered, accepted and paid for in full by our customers. Our review focuses on determining whether revenue was recognized in the appropriate accounting periods."

Atmel (ATML) announced the availability of a new LIN family for automotive switch scan applications and in-vehicle ambient lighting control.

Skyworks Solutions (SWKS) introduced a family of highly efficient front-end solutions for smart water and gas metering applications.

NetApp (NTAP) reported second quarter earnings of $0.51 per share, $0.03 better than the Capital IQ consensus of $0.48; revenues rose 2.3% year/year to $1.54 billion versus the $1.54 bln consensus. The company issues in-line guidance for the third quarter EPS EPS of $0.53-0.58 versus the $0.54 consensus and revenues of $1.575-1.675 billion versus $1.62 billion consensus. "We also saw momentum in our partnering strategy with continued FlexPod growth and a record high revenue contribution from Arrow and Avnet. Our focus on delivering best-of-breed storage solutions and the leverage we gain through go-to-market and channel partners will enable NetApp to grow our business and gain share."

Texas Instruments (TXN) announced it will reduce costs and focus investments in its Wireless business on embedded markets with greater potential for sustainable growth. Cost reductions include the elimination of about 1,700 jobs worldwide. TI previously outlined intentions to focus its OMAP processors and wireless connectivity solutions on a broader set of embedded applications with long life cycles, instead of its historical focus on the mobile market where large customers are increasingly developing their own custom chips. These changes require fewer resources and less investment. "We have a great opportunity to reshape our OMAP processor and wireless connectivity product lines to concentrate on embedded markets. Momentum is already building with new embedded applications and a broad set of customers, and we are accelerating our efforts in these areas," said Greg Delagi, senior vice president of Embedded Processing. As a result of these actions, the co expects annualized savings of about $450 million by the end of 2013. Total charges will be about $325 million, most of which will be accounted for in the current quarter. TI's Q4 outlook, published on Oct 22, did not comprehend these restructuring charges.

09:58 am S&P Information Technology Index trading higher today along with tbe broader market

The tech sector is trading modestly higher today, along with slight gains in the broader market. Semiconductors are showing relative weakness, however, with the SOX trading 0.2% lower. Within the chip index, VECO (-6.7%) is a notable laggard. Among other major indices, the SPY is trading 0.1% higher today, while the QQQ is up 0.1% and the NASDAQ is trading roughly flat on the session. Among tech bellwethers, INTC (+1.0%) is showing strength, while FB (-3.0%) is showing notable weakness.

In tech earnings last night, NTAP (+10.2%) posted a Q2 EPS beat and guided inline and NTES (-4.8%) reported a miss, but announced a special dividend and a share repurchase. Also, AKAM (+0.1%) reaffirmed its guidance. This morning, DANG (+15.8%) posted a beat and raise. In news, TXN (+0.3%) announced a restructuring effort in eliminating its OMAP business and cut 1.7K jobs. Among rumors, there are reports that AAPL (-0.5%) is shipping more MacBook orders, but may delay iMac shipments. In notable analyst upgrades this morning in the tech space, CTSH (+0.7%) and CHA (-0.3%) were upgraded to Outperform at Credit Suisse, NTAP (+10.2%) was upgraded to Outperform at Raymond James. Among downgrades, MGI (-8.6%) and PAYX (+0.2%) were downgraded to Neutral at Credit Suisse. AMAT (+0.2%), DELL (+0.1%), and MRVL (+1.2%) are the notable names in tech scheduled to report quarterly results today after the close.

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Amateur Investors Weekend Stock Market Analysis (12/1/12)

http://www.amateur-investor.net/Weekend_Market_Analysis_Dec_1_2012.htm

Well here we are with only 30 Days to go until the end of the year. I haven't talked about Shiller's PE Ratio in awhile so let's take a look at the chart which goes all the way back to the late 1880's involving the Inflation Adjusted S&P Composite. The historical Average PE Ratio has been around 15 as denoted by the brown line. Overall major Bear Market Bottoms in the past haven't occurred in the Inflation Adjusted S&P Composite until the PE Ratio has dropped below the "7" level as denoted by the green line. The most recent event was back in the early 1980's (point A) followed by two others in the early 1930's and early 1920's (points B). Meanwhile notice back in March of 2009 when the S&P Composite bottomed the PE Ratio dropped just below the long term mean (point C) so it didn't reach a level that has signaled major Bear Market Lows in the past. Thus one can conclude that either Shiller's PE Ratio will be wrong this time around or the Inflation Adjusted S&P Composite hasn't made a major Bear Market Low.



Another thing to notice is the long term upward channel in the Inflation Adjusted S&P Composite as denoted by the black lines. As you can see the bottom of the upward channel connects the early 1930's low with the early 1980's low while the top of the upward channel coincides with the late 1920's high and late 1990's high. My guess would be if Shiller's PE Ratio is going to end up being right, and eventually drop below the "7" level, then the Inflation Adjusted S&P Composite will come close to retesting the bottom of its longer term upward channel at some point in the future.



The last thing to consider is that when periods of high inflation occur this can have a dramatic affect on what a normal chart looks like versus an Inflation Adjusted one. If we overlay the Inflation Adjusted S&P Composite (green) with the typical non Inflation Adjusted S&P Composite (red) one can see significant differences at times. For example from the late 1970's through the early 1980's the Inflation Adjusted S&P Composite trended lower (points D to E) while the non Inflation Adjusted S&P Composite actually moved higher (points F to G). A similar pattern also occurred back in the early 1900's as the Inflation Adjusted S&P Composite made substantially lower Lows (points H to I) while the Non Inflation Adjusted S&P Composite traded generally sideways for several years (points J to K). Thus it's entirely possible in the future the Inflation Adjusted Composite could drop back below the March 2009 low while the Non Inflation Adjusted S&P Composite does not.

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InvestmentHouse Weekend Stock Market Summary

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

- Stocks advance, but still just a slow burn versus a new surge.
- Jobs increase (again at the low pay end), unemployment rate falls (again because people disappear), but there is some improvement as well.
- Michigan Sentiment takes a post-election reality turn.
- What's with all the earthquakes?
- Stocks taking their time in trying to break higher, allowing more to set up, but they need to get on with the Christmas rally.
- If the Fed announces QE4, will the market react the same as it did to QE3?

Market gets what it should want but still hesitates.

Futures were iffy and trending lower, but when the jobs report hit the wire with 146K jobs (a 56K beat) and unemployment down to 7.7%, the headline readers jumped in and futures jumped to the upside. Sharply upside. Looked as if the market finally got the catalyst it needed to break the weeklong lateral consolidation.

After the initial pop, however, stocks again remained tentative. The highs were hit near the opening bell. Perhaps investors were not as enthralled with the jobs report as the initial stock jump suggested. They also may not have been too pleased with Michigan sentiment dropping over 8 points as expectations plummeted 13 points.

All that pre-election hope is meeting reality. Rhetoric and lofty, less than factual statements only go so far when citizens face the same economic problems.

There was another, non-market disturbing news theme. Early in the morning I read about a 7.3 magnitude earthquake in Japan near the reactor that went down in the prior quake and tsunami.

Later in the day New Zealand reported a 6+ quake. New Guinea reported a quake as well. On top of the natural disasters are the usual manmade ones. Unrest in Egypt. Syria's leader reportedly thinking of using chemical weapons on his own people. North Korea is readying the test launch of another ballistic missile and Japan has promised to shoot it down. Financial upheaval on the entire European continent and the US is no bastion of financial safety. All that is needed are some locusts, blood in the seas and there you go. December 21 is the end of the Mayan calendar, just 13 more shopping days left!

Plagues may be coming, but so may be more Fed stimulus. The obvious question is whether that would be a plague or deliverance. Friday there was plenty more speculation whether the Fed would come to the table with more QE. That move was rather widely expected until the Friday report. Indeed, many still believe the Fed will act either regardless of the report or because the report's internals were not that strong, presenting more of the same trends that indicate a less than healthy jobs market.

Perhaps continued anticipation of additional QE is why the market, after not finding solace in the jobs report, held its ground.

Stocks started nicely higher on the jobs headlines, faded on the Michigan Sentiment miss, and continued lower to midmorning. As is often the case, midmorning was the turning point. Stocks found bottom roughly at the Thursday close and started back upside. Slow, steady, boring, but they recovered ground into the close. SP500 never made it back to the session high and NASDAQ barely made it off the day's lows; it was not strong but they did recover. Indeed, DJ30 and its pattern that we hated the most led the market as it did manage to close out at session highs.

In the end it was another mixed showing, mostly upside, but again no great upside break. The indices set up for a nice upside break with a tight lateral move, and all they are doing at this juncture is melting to the upside. Not terrible action but certainly not a renewal of buyers, not a surge of upside interest. Don't get me wrong; stocks can melt upside no problem. Those just are not always the greatest upside runs. Kind of like that 'light drizzle' discussed Thursday night.

SP500 4.13, 0.29%
NASDAQ -11.23, -0.38%
DJ30 81.09, 0.62%
SP400 0.11%
SOX 0.22%
Russell 2000 0.06%

OTHER MARKETS

Dollar. 1.2930 versus 1.2963 US dollar/Euro. The dollar was much stronger versus the euro on the news of the jobs report, but as the day wore on the dollar lost its mojo. Compared to other currencies, however, the dollar finished strong, rebounding from a week of weakness. Note how it bounced off the October high, using that as support.

Bonds. 1.63% versus 1.57% 10 year Treasury. Stocks may not have been totally overwhelmed by the jobs report, but bonds were taking it seriously, selling off hard to the 50 day EMA. Perhaps this is a signal the Fed will not act with a QE4. Some people seem to believe it is a fait accompli. Bonds were not so sanguine.

Gold. 1705.10, +3.30. Not much of a gain but it is the action Wednesday to Friday is what is interesting. Gold tapped at the same low three straight sessions and bounced off of that support. Working on setting up that double bottom over the 200 day SMA.

Oil. 85.98, -0.28. Faded a bit further in a down week overall. Oil is at some support but it failed at the 50 day EMA and that suggests it continues to weaken in its downtrend below the 50 day EMA.

TECHNICAL SUMMARY

Internals.

Stats: -11.23 points (-0.38%) to close at 2978.04
Volume: 1.591B (-5.8%)

Up Volume: 673.5M (-506.5M)
Down Volume: 905.69M (+385.41M)

A/D and Hi/Lo: Decliners led 1.16 to 1
Previous Session: Decliners led 1.04 to 1

New Highs: 51 (+8)
New Lows: 30 (-9)

S&P
Stats: +4.13 points (+0.29%) to close at 1418.07
NYSE Volume: 551M (-1.96%)

A/D and Hi/Lo: Advancers led 1.22 to 1
Previous Session: Advancers led 1.13 to 1

New Highs: 97 (+13)
New Lows: 26 (-3)

Volume: Lower trade Friday after already declining trade on the week. Just not a lot of volume pushing on stocks and they certainly are not going very far with such a light push. Between holidays so a bit lighter volume is normal, so not sweating it too much. Just a bit worrisome that the market is getting the catalysts it seems would break it higher, but they are not doing it even with low trade.

Breadth. Flat yet again, but then again, the market has not been racing on the week either.

THE CHARTS

SP500. Continued a modest move off the 50 day EMA on more below average volume. Trying to get some momentum off the test of the mid-November relief bounce. Moving up but just not a lot of strength. Light drizzle, eh? Financials were rallying , however, and thus SP500 moved up to the mid-August high. Still at resistance and on low volume to boot. Okay, yes there are plenty of reasons to not like it, but SP500 continues to the upside.

NASDAQ. Amazing how NASDAQ follows AAPL. That is what happens when one stock is forecast by GS to account for 33% of the Q4 GDP consumption and it consequently comprises the bulk of the index's market cap. Anyway after the Thursday AAPL-led bounce NASDAQ gapped upside through the 200 day SMA and near the 2011 up trendline only to reverse when AAPL reversed. NASDAQ's pattern is very similar to SP500, kind of an inverted head and shoulders and thus kind of positive. That leaves it in position to rally but it certainly is having a hard time getting the move going. Needs AMZN, EBAY, DELL, CSCO, etc. to continue their rallies.

Russell 2000/SP400. Gapped upside but faded to flat, still working on the lateral move started late November when the small caps gapped through the down trendline. Nice, looks good, still waiting on the move.

SP400 midcaps are bleeding higher similar to SP500, posting four consecutive upside moves that took the index right up to . . . the same resistance it tested Monday when it shot higher but reversed. Still has the October and November highs it is working on. Hate these bleeds higher.

SOX. Solid Thursday bounce off the 50 day EMA and then a doji with a slight gain Friday. Not the move we wanted to see and SOX is right at some resistance. Nonetheless it showed some leadership; the chips are trying to turn.

DJ30/DJ20. DJ30 led the market Friday. Bumped the 50 day EMA for a week, we hated the pattern, and so it broke upside through resistance at 13,100.

DJ20. Bounced of the 50 day EMA early in the week and through the 200 day SMA. Modest gain Friday and still looks in position to continue its move to the top of the range.

Summary: Not making a sharp break, just continuing the lateral move in the case of the midcaps, bleeding higher in the case of SP500, actually jumping upside for the Dow, or falling with AAPL as is NASDAQ. Quite mixed action, but all of it is inside of a fairly tight range, not giving back the rally that started Thanksgiving week.

LEADERSHIP

Big names. AAPL reversed the Thursday gains and sold. AMZN is slowing its move, testing in a way as it slows the gain. EBAY is holding the 10 day EMA and looks very good in this test as well. GOOG gapped upside then reversed. Still a good pattern. These leaders are a bit tired but GOOG is ready to takeover and lead.

Financial. Continuing the upside move led by the big banks. JPM jumped over 2.5%, C added 1.7% to its solid weekly gain. Not all financials are moving; credit services lag.

Retail. A very mixed bag so to speak. You know, holiday shopping and all. LTD enjoys a nice pullback. COH looks as if it wants to bounce off a rounded bottom. M, JWN -- the big boxes in the malls -- are holding up but are not in position to surge. Eateries are struggling overall.

Tech. Still weak but trying to improve in some places. ADTN is interesting. FFIV is at the bottom of the channel and it may just be ready for an upside break. JNPR broke through the 200 day SMA. Some moves, some setting up, a lot not really in position to take the lead.

Industrial. CAT cleared the recent highs on the week. DE is decent in a two month pennant. JOY is trapped below the 50 day EMA.

THE ECONOMY

TO VIEW THE ECONOMY VIDEO CLICK THE FOLLOWING LINK:
Economy Summary Video

Okay, here is the jobs scoop: better headlines, some better indications, but some still very troubling longer-term trends.

Most pundits admitted the headlines did not tell the true story, but they also said there were signs of continued improvement. There were. Of course the improvement was not the paltry number of jobs even if it was a big beat over very terrible expectations. The silver lining most saw was the 465K non-seasonally adjusted new workers added; that was in line with pre-crisis trends at this time of year and shows that retailers are getting back to expectations of a solid consumer. Why I am not sure; every piece of data seen of late shows consumption is lower (the most recent GDP iteration is the case in point), but perhaps they know something the data is not showing. Or, perhaps they are hoping for something that is not there, forgetting a couple of old but useful sayings:

Those who expect nothing are never disappointed.
No brain, no headache.

No brain . . .

Nonfarm Payrolls, November (8:30): 146K actual versus 90K expected, 138K prior (revised from 171K)

Nonfarm Private Payrolls, November (8:30): 147K actual versus 120K expected, 189K prior (revised from 184K)

Unemployment Rate, November (8:30): 7.7% actual versus 8.0% expected, 7.9% prior

Hourly Earnings, November (8:30): 0.2% actual versus 0.1% expected, 0.0% prior

Average Workweek, November (8:30): 34.4 actual versus 34.4 expected, 34.4 prior

Here are the less covered facts, the seedier side of the report. Please ask small children and those who can't handle the truth to leave the room.

FIRST, the average workweek remained a meager 34.4 hours for about the tenth month straight (or so it seems). There is simply no growth in hours worked despite all of the talk of jobs added each month. Why does this matter? Employers don't hire when they are not working their employees to the point the employees are learning the words to that 1977 classic country song by Johnny Paycheck, 'Take this Job and Shove It.' Economic times were bad then as well. How appropriate.

A corollary to the 'work them until they quit' rule is the employee view when times are bad and jobs are scarce: 'keep your head down, shut up, keep job.' Those who want to work are happy to have a job and are simply doing their job. Thus they are willing to take the hours and the low pay for a paycheck. Here is the rub, however, in two parts. Part One, the hours just are not there because there is not enough work to keep them for long hours. Or, Part Two, the work is there but employers cannot get enough skilled laborers and thus they have to turn down work and thus the hours remain low overall. We are hearing BOTH from our business contacts as discussed below.

Unemployment rate falls to 7.7% on less workers looking for work. Nothing new there.

SECOND, and much more interesting and intriguing, is the continuing decline in the labor force. It came in at a sterling 63.6%, falling 0.2%. Can you fathom that in the United States almost 40% of those capable of working ARE NOT working?

350,000 more workers left the workforce. Fewer and fewer people are looking for work. Thus the unemployment rate fell to 7.7%. No job, no prospects, and most importantly, no income to tax to pay into the Treasury.

Investor's Business Daily

If you pay someone to do nothing, he will do nothing -- Jon Johnson

Moreover, why even take a job if it is there and doesn't pay any more than you can get from the various government programs that you can stack one upon the other. I saw a story on CNBC today that highlights part of what I discussed a week ago about the effort to find a job and work versus simply collecting benefits. Phil Lebeau talked to machine shops making oil and gas production and exploration items that had the work but could not keep people at the starting level interested in doing the work. After a few days or even a day they throw in the towel because they can sit and do nothing and have as much disposable income as they made as an apprentice. A machine shop paying $13/hour for an apprentice translates into about $25K for the year. You can sit on your duff and collect benefits and then do a little cash only work on the side and live better than the poor schmuck who works 9 to 5. As I always say, if we want to pay people to do nothing, they will do nothing. That is what we are finding out but are not rectifying.

Wal-Mart greeter workforce?

THIRD, we see more of that same problem of job quality versus quantity, and who the jobs are going to. Wages are stagnant, and in real terms are declining. Personal Income and Spending and the GDP revision show this. Most jobs created are in the lower third of the income scale. That has been the case during this entire recovery. The numbers are striking.

Who is working those jobs? As we have reported before, they are going to the older workers.

November:
16 to 19 years: 6K
20-24 years: 62K
25-54 years: -359K
55-69: 177K

The 25 to 54 demographic is the prime wage earning segment. It is getting crushed. The middle class the President champions is being destroyed by his policies.

Don't believe it? Let's look at the numbers since January 2009:
55-69: 4,000,000
16-19 and 20-24 and 25-54: -3,000,000

THE MARKET

SENTIMENT INDICATORS

VIX: 15.9; -0.68
VXN: 18.35; -0.14
VXO: 16.24; -0.82

Put/Call Ratio (CBOE): 0.8; -0.12

Bulls versus Bears

Bulls: 43.6% versus 39.3% versus 37.2% versus 38.3% versus 43.6 versus 41.5% versus 45.7% . Big jump as investors react to the Thanksgiving rally. Getting right back to where they were a month back ahead of the selling. Got closer to 35% but no cigar. Background: Undercut 35%, the threshold for bullishness, in early June. 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: 25.5% versus 27.7% versus 27.7% versus 28.7% versus 27.7% versus 27.7% versus 25.5%. What goes around comes around. Bears are fading to the level hit almost two months back just a bulls are rising toward that level. On the last run 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.

MONDAY

Stocks moved up on the week but were a letdown overall, unable to make that big upside break after a good lateral consolidation. If they survive the weekend, they will still be in position. So far no major catastrophe has hit. The bleed higher has not gone too far to take away the consolidation's impact, and it hasn't destroyed too many consolidation attempts (they move higher before they are ready and then flop).

Still a lot of data this coming week with the FOMC meeting the early week highlight. The Friday jobs report renewed the debate regarding any further QE, but frankly Bernanke said he would not remove any until the economy was really improving. Of course that doesn't mean he will ADD to it if things are better. It is 50-50 in our book though some say it is a done deal.

Question is, if there is QE4 will that have any positive impact? Will it have any negative impact? Stocks rallied into September on the promise of QE3 then sold on the announcement. Of course, that was a big rally. This recent move is a blip, an oversold bounce that has left the large cap indices with very questionable patterns. Not that much anticipation. Either not enough time to get in a good rally ahead of more stimulus or perhaps investors simply believe any more stimulus won't have as much impact. QE3 was all in the anticipation, not in the having.

After a time you may find that having is not so pleasing a thing after all as wanting. It is not logical, but it is often true. -- Spock from 'Amok Time'. A play on the old market adage, buy on the rumor, sell on the news.

The point I was getting to (albeit slowly): will there be a post-FOMC announcement selloff as in September? Could be, but as noted, this has not been much of a move at all and has not been that powerful. Some strong leaders for sure (AMZN, EBAY), but new ones are not exactly waiting in line to take their place at the front. That is always the most important tell in a rally, and that keeps us, despite the apparent upside bias in the market, concerned about the longevity of this move. Again, there still isn't much of a pattern by SP500 and DJ30; they can continue higher, but this is more of a reaction than a base. That and the leadership issue raise serious doubts for us and this rally.

For now, however, there are stocks still attempting to set up even with the drift higher. The indices certainly look as if they want to continue the holiday rally (I will call it that as it spans, thus far, Thanksgiving and the period leading into Christmas). As noted, to do that they need more stocks to take the torch and lead. Many stocks have bounced from weak patterns and are trying to figure out what they do next. Not the best patterns to chase.

Others, however, are in better tests after breaking from good bases (e.g. EBAY) or are just coming off rounded bottoms (e.g. GOOG, COH). If they move we will use them to make money before the year end. After that, more taxes on your income, and a tax on each financial transaction. New year, new issues, but making money is still the way to get your way.

So, we will grab plays as they show themselves and ride them in the continuing move. If stocks want to rally into Christmas (or 12-21 if that is it), then we are going to ride it for all it is worth. If they stumble post FOMC, well then the indices will test that prior low and try to set up a retracement double bottom or some other pattern. Watch for a post-FOMC reversal signal such as a surge then purge on high volume or a move higher that just runs out of volume and MACD does not follow higher. If no topping signals show up, , happy holidays!

Have a great weekend!

Support and resistance

NASDAQ: Closed at 2978.04
Resistance:
The 200 day SMA at 2988
2988 is the July 2012 high
The 50 day EMA at 2992
2999 is the bottom of the August 2012 consolidation
3000 is the February 2012 post-bear market high
3008 is the up trendline from 2011
3024 is the gap point from early May
3026 from 10/2000 low
3042 from 5/2000 low and several other price points
3076 is the late April 2012 high
3090 is the mid-March interim high
3037 is the October low
3101 is the August 2012 high
3134 is the March 2012 post-bear market peak
3171 is the October intraday high
3197 is the September 2012 post-bear market high
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
2977 to 2980 is the bottom of the late October 2012 consolidation
2962 is the April 2012 low
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2900 is the March 2012 intraday low
2858 is the late July 2011 peak
2847 is the mid-May 2012 low
2838 from the July 2012 lows
2778 from the May 2012 low and June 2012 gap point.
2747 is June 2012 closing low
2726 IS June 2012 intraday low

S&P 500: Closed at 1418.07

Resistance:
1425 from May 2008 closing highs and the October 2012 low
1427 is the August 2012 peak
1434 from early November 2012
1433 from August 2007 closing lows
1440 from November 2007 closing lows
1464 is the June up trendline
1463 is the September closing high
1466 is the September closing high
1471 is the October 2012 intraday high
1475 is the September 2012 high
1499 from January 2008
1539 from June 2007

Support:
The 50 day EMA at 1409
1408 is the late October range closing low
1406 is the early May 2012 peak
1402.22 is the closing low of the August 2012 lateral consolidation
The 200 day SMA at 1386
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
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 13,155.13
Resistance:
13,297 is the April 2012, prior post bear market high
13,300 to 13,331 is the August 2012 post-bear market high
13,653 is the September 2012 high
13662 is the October 2012 intraday 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
The 50 day EMA at 13,061
13,056 is the February 2012 high
The 200 day SMA at 12,998
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012
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

December 3 - Monday
- ISM Index, November (10:00): 49.5 actual versus 51.2 expected, 51.7 prior
- Construction Spending, October (10:00): 1.4% actual versus 0.4% expected, 0.5% prior (revised from 0.6%)
- Auto Sales, November (14:00): 5.2M prior
- Truck Sales, November (14:00): 6.0M prior

December 5 - Wednesday
- MBA Mortgage Index, 12/01 (7:00): 4.5% actual versus -0.9% prior
- ADP Employment Change, November (8:15): 118K actual versus 125K expected, 157K prior (revised from 158K)
- Productivity-Rev., Q3 (8:30): 2.9% actual versus 2.7% expected, 1.9% prior
- Unit Labor Costs -Rev., Q3 (8:30): -1.9% actual versus -0.8% expected, -0.1% prior
- Factory Orders, October (10:00): 0.8% actual versus -0.1% expected, 4.5% prior (revised from 4.8%)
- ISM Services, November (10:00): 54.7 actual versus 53.7 expected, 54.2 prior
- Crude Inventories, 12/01 (10:30): -2.357M actual versus -0.347M prior

December 6 - Thursday
- Challenger Job Cuts, November (7:30): 34.4% actual versus 11.6% prior
- Initial Claims, 12/1 (8:30): 370K actual versus 382K expected, 395K prior (revised from 393K)
- Continuing Claims, 11/24 (8:30): 3205K actual versus 3275K expected, 3305K prior (revised from 3287K)

December 7 - Friday
- Nonfarm Payrolls, November (8:30): 146K actual versus 90K expected, 138K prior (revised from 171K)
- Nonfarm Private Payrolls, November (8:30): 147K actual versus 120K expected, 189K prior (revised from 184K)
- Unemployment Rate, November (8:30): 7.7% actual versus 8.0% expected, 7.9% prior
- Hourly Earnings, November (8:30): 0.2% actual versus 0.1% expected, 0.0% prior
- Average Workweek, November (8:30): 34.4 actual versus 34.4 expected, 34.4 prior
- Michigan Sentiment, December (9:55): 74.5 actual versus 82.4 expected, 82.7 prior
- Consumer Credit, October (15:00): $14.2B actual versus $9.9B expected, $12.2B prior (revised from $11.4B)

December 11 - Tuesday
- Trade Balance, October (8:30): -$42.7B expected, -$41.5B prior
- Wholesale Inventories, October (10:00): 0.4% expected, 1.1% prior

December 12 - Wednesday
- MBA Mortgage Index, 12/08 (7:00): 4.5% prior
- Export Prices ex-ag., November (8:30): 0.2% prior
- Import Prices ex-oil, November (8:30): 0.3% prior
- Crude Inventories, 12/08 (10:30): -2.357M prior
- FOMC Rate Decision, December (24:30): 0.25% expected, 0.25% prior
- Treasury Budget, November (14:00): -$113.0B expected, -$137.3B prior

December 13 - Thursday
- Initial Claims, 12/08 (8:30): 375K expected, 370K prior
- Continuing Claims, 12/01 (8:30): 3200K expected, 3205K prior
- Retail Sales, November (8:30): 0.4% expected, -0.3% prior
- Retail Sales ex-auto, November (8:30): 0.0% expected, 0.0% prior
- PPI, November (8:30): -0.5% expected, -0.2% prior
- Core PPI, November (8:30): 0.1% expected, -0.2% prior
- Business Inventories, October (10:00): 0.4% expected, 0.7% prior

December 14 - Friday
- CPI, November (8:30): -0.2% expected, 0.1% prior
- Core CPI, November (8:30): 0.1% expected, 0.2% prior
- Industrial Production, November (9:15): 0.4% expected, -0.4% prior
- Capacity Utilization, November (9:15): 78.0% expected, 77.8% prior

[ReturntoSender]

From Briefing.com: Weekly Recap - Week ending 14-Dec-12

Dow -35.71 at 13135.01, Nasdaq -20.83 at 2971.33, S&P -5.87 at 1413.58

Equities spent the day in the red as weakness in shares of Apple (AAPL 509.79, -19.89) weighed on the markets throughout the session. The S&P 500 held near its opening levels until the final hour when selling pressure pushed the benchmark index to a loss of 0.4%.

The technology sector was the biggest laggard due to underperformance from Apple and its suppliers. Earlier, UBS lowered its price target for AAPL to $700 from $780 due to an expected decline in iPhone and iPad shipments. The largest tech company settled lower by 3.8% on the day the iPhone 5 began selling in China.

Looking at notable Apple suppliers, Avago Technologies (AVGO 31.13, -2.56), Cirrus Logic (CRUS 25.58, -1.82), Skyworks Solutions (SWKS 19.80, -1.25), and Jabil Circuit (JBL 17.51, -1.02) all lost between 3.7% and 7.6%.

Elsewhere in technology, Adobe Systems (ADBE 37.56, +2.03) advanced 5.7% after beating on earnings and revenue. During the fourth quarter, the software company earned $0.61, which was $0.05 better than the Capital IQ consensus estimate. Meanwhile, the company's revenue of $1.15 billion also exceeded expectations. The software developer topped off the report with guidance, which was on the lower end of analyst estimates. Following the earnings report, JMP Securities upgraded Adobe to ‘Market Outperform' from ‘Market Underperform' with a $42 price target. On the other hand, Janney Montgomery Scott downgraded ADBE to ‘Neutral' from ‘Buy.'

The materials sector outperformed the broader market, and steel suppliers contributed to the strength. Last night, the Chinese HSBC manufacturing PMI survey revealed the second expansionary reading in a row. The data signals a possible rebound in Chinese growth, which would be beneficial to steelmakers. Among the major producers, Cliffs Natural Resources (CLF 33.96, +1.67), Nucor (NUE 42.28, +1.09), and Reliance Steel (RS 59.25, +1.31) all gained between 2.2% and 5.2%.

Energy stocks slipped 0.5% despite crude oil adding over 1.0%. Schlumberger Limited (SLB 68.91, -3.65) slid 5.0% following this morning's profit warning. The company said that it is experiencing continued contractual delays and higher-than-usual seasonal slowdowns in activity.

In notable analyst rating changes, Exxon Mobil (XOM 88.08, -0.50) shed 0.6% after Goldman Sachs downgraded the company to ‘Neutral' from ‘Buy.' Elsewhere, BP (BP 41.39, -0.08) finished lower by 0.2% after Credit Suisse downgraded the energy producer to ‘Neutral' from ‘Outperform.' On the upside, Marathon Oil (MRO 30.82, +0.63) advanced 2.1% after Goldman Sachs upgraded MRO to ‘Buy' from ‘Neutral.'

European markets entered the weekend on a mixed note. The United Kingdom's FTSE shed 0.1%, France's CAC ended flat, and Germany's DAX added 0.2%.

In the United Kingdom, Prudential lost 2.0%, and was the weakest performer. The insurer was pressured after the top industry regulator said European insurers and pension funds will face headwinds due to low interest rates. On the upside, miners outperformed and Polymetal International gained 2.3%.

In France, utility stocks were among the biggest laggards. Electricity provider GDF Suez lost 0.3% and water supplier Veolia Environnement slid 1.1%. On the upside, provider of communications solutions Alcatel-Lucent (ALU 1.24, +0.14) gained 7.0% after securing EUR1.6 billion in financing from Credit Suisse and Goldman Sachs. It should be noted that digital security provider Gemalto will replace Alcatel-Lucent in the CAC on December 24.

Germany's DAX was supported by carmakers. Daimler gained 2.6% after its European market share increased to 5.7% from 5.2%. The uptick was due to strong sales by its Mercedes unit. Meanwhile, Deutsche Bank was the weakest performer. The financial giant lost 1.6% after a German court found the company partially liable for the collapse of the Leo Kirch media group.

In today's economic data, November consumer prices decreased by 0.3%, which was below the Briefing.com consensus. Today's reading follows the 0.2% increase recorded during the prior month. In addition, core prices rose by 0.1% which was in-line with expectations.

Industrial production increased during November by 1.1%, which was better than the 0.1% increase that had been expected by the Briefing.com consensus. The reading follows the revised 0.7% decrease recorded during the prior month. Capacity utilization hit 78.4%, which was better than the 77.9% expected by the Briefing.com consensus, and up from the revised prior month reading of 77.7%.

On Monday, December Empire Manufacturing Index will be reported at 8:30 ET and October net long-term TIC flows will be released at 9:00 ET.

Week in Review: Markets in Holding Pattern as Budget Deal Remains Elusive

On Monday, equities were little changed. With no economic data to digest, investors expressed caution after Italy's Prime Minister Mario Monti announced plans to submit his resignation upon the successful approval of the country's budget. However, afternoon reports from the Financial Times indicated Italy's centrist parties urged Mr. Monti to run on their ticket in next year's election. Domestically, trade was confined to a narrow range and volume was well below-average. As a result, the S&P 500 finished flat.Hewlett-Packard (HPQ 14.75, +0.25) rose by 2.6% following earlier rumors which suggested activist investor Carl Icahn was building a stake in the company.

Tuesday's session was relatively quiet as the major averages followed an upbeat open with a climb to their respective highs. At noon, House Speaker John Boehner said he remains hopeful a budget deal will be reached, but first, Democrats and the President need to outline specific spending cuts. The comments had little effect on the markets as equities continued holding at their best levels. However, 90 minutes before the close, Senate Majority Leader Harry Reid said Democrats do not plan to propose spending cuts, and that reaching a consensus before Christmas would be difficult. In response to Senator Reid's comments, the S&P 500 slipped from its highs, trimming its gain to 0.6%. TripAdvisor(TRIP 41.67, -1.04) spiked 6.6% after Liberty Interactive (LINTA 19.12, -0.16) purchased 4.8 million TRIP shares for $62.50 per share. As a result of the transaction, Liberty Interactive will control a majority voting stake in TripAdvisor.

Wednesday began on a slightly higher note in anticipation of the latest policy statement from the Federal Reserve. The major averages spiked to session highs upon the release of the central bank's directive. However, stocks surrendered all of their gains, and the S&P 500 finished flat. As expected, the Federal Open Market Committee held its Federal Funds Rate steady at 0-0.25%. In addition, the Fed announced ‘Operation Twist' will be replaced by a Treasury purchasing program with an initial rate of $45 billion per month. Also of note, the key interest rate is expected to remain at exceptionally low levels until a target unemployment rate of 6.5% is reached. Molycorp (MCP 10.05, -0.19) slid 3.0% after announcing the departure of Chief Executive Officer Mark Smith. The company's Board of Directors has appointed Costantine Karayannopoulos as Interim President and Chief Executive Officer.

On Thursday, the major averages began on a mixed note before selling pressure pushed the key indices to their respective lows. Shortly before noon, House Speaker John Boehner addressed the media in Washington. During his remarks, the speaker suggested President Obama is not serious about cutting spending, and the White House is willing to go over the fiscal cliff. Mr. Boehner's remarks had little impact on the markets, which continued pushing to fresh lows. However, a late-afternoon headline indicated Speaker Boehner and President Obama will meet in person at 17:00 ET. The report lifted the S&P 500 off its worst level of the day, but the benchmark index still finished with a loss of 0.6%.Boston Beer (SAM 132.38, +0.44) surged 15.5% after the brewer raised its 2012 earnings expectations as well as the 2013 depletion projections. Following the update, the company sees 2012 earnings between $4.30 and $4.60, while the Capital IQ consensus expects earnings at $4.24 per share.

 
 Index	  Started Week	Ended Week   Change  % Change   YTD % 
 DJIA	    13155.13	 13135.01   -20.12	-0.2	7.5 
 Nasdaq	     2978.04	  2971.33    -6.71	-0.2   14.1 
 S&P 500	1418.07	  1413.58    -4.49      -0.3   12.4 
 Russell 2000  822.27	   823.75     1.48       0.2   11.2

4:30PM SunPower reaches settlement in class action litigation (SPWR) 5.41 +0.12 : Co announced it has entered into an agreement to settle the private securities class action suit against the company and certain current and former members of management. This action is titled, "In re SunPower Securities Litigation." The agreement, which is subject to negotiation and execution of a final settlement document and court approval, provides for the payment by SunPower of $19.7 million and would lead to the dismissal of all claims against the defendants. The company expects to reflect the impact of the settlement in its fourth quarter 2012 financial results. "While we strongly believe that the company and its management fully met all their legal obligations, we have decided it is more prudent to focus our efforts on growing new markets and continuing to expand our leading residential market share position," said Lisa Bodensteiner, SunPower executive vice president and general counsel.

ASML Holding NV (ASML) and Cymer (CYMI) provide a status update regarding ASML's previously announced pending acquisition of all of the outstanding shares of Cymer. Cymer has established February 5, 2013 as the date on which it will hold a special shareholders meeting at which the stockholders of record of Cymer as of 7 January 2013 will be asked to vote on, among other things, a proposal to approve the merger agreement,

Adobe Systems (ADBE) reported fourth quarter earnings of $0.61 per share, ex items, $0.05 better than the Capital IQ consensus of $0.56, while revenues rose 0.1% year/year to $1.15 billion versus the $1.1 bln consensus. Key Points: Deferred revenue grew by $59.3 million to a record $619.6 million. Adobe added approximately 10,000 Creative Cloud subscriptions per week during the quarter, versus the addition of 8,000 subscriptions per week in the third quarter. Adobe Marketing Cloud achieved record quarterly revenue of $220.4 million, which represents 32 percent year-over-year growth. "We're driving migration to a subscription model in our Creative business faster than we predicted a year ago, and we are confident fiscal 2013 will be the pivotal year for the transition." According the conference call slides company stated "For the first quarter of fiscal 2013, we are targeting a revenue range of $950 million to $1 billion dollars [vs $1.07 bln Capital IQ Consensus Estimate]..."We expect total Adobe reported revenue in FY13 to be approximately $4.1 billion [vs $4.47 bln Capital IQ Consensus Estimate]. We will closely manage expenses during this upcoming transition year, and expect earnings per share to be approximately $0.62 on a GAAP-basis, and $1.40 on a non-GAAP basis [may not compare to $2.37 Capital IQ Consensus Estimate]."

Microsoft (MSFT) was initiated with a Market Perform at BMO Capital Markets; tgt $30. The firm concludes that a weak PC market, a slowdown in transactional enterprise license sales, and a slow ramp of Surface tablet sales will cap the upside in shares. While they are positive on touch-enabled PCs and enterprise demand for Office-enabled Windows tablets, demand could take longer-than-expected to ramp. While they believe that the Server and Tool business can continue to grow at a ~10% clip and gain share, they think that more of the growth in this business is driven by co's licensing model changes and price increases than most investors believe.

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InvestmentHouse Weekend Market Summary

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

- FOMC QE4 +2 and stocks are still off.
- Outside of NASDAQ struggling on the AAPL deleveraging, indices look solid, leaders holding up well.
- Inflation as per the government gives the Fed all the room it needs to keep easing, but reality is another matter.
- Industrial production, capacity show solid improvement over a weak October.
- Heading in opposite directions? China PMI up for second time after a year of downside while Japan, Europe plunge.

Stocks still sluggish, test nicely, but history says that after late stage QE, they need to prove they can move upside.

Futures rose early in the session on word that China's flash PMI registered over 50 for the second straight month, this after 12 months of negative reads. Of course this is government data and not the measurable results the world can rely upon, but with so much bad data around the globe and the fact that it is the Christmas season, it seems people, as in the kids in the 'Polar Express,' want to believe.

So futures were indeed higher. The belief, whether in China or Christmas spirit, however, started to wane as Santa explained in 'Elf'; seems the Christmas cheer was not enough to get the 'clausometer' high enough for the market to reach flight speed.

Thus the dream of a good old fashioned family Christmas so treasured by Clark Griswold had to be shelved for another day.

Despite a CPI that was plenty tame (-0.3% versus -0.2% expected and 0.2% October; Core 0.1% versus 0.1%), futures eroded. Speaking of tame inflation, however, I must note a personal story: 8 years ago I bought a Kenmore Freezer for $499. That same freezer today costs $799, a 60% increase in price. No, there is no inflation, no problem with dollar value erosion.

Perhaps it was Japan's manufacturing hitting an 11 month low as its depression, similar to Doc Holiday's hypocrisy in 'Tombstone', knows no bounds.

Perhaps it was the impasse in the FCliff negotiations as Pelosi complained about families needing to get together for Christmas, Hanukkah, or Kwanza (versus I suppose having . . . jobs?) and Boehner leaving town BUT leaving everyone his cell phone number just in case.

Or perhaps the EU economic issues were a contributing factor as its PMI missed expectations at 46.3 and auto sales hit their lowest in 19 years!

Futures backed off from morning highs and the indices opened lower. They traded modestly negative all session but then caught a downside bid late in the afternoon as word of an elementary school shooting leaving over 20 dead hit the wires. A modest bounce tried to lift stocks but the indices were all negative at the close.

SP500 -5.87, -0.41%
DJ30 -20.83, -0.70%
DJ30 -35.71, -0.27%
SP400 -0.23%
SOX -0.69%
RUTX -0.06%

Of course there was the immediate crossfire about gun control needs, talk of executive orders by the President if Congress didn't act, etc. It is amazing how when trouble hits the Constitution is thrown in the trash, only resurrected when needed to grow government even bigger, the opposite of what it was written for. Thing is, a lot of what we are seeing lately is tied to this notion that the world is coming to an end on the 21st. That is like a full moon to the tenth power with respect to how people act. When that time passes and if we are all still here, this insanity likely dies down.

As for the market, it pretty much left the session in mourning. But it was not a rout. We looked at our positions again and again during the day and they simply, with just a few exceptions, not getting themselves into trouble. Sure AAPL is in real trouble. It released its iPhone 5 in China and one store had all of two people standing in line to get in. Seems AAPL's cache is domestic, and after a big run it is deleveraging just as Europe, the stock markets, etc. have done in this financial crisis.

Outside of AAPL and a few others, however, the action was very calm, very tame. Of course it was like that after QE3 and then broke down. Still, if the leaders are holding the line and acting well, you see if they can come off of a test with renewed vigor. They didn't do it Friday, but it is Christmas, there is a Christmas rally in place, and if investors want to rally stocks, they remain in position to be rallied.

OTHER MARKETS

Dollar. 1.3160 versus 1.3077 euro. Down hard versus the euro but held up decently against all other currencies. After all, with a race to the bottom your currency doesn't make a lot of moves because markets know other central banks will act to offset any advantage your currency might gain (if you call gutting its value gain) via policy actions.

Bonds. 1.71% versus 1.73% 10 year Treasury. Gapped up after holding at the 200 day EMA Thursday. Hard down on the week, trying to rebound post-FOMC announcement.

Gold. 1696.90, -0.20. Gold really went nowhere in the wake of the Thursday dive lower. It continues to hold below the 50 day EMA and mostly work laterally.

Oil. 86.73, +0.84. Working laterally, trying to put in a higher low after failing at the 50 day EMA to start December. Has not turned tail and totally dropped, instead trying to work laterally and build a support level to rally from.

TECHNICAL SUMMARY

Internals.

NASDAQ
Stats: -20.83 points (-0.7%) to close at 2971.33
Volume: 1.772B (-2.15%)

Up Volume: 889.37M (+128.39M)
Down Volume: 896.25M (-163.75M)

A/D and Hi/Lo: Decliners led 1.05 to 1
Previous Session: Decliners led 1.69 to 1

New Highs: 35 (-4)
New Lows: 39 (+7)

NYSE/S&P
Stats: -5.87 points (-0.41%) to close at 1413.58
NYSE Volume: 588M (-2.49%)

A/D and Hi/Lo: Decliners led 1.12 to 1
Previous Session: Decliners led 2.32 to 1

New Highs: 79 (+11)
New Lows: 30 (-4)

Dow
Stats: -35.71 points (-0.27%) to close at 13135.01

Volume: Trade down 2% on both NASDAQ and NYSE on a holiday Friday and after the CT tragedy took the life out of the market and the country. Volume remains elevated overall, showing some distribution on the week but also the indices are at support so a bit of higher volume shows some buyers hanging in and picking up positions.

Breadth. Very modest at -1.1:1 on both exchanges. No major weakness, just a modest fade on the session and really on the end of the week.

THE CHARTS

SP500. Faded to the 50 day EMA on lighter trade after a tombstone doji Wednesday on the FOMC decision. Very orderly fad and still in position to bounce off the late October low and the August consolidation. As before, it has left itself in position to bounce and all it needs is for the buyers to step in.

NASDAQ. This one is the worrisome one as it gapped through the 200 day SMA, the 50 day EMA and the 20 day EMA. It is undercutting the late October low as well as the July highs. The 200 day SMA and 50 day EMA are virtually coincident, indicating a negative cross is coming. Not a complete blowout of support and of course it can still reverse; seen that a lot the past couple of years. AAPL is a major drag on NASDAQ; the main drag. We have a downside play on NASDAQ at the ready in the event it cannot pull out of this decline.

Russell 2000/SP400. Was up on the day but could not hold it to the close. Still a solid pattern, having filled the Tuesday upside gap out of the consolidation. It is now sitting at the prior consolidation and has put itself in position to bounce once more. Now we wait and see if they can do it.

SP400 midcaps again faded to just below the 10 day EMA and are flirting with undercutting the October and November interim peaks. No major break but needs to start firming and holding for a rebound move.

SOX. Faded further, holding at the 10 day EMA on the close after a brief undercut. Failed at the 200 day SMA and prior peaks and lows and now is at the lick log: will it bounce to take them on again or has it shot its last bolt as Miss Havelock was told in 'For Your Eyes Only'?

DJ30/DJ20. Faded again but held the 10 day EMA nicely. DJ30 is still not a pattern I love but it is working on it, and if it bounces here has put in a right shoulder to a possible inverted head and shoulders. Indeed, the risk/reward is very good for a play up to the interim highs if it does in fact hold at this near support.

DJ20. Four days straight DJ20 has pushed to the top of its range only to be rebuffed. Still fighting at the top of the range.

Summary: The indices edged lower for the most part, and that kept them at near support and in the position to bounce if they just can get the bids. NASDAQ is the problem child given it is joined at the hip with AAPL. Outside of those co-dependent entities the indices are in position to bounce and there was not really any damage done to the leaders on the week.

LEADERSHIP

Big names. AAPL gapped lower close to the November intraday low. Tells NASDAQ's story. AMZN is trying to hang on. EBAY dropped over 1%. Any wonder why the midcaps and small caps were providing most of the leadership?

Semiconductors. Edged lower overall but some names are not bad. TXN was up. INTC has a nice 1-2-3 pullback in place. Some of the smaller names that helped leader earlier are still testing. If they can hold and bounce the chips become much more interesting.

Financial. The banks are still holding their lateral moves, flat-lining for the week. Brokerages, e.g. MS, started moving higher on the week and indeed added gains Friday. Still very promising sector.

Retail. Still as mixed as can be. The discount variety stores are getting hammered. DLTR, DG, even TGT. The big box department stores are not much better, e.g. JWN, M. Specialty retailers are faring better, e.g. LULU, LTD, CAB.

Transports. Truckers still look good, e.g. ODFL, ABFS. Rails are mixed: CSX versus KSU. Airlines have jumped: DAL, LUV.

Drugs/Healthcare. Still setting up nicely. ISRG, OSIR, ARNA, CELG, ONXX.

Summary: There is still leadership and stocks still in great position to move higher.

THE MARKET

SENTIMENT INDICATORS

VIX: 17; +0.44
VXN: 20.19; +0.72
VXO: 17.46; +0.75

Put/Call Ratio (CBOE): 0.89; +0.05

Bulls versus Bears

Bulls: 45.7% versus 43.6% versus 39.3% versus 37.2% versus 38.3% versus 43.6 versus 41.5% versus 45.7% . Okay, right back up to the peak two months back after peaking in September. Working back up with the market bounce. Got close to 35% on the last dip, but no cigar. Background: Undercut 35%, the threshold for bullishness, in early June. 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: 23.4% versus 25.5% versus 27.7% versus 27.7% versus 28.7% versus 27.7% versus 27.7% versus 25.5%. Bears are falling faster than bulls are rising, somewhat ironic given the fiscal cliff issues. Now at the level hit almost two months back just a bulls are rising toward that level. On the last run 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.

MONDAY

Yet another heavy week of economic data along with more fiscal cliff machinations. Throw on top of that the outcry over what happened in CT and the threats of executive orders on guns and you have another week of peace on earth and good will toward men.

More fun on the Hill this week.

The background is what the background is. The Fed has spoken. QE is here to stay until the Fed says it won't be here whether or not it talks of 6.5% unemployment as some important signpost or not. Japan is just now wanting to vote expressly on unending monetary policy. We have followed Japan's path and thus we are nowhere near ending stimulus. Indeed I would put the Fed's focus on employment above its mandated focus on price stability and maximized growth. It has added its own third leg, unemployment.

Thus while specific economic reports and stories will impact the market on a day to day basis, the stage is basically set: open-ended QE and a huge deficit with no economic growth to speak of. The main factors at that point are the Cliff, new regulations from the Administration, and how all of that impacts growth prospects. In short, the market faces the same challenges of the past few months, just closer in time now.

Therefore you go back and look at the technical picture to show how the market is interpreting the events. Right now the indices are testing the second run off the November low. They are at a crucial point of support where they either decide to bounce on into Christmas and make this a true holiday rally spanning both Thanksgiving and Christmas or fold and head lower in a move akin to the post-QE3 rollover.

Leaders are still mostly holding on just fine and are in position to bounce. As noted, Friday we looked at our plays again and again and were pleased with the vast majority. No technical issues to cause alarm.

At the same time, the post QE3 test was very normal and ordinary, and then after a week the bottom dropped. Thus while we like the action of the plays we need to be vigilant and if the leaders cannot make bounces off the pullback then lighten up the upside as the holiday rally slows its momentum.

Have a great weekend!

Support and resistance

NASDAQ: Closed at 2971.33
Resistance:
2977 to 2980 is the bottom of the late October 2012 consolidation, July 2012 peak
2988 is the July 2012 high
The 200 day SMA at 2989
The 50 day EMA at 2989
2999 is the bottom of the August 2012 consolidation
3000 is the February 2012 post-bear market high
3019 is the up trendline from 2011
3024 is the gap point from early May
3026 from 10/2000 low
3042 from 5/2000 low and several other price points
3076 is the late April 2012 high
3090 is the mid-March interim high
3037 is the October low
3101 is the August 2012 high
3134 is the March 2012 post-bear market peak
3171 is the October intraday high
3197 is the September 2012 post-bear market high
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
2962 is the April 2012 low
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2900 is the March 2012 intraday low
2858 is the late July 2011 peak
2847 is the mid-May 2012 low
2838 from the July 2012 lows
2778 from the May 2012 low and June 2012 gap point.
2747 is June 2012 closing low
2726 is June 2012 intraday low

S&P 500: Closed at 1413.58

Resistance:
1425 from May 2008 closing highs and the October 2012 low
1427 is the August 2012 peak
1434 from early November 2012
1433 from August 2007 closing lows
1440 from November 2007 closing lows
1446 is a short term down TL from the September 2012 peak
1466 is the September closing high
1471 is the October 2012 intraday high
1475 is the September 2012 high
1499 from January 2008
1539 from June 2007

Support:
The 50 day EMA at 1411
1408 is the late October 2012 range closing low
1406 is the early May 2012 peak
1402.22 - 1400 is the closing low of the August 2012 lateral consolidation
The 200 day SMA at 1387
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
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 13,135.01

Resistance:
13,297 is the April 2012, prior post bear market high
13,300 to 13,331 is the August 2012 post-bear market high
13,653 is the September 2012 high
13662 is the October 2012 intraday high
13,668 from 12-2007 peak
13,692 from 6-2007 peak
14,022 from 7-07 peak

Support:
The 50 day EMA at 13,085
13,058 from the May 2008 peak on that bounce in the selling
13,056 is the February 2012 high
The 200 day SMA at 13,004
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012
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

December 14 - Friday
- CPI, November (8:30): -0.3% actual versus -0.2% expected, 0.1% prior
- Core CPI, November (8:30): 0.1% actual versus 0.1% expected, 0.2% prior
- Industrial Production, November (9:15): 1.1% actual versus 0.3% expected, -0.7% prior (revised from -0.4%)
- Capacity Utilization, November (9:15): 78.4% actual versus 78.0% expected, 77.7% prior (revised from 77.8%)

December 17 - Monday
- Empire Manufacturing, December (8:30): 2.0 expected, -5.2 prior
- Net Long-Term TIC Fl, October (9:00): $3.3B prior

December 18 - Tuesday
- Current Account Imbalance, Q3 (8:30): -$103.6B expected, -$117.4B prior
- NAHB Housing Market , December (10:00): 47 expected, 46 prior

December 19 - Wednesday
- MBA Mortgage Index, 12/15 (7:00): 6.2% prior
- Housing Starts, November (8:30): 873K expected, 894K prior
- Building Permits, November (8:30): 876K expected, 866K prior
- Crude Inventories, 12/15 (10:30): 0.843M prior

December 20 - Thursday
- Initial Claims, 12/15 (8:30): 345K expected, 343K prior
- Continuing Claims, 12/08 (8:30): 3192K expected, 3198K prior
- GDP - Third Estimate, Q3 (8:30): 2.7% expected, 2.7% prior
- GDP Deflator - Third Est., Q3 (8:30): 2.7% expected, 2.7% prior
- Existing Home Sales, November (10:00): 4.90M expected, 4.79M prior
- Philadelphia Fed, December (10:00): 1.0 expected, -10.7 prior
- Leading Indicators, November (10:00): -0.2% expected, 0.2% prior
- FHFA Housing Price Index, October (10:00): 0.2% prior
- Natural Gas Inventories, 12/15 (10:30): 2 prior

December 21 - Friday
- Personal Income, November (8:30): 0.3% expected, 0.0% prior
- Personal Spending, November (8:30): 0.3% expected, -0.2% prior
- PCE Prices - Core, November (8:30): 0.1% expected, 0.1% prior
- Durable Orders, November (8:30): 0.2% expected, 0.5% prior (revised from 0.0%)
- Durable Orders -ex Transports, November (8:30): -0.4% expected, 1.8% prior (revised from 1.5%)
- Michigan Sentiment - Final, December (9:55): 74.0 expected, 74.5 prior

[ReturntoSender]

InvestmentHouse Weekend Market Summary:

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

-Fed officials do some quick explaining of the FOMC minutes.
- Fed's Bullard glibly acknowledges Fed's money printing ways.
- Non-Farm Payrolls rise and so does unemployment rate. Don't worry, unemployment stimulates employment (a.k.a. the Larry Summers exit theory).
- Small caps and midcaps bounce right back to the lead.
- Big move, could rest, but many look ready to move still.
- AAPL remains a drag, but other leaders look very ready to push the market higher.

Stocks shake off FOMC QE gaffe with the help of a money printing gaffe.

Thursday closed out the session on shaky ground as the FOMC minutes more than hinted QE would end at some point in 2013. When it ends depends upon which 'some' of the three groups of 'some' referenced in the minutes is in control. I have a feeling that none of the groups of some include Bernanke, but the market likes to view things in the worst light and thus struggled through the session.

Friday the news was a bit better (I suppose; none of the news is great) as more economic data hit (e.g. the jobs report) and the Fed engaged in some fancy footwork as two Fed heavy hitters explained how the minutes in no way suggested QE was going to end anytime soon.

It was enough to calm Thursday's nerves and allow stocks to rise. Futures were lower, modestly so, but they grew into the open and chugged steadily higher all session. A last hour bid pushed stocks nicely higher but then sellers entered on the back half of that hour and took away that surge. That took some luster off the day but it still left the indices higher overall.

SP500 7.10, 0.49%
NASD 1.09, 0.04%
DJ30 43.85, 0.33%
SP400 0.75%
SOX 0.04%
RUTX 0.76%

Not a bad result given the market was rattled by the Fed Thursday as noted. Indeed, SP400 midcaps and the Russell 2000 small caps pushed further to new all-time highs as SP500, the Friday leader of the large caps, gets closer to matching a 5 year high itself, led again by financial stocks. Not a bad result to a very strong week, aided of course by the Monday 'let's make a deal' surge and the Wednesday 'we have a deal' surge.

Was that most of the year's gain right there? Could be. The economy is still crappy no matter what terms or reference points you look at, there is still the debt ceiling and entitlement 'fight' ahead (not sure it will be a fight this time), and as we found out Friday AFTER the close, the CBO erred in its assessment of the deficit impact of the 'fiscal cliff deal': it does NOT add $4T to the deficit over 10 years. It adds $4.6T to the debt. Glad that is cleared up.

These are heavy drags on the economy and thus the stock market. The economy CANNOT grow enough to pay off $16.4T in current debt and $50T to $100T of promised additional debt. As the President likes to say, the math doesn't work. Although he obviously failed math given he believes we cannot cut our way to balance but have to raise taxes to do so. Mr. President, we could confiscate (not tax, but outright take) all the wealth in the country and not pay the promises made. That is not a tax problem but a spendthrift problem.

Back to the Fed. After the market was thoroughly spooked Thursday by a public relations gaffe when the Fed released its minutes that actually discussed an economy without massive quantitative easing, it was out in a very planned response Friday.

Indeed, the Fed appeared so intent upon calming the markets that the explanations went too far. Mr. Bullard and Mr. Lacker (the latter being the most hawkish on the FOMC and thus adding credibility to the backtrack) explained to CNBC's chief economist Steve 'think inside the textbook' Leisman that the economy was simply not that great (how reassuring!) and that the Fed was going to have to keep the stimulus going for the foreseeable future. Of course they all agreed great care must be used in spending the money we have to which Leisman said "you have a lot of dollars . . . you get to print them." Bullard, a bit too casually, replied "Aah, indeed we do."

"You want some money Steve? I have the printer in my trunk."

Of course this is exactly what Chairman Bernanke told Congress the Fed could not and would not do. But then again, it is all semantics. Printing and buying your own treasuries is denied as printing money, but the effect is $85B more in the system each month right now.

Even today, a 'new' idea for the Treasury to mint a $1T platinum coin and then borrow against it at the Fed was seen as a rational way to avoid the debt ceiling and maintain the 'full faith and credit' of the US without any lengthy battle. Of course the only way such a coin would be viewed as worth anything would be the promise to back it with $1T worth of platinum. The problem is, to date in the history of the world, 16 tons of platinum has been mined. At $1557/ounce value, it would take 18,000 tons of platinum to back a $1T platinum coin and give it any value.

As you can see, it is a stupid idea in terms of 'funding' the debt. It only continues the charade that the dollar or $1T coin is backed by anything. It is simply a mechanism to use to try and avoid a fight with Congress about the debt ceiling. Hey, if you pretend the problem is not there no one will care, right? At least not the US electorate that is happy to be blind to our financial problems until that day they run out of other people's money.

Jobs beat but unemployment rate rises.

After the Bullard comments the jobs data makes more sense, i.e. the unemployment rate rose despite rising jobs. How so? Remember Bernanke pointed out 6.5% unemployment as a marker for withdrawing QE. How appropriate unemployment ticked higher to 7.8% from 7.7% even as jobs created topped expectations.

Nonfarm Payrolls, December (8:30): 155K actual versus 150K expected, 161K prior (revised from 146K)
Nonfarm Private Payrolls, December (8:30): 168K actual versus 145K expected, 171K prior (revised from 147K)
Unemployment Rate, December (8:30): 7.8% actual versus 7.7% expected, 7.8% prior (revised from 7.7%)
Hourly Earnings, December (8:30): 0.3% actual versus 0.2% expected, 0.3% prior (revised from 0.2%)
Average Workweek, December (8:30): 34.5 actual versus 34.5 expected, 34.4 prior

You cannot have employment falling if the Fed is going to be successful and devalue our currency to the point debts can be paid. Seems illogical but it isn't: The economy is not growing fast enough and cannot grow enough to pay down the debt and it certainly won't grow enough with the big government policies in place and that are going to stay in place. It has to be through devaluing our currency. So, it is okay for unemployment to rise so it can continue the process, as Bullard stated, by printing more money.

Oh, and by the way, lest you think the rate is just made up (well, actually it is), consider the following. First, there are 28.7M citizens on disability. How can an economy be healthy with that many people unable to find jobs, have run out of unemployment, and use disability to get by. Further, the jobs growth was AGAIN all centered in the 55 to 69 demographic group. The 18 to 29 age group suffers unemployment at 11.5%!! Go to college, study hard, get a degree, don't worry about $100+K of debt, and . . . stay unwillingly unemployed.

Reminds me of the old Billy Joel song 'Allentown':

Well we're waiting here in Allentown
For the Pennsylvania we never found
FOR THE PROMISES THE TEACHERS GAVE
IF WE WORKED HARD
IF WE BEHAVED.

SO OUR GRADUATIONS HANG ON THE WALL
But they never really helped us at all
No they never told us what was real
Iron and coke, chromium steel

And we're waiting here in Allentown.
But they've taken all the coal from the ground
And the union people crawled away . . .

But not to worry. Labor Secretary Solis told us in her rounds on the financial stations that despite tens of millions still out of work either collecting unemployment, disability, or nothing, the extension of unemployment benefits will save us all.

Yes, she played the tired line, saying that thanks to the extension of benefits 'millions and millions' of jobs were saved, using the old 'unemployment leads to employment' argument that prompted Obama's first economic advisor Larry Summers to get the hell out of Dodge lest his reputation be sullied by what was going to be the weak, pathetic recovery we have suffered through. Ms. Solis stated that for every dollar of unemployment benefits $2 of economic activity results. That is an old Keynes theory that of course does not hold up on reality. If that were the case, let's all sit back, collect unemployment dollars, spend them, and enjoy twice the economic strength we have now.

Oh, but that ignores the reality that the money has to come from SOMEONE ELSE who actually IS productive and is making the economy work. TRANSFERRING money from one person to another CREATES NOTHING. Again, if it did then the $6+T the President spent in his first term would have produced over $12T in economic activity. It obviously did not because we are still $6T+ more in debt than we were. Yes, the math just doesn't work, but if you don't know what you are talking about you don't even know you look the fool. Of course the anchors on the financial stations never called her on any of this so it was all an exercise in further 'dumbing down' the debate.

Let's Not Forget the Debt Ceiling and those pesky Entitlement cuts!

Even with worries already rising regarding the debt ceiling and promised (a.k.a. nonexistent) entitlement cuts, stocks still managed gains. Perhaps it was the knowledge that our nation's leaders are already hard at work resolving those issues.

The President, Harry Reid, and John Boehner take a break from debt ceiling/entitlement cut negotiations. Hey, if Pelosi can Photoshop, why can't we?

OTHER MARKETS

Dollar. 1.3073 versus 1.3066. Surged again, moving through the 200 day SMA on the high but could not hold it, reversing just below the November recovery peak. The dollar surged Thursday on the thought of taking back QE. Yes it was up Friday, but that sure looks like a possible reversal.

Bonds. 1.92% versus 1.89% 10 year. The 10 year lost more ground, but overall bonds, as shown in the chart, reversed and held the September low. Ready for a relief bounce after getting hammered on the week with a deal, the FOMC minutes. Friday the Fed-speak helped most bonds recover, but not the 10 year, at least not yet.

Gold. 1648.80, -25.80. Gold was bombed again, gapping below the 200 day SMA and selling below the late December lows. Then came Bullard and Lacker, and gold recovered off its low. Yes still a heavy loss but bouncing back as the threat or fear of losing QE was back-burnered for now.

Oil. 93.09, +0.17. Oil sold to the 200 day SMA but then recovered as the dollar lost its early surge. That kept oil above the 200 day SMA it broke through on Wednesday on the Cliff deal. Still some resistance at 94.50, but not insurmountable.

TECHNICAL SUMMARY

Internals.

NASDAQ
Stats: +1.09 points (+0.04%) to close at 3101.66
Volume: 1.743B (+0.14%)

Up Volume: 1.18B (+308.04M)
Down Volume: 529.49M (-370.97M)

A/D and Hi/Lo: Advancers led 1.77 to 1
Previous Session: Decliners led 1.09 to 1

New Highs: 135 (-4)
New Lows: 6 (-6)

S&P
Stats: +7.1 points (+0.49%) to close at 1466.47
NYSE Volume: 573M (-10.47%)

A/D and Hi/Lo: Advancers led 2.74 to 1
Previous Session: Advancers led 1.1 to 1

New Highs: 398 (-34)
New Lows: 40 (-11)

Dow
Stats: +43.85 points (+0.33%) to close at 13435.21

THE CHARTS

SP500. Started flat, then a steady, albeit unspectacular move higher to close near session highs and indeed at a new post-bear market closing high. It missed a new high by 8 points. Financials led the move and thus led SP500 higher.

NASDAQ. AAPL sold off and thus NASDAQ was hampered, closing flat. Tight doji, however, and holding its move past the August consolidation. 3140ish is next resistance, and as long as it holds the gap that is reachable.

Russell 2000/SP400. Another solid session off the Thursday continuation doji, another new high. The children are indeed leading, not testing back at all. After this big week, likely a test toward the old high (864.70 closing), but wasn't showing that on Friday.

SP400 midcaps put in another all-time high again with a solid move of their own. Very solid week, showing now problems, but after such a move a bit of backfilling is normal.

SOX. As with NASDAQ, a doji, going nowhere. But, that is not bad as SOX holds its gap higher as well.

DJ30/DJ20. Modest gain but closing near the session high though well off the closing highs at 13,600. Hey, pretty solid action.

DJ20. Still running and closing in on a post-bear market high of its own at5628 (closed at 5534).

Summary: After taking a day off on the FOMC worries, the same leading indices led higher again with the SP500 coming along better. NASDAQ is a worry but for now it is following.

LEADERSHIP

Big names. Again sloppy. AAPL posted a second down session after gapping upside Wednesday but was unable to hold all of that move. EBAY was up, holding where it needed to but nothing great. Ditto AMZN. GOOG was the performer, making us a lot money on the week and we banked some Friday.

Financial. Strong all week and on Friday. C, BAC, and JPM. Strong.

Retail. More trouble. LULU gapped below the 50 day EMA and glad we got out after the gap and reversal Wednesday. ROST is pretty interesting after its gap through resistance. Many others are struggling though hanging on, e.g. M, JWN.

Technology. Still some interesting, still some struggling. FFIV is volatile but interesting. KLIC is in a nice test. SNDK looks very interesting. RAX as well, and ADTN is heading upside.

Industrial: CAT is holding that big Wednesday gap as is CMI, TEX and DE. Not in buy position, but good moves supporting the overall market move.

Transports. Truckers look good as JBHT and ODFL sport new rally highs. ABFS continues its trend reversal. KSU in rails is surging to a rally high. Even airlines are rallying, e.g. DAL, LUV.

THE MARKET

SENTIMENT INDICATORS

VIX: 13.83; -0.73
VXN: 15.51; -1.6
VXO: 13.8; -0.21

Put/Call Ratio (CBOE): 0.82; -0.02

Bulls versus Bears

Bulls: 47.8% versus 46.8% versus 45.7% versus 43.6% versus 39.3% versus 37.2% versus 38.3% versus 43.6 versus 41.5% versus 45.7% . Bumping 50% level, getting more confident but still off the late September peak. It is similar to the pattern in September when the market started a two month selloff, so bears watching. Background: Undercut 35%, the threshold for bullishness, in early June. 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 24.5% versus 23.4% versus 25.5% versus 27.7% versus 27.7% versus 28.7% versus 27.7% versus 27.7% versus 25.5%. Holding flat even as the market surged. Not buying it quite yet as it hovers right at the last September lows. As with the bulls, it bears watching. 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.

MONDAY

Quite the week and it was a short one. But there was the anticipation of the deal and then the 'deal' itself. Gee, sounds like a Grisham novel. Just read 'The Broker,' and wonder why I finished it. Typos, glaring grammatical errors, unending descriptions of Italy (uses 'ancient' to describe the places multiple times in one paragraph), unending Italian lessons, a major plot miss, and then after endless, boring descriptions of the towns, a short, fast ending with many untied threads. If he had submitted it under a pseudo name it would have never made it to print. But, I digress.

Okay. The biggest opening week for a year in, well, years. With such big moves the market is primed for a test next week, right? It always is after these kind of moves, but if you look at individual stocks, many are not overbought at all. Yes they gapped upside on Wednesday, but just because a stock gaps does not mean it immediately sells back. Indeed on strong moves a stock will gap several times before ultimately rolling over after the run is out of gas and then corrects and fills the gaps.

Thus we will continue to look for the upside positions as many remain set up well to continue the move. Remember, rallies occur in waves. Some rise first and then rest while others complete their patterns and step up to lead. STX, SNDK, EBAY, CTRP and many others still have a lot of room to run.

A rally lives by its leadership. This market still shows plenty of leadership in position to move, even with AAPL flopping around like a carp on hot pavement, and thus we still look for upside.

AAPL gasps carp-like, struggling to regain its cache.

Of course you never get too cocky. Good moves are tested and many of these stocks can test a bit more before moving further upside. Doesn't mean a selloff, just means you have to be patient, let them finish setting up, and when they break upside, move in.

A key will be NASDAQ and its ability to hold its Wednesday gap. It has struggled since, but it has not given up ground. It needs to finish the test this coming week and provide some leadership in the continuing move. Again, AAPL is a major problem given its market weight. It is taking GOOG to neutralize AAPL's weakness, and GOOG does look good. Perhaps NASDAQ can overcome AAPL in numbers as other NASDAQ stocks make the move.

Have a great weekend!

Support and resistance

NASDAQ: Closed at 3101.66

Resistance:
3104-3112 from August and mid-October peaks.
3134 is the March 2012 post-bear market peak
3171 is the October intraday high
3197 is the September 2012 post-bear market high
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
3101 is the August 2012 high
3037 is the October low
3090 is the mid-March interim high
3076 is the late April 2012 high
3062 is the December 2012 prior peak
The 2011 up trendline at 3045
3042 from 5/2000 low and several other price points
3024 is the gap point from early May
The 50 day EMA at 3011
3000 is the February 2012 post-bear market high
2999 is the bottom of the August 2012 consolidation
The 200 day SMA at 2991
2988 is the July 2012 high
2977 to 2980 is the bottom of the late October 2012 consolidation, July 2012 peak
2962 is the April 2012 low
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2900 is the March 2012 intraday low
2858 is the late July 2011 peak
2847 is the mid-May 2012 low
2838 from the July 2012 lows

S&P 500: Closed at 1466.47

Resistance:
1466 is the September 2012 closing peak and rally closing high
1471 is the October 2012 intraday high
1475 is the September 2012 high
1499 from January 2008
1539 from June 2007

Support:
1445 is a short term down TL from the September 2012 peak
1440 from November 2007 closing lows
1434 from early November 2012
1433 from August 2007 closing lows
1427 is the August 2012 peak
1425 from May 2008 closing highs and the October 2012 low
The 50 day EMA at 1422
1408 is the late October 2012 range closing low
1406 is the early May 2012 peak
1402.22 - 1400 is the closing low of the August 2012 lateral consolidation
The 200 day SMA at 1391
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
1332 is the early March 2011 peak

Dow: Closed at 13,435.21

Resistance:
13,557 to 13,662
13,653 is the September 2012 high
13662 is the October 2012 intraday high
13,668 from 12-2007 peak
13,692 from 6-2007 peak
14,022 from 7-07 peak

Support:
13,413 from the late September 2012 low
13,300 to 13,331 is the August 2012 post-bear market high
13,297 is the April 2012, prior post bear market high
The 50 day EMA at 13,145
13,058 from the May 2008 peak on that bounce in the selling
13,056 is the February 2012 high
The 200 day SMA at 13,017
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012
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

January 2 - Wednesday
- MBA Mortgage Index, 12/29 (7:00): -12.3% prior
- ISM Index, December (10:00): 50.7 actual versus 50.5 expected, 49.5 prior
- Construction Spending, November (10:00): -0.3% actual versus 0.5% expected, 0.7% prior (revised from 1.4%)

January 3 - Thursday
- MBA Mortgage Index, 12/29 (7:00): -10.4% actual versus -12.3% prior
- Challenger Job Cuts, December (7:30): -22.1% actual versus 34.4% prior
- ADP Employment Chang, December (8:15): 215K actual versus 140K expected, 148K prior (revised from 118K)
- Initial Claims, 12/29 (8:30): 372K actual versus 365K expected, 362K prior (revised from 350K)
- Continuing Claims, 12/22 (8:30): 3245K actual versus 3200K expected, 3201K prior (revised from 3206K)
- Natural Gas Inventor, 12/29 (10:30)
- FOMC Minutes, 12/12 (14:00): Everyone agreed QE should be cut back or eliminated at some point in 2013
- Auto Sales, December (14:00): 5.6M prior
- Truck Sales, December (14:00): 6.5M prior

January 4 - Friday
- Nonfarm Payrolls, December (8:30): 155K actual versus 150K expected, 161K prior (revised from 146K)
- Nonfarm Private Payr, December (8:30): 168K actual versus 145K expected, 171K prior (revised from 147K)
- Unemployment Rate, December (8:30): 7.8% actual versus 7.7% expected, 7.8% prior (revised from 7.7%)
- Hourly Earnings, December (8:30): 0.3% actual versus 0.2% expected, 0.3% prior (revised from 0.2%)
- Average Workweek, December (8:30): 34.5 actual versus 34.5 expected, 34.4 prior
- Factory Orders, November (10:00): 0.0% actual versus 0.5% expected, 0.8% prior
- ISM Services, December (10:00): 56.1 actual versus 53.5 expected, 54.7 prior
- Natural Gas Inventor, 12/29 (10:30): -135 BCF actual
- Crude Inventories, 12/29 (11:00): -11.12M actual

January 8 - Tuesday
- Consumer Credit, November (15:00): $10.6B expected, $14.2B prior

January 9 - Wednesday
- MBA Mortgage Index, 01/05 (7:00)
- Crude Inventories, 01/05 (10:30): -11.1M prior

January 10 - Thursday
- Initial Claims, 01/05 (8:30): 366K expected, 372K prior
- Continuing Claims, 12/29 (8:30): 3200K expected, 3245K prior
- Wholesale Inventories, November (10:00): 0.1% expected, 0.6% prior
- Natural Gas Inventories, 01/05 (10:30): -135BCF prior

January 11 - Friday
- Trade Balance, November (8:30): -$41.8B expected, -$42.2B prior
- Export Prices ex-ag., December (8:30): -0.7% prior
- Import Prices ex-oil, December (8:30): -0.2% prior
- Treasury Budget, December (14:00): -$86.0B prior

[ReturntoSender]

From Briefing.com: 4:15 pm : Equities began today's session on a positive note after China's trade surplus expanded to $31.6 billion due to strong export growth. The upbeat open was followed by a late-morning stumble, but the S&P 500 showed resilience and climbed to fresh highs. The benchmark index ended with a gain of 0.8%.

The financial sector paced the advance, and the SPDR Financial Select Sector ETF (XLF 17.15, +0.21) settled higher by 1.3%. The financial sector proxy ETF ended at a fresh 52-week high with most majors scheduled to announce their fourth quarter earnings next week. Tomorrow morning, Wells Fargo (WFC 35.40, +0.69) will be the first notable sector component to report. The Capital IQ consensus expects the bank to reveal earnings of $0.89 on $21.26 billion in revenue. An in-line report would indicate healthy year-over-year bottom line growth of nearly 22.0%. Looking at other majors, Bank of America (BAC 11.78, +0.35) gained 3.1% and Morgan Stanley (MS 20.34, +0.72) advanced 3.7%.

The technology sector spent the majority of the session in the red, but late-day strength in the shares of Apple (AAPL 523.51, +6.41) saw the stock rise by nearly $10, and pushed the tech sector higher. The notable bid followed comments from Apple's chief of marketing who said the company "is not interested" in making cheap, low-profit products. The largest tech company was in the news earlier this morning when Reuters reported Chief Executive Officer Tim Cook met with the chairman of China Mobile (CHL 58.75, +1.45) to talk about "matters of cooperation." China Mobile, which has over 700 million subscribers, does not currently offer Apple products on its network.

Among names reacting to analyst comments, Microsoft (MSFT 26.46, -0.24) shed 0.9% after Morgan Stanley downgraded the stock to ‘Equal-Weight' from ‘Overweight.'

Teen retailers lagged the broader market after Aeropostale (ARO 13.24, -0.13) issued downside earnings guidance due to disappointing holiday sales. Aeropostale shed 0.9% and peer American Eagle Outfitters (AEO 19.94, -0.69) settled lower by 3.3%.

Elsewhere, Tiffany (TIF 60.40, -2.86) slumped 4.5% after the jewelry retailer said it expects its fourth quarter earnings to be near the low end of its prior guidance range. Peers Blue Nile (NILE 36.58, -0.57) and Coach (COH 57.49, -0.47) both lost near 1.0%.

The latest weekly initial jobless claims count totaled 371,000, which was worse than the 364,000 that had been expected by the Briefing.com consensus. The tally was above the revised prior week count of 367,000. As for continuing claims, they fell to 3.109 million from 3.236 million.

In tomorrow's economic data, November trade balance, export prices ex-agriculture, and import prices ex-oil will all be reported at 8:30 ET. Lastly, the U.S. Treasury will release its December budget at 14:00 ET.DJ30 +80.71 NASDAQ +15.95 SP500 +11.10 NASDAQ Adv/Vol/Dec 1443/1.70 bln/1036 NYSE Adv/Vol/Dec 1938/726.9 mln/1046

3:30 pm :

Crude oil spent its entire session in the black but pulled-back from its session high of $94.61 per barrel set at the pit trade open. Still, it settled 0.8% higher at $93.82 per barrel as a weaker dollar index provided the energy component with support. In addition, reports indicated that there was a pipeline explosion in Yemen that halted exports.
Natural gas rose on strong inventory data that showed a draw of 201 bcf when a draw of 189 bcf was anticipated. It climbed as high as $3.21 per MMBtu and settled with a 2.6% gain at $3.19 per MMBtu.
Gold rose during today's pit trade as the dollar index weakened. Strength came on the ECB press conference where President Mario Draghi noted that today's ECB's decision to leave benchmark rate unchanged was unanimous. The yellow metal came off its session low of $1660.30 per ounce and traded in a consolidative fashion near its session high of $1678.80 per ounce in afternoon action. It eventually settled at $1677.90 per ounce, or 1.3% higher.
Silver also trended higher during today's floor session. It lifted off its session low of $30.45 per ounce and settled at $30.93 per ounce, booking a gain of 2.2%.

4:30PM JDSU appoints Rex Jackson Chief Financial Officer (JDSU) 13.47 -0.05 : Co announced two executive appointments, naming Rex Jackson as executive vice president and chief financial officer, and Susan Spradley as senior vice president with responsibility for the development and management of the company's communications test and measurement product portfolio.

Jackson reports to Tom Waechter, JDSU's president and chief executive officer, and has served as acting CFO since September 2012. He joined JDSU two years ago as senior vice president, Business Services, with responsibility for several corporate functions, including Information Technology, where he has driven significant operational improvements. Jackson brings strong financial management experience to the company.

Prior to JDSU, he served as executive vice president and chief financial officer at Symyx Technologies, where he led the company's acquisition of MDL Information Systems and subsequent merger with Accelrys. Jackson also served as acting CFO at Synopsys and held executive positions with Avago, AdForce and Read-Rite

9:05AM Benchmark Electronics expects to exceed Q4 2012 guidance; co sees revs of $580-610 mln vs $594.6 mln Capital IQ Consensus Est, sees EPS of $0.26-0.31 vs $0.29 consensus (BHE) 16.63 : Co announced that it expects to report revenue and earnings per share modestly above the high end of guidance for Q4 2012. The co provided Q4 revenue guidance of $580 million to $610 million, with corresponding diluted EPS between $0.26 to $0.31 (excluding restructuring and Thailand flood related charges) on October 25, 2012.

9:02AM SolarCity secures industry-first master backup servicing agreement (SCTY) 15.65 : Co has created a new option for its solar investment funds. The company has completed what it believes to be the industry's first master backup servicing agreement with an AA- rated financial institution. Developers in a range of mature asset classes such as mortgages, auto financing and student loans often work with large financial institutions to provide investors additional insurance against asset servicing risk in return for a lower cost of capital.

8:33AM First Solar begins construction of Campo Verde solar project (FSLR) 31.90 : Co announced it has started constructing the 139 megawatt Campo Verde Solar Project, located near El Centro in Imperial County, Calif. The solar power plant is expected to be completed in 2013. Economic benefits of the project include approximately 250 construction jobs, as well as over $230 million in new economic activity to the Imperial Valley, according to a county study.

8:12AM Nokia: Sees Q4 exceeding previous forecast (NOK) 3.75 : Nokia now estimates that Devices & Services has exceeded expectations and achieved underlying profitability in the fourth quarter 2012. Mobile Phones business unit and Lumia portfolio delivered better than expected results. Operating expenses were lower than expected. Devices & Services non-IFRS operating margin for the fourth quarter 2012 now expected to be between break even and positive 2 percent. Seasonality and competitive environment are expected to have a negative impact on the first quarter 2013 underlying profitability for Devices & Services, compared to the fourth quarter 2012. Nokia also estimates that Nokia Siemens Networks has exceeded expectations for the fourth quarter 2012. Nokia Siemens Networks non-IFRS operating margin for the fourth quarter 2012 now expected to be between 13 and 15 percent. Seasonality is expected to have a negative impact on the first quarter 2013 underlying profitability for Nokia Siemens Networks, compared to the fourth quarter 2012.

Preliminary financial information for the fourth quarter 2012: Nokia currently estimates that Devices & Services net sales in the fourth quarter 2012 were approximately EUR 3.9 billion, with total device volumes of 86.3 million units.
Mobile Phones net sales of approximately EUR 2.5 billion, with total volumes of 79.6 million units of which 9.3 million units were Asha full touch smartphones.
Smart Devices net sales of approximately EUR 1.2 billion, with total volumes of 6.6 million units of which 4.4 million units were Nokia Lumia smartphones.
Total smartphone volumes of 15.9 million units composed of 9.3 million Asha full touch smartphones, 4.4 million Lumia smartphones and 2.2 million Symbian smartphones.
Devices & Services Other net sales of approximately EUR 0.2 billion, including a positive impact from non-recurring IPR income of approximately EUR 50 million.
Nokia currently estimates that Devices & Services non-IFRS operating margin for the fourth quarter 2012 was between break even and positive 2 percent, which compares to the previous outlook of approximately negative 6 percent, plus or minus four percentage points.
Devices & Services non-IFRS operating margin includes a positive impact from non-recurring IPR income of approximately EUR 50 million.
Preliminary outlook for the first quarter 2013: Nokia expects its non-IFRS Devices & Services operating margin in the first quarter 2013 to be approximately negative 2 percent, plus or minus four percentage points. This outlook is based on Nokia's expectations regarding a number of factors, including:
competitive industry dynamics continuing to negatively affect the Smart Devices and Mobile Phones business units;
the first quarter being a seasonally weak quarter; - consumer demand, particularly for our Lumia and Asha smartphones; - continued ramp up for our new Lumia smartphones;
expected cost reductions under Devices & Services' restructuring program; and
the macroeconomic environment. Nokia expects Location & Commerce non-IFRS operating margin in the first quarter 2013 to be negative due to lower recognized revenue from internal sales, which carry higher gross margin, and to a lesser extent by a negative mix shift within external sales.
Nokia and Nokia Siemens Networks expect Nokia Siemens Networks non-IFRS operating margin in the first quarter 2013 to be approximately positive 3 percent, plus or minus four percentage points. Nokia will provide more details when it reports fourth quarter and full year 2012 results on January 24, 2013.

7:56AM Kopin announces agreement to sell III-V assets to IQE plc for $75 mln (KOPN) 3.52 : Co announced that it had entered into an agreement to sell its III-V assets to IQE plc, a UK-based designer and supplier of advanced semiconductor wafers. The all-cash, $75 million transaction will enable Kopin to focus exclusively on continued commercial development of Golden-i, the Company's mobile communications technology platform, as well as on its microdisplay products. The closing of the transaction is expected to occur next week and is subject to customary closing conditions.

1:59AM Alpha and Omega Semi announces CEO succession plan (AOSL) 8.84 : Co announces it has established a CEO succession plan and has retained an executive search firm to seek a new CEO as its founder, Chairman and CEO Dr Chang plans for retirement. During the search period, AOS' business operations will continue as usual with Dr. Chang as the CEO. He will work closely with the new leader once identified to ensure a seamless transition. Upon completion of the transition, Dr. Chang will continue to serve in the capacity of Chairman of the Board.

QuickLogic (QUIK) announced that it expects to report Q4 revenue of approximately $3.1 mln compared to previously announced guidance of approximately $3.7 mln, plus or minus 10%. New product revenue is expected to be approximately $1.0 mln while mature product revenue is expected to be approximately $2.1 mln as compared to previously announced guidance of approximately $1.6 mln and $2.1 mln plus or minus 10%, respectively. "While I'm disappointed in our revenue performance for the fourth quarter, we are continuing to make progress in our long term customer and partner strategy," said Andy Pease, QuickLogic's President and CEO." This progress includes the initial shipment on the new handset design mentioned in our last conference call, and 3 new orders that were booked in December for our ArcticLink III platform, two of which utilize our MIPI interface. I will provide more details on our progress during our upcoming earnings conference call."

Parametric (PMTC) disclosed that on January 8, 2013, Parametric Technology Corporation committed to a plan to further restructure its workforce and related facilities. The restructuring furthers PTC's commitment to enhance long-term profitability and is a component of PTC's previously announced plan to achieve non-GAAP EPS of $1.70 to $1.80 for fiscal year 2013 (vs $1.75 Capital IQ Consensus Estimate). PTC will record a restructuring charge of approximately $15 million for its second fiscal quarter ending March 30, 2013, of which approximately $14.5 million is attributable to termination benefits and approximately $0.5 million is attributable to facility consolidations. The restructuring will result in cash expenditures of approximately $15 million during fiscal year 2013. The timing of the reductions in force will vary by country based on local legal requirements, but PTC expects that substantially all affected employees will be separated from PTC by the end of the second fiscal quarter. While PTC expects the restructuring to be substantially completed in the second fiscal quarter of 2013, the full impact of the expense reductions will not be realized until the third fiscal quarter of 2013.

DragonWave (DRWI) reported third quarter loss of $0.36 per share, $0.05 worse than the Capital IQ consensus of ($0.31), while revenues rose 226.3% year/year to $38.5 million versus the preannouncment of approximately $39 million on Dec 6 and the $41.7 million consensus. The company issued downside guidance for the fourth quarter with revenues of $40-45 million versus the $47.40 million consensus. Revenue through the new Nokia Siemens Networks channel totaled $25.6 million in the quarter. Gross margin for Q3 was 19%, compared with 41% in 3Q12 and 15% in 2Q13. The gross margin in the second quarter of fiscal year 2013 reflects the inclusion of an inventory impairment provision of $2.6 million. Without the inventory provision, the gross margin in the second quarter was 21%. "While visibility into our revenue pipeline has been challenging, we have continued to work hard on completing the integration activities of our strategic partnership with Nokia Siemens Networks to position ourselves for growth."

Richardson Elec (RELL) reported second quarter (Nov) earnings of $0.04 per share, $0.01 worse than the two analyst estimate of $0.05, while revenues fell 6.4% year/year to $36.6 million versus the $36.18 million two analyst estimate. Gross profit during the second quarter of fiscal 2013 was impacted by unabsorbed manufacturing labor and overhead of $0.3 million, or 0.8% of net sales. "Sales in the first half of our fiscal year were impacted by slowing growth in Asia combined with global financial instability and a decline in demand for semiconductor wafer fabrication components. We have adjusted resources to align our costs with current sales expectations. With an outlook for improving global economic conditions, we anticipate sales for the second half of our fiscal year to be up significantly over the first half...Cash and investments at the end of our second quarter were $147.3 million. We used $6.0 million to repurchase 0.5 million shares during the second quarter of fiscal 2013. As of today, we have repurchased a total of 3.5 million shares for $44.2 million under our share repurchase authorization and currently have $30.8 million remaining."

[ReturntoSender]

From Briefing.com: 4:25 pm : The major averages ended today's session near their opening levels. The Dow was an exception as the blue chip index finished higher by 0.3%. The 30-stock average outperformed as 19 components registered gains.

The Nasdaq trailed the broader market for the duration of the day after a disappointing earnings report from Apple (AAPL 450.50, -63.50) sent the stock lower by 12.4%. While the largest tech stock suffered its biggest percentage drop in more than four years, its suppliers held up relatively well. Cirrus Logic (CRUS 26.71, -3.24) was an exception, sinking 10.8% ahead of its earnings report scheduled for this evening.

As Apple earnings weighed on tech shares, the remainder of the market traded with a generally positive bias. Netflix (NFLX 146.86, +43.60) was a notable standout as the stock soared 42.2% after its fourth quarter results handily beat the Capital IQ earnings and revenue estimate. In addition, the video streaming service guided first quarter top and bottom line above consensus.

Even less-than-stellar results were welcomed by investors today as F5 Networks (FFIV 103.22, +4.41) gained 4.5% despite reporting in-line revenue and a bottom line miss. The results were topped off with upside second quarter earnings guidance, which contributed to the buying interest. Peer Cisco Systems (CSCO 21.02, +0.40) added 1.9%.

As the market resisted the selling pressure stemming from poor Apple earnings, the Dow Jones Transportation Average ended the session with a gain of 1.7%. The bellwether complex, which has soared over 10% since January 1, saw all-around strength, but trucking stocks outperformed. JB Hunt (JBHT 67.57, +4.11) surged 6.5% after its fourth quarter earnings beat on the bottom line. Meanwhile, peers Con-way (CNW 33.00, +1.88) and CH Robinson (CHRW 67.21, +1.46) settled with respective gains of 6.0% and 2.2%.

Looking at the S&P 500 sector breakdown, technology was the biggest laggard (-2.0%), followed by telecoms (-0.3%) and materials (+0.2%). On the upside, discretionary (+0.7%) and health care (+0.7%) stocks saw relative strength.

The CBOE Volatility Index (VIX 12.76, +0.30) advanced 2.4% after being up as much as 8.2% intraday. However, the so-called "fear gauge" remains near its 5-year low.

Crude oil added 0.8% to settle at $96.00 despite a larger-than-expected inventory build.

The market received just two economic reports this morning. The latest weekly initial claims count totaled 330,000, which was lower than the 355,000 that had been expected by the Briefing.com consensus. The tally was below the revised prior week count of 335,000. As for continuing claims, they fell to 3.157 million from 3.228 million.

Elsewhere, leading indicators for December increased by 0.5%, in-line with the Briefing.com consensus forecast. Today's figure followed the prior month's unchanged reading.

Tomorrow's economic data will be limited to December new home sales. This report will be released at 10:00 ET. Among notable earnings, Honeywell (HON 68.24, -0.03) and Procter & Gamble (PG 70.42, -0.27) are scheduled to report prior to the opening bell.DJ30 +46.00 NASDAQ -23.29 SP500 +0.01 NASDAQ Adv/Vol/Dec 1374/1.99 bln/1100 NYSE Adv/Vol/Dec 1680/678.5 mln/1316

3:30 pm :

Mar crude oil rose during today's floor trade on encouraging Initial and Continuing Claims data and an unexpected drop in gasoline inventories. Although crude oil inventories had a higher-than-anticipated build, gasoline inventories showed a draw of 1.738 mln barrels when consensus called for a build of 1.3 barrels. The energy component touched a session high of $96.68 per barrel and settled with a 0.7% gain at $95.94 per barrel.
Feb natural gas fell from its session high of $3.59 per MMBtu and into negative territory as inventories showed a draw of 172 bcf when a draw of 166 bcf was expected. Natural gas continued to trend lower and eventually settled with a 2.8% loss at $3.45 per MMBtu.
Feb gold extended yesterday's losses, dipping as low as $1664.20 per ounce in early morning pit action. The yellow metal traded up to the $1674.00 per ounce level but pulled-back slightly in afternoon action. It settled 1.0% lower at $1669.60 per ounce.
Mar silver also struggled in negative territory during today's floor session. It touched a session low of $31.62 per ounce and settled 2.2% lower at $31.72 per ounce.

DJ30 +59.51 NASDAQ -19.61 SP500 +1.61 NASDAQ Adv/Vol/Dec 1309/1656.3 mln/1139 NYSE Adv/Vol/Dec 1610/463 mln/1358

6:28PM Lattice Semi Correction: Co reports Q4 GAAP EPS of ($0.06), $0.01 better than the Capital IQ Consensus Estimate of ($0.07); reports revs in-line; guides Q1 revs below consensus (LSCC) 3.90 -0.15 : We previously reported that LSCC missed by $0.05 when in fact the company beat by $0.01. The prior comment has been deleted.

Co Reports Q4 (Dec) GAAP loss of $0.06 per share, $0.01 better than the Capital IQ Consensus Estimate of ($0.07); revenues fell 6.1% year/year to $65.9 mln vs the $65.91 mln consensus.

Co issues downside guidance for Q1, revenue is expected to decline approximately 2% to 4% on a sequential basis, which equates to ~$63.3-64.6 mln vs. $67.34 mln Capital IQ Consensus Estimate. Co previously lowered rev guidance to -8 to -6% QoQ to ~$65.2-66.7 mln from $69.5-72.3 mln on Dec 12. Gross margin percentage is expected to be approximately 54% plus or minus 2%. Total operating expenses are expected to be approximately $35.5 million, including approximately $0.5 million in restructuring charges.

4:18PM KLA-Tencor beats by $0.06, beats on revs (KLAC) 51.99 -0.38 : Reports Q2 (Dec) earnings of $0.63 per share, $0.06 better than the Capital IQ Consensus Estimate of $0.57; revenues rose 4.7% year/year to $673 mln vs the $634.52 mln consensus. "In the second quarter, KLA-Tencor delivered revenue and earnings per share at or above the upper end of our range of guidance in the face of a challenging demand environment."

Co is expected to guide on its conference call at 17:00

4:16PM QLogic beats by $0.03, beats on revs (QLGC) 10.82 : Reports Q3 (Dec) earnings of $0.20 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.17; revenues fell 16.4% year/year to $11 9.4 mln vs the $115.77 mln consensus. "We are seeing stabilization in our business and I believe our investments in innovative technologies for new market opportunities position us well to deliver future growth."

4:11PM Juniper Networks beats by $0.06, beats on revs; guides Q1 in-line (JNPR) : Reports Q4 (Dec) earnings of $0.28 per share, $0.06 better than the Capital IQ Consensus Estimate of $0.22; revenues rose 1.8% year/year to $1.14 bln vs the $1.13 bln consensus. Co issues in-line guidance for Q1, sees EPS of $0.18-0.22 vs. $0.20 Capital IQ Consensus Estimate; sees Q1 revs of $1.050-1.070 bln vs. $1.07 bln Capital IQ Consensus Estimate. "For the fourth quarter we delivered sequential and year-over-year revenue growth and expanded operating margins. We have largely completed our announced workforce actions and are well underway with our facility and supply chain efforts to reduce our cost structure..."

4:08PM Microsoft beats by $0.01, reports revs in-line (MSFT) 27.63 : Reports Q2 (Dec) earnings of $0.76 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.75; revenues rose 2.7% year/year to $21.46 bln vs the $21.5 bln consensus; gross margin 73.5% vs. ests of ~73%.

The Windows Division posted revenue of $5.88 billion, a 24% increase from the prior year period. Adjusting for the net deferral of revenue for the Windows Upgrade Offer and the recognition of the previously deferred revenue from Windows 8 Pre-sales, Windows Division non-GAAP revenue increased 11% for the second quarter. Microsoft has sold over 60 million Windows 8 licenses to date.
The Server & Tools business reported $5.19 billion of revenue, a 9% increase from the prior year period, driven by double-digit percentage revenue growth in SQL Server and System Center.
The Microsoft Business Division posted $5.69 billion of revenue, a 10% decrease from the prior year period. Adjusting for the impact of the Office Upgrade Offer and Pre-sales, Microsoft Business Division non-GAAP revenue increased 3% for the second quarter. Revenue from Microsoft's productivity server offerings -- collectively includingLync, SharePoint, and Exchange -- continued double-digit percentage growth.
The Entertainment and Devices Division posted revenue of $3.77 billion, a decrease of 11% from the prior year period. Adjusting for the Video Game Deferral, the division's non-GAAP revenue decreased 2% for the second quarter. Xbox continues to be the top-selling console in the United States. During the quarter, Microsoft launched Windows Phone 8 with a broad array of carriers and devices.

Microsoft reaffirms fiscal year 2013 operating expense guidance of $30.3 billion to $30.9 billion.

4:06PM Microsemi misses by $0.02, misses on revs; guides Q2 EPS below consensus, revs below consensus (MSCC) 20.24 +0.17 : Reports Q1 (Dec) earnings of $0.50 per share, $0.02 worse than the Capital IQ Consensus Estimate of $0.52; revenues rose 2.8% year/year to $247.6 mln vs the $252.09 mln consensus.

* Non-GAAP gross margin was 57.6%, up 290 bps year/year.

*Guidance: Co issues downside guidance. Co expects Q2 revs to decline by 4-8% sequentially, which equates to approx $227.8-$237.7 mln vs. $253.76 mln CapIQ consensus; Sees EPS of $0.37-0.43 vs. $0.54 Capital IQ Consensus Estimate.

4:05PM Flextronics beats by $0.02, beats on revs; guides Q4 EPS below consensus, revs below consensus (FLEX) 6.72 +0.08 : Reports Q3 (Dec) earnings of $0.22 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.20; revenues fell 18.0% year/year to $6.12 bln vs the $6.01 bln consensus. Co issues downside guidance for Q4 (Mar), sees EPS of $0.11-0.15, excluding non-recurring items, vs. $0.20 Capital IQ Consensus Estimate; sees Q4 revs of $5.00-5.30 bln vs. $5.69 bln Capital IQ Consensus Estimate.

4:05PM Cirrus Logic beats by $0.22, beats on revs; guides Q4 revs below consensus (CRUS) 26.70 -3.24 : Reports Q3 (Dec) earnings of $1.64 per share, ex items, $0.22 better than the Capital IQ Consensus Estimate of $1.42; revenues rose 153.3% year/year to $310 mln vs the $286.11 mln consensus. Co issues downside guidance for Q4, sees Q4 revs of $200-220 mln vs. $237.31 mln Capital IQ Consensus Estimate.

Reported Q3 Gross margin of 51 percent.
Sees Q4 Gross Margin of between 50 percent and 52 percent.
"During the quarter, we gained traction with our portable audio and LED lighting products, where we began shipping in additional SKUs and customers. Our outlook for the year remains on track, and we are positioned well for further growth in FY14. We continue to see significant opportunities to grow our business with both new and existing customers."

4:02PM Maxim Integrated beats by $0.01, reports revs in-line; guides Q3 EPS in-line, revs in-line (MXIM) 30.99 +0.04 : Reports Q2 (Dec) earnings of $0.42 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.41; revenues rose 2.4% year/year to $605.3 mln vs the $610.22 mln consensus.

Co issues in-line guidance for Q3, sees EPS of $0.39-0.43, excluding non-recurring items, vs. $0.40 Capital IQ Consensus Estimate; sees Q3 revs of $580-610 mln vs. $600.00 mln Capital IQ Consensus Estimate.

4:01PM Coherent reports EPS in-line, misses on revs (COHR) 51.32 -1.65 : Reports Q1 (Dec) earnings of $0.71 per share, in-line with the Capital IQ Consensus Estimate consensus of $0.71; revenues fell 4.0% year/year to $183.2 mln vs the $186.22 mln consensus. Bookings received during the first fiscal quarter ended December 29, 2012 of $176.0 million decreased 12.8% from $201.8 million in the same prior year period and increased by 3.9% compared to bookings of $169.3 million in the immediately preceding quarter. The book-to-bill ratio was 0.96, resulting in backlog of $348.1 million at December 29, 2012, compared to a backlog of $352.8 million at September 29, 2012 and a backlog of $365.5 million at December 31, 2011.

8:16AM Cypress Semi reports Q4 results at high end of downside preannouncement (CY) 10.44 : Reports Q4 (Dec) earnings of $0.05 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.04; revenues fell 25.6% year/year to $180.3 mln vs the $178.07 mln consensus (co warned on Jan 8: EPS of $0.03-0.04 on rev of $177-179 mln).

"We did not perform well in 2012, including the fourth quarter. Yes, the economy is lackluster, but our performance was not good even in that environment. Our revenue was at the higher end of our preliminary financial announcement on January 8, 2013, but it decreased 11% sequentially-well below our expectations at the beginning of the fourth quarter. All divisions decreased sequentially and on a year-on-year basis. We are now cutting the co down structurally from four divisions to three to rapidly reduce our operating expenses. Our goal is to re-establish the drop-through earnings leverage that has characterized Cypress since the SunPower spinout. Our fourth-quarter book-to-bill of 0.88 was up sequentially in every division for the first time all year. We now expect our first quarter, due to the seasonality of our business, to be the revenue bottom of the current semiconductor slump, with revenue growth thereafter. (consensus calls for Q1 rev -3.2% QoQ from $180.3 mln in Q4)"

7:37AM Fairchild Semi reports EPS in-line, misses on revs; guides Q1 revs in-line (FCS) 14.86 : Reports Q4 (Dec) adjusted earnings of $0.10 per share, excluding non-recurring items, in-line with the Capital IQ Consensus Estimate consensus of $0.10; revenues fell 1.8% year/year to $333.4 mln vs the $339.74 mln consensus. Q4 Gross margin was 29.8% compared to 33.5% in the prior quarter and 30.0% in the year-ago quarter.

Guidance and assumptions:
Co issues in-line guidance for Q1, sees Q1 revs of $330-350 mln vs. $345.71 mln Capital IQ Consensus Estimate.

Co states current scheduled backlog is nearly sufficient to achieve the low end of this range.
Co expects adjusted gross margin to be 29% plus or minus 50 basis points due primarily to lower factory loadings and incrementally higher start up costs at our 8 inch wafer fab in Korea.
Co anticipates R&D and SG&A spending to be in the range of $90-93 mln as we begin accruing again for variable compensation and increased payroll related taxes.

Commentary:
"We saw better than seasonal distribution sell through and a significant improvement in bookings during the fourth quarter. The solid sell through contributed to our larger than expected channel inventory reduction of $17 million during the fourth quarter. Bookings were up substantially in the fourth quarter and we have a solidly positive book to bill so far in the first quarter. We also reduced internal inventory another 2% and now have very lean channel and internal inventories at levels not seen since we emerged from the recession."

Apple (AAPL) reported first quarter earnings of $13.81 per share, $0.26 better than the Capital IQ consensus of $13.55. The company sold a record 47.8 million iPhones in the quarter (vs. ests of approximately 48 million), compared to 37 million in the year-ago quarter. Apple also sold a record 22.9 million iPads during the quarter (vs. ests of approximately 22 million), compared to 15.4 million in the year-ago quarter. The co sold 4.1 million Macs (vs. ests of approximately 5 million), compared to 5.2 million in the year-ago quarter. Apple sold 12.7 million iPods in the quarter, compared to 15.4 million in the year-ago quarter. Q1 gross margins of 38.6% vs Street est of 38.6% and 36% guidance. Co issues downside guidance for Q2, sees Q2 revs of $41-43 bln vs. $45.94 bln Capital IQ Consensus Estimate; with gross margin of 37.5-38.5% vs. ests of approximately 40.5%... Apple typically guides conservatively.

Netflix (NFLX) reported fourth quarter earnings of $0.13 per share, $0.27 better than the Capital IQ consensus of ($0.14), while revenues rose 7.9% year/year to $945 million versus the $934.85 million consensus. The company issued upside guidance for Q1, sees EPS of $0.00-0.23 vs. ($0.09) Capital IQ Consensus Estimate; sees Q1 revs of $1.004-1.031 bln vs. $970.10 million Capital IQ Consensus Estimate. 'We added more than 2 million members in Q4 to end the year with over 27 million domestic members. Our holiday season was particularly strong, driven by consumers buying new electronic devices, including tablets and smart TVs. Both voluntary and involuntary retention improved in Q4. The increase in involuntary retention was due to improvements in how we process payments and recover those members on payment hold. We believe the gains in voluntary retention stemmed from steady improvements in service and content relative to the broad array of video choices available to consumers, as shown by the continued growth in our median hours viewed per member'. Netflix Q4 Metrics Domestic Streaming Total Subs Q4 27.15 million vs Guidance 26.4-27.1 million Paid Subs Q4 25.4 million vs Guidance 24.9-25.4 million Revenue Q4 $589 million vs Guidance $581-588 million Contribution Profit $109mln vs Guidance $94-102 million Contribution Margin Q4 18.5% vs Guidance 17% 'Our target remains to expand contribution margin on average about 100 basis points per quarter. We anticipate domestic streaming contribution profit will, for the first time ever, be larger than DVD contribution profit (and up about 90% year over year) in Q1'. International Streaming Paid Subs Q4 6.12 million vs Guidance 4.23-4.75 million Revenue Q4 $101mln vs Guidance $90-100 million Contribution Loss ($105 million) vs Guidance ($119 million) to ($107 million) 'Over the course of this year, we expect to see declining losses in our current international markets as member growth exceeds growth in content spending. With a Q1 guidance midpoint of $87 million in international losses, we expect a sequential improvement of $18 million, with more modest sequential improvements expected in subsequent quarters. For the first half of 2013, we aren't planning to launch additional international markets. We are evaluating several expansion markets for late 2013 or 2014, but have not made any decisions yet. Our launch in the Nordics was very successful, confirming our belief in the large international opportunity for our service. In Latin America, we've made steady progress on our consumer payment infrastructure'. Domestic DVD Total Subs 8.22 million vs Guidance 7.85-8.15 million Revenues Q4 $254 million vs $248-255 million Consolidated Global Net Income Q4 $8 million vs Guidance ($13.2 million) to $2 million EPS Q4 $0.13 vs Guidance ($0.23) to $0.04 'The US Postal Service is under financial stress, but we don't foresee service changes this year that have a material negative impact upon us or our members' Netflix Q1 Guidance Domestic Streaming Total Subs Q1 28.5-29.2 million Paid Subs Q1 27.5-29.2 million Revenue Q1 $633-641 million Contribution Profit Q1 $122-130 million International Streaming Total Subs Q1 6.6-7.3 million Paid Subs Q1 5.8-6.4 million Revenue Q1 $132-144 million Contribution Loss Q1 ($94-80 million) Domestic DVD Total Subs Q1 7.6-8.5 million Revenues Q1 $239-246 million Consolidated Global Net Income Q1 $0-14 million EPS Q1 $0.00-0.23 Carl Icahn 'Carl Icahn became a 10% investor last quarter at approximately $58 per share. We have no further news about his intentions, but have had constructive conversations with him about building a more valuable company'.

F5 Networks (FFIV) reported first quarter earnings of $1.14 per share, $0.01 worse than the Capital IQ consensus Estimate of $1.15, while revenues rose 13.4% year/year to $365.5 million versus the $366.73 million consensus. The company issued mixed guidance for the second quarter with EPS of $1.21-1.24 versus the $1.20 consensus and revenues of $370-380 million versus the $379.56 million consensus. "During the first quarter, strong sales to North American enterprises and service providers were offset by a substantial slowdown in U.S. Federal sales. Japan sales were also weak during the quarter, in contrast to continuing strength in Europe and solid year-over-year growth in the rest of the Asia-Pacific region."

SanDisk (SNDK) reported fourth quarter earnings of $1.05 per share, excluding non-recurring items, $0.30 better than the Capital IQ consensus of $0.75, while revenues fell 2.2% year/year to $1.54 bln versus the $1.53 billion consensus. "SanDisk ended 2012 with strong momentum in our SSD business, which contributed 10% of our Q4 revenue. We are now supplying client SSDs to ten leading PC OEMs and our enterprise SSDs are qualified at a fourth storage OEM. We drove solid sequential growth in our embedded mobile products and continued to execute well in our retail business. We believe that our broadening customer engagements and expanding product portfolio position us well for strong profitability in 2013." (stock is halted)

Needham upgraded Sandisk (SNDK) to Buy from Hold and sets a tgt at $60 after Co reported 4Q12 results that beat on the topline and came in significantly higher on the bottom line (roughly $0.30 above) based on exceptionally strong gross margins (40% vs its 33% est). While the attach rates for bundled cards have begun to decline, the overall NAND environment remains favorable as the major NAND vendors seem to be acting rationally and not adding wafer capacity, leading to a better pricing environment. On the embedded front, SNDK is benefiting from Apple's iPhone 5 win (custom embedded) and seeing a significant ramp in its embedded MCP solutions. More importantly, though, is that SNDK is seeing a favorable mix shift to SSDs and embedded, which carry higher gross margins along with a better pricing environment, the combination of which is leading a significantly higher gross margin profile.

09:08 am SanDisk upgraded to Buy at Needham; tgt $60 following earnings: . Needham upgrades SNDK to Buy from Hold and sets a tgt at $60 after Co reported 4Q12 results that beat on the topline and came in significantly higher on the bottom line (roughly $0.30 above) based on exceptionally strong gross margins (40% vs its 33% est). While the attach rates for bundled cards have begun to decline, the overall NAND environment remains favorable as the major NAND vendors seem to be acting rationally and not adding wafer capacity, leading to a better pricing environment. On the embedded front, SNDK is benefiting from Apple's iPhone 5 win (custom embedded) and seeing a significant ramp in its embedded MCP solutions. More importantly, though, is that SNDK is seeing a favorable mix shift to SSDs and embedded, which carry higher gross margins along with a better pricing environment, the combination of which is leading a significantly higher gross margin profile.

11:40 am Tech Sector trading lower by 1.1% following Apple Earnings
The tech sector is trading lower today, trailing gains in the broader market. Semiconductors are showing relative strength with the SOX trading only 0.1% lower. Within the chip index, SNDK (+3.6%) and AMD (+3.6%) are notable standouts. Among other major indices, the SPY is trading 0.4% higher today, while the QQQ is down 0.5% and the NASDAQ is trading 0.1% lower on the session. Among tech bellwethers, CSCO (+2.2%) is showing notable strength, while AAPL (-10.2%) is under pressure.

In another busy night in tech earnings, AAPL (-10.2%) posted a relatively inline quarter, but offered disappointing iOS metrics and downside guidance; SNDK (+3.8%) reported a beat and guided below consensus; WDC (+3.8%) posted a beat and issued inline guidance; LRCX (-0.1%) reported a beat and guided just below consensus; and MLNX (+2.5%) reported results inline with its downside preannouncement and guided well below consensus. This morning, XRX (+3.2%) posted a modest Q4 beat and reaffirmed guidance, while NOK (-4.6%) and FCS (+4.6%) posted roughly inline results and AVT (+7.8%) posted a solid beat. In news, DBD (-8.2%) announced its CEO is stepping down immediately. In conjunction, the Co issued downside guidance. Among rumors, VZ (+0.4%) may be in position to take control of Verizon Wireless from JV partner VOD (+2.3%), according to a report. Also, there is chatter than LNVGY (+5.8%) is interested in buying RIMM (+3.8%). Among notable analyst upgrades this morning in the tech space, ASML (+2.5%) was upgraded to Buy at BofA/Merrill and RBC upgraded ADSK (+2.9%) to Outperform. Among downgrades, AAPL (-10.2%) was downgraded at Jefferies and Scotia Capital removed from the Best Ideas List at Morgan Stanley, Wunderlich and Stifel downgraded SYMC (+1.7%) to Hold, ALTR (-4.7%) was downgraded to Market Perform at William Blair, VECO (-1.6%) was downgraded to Neutral at UBS, and MLNX (+2.5%) was downgraded at Pac Crest and Craig-Hallum. T (+0.8%), FLEX (+2.1%), JNPR (+1.7%), KLAC (+0.2%), and MSFT (+1.6%) are the notable names in tech scheduled to report quarterly results today after the close.

[ReturntoSender]

InvestmentHouse Weekend Market Summary

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

-The move continues with an apparent reacceleration.
- Earnings appear good but some are questioning them.
- Took some gain, otherwise letting the rally ride, but just in case...

Impressive action yet again as stocks gained across the board. That early start higher did not turn into selling, or at least not that much selling; stocks dipped in the last 1.5 hours off session highs. A bounce in the last 10 minutes of trade erased much of that loss and indeed the midcaps, small caps, and DJ30 closed out the session at their highs.

SP500 8.14, 0.54%
NASD 19.33, 0.62%
DJ30 70.65, 0.51%
SP400 0.89%
RUTX 0.56%
SOX 1.27%

SP500 just managed to hang onto a move over 1500, but it was a pretty solid move. NASD is still below last week's highs hit as GOOG and AAPL rallied ahead of the AAPL earnings. DJ30, SP400, RUTX, DJ20, and SP500 all moved to even higher PBMH (Post-bear market highs). Indeed the move, after a big run already and after getting deep into earnings season, is extending beyond expectations.

Thus, while we did take some gain on some positions that were up but not surging and some that have earnings early next week, we kept most positions running. We looked at them again and again and decided that we were not going to totally start guessing at a market top. Sure it can turn over on Monday and start fileting stocks, but nothing thus far other than the length and size of the run and possible rendevous with history suggests it is running out of gas.

The internals were not that solid as volume fell 2.3% on NYSE and 9.8% on NASD. Breadth was decent on NYSE (1.5:1) but not great. NASD was less at 1.25:1.

Leadership, however, remains strong. AMZN exploded higher ahead of next week's earnings. EBAY jumped up again. SNDK rallied. CMI up, ACAD rallied 5%, QLGC surged (& purged a bit), PII rallied, SRPT looked to have made a definitive upside break as did SWI, DECK exploded higher. APC (energy) surged, GGC (chemicals) surged, TOL (homebuilders) surged.

Perhaps leadership reverses. Given the strength it more likely puts in a test, but we don't want to assume anything. We took some gain, let those running run, and we will keep reasonable stops and take gain at reasonable places. Strong run and we want to let a strong run work for us as long as it will.

OTHER MARKETS

Dollar fell hard: 1.3456 vs 1.33.76

Bonds slaughtered: 1.95% versus 1.85%

Oil flat: 95.88, -0.07

Gold finished a tough week lower again: 1657.00, -15.10

The headlines were mostly friendly. PG, KMB, HAL all beat on earnings. The EU showed higher confidence in Germany so the dollar sold. Bonds sold on the notion that the US and world economies are improving.

It would be nice, and perhaps they are. But of course there are lingering doubts:

Bond inflows jumped 8.5B in treasury funds and $2.3B in municipal bond funds. Stock outflows rose to $5.8B the past two weeks. Bonds are selling but flows surge. That selling may not last, but it does appear the market is sensing the Fed might have to throttle back on stimulus and thus the bond decline. If bonds continue to sell that in itself will put the brakes on inflows; investors get their statements and see some rather big drops in their investments and they will flee for their lives.

New Home Sales, December fell 7.3% though prices rose 13.3% year/year.

And what about earnings season? Goldman Sachs shows that while the big name companies are apparently hitting the ball well, many are driving out of bounds.

To wit: Goldman's halftime report for the season shows earnings down 6% from expectations heading into the season. If this holds that is a 1% improvement over Q4 2011 when Europe nosed over in a plunge downward, taking massive coordinated central bank manipulation to avert a total crash. That comparison makes things appear less rosy, but don't tell the market because as of Friday it could care less. It has the notion, and frankly you have to go with what the market believes, that things will get better. Have to love that optimism because . . . it is sure pushing our positions higher.

We are going to look at plays we can make off the earnings moves given we are half way in and some big names have reported good results and made strong moves; we love to play off those if we can. We are also going to look at some 'just in case' plays to the downside in the event the switch is thrown over the weekend and earnings upside turns into selling.

Have a great and blessed weekend.

NASDAQ
Stats: +19.33 points (+0.62%) to close at 3149.71
Volume: 1.829B (-9.86%)

Up Volume: 1.37B (+250M)
Down Volume: 529.22M (-381.83M)

A/D and Hi/Lo: Advancers led 1.25 to 1
Previous Session: Advancers led 1.25 to 1

New Highs: 206 (-13)
New Lows: 11 (+2)

S&P
Stats: +8.14 points (+0.54%) to close at 1502.96
NYSE Volume: 617M (-2.37%)

A/D and Hi/Lo: Advancers led 1.57 to 1
Previous Session: Advancers led 1.27 to 1

New Highs: 605 (-89)
New Lows: 64 (-1)

DJ30
Stats: +70.65 points (+0.51%) to close at 13895.98

Support and resistance

NASDAQ: Closed at 3149.71

Resistance:
3171 is the October intraday high
3197 is the September 2012 post-bear market high
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
3134 is the March 2012 post-bear market peak
The 10 day EMA at 3130
3104-3112 from August and mid-October peaks.
3101 is the August 2012 high
3090 is the mid-March interim high
3076 is the late April 2012 high and the 1/2013 low after gapping higher
The 2011 up trendline at 3062
3062 is the December 2012 prior peak
The 50 day EMA at 3060
3042 from 5/2000 low and several other price points
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
The 200 day SMA at 2993
2988 is the July 2012 high
2977 to 2980 is the bottom of the late October 2012 consolidation, July 2012 peak
2962 is the April 2012 low
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2900 is the March 2012 intraday low
2858 is the late July 2011 peak
2847 is the mid-May 2012 low
2838 from the July 2012 lows

S&P 500: Closed at 1502.96

Resistance:
1539 from June 2007

Support:
1499 from January 2008
The 10 day EMA at 1485
1475 is the September 2012 high
1471 is the October 2012 intraday high
1466 is the September 2012 closing peak and rally closing high
The 50 day EMA at 1446
1440 from November 2007 closing lows
1434 from early November 2012
1433 from August 2007 closing lows
1427 is the August 2012 peak
1425 from May 2008 closing highs and the October 2012 low
1408 is the late October 2012 range closing low
1406 is the early May 2012 peak
1402.22 - 1400 is the closing low of the August 2012 lateral consolidation
The 200 day SMA at 1396
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
1332 is the early March 2011 peak

Dow: Closed at 13,895.98

Resistance:
14,022 from 7-07 peak

Support:
13,692 from 6-2007 peak
The 10 day EMA at 13,674
13,668 from 12-2007 peak
13662 is the October 2012 intraday high
13,653 is the September 2012 high
13,557 to 13,662
13,413 from the late September 2012 low
13,300 to 13,331 is the August 2012 post-bear market high
The 50 day EMA at 13,341
13,297 is the April 2012, prior post bear market high
13,058 from the May 2008 peak on that bounce in the selling
13,056 is the February 2012 high
The 200 day SMA at 13,048
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012
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

January 28 - Monday
- Durable Orders, December (8:30): 1.6% expected, 0.8% prior (revised from 0.7%)
- Durable Goods -ex transports, December (8:30): 0.0% expected, 1.6% prior
- Pending Home Sales, December (10:00): 0.0% expected, 1.7% prior

January 29 - Tuesday
- Case-Shiller 20-city, November (9:00): 5.2% expected, 4.3% prior
- Consumer Confidence, January (10:00): 65.1 expected, 65.1 prior

January 30 - Wednesday
- MBA Mortgage Index, 01/26 (7:00): 7.0% prior
- ADP Employment Change, January (8:15): 175K expected, 215K prior
- GDP-Adv., Q4 (8:30): 1.0% expected, 3.1% prior
- Chain Deflator-Adv., Q4 (8:30): 1.6% expected, 2.7% prior
- Crude Inventories, 01/26 (10:30): 2.813M prior
- FOMC Rate Decision, January (14:15): 0.25% expected, 0.25% prior

January 31 - Thursday
- Challenger Job Cuts, January (7:30): 34.4% prior
- Initial Claims, 01/26 (8:30): 345K expected, 330K prior
- Continuing Claims, 01/19 (8:30): 3200K expected, 3157K prior
- Personal Income, December (8:30): 0.7% expected, 0.6% prior
- Personal Spending, December (8:30): 0.3% expected, 0.4% prior
- PCE Prices - Core, December (8:30): 0.1% expected, 0.0% prior
- Employment Cost Index, Q4 (8:30): 0.5% expected, 0.4% prior
- Chicago PMI, January (9:45): 50.5 expected, 48.9 prior (revised from 51.6)
- Natural Gas Inventor, 01/26 (10:30): -172 bcf prior

February 1 - Friday
- Nonfarm Payrolls, January (8:30): 180K expected, 155K prior
- Nonfarm Private Payrolls, January (8:30): 193K expected, 168K prior
- Unemployment Rate, January (8:30): 7.7% expected, 7.8% prior
- Hourly Earnings, January (8:30): 0.2% expected, 0.3% prior
- Average Workweek, January (8:30): 34.5 expected, 34.5 prior
- Michigan Sentiment -, January (9:55): 71.4 expected, 71.3 prior
- ISM Index, January (10:00): 50.5 expected, 50.7 prior
- Construction Spending, December (10:00): 0.5% expected, -0.3% prior
- Auto Sales, January (14:00): 5.5M prior
- Truck Sales, January (14:00): 6.5M prio

[ReturntoSender]

From Briefing.com: 4:15 pm : The major averages saw little change during the last session of the month. The S&P 500 shed 0.2%, while Nasdaq outperformed and ended flat.

Mixed trade unfolded amid economic data which was largely in-line with expectations. Weekly initial claims were reported at 368,000 (Briefing.com consensus 345,000), which supports the notion that the lower readings over the prior two weeks were primarily the result of seasonal adjustment problems. Today's number drives initial claims right back to the 350,000-400,000 range where they have been bounded for most of the last year.

Elsewhere, the personal income report stood out as the December increase of 2.6% was well ahead of the 0.7% rise expected by the Briefing.com consensus. However, the notable rise in personal income was due to a surge in personal income on assets as investors chose to lock in a lower capital gains tax rate ahead of the New Year.

The fourth quarter Employment Cost Index increased by 0.5%, in-line with the Briefing.com consensus.

The day's final economic report saw the January Chicago PMI climb to 55.6. The reading surprised to the upside as economists surveyed by Briefing.com had generally expected the index to come in at 50.5.

In addition to economic data, investors received several notable earnings reports. Ryder System (R 56.78, +2.52), MasterCard (MA 518.40, +2.40), and Qualcomm (QCOM 66.02, +2.49) gained between 0.5% and 4.6% after beating on earnings.

On the downside, ConocoPhillips (COP 58.00, -3.09), Dow Chemical (DOW 32.20, -2.41), and UPS (UPS 79.29, -1.94) fell short of expectations.

With January now in the books, we would like to recap the first month of 2013.

Month in Review: Equities Soar as Full Force of 'Fiscal Cliff' AvertedResponding favorably to the Congressional compromise on tax rates, the S&P 500 jumped 2.8% in the first week of 2013 and rarely looked back. Despite some mixed economic and earnings news along the way, the S&P 500 closed with a gain in 13 out of 21 sessions and ended January at 1498.27 its best level since December 2007. The Dow Jones Industrial Average for its part surged 5.8% and recorded its best January since 1989.

Economic Data Paints Bleak January Picture

The bulk of economic data reported during the month beat the Briefing.com consensus. However, data reported for the month of January often came up short.
Of the seven January reports, five fell short of expectations.
The Empire Manufacturing Index, NAHB Housing Index, Philadelphia Fed Survey, Michigan Sentiment, and Consumer Confidence reports all missed expectations.
Meanwhile, the ADP Employment Change and Chicago PMI surprised to the upside.
The advance fourth quarter GDP reading was a headline disappointment, as a 0.1% contraction was recorded for the final quarter of 2012. However, the report was not as weak as it appeared.
The biggest drag on quarterly growth came in the form of a 6.6% decrease in government spending. This was largely due to a 22.2% decline in defense spending which followed a 12.9% increase during the third quarter.
The change in private inventories also subtracted 1.27 percentage points from the change in real GDP.
Personal consumption expenditures, which constitute more than 70% of GDP, rose 2.2%, which was the largest increase since the first quarter of 2012.
Business investment rose 12.4%, which was the largest uptick since the third quarter of 2011.

Mixed Earnings Unable to Derail Rally

The second half of the month saw the start of the fourth quarter earnings season.
Most companies have beaten on the bottom line per usual, hurdling estimates that had been lowered in many cases by analysts ahead of the reports. Revenue growth is still weak, but similar to earnings, most companies have exceeded depressed top line growth estimates.
Cautious guidance has been a common theme as many companies see headwinds in the first half of the year, although the default opinion is that the second half of the year should look better.

Transports, Energy, Health Care, and Discretionary Stocks Paced the Gains

The Dow Jones Transportation Average gained 9.4% as truckers and railroads joined the rally enjoyed by airlines since mid-November.
Energy stocks also displayed relative strength and the SPDR Energy Select Sector ETF (XLE) advanced 8.3%. This was largely supported by a 6.2% rise in the price of crude oil. The energy component ended the month just a shade under $98.
The Health Care sector has been a standout, trailing behind only energy in the sector rankings on a year-to-date basis (+7.4%).
The discretionary sector has also been among the top performers in the S&P 500.
Homebuilders continued their strength from 2012. The SPDR S&P Homebuilders ETF (XHB) ended January with a gain of 8.3%. Many builders reported strong fourth quarter earnings, replete with reports of strong backlogs and order trends.

Technology Lagged as Apple Weighed

The tech-heavy Nasdaq underperformed the remaining major indices as Apple (AAPL), which is the single largest index component, continued displaying weakness.
Shares of Apple sold off through the first half of the month before pausing near the $500 level.
A disappointing January 23 earnings report caused the stock to lose more than 10%. The company fell short of revenue expectations and issued downside guidance.
The largest tech stock ended the month down 14.4%, at levels last seen in February 2002.
Excluding Apple, the technology sector fared relatively well. Semiconductors outperformed despite a rash of disappointing earnings reports and outlooks. The PHLX Semiconductor Index climbed 7.7%.

Defensive Stocks Bid into Second Half

During the second half of the month, defensive-oriented sectors started to attract increased buying interest.
Telecoms (+1.8%) and utilities (+4.5%) registered the bulk of their gains during the second half of the month after the broader market had already seen the majority of its rise.
Health care stocks enjoyed strength throughout the month as upbeat earnings supported the space.

Headwinds Remain as S&P 500 Nears Uncharted Territory

As the S&P 500 hovers just 4.3% below its all-time high, challenges remain visible.
A notable drop in consumer confidence occurred as the initial impact of the payroll tax cut expiration was felt by income earners.
Sequester cuts are scheduled to go into effect in March, with the brunt of the impact to be absorbed by the defense sector.
The debt ceiling issue has only been deferred rather than fixed.
Japan's bold bid to weaken its currency and to inflate its economy is raising the risk of currency wars as other countries aim to support their exporters.
Geopolitical issues are simmering, with conflicts in the Middle East starting to make headline waves (eg. Egypt, Israel/Syria/Iran) and North Korea toying with nuclear tests.
Rising interest rates threaten to slow the housing recovery.
Bullish sentiment, which is a contrarian indicator, is picking up noticeably.

DJ30 -49.84 NASDAQ -0.18 SP500 -3.85 NASDAQ Adv/Vol/Dec 1525/2.11 bln/946 NYSE Adv/Vol/Dec 1557/933.2 mln/1421

3:30 pm :

Mar crude oil spent its entire floor session in negative territory as mixed economic data released this morning that included weekly initial claims and the personal income report weighed on prices. The energy component dropped to a session low of $96.84 per barrel in early morning action but inched higher for the remainder of the session. It managed to trim its loss to 0.4% as it closed at $97.52 per barrel, slightly below its session high of $97.65 per barrel.
Mar natural gas slid to a floor session low of $3.24 per MMBtu on inventory data that showed a draw of 194 bcf when a draw of 205 to 206 bcf ws anticipated. However, buyers stepped in and pushed prices into positive territory and to a session high of $3.39 per MMBtu. Natural gas eventually settled the session unchanged at $3.34 per MMBtu.
Apr gold retreated from its session high of $1678.50 and fell deeper into negative territory on the economic data. It settled 1.2% lower at $1661.80 per ounce, or slightly above its session low of $1658.40 per ounce.
Mar silver also extended overnight losses, falling as low as $31.12 per ounce in early afternoon pit trade. It eventually closed at $31.36 per ounce, or 2.5% lower.

5:38PM TTM Tech announces resignation of CFO Steven Richards; will be replaced by Todd Schull (TTMI) 7.97 +0.11 : Co announced that Steven Richards, the company's Executive Vice President and Chief Financial Officer has resigned from the company to pursue other interests. Mr. Richards will remain with the company though March 29, 2013 in order to transition his duties to his successor. The company also announced that Todd Schull has been appointed Executive Vice President, effective February 20, 2013 and will assume the role of Executive Vice President and Chief Financial Officer of TTM Technologies, Inc., effective March 2, 2013. Mr. Schull joins TTM Technologies from Sanmina (SANM), where he served as Senior Vice President of Finance and Corporate Controller.

4:18PM Power-One misses by $0.01, reports revs in-line; guides Q1 revs in-line (PWER) 56.85 -0.63 : Reports Q4 (Dec) loss of $0.10 per share, ex-items, $0.01 worse than the Capital IQ Consensus Estimate of ($0.09); revenues fell 28.1% year/year to $191.7 mln vs the $192.78 mln consensus.

*Co issues in-line guidance for Q1, sees Q1 revs of $175-200 mln vs. $196.43 mln Capital IQ Consensus Estimate. It is expected that gross margins will improve sequentially from the fourth quarter as a result of the cost reduction initiatives that have been undertaken.

4:17PM Emulex misses by $0.01, reports revs in-line; guides Q3 EPS below consensus, revs below consensus (ELX) 7.64 +0.20 : Reports Q2 (Dec) earnings of $0.19 per share, $0.01 worse than the Capital IQ Consensus Estimate of $0.20; revenues fell 5.1% year/year to $122.1 mln vs the $121.92 mln consensus. Co issues downside guidance for Q3, sees EPS of $0.12-0.14, excluding non-recurring items, vs. $0.16 Capital IQ Consensus Estimate; sees Q3 revs of $110-114 mln vs. $117.77 mln Capital IQ Consensus Estimate.

4:13PM PMC-Sierra beats by $0.02, beats on revs (PMCS) 5.78 +0.07 : Reports Q4 (Dec) earnings of $0.12 per share, excluding non-recurring items, $0.02 better than the Capital IQ Consensus Estimate of $0.10; revenues fell 15.2% year/year to $129.4 mln vs the $126.5 mln consensus.

4:09PM Micrel misses by $0.01, beats on revs; guides Q1 EPS in-line, revs in-line (MCRL) 10.41 +0.22 : Reports Q4 (Dec) earnings of $0.06 per share, excluding non-recurring items, $0.01 worse than the Capital IQ Consensus Estimate of $0.07; revenues rose 6.0% year/year to $62.3 mln vs the $60.82 mln consensus. Co issues in-line guidance for Q1, sees GAAP EPS of ~$0.05-0.10 vs. $0.08 Capital IQ Consensus Estimate; sees Q1 revs of $58.6-64.2 mln vs. $63.63 mln Capital IQ Consensus Estimate.

As a result of the sluggish macroeconomic environment, 2012 was one of the most difficult years of the past decade for the entire semiconductor industry. Consequently, we believe semiconductor customers significantly reduced inventory levels during the year which resulted in relatively short lead times and caused the industry as a whole to ship below actual demand. We believe that we are seeing a bottom to the industry decline and we expect growth in the industry to resume. We expect lead times to increase and inventory levels to normalize towards the second half of the year resulting in modest full-year growth in 2013 for the industry.

4:02PM RF Micro Device announces extension of share repurchase program (RFMD) 5.00 +0.09 : Co announced that its board of directors has authorized an extension of RFMD's 2011 share repurchase program to repurchase up to $200 million of the Company's common stock through January 31, 2015. Since January 2011, the Company has repurchased $ 49.9 million of its common stock under this program, leaving it with additional authorization of up to $150.1 million under the program as a result of this extension.

4:01PM Brooks Automation beats by $0.05, beats on revs; guides Q2 EPS above consensus, revs in-line (BRKS) 9.36 -0.08 : Reports Q1 (Dec) loss of $0.06 per share, excluding non-recurring items, $0.05 better than the Capital IQ Consensus Estimate of ($0.11); revenues fell 18.5% year/year to $98 mln vs the $90.66 mln consensus. Co issues mixed guidance for Q2, sees EPS of ($0.05)- $0.00, excluding non-recurring items, vs. ($0.05) Capital IQ Consensus Estimate; sees Q2 revs of $102-100 mln vs. $107.83 mln Capital IQ Consensus Estimate.

11:28AM MEMC Elec subsidiary SunEdison and CAP sign agreement to build 100 MW solar PV plant (WFR) 4.05 +0.03 : SunEdison, a leading global solar energy services provider and subsidiary of MEMC Electronic Materials (WFR), has signed an agreement with the Chilean mining and steel group CAP to construct what is expected to be the largest solar photovoltaic power plant in Latin America and one of the largest in the world. The plant is designed to have an installed capacity of 100MW (DC) and will be located in the Atacama Desert of Chile. It is estimated that the plant will produce as much as 15% of the mining group's energy needs.

10:17AM JDS Uniphase breaks out to multi-month highs on earnings (JDSU) 14.92 +2.52 : The stock attacts bids this morning after beating on earnings and revenues last night. This morning's price gap has the stock breaking out to fresh multi-month highs above the $14-level to challenge its 2012 highs along $15/15.17.

9:02AM Ultratech beats by $0.01, beats on revs (UTEK) 38.22 : Reports Q4 (Dec) earnings of $0.48 per share, $0.01 better than the Capital IQ Consensus Estimate of $0.47; revenues rose 16.9% year/year to $65.59 mln vs the $62.49 mln consensus. "Ultratech completed 2012 with positive momentum financially and operationally. We again achieved record quarterly levels of net sales and net income. Due to our strong balance sheet and financial success, over the course of 2012, we made key acquisitions and introduced exciting new products that bolster our position in existing markets and expand our addressable markets."

1:06AM NXP Semi beats by $0.03, beats on revs; sees Q1 EPS above conensus; revs in-line (NXPI) 29.98 : Reports Q4 (Dec) earnings of $0.50 per share, $0.03 better than the Capital IQ Consensus Estimate of $0.47; revenues rose 19.9% year/year to $1.12 bln vs the $1.09 bln consensus. Co sees Non - GAAP EPS $ 0.47-0.51 vs $0.45 CIQ est; Total Revenue $ 1,051-1,082 mln vs 1,066 mln CIQ est

Skyworks (SWKS) reported first quarter earnings of $0.54 per share, excluding non-recurring items, in-line with the Capital IQ consensus of $0.54, while revenues rose 15.2% year/year to $453.7 million versus the $450.57 million consensus. The company issued guidance for the second quarter with EPS of $0.47, excluding non-recurring items, versus the $0.47 consensus and revenues of approximately $420 million versus the $417.36 million consensus. Expands operating margin 70 bps QoQ to 25.3 percent on a non-GAAP basis; repurchased 1.9 million shares of common stock.

Qualcomm (QCOM) reported first quarter earnings of $1.26 per share, excluding non-recurring items, $0.14 better than the Capital IQ consensus of $1.12, while revenues rose 28.6% year/year to $6.02 billion versus the $5.9 billion consensus. First Quarter Key Business Metrics MSMTM chip shipments: 182 million units, up 17 percent y-o-y and 29% QoQ. September quarter total reported device sales: ~$53.3 billion, up 29 percent y-o-y and 15 percent QoQ. September quarter estimated 3G/4G device shipments: approximately 233 to 237 million units, at an estimated average selling price of approximately $224 to $230 per unit. The company issued guidance for the second quarter with EPS of $1.10-1.18, excluding non-recurring items, versus the $1.10 consensus and revenues of $5.8-6.3 billion versus the $5.89 billion consensus Estimate. The company issued guidance for fiscal year 2013 with raised EPS to $4.25-4.45, excluding non-recurring items, from $4.12-4.32 versus the $4.32 consensus and raised fiscal year 2013 revenues to $23.4-24.4 billion from $23-24 billion versus $23.57 billion consensus.

Facebook (FB) reported fourth quarter earnings of $0.17 per share, $0.02 better than the Capital IQ consensus Estimate of $0.15, while revenues rose 40.1% year/year to $1.59 billion versus the $1.52 billion consensus. Mobile revenue represented ~23% of advertising revenue for the fourth quarter of 2012, up from ~14% of advertising revenue in the third quarter of 2012. Revenue from advertising was $1.33 billion, representing 84% of total revenue and a 41% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased by 43%. The company reported Monthly Average Users increased 25% YoY to 1.06 billion versus 26% YoY growth rate in Q3. The company reported Daily Average Users increased 28% YoY to 618 million versus 28% YoY growth rate in Q3. The company reported Mobile MAU's increased 57% YoY to 680 million versus 61% YoY growth rate in Q3.

09:13 am Facebook downgraded to Hold at Stifel Nicolaus; time to take profits: . Stifel Nicolaus downgrades FB to Hold from Buy. Co reported what it views as solid 4Q12 results; ad revenue growth accelerated to 43% ex-FX. Mobile now represents 23% of total ad revenues, up from 14% in 3Q. But the Co guided to significant margin compression in 2013, marking a fundamental downshift in the earnings trajectory. Co also downplayed the prospects for some growth initiatives, such as Gifts. With its earnings model totally re-calibrating, it is time to take some profits and evaluate the likelihood of potential earnings upside in future quarters. Firm potentially would look to add to positions in the mid-$20s, or when the duration of this investment phase is better understood, all else being equal.

09:12 am JDS Uniphase upgraded to Buy at Needham; tgt $18 following strong CY4Q: . Needham upgrades JDSU to Buy from Hold and sets target price at $18 following strong CY4Q. Stronger than expected results in T&M helped JDSU beat on Revs and better than expected Operating Margins in all three units helped JDSU beat EPS handily with $0.18/sh, up from $0.14 forecasted. JDSU management noted 1) conversations with OEMs and service providers suggest a stronger CY13; 2) European demand has bottomed out and looks poised to improve, 3) China is embarking on a major 100G build 4) January demand was better than October, and finally, 5) JDSU believes the timing of the spend in CY13 will start a bit later than typical as the "larger spending takes more time to allocate."

08:28 am Facebook shares fall 5% despite beat on EPS
Facebook (FB $29.50 -1.74) reported fourth quarter earnings of $0.17 per share, $0.02 better than the Capital IQ consensus Estimate of $0.15, while revenues rose 40.1% year/year to $1.59 billion versus the $1.52 billion consensus. Mobile revenue represented ~23% of advertising revenue for the fourth quarter of 2012, up from ~14% of advertising revenue in the third quarter of 2012. Revenue from advertising was $1.33 billion, representing 84% of total revenue and a 41% increase from the same quarter last year. Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased by 43%. The company reported Monthly Average Users increased 25% YoY to 1.06 billion versus 26% YoY growth rate in Q3. The company reported Daily Average Users increased 28% YoY to 618 million versus 28% YoY growth rate in Q3. The company reported Mobile MAU's increased 57% YoY to 680 million versus 61% YoY growth rate in Q3.

08:26 am Qualcomm shares rise 7% following better than expected earnings
Qualcomm (QCOM $67.70 +4.27) reported first quarter earnings of $1.26 per share, excluding non-recurring items, $0.14 better than the Capital IQ consensus of $1.12, while revenues rose 28.6% year/year to $6.02 billion versus the $5.9 billion consensus. First Quarter Key Business Metrics MSMTM chip shipments: 182 million units, up 17 percent y-o-y and 29% QoQ. September quarter total reported device sales: ~$53.3 billion, up 29 percent y-o-y and 15 percent QoQ. September quarter estimated 3G/4G device shipments: ~233 to 237 million units, at an estimated average selling price of approximately $224 to $230 per unit. The company issued guidance for the second quarter with EPS of $1.10-1.18, excluding non-recurring items, versus the $1.10 consensus and revenues of $5.8-6.3 billion versus the $5.89 billion consensus Estimate. The company issued guidance for fiscal year 2013 with raised EPS to $4.25-4.45, excluding non-recurring items, from $4.12-4.32 versus the $4.32 consensus and raised fiscal year 2013 revenues to $23.4-24.4 billion from $23-24 billion versus $23.57 billion consensus.

08:24 am SkyWorks shares rise 11% following better than expected earnings
Skyworks (SWKS $24.00 +2.44) reported first quarter earnings of $0.54 per share, excluding non-recurring items, in-line with the Capital IQ consensus of $0.54, while revenues rose 15.2% year/year to $453.7 million versus the $450.57 million consensus. The company issued guidance for the second quarter with EPS of $0.47, excluding non-recurring items, versus the $0.47 consensus and revenues of approximately $420 million versus the $417.36 million consensus. Expands operating margin 70 bps QoQ to 25.3 percent on a non-GAAP basis; repurchased 1.9 million shares of common stock.

08:19 am Citrix Systems shares soar 11% following better than expected earnings
Citrix Systems (CTXS $74.48 +7.50) reported fourth quarter earnings of $0.90 per share, $0.06 better than the Capital IQ consensus of $0.84, while revenues rose 19.5% year/year to $740 million versus the $705.89 million consensus. Product and license revenue increased 17%; Software as a service revenue increased 18%; Revenue from license updates and maintenance increased 22%; Professional services revenue, which is comprised of consulting, product training and certification, increased 20%; Revenue increased in the Pacific region by 52%; increased in the EMEA region by 19%; and increased in the America's region by 14%; Deferred revenue totaled $1.2 billion, compared to $960 million as of December 31, 2011, an increase of 25%; non-GAAP operating margin was 30%. The company issues guidance for the first quarter with EPS of $0.62-0.63, excluding non-recurring items, versus the $0.67 consensus and revenues of $670-680 million versus the $669.14 million consensus. The company issued guidance for fiscal year 2013 with EPS of $3.12-3.15, excluding non-recurring items, versus the $3.12 consensus and revenues of $2.95-2.98 billion versus the $2.91 billion consensus.

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From Briefing.com: Weekly Recap - Week ending 01-Feb-13

Dow +149.21 at 14009.79, Nasdaq +36.97 at 3179.1, S&P +15.06 at 1513.17

Stocks saw broad gains during today's session and the S&P 500 ended higher by 1.0%. Meanwhile, the Dow climbed 1.1% and settled above 14,000 for the first time since October 2007. The day was busy with economic data, most of which surprised to the upside. Overseas, China's HSBC manufacturing PMI signaled continued expansion while readings in Europe were better-than-feared.

Domestically, investors received a full slate of data with the headline report coming in the form of January nonfarm payrolls. During the first month of 2013, the economy added 157,000 nonfarm jobs, which fell short of the 180,000 expected by the Briefing.com consensus. In addition, the unemployment rate ticked up to 7.9%. The immediate reaction sent equity futures higher as the rise in unemployment signals the Federal Reserve will not be removing its support from the markets in the near future.

The morning sentiment was aided by a strong January ISM index, upbeat December construction spending, as well as the positive revision to the final January Michigan Consumer Sentiment Survey.

All ten S&P 500 sectors ended in the black and five added at least 1.0%.

Financials rallied broadly and the SPDR Financial Select Sector ETF (XLF 17.61, +0.23) notched a fresh 52-week high. Bank of America (BAC 11.71, +0.39) and Morgan Stanley (MS 23.51, +0.71) outperformed their peers and settled with respective gains of 3.5% and 3.1%.

Elsewhere, the materials sector rallied on the strength of steel producers. The industry tends to show elevated sensitivity to Chinese economic data, and today's manufacturing PMI beat suggested Chinese steel demand will remain strong. The Market Vectors Steel ETF (SLX 49.61, +0.77) advanced 1.6%.

The tech sector underperformed earlier in the week, but did its best to catch up to the broader market today. Interestingly, technology stocks rallied without the participation of Apple (AAPL 453.62, -1.87). However, microprocessor manufacturers picked up the slack and the PHLX Semiconductor Index gained 1.9%.

The CBOE Volatility Index (VIX 12.92, -1.36) fell almost 10.0%, and ended near its 52-week low of 12.29.

Today's volume was strong with more than 750 million shares changing hands on the floor of the New York Stock Exchange.

Next week shapes up to be pretty light in terms of economic data. On Monday, December factory orders will be reported at 10:00 ET.

 
 Index	  Started Week	Ended Week	Change	% Change  YTD % 
 DJIA	    13895.98	 14009.79	113.81	   0.8	  6.9 
 Nasdaq	     3149.71	  3179.10	 29.39	   0.9	  5.3 
 S&P 500	1502.96	  1513.17	 10.21	   0.7	  6.1 
 Russell 2000  905.24	   911.19	  5.95	   0.7	  7.3

4:17PM TTM Tech signs letter of intent for SYE and DMC plants (TTMI) 7.94 -0.03 : Co announced that it has signed a letter of intent with its minority partner, Shengyi Technology Co., to dispose of TTM's 70.2 percent equity interest in the SYE plant and to acquire Sytech's 20 percent equity interest in the DMC plant. Both the SYE and DMC plants manufacture conventional PCBs and are located in Dongguan, China. Subject to conclusion of a formal sale and purchase agreement between the parties, the transaction is expected to close by the end of the second quarter of 2013. A condition for closing is that the parties value all of SYE at 1 billion RMB (about $161 million) and all of DMC at 900 million RMB (about $145 million).

4:09PM This week's biggest % gainers/losers (SCANX) : The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

Today's top 20 % gainers

Technology: UIS (23.17 +22.5%), SGI (14.64 +21.37%), FSL (14.83 +19.82%), FTNT (23.65 +18.25%), LSCC (4.61 +14.1%)
Services: WMS (24.67 +44.06%), RSH (3.16 +42.42%), HHS (7.98 +23.72%), MGAM (18.43 +16.51%), TUES (8.61 +15.7%), EDMC (4 +14.55%)
Industrial Goods: TEX (32.91 +13.89%)
Healthcare: KERX (7.18 +152.92%)
Financial: PGR (22.69 +115.83%), ALEX (33.63 +14.09%)
Consumer Goods: PBI (13.81 +18.6%)
Basic Materials: CPNO (38.64 +19.29%), VLO (44.89 +15.2%), HES (68.24 +14.92%), AZC (2.79 +14.54%)

Today's top 20 % losers

Technology: RIMM (13.04 -26.83%), VMW (78.89 -20.08%), SANM (9.74 -19.46%), FIO (17 -17.86%), EGHT (7 -16.62%), VIPS (18.9 -15.78%), LXK (23.68 -14.89%), CEVA (15.21 -13.65%), ELLI (20.98 -13.4%)
Services: LQDT (33.23 -22.63%), OSTK (13.31 -18.55%)
Industrial Goods: DDD (58.66 -16.95%)
Healthcare: HALO (6.54 -19.4%), HLF (35.16 -16.02%), STSI (2.15 -13.58%), CADX (4.87 -13.21%)
Consumer Goods: SCSS (22.7 -21.91%), RDEN (39.98 -19.9%), STZ (32.69 -14.32%)
Basic Materials: CBT (37.52 -12.93%)

10:29AM Hewlett-Packard announces restructuring plan for Enterprise Services in Germany (HPQ) 18.63 +0.12 : The plan is part of HP's global multiyear restructuring plan that was announced on May 23, 2012, and further detailed at its Securities Analyst Meeting on Oct. 3, 2012.

Under the proposal presented today to the German Supervisory Board, the planned changes in Germany will affect ~1,100 positions.
Co will also close its site in Russelsheim, Germany, by the end of October. As part of the upcoming closure of the Russelsheim site, ~850 positions will be eliminated due to efficiency gains, local partner outsourcing and consolidation with other HP global service delivery hubs. Employees affected by the changes will have the opportunity to apply for open positions at other HP sites. The approximately 250 employees that remain at the site will have the opportunity to transfer to HP partners or clients.
The HP Enterprise Services restructuring will not impact any of HP's other major sites in Germany, and co will continue to employ ~10,000 people in the country.

08:48 am Oracle upgraded to Outperform at BMO Capital Markets; tgt raised to $43: . BMO Capital Markets upgrades ORCL to Outperform from Market Perform and raises their tgt to $43 from $36 on a belief that the top-line growth outlook has improved materially. On Wednesday, the firm hosted Oracle for a day of investor meetings. They conclude that enterprise data software spending is improving after a rough 2012 and that demand for engineered data appliances is now broad enough that Exadata sales will have a discernable impact on Oracle's overall growth rate in 2013.

11:05 am Tech Sector trading higher by 0.8% and ahead of the broader market
The tech sector is trading higher today, inline with gains in the broader market. Semiconductors are showing relative strength as well with the SOX trading 1.1% higher. Within the chip index, STM (+4.6%) is a notable standout. Among other major indices, the SPY is trading 0.9% higher today, while the QQQ and the NASDAQ are trading 0.8% higher on the session. Among tech bellwethers, VZ (+2.3%) is showing notable strength, while FB (-1.8%) is under pressure.

In tech earnings, ADNC (+25.9%) posted a beat and raise, whereas N (+6.2%) and CAVM (+7.2%) reported beats and offered relatively inline guidance. Also, CTCT (-1.7%) posted a beat but guided lower. In news, CLWR (+0.6%) filed a preliminary statement in connection with its definitive agreement with S (+0.8%) for S to acquire the ~ 50% stake in CLWR that it does not already own for $2.97 per share. Among rumors, SPLK (+1.6%) and NTAP (+0.8%) may be possible takeover targets by IBM (+1.0%), according to reports. Also, DELL (+3.6%) LBO buyout between $15-16/share could be announced by early next week, according to reports. Among notable analyst upgrades this morning in the tech space, VZ (+2.3%) was upgraded to Overweight at Piper, IFNNY (+3.4%) was upgraded to Buy at Jefferies, BMO upgraded ORCL (+1.7%) to Outperform, and ADNC (+25.9%) was upgraded to Hold at Deutsche Bank. Also, ERIC (+4.7%) was added to the Conviction Buy list at Goldman. Among downgrades, BCOV (-23.3%) was downgraded to Outperform at RBC and GLUU (-2.3%) was downgraded to Market Perform at Northland.

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From Briefing.com: Weekly Recap - Week ending 08-Feb-13

Dow +48.92 at 13992.97, Nasdaq +28.74 at 3193.87, S&P +8.54 at 1517.93

The S&P 500 punctuated a somewhat volatile week by adding 0.6%. Though the benchmark index ended firmly in the black, the bulk of its advance took place during the initial minutes. After notching a session high in the 1518 area, the index spent the remainder of the day in a two point range. While the S&P held its levels, the Dow Jones followed its morning rally with a partial retreat which was halted near the middle of its range.

Quiet trade unfolded as snowstorm Nemo envelops the East Coast. With forecasts calling for up to a foot of snow in New York, and more than 25 inches in Boston, today's volume paced well below average. The final tally indicated less than 600 million shares changed hands on the floor of the New York Stock Exchange.

Storm preparation was also reflected in individual stocks as Briggs & Stratton (BGG 24.37, +0.57) and Generac (GNRC 40.54, +0.80) settled with respective gains of 2.4% and 2.0%. The two manufacturers of power generators saw some buying interest as the Northeast prepares for the possibility of interruptions to power delivery.

Meanwhile, the broader market was powered by the technology sector. The SPDR Technology Select Sector ETF (XLK 29.93, +0.26) ended higher by 0.9% with outperformance largely due to relative strength of top components. Apple (AAPL 474.98, +6.76), Google (GOOG 785.37, +11.42), and International Business Machines (IBM 201.68, +1.94) all climbed between 1.0% and 1.5% with Google settling at a fresh all-time high.

Remaining in the tech sector, LinkedIn (LNKD 150.48, +26.39) soared 21.3% after the company's earnings and revenue eclipsed the Capital IQ consensus estimates. Note that today's surge sent LinkedIn to a fresh all-time high of its own.

Energy stocks outperformed as well, but the strength came despite no change in the price of oil. The energy component settled at $95.79.

On the downside, utilities weighed, but lifted off their lows during the afternoon session. Sector component Entergy (ETR 64.47, -0.49) shed 0.8% after reporting its revenue below analyst estimates.

This morning, the market received two economic data points. The January trade deficit narrowed to $38.5 billion thanks in part to a $3.8 billion increase in industrial supply and material exports. This occurred as imports suffered a $4.2 billion decline in industrial supplies and materials. It should be noted the brief worker strike at the Ports of Los Angeles and Long Beach likely contributed to the lower deficit.

Elsewhere, December wholesale inventories decreased 0.1%, which was worse than the increase of 0.3% expected by the Briefing.com consensus. This report carries negative implications for the upcoming revision to fourth quarter GDP growth as the Bureau of Economic Analysis had estimated an inventory growth of 0.7% in the preliminary reading.

On Tuesday, the January Treasury Budget will be reported at 14:00 ET. While there is no economic data on Monday's docket, earnings reports will continue pouring in. CNA Financial (CNA 31.80, +0.08) and Loews (L 43.85, +0.11) are scheduled to report their quarterly earnings ahead of the opening bell.

Week in Review: S&P 500 Chops Around 1,500

On Monday, the S&P 500 ended lower by 1.2% after European concerns returned to the forefront. Equities began the day with a broad sell-off as a downbeat European trade weighed. Italian and Spanish indices were the source of continent-wide weakness as controversy continued to plague the troubled sovereigns. In Italy the MIB lost 4.5% as authorities continue to investigate several financials, including the world's oldest bank, Banca Monte dei Paschi di Siena. Meanwhile, Spain's IBEX fell 3.8% as 34 of 35 listings ended in the red. The markets were rattled as Prime Minister Mariano Rajoy and other members of the People's Party find themselves in the middle of an alleged kickback scheme uncovered by Spain's largest daily newspaper, El Pais. Recent days have seen Mr. Rajoy face resignation calls from opposition leaders as well as Spanish citizens. European financials saw notable selling pressure with the weakness spilling over to their U.S. counterparts. The SPDR Financial Select Sector ETF (XLF 17.60, +0.04) slipped 1.1%.

Tuesday's session brought resilience to the markets as the key averages recovered the majority of their losses from Monday. The S&P 500 settled higher by 1.0% after spending the duration of the day in a steady climb. The morning sentiment was aided by upbeat European trade where Italian and Spanish markets recovered from Monday's plunge. Domestically, seven of ten S&P 500 sectors registered gains in the neighborhood of 1.0%. Tech shares led the way after the sector felt the brunt of Monday's selling. The largest tech stock, Apple, outperformed the broader market and ended higher by 3.5%.

Wednesday brought little change to the S&P 500 after spending the vast majority of the session in the red. The major averages began the day on a cautious note as European indices retreated in anticipation of an update from Monte dei Paschi regarding the size of its derivative-related losses. This caused selling of the Italian 10-yr as its yield climbed 13 basis points to 4.58%, its worst level since mid-December 2012. Reliance Steel (RS 71.44, +1.38) surged 5.9% following an agreement to acquire all outstanding shares of Metals USA (MUSA 20.78, +0.09) for $20.65 per share. The purchase price represents a 12.8% premium to Metals USA's Tuesday closing price, and the total transaction value is estimated at $1.2 billion.

On Thursday, equities ended the day with slim losses causing the S&P 500 to slip 0.2%. Though stocks saw little change at the outset of the session, sellers were able to take control within the first 30 minutes, and drive the major averages to their respective lows. The early broad-based weakness came about as the dollar index spiked to its highs in the 80.20 area. The sharp move took place after European Central Bank President Mario Draghi voiced concerns over the strength of the euro. The common currency weakened immediately following his remarks, falling to its session low near 1.3400 against the greenback. Phillip Morris (PM 90.45, +0.63), rose 2.4% after beating on earnings.

 
 Index	   Started Week  Ended Week    Change % Change   YTD % 
 DJIA	     14009.79	   13992.97    -16.82	-0.1	6.8 
 Nasdaq	      3179.10	    3193.87	14.77	 0.5	5.8 
 S&P 500	1513.17       1517.93	 4.76	 0.3	6.4 
 Russell 2000   911.19	     913.67	 2.48	 0.3	7.6

4:26PM Freescale Semi announces allocations of proposed new senior secured term loan facility (FSL) 15.54 +0.40 : Co announced that it has been advised by the lead arranger under its proposed new senior secured term loan facility that the arrangers have received sufficient orders to allocate and close the proposed new term loan facility. The proposed new term loan facility reduces indebtedness currently due in 2016 and extends to 2020 the maturities of co's indebtedness currently due in 2019 and a portion of co's indebtedness currently due in 2016. The proposed new term loan facility provides for two term loan tranches in an aggregate principal amount of approximately $2,741,000,000, consisting of a $350,000,000 term loan that will mature in December 2016 and a $2,391,000,000 term loan that will mature in March 2020. The maturity of the 2020 term loan may be accelerated to December 2017 under specified circumstances. The $350,000,000 term loan is expected to bear interest at a rate equal to LIBOR plus 3.25% (with LIBOR of not less than 1.00%), and the $2,391,000,000 term loan is expected to bear interest at a rate equal to LIBOR plus 3.75% (with LIBOR of not less than 1.25%). The closing of the proposed new term loan facility, which is expected to occur on March 1, 2013, is subject to customary conditions, and there can be no assurance that Freescale will be successful in obtaining the proposed new term loan facility on reasonably acceptable terms, or at all.

3:09PM Dell: 8.5% holder Southeastern Asset Management files 13D filing; intends to avail itself of all options at its disposal to oppose the proposed transaction (DELL) 13.48 -0.05 :

"On February 5, 2013, the Issuer announced that it had signed a definitive merger agreement pursuant to which Michael Dell, together with Silver Lake Partners, intend to cash-out existing stockholders of the Issuer at a per share price of $13.65 in a "going private" transaction. In response to such announcement, on February 8, 2013, Southeastern sent a letter to the Board of Directors of the Issuer expressing its extreme disappointment in the per share price of $13.65, which Southeastern believes grossly undervalues the Issuer. The letter also expressed Southeastern's current intent to vote against the proposed transaction as currently structured. The letter further stated that Southeastern currently intends to avail itself of all options at its disposal to oppose the proposed transaction, including but not limited to a proxy fight, litigation claims and any available Delaware statutory appraisal rights."
Firm's valuation summary arrives at a price of $23.72 for DELL. (INSID)

9:58AM Riverbed Technology - - Earnings Mover down -18% (RVBD) 16.43 -3.67 : Negative reaction to earnings send the stock diving down towards its November low of 16.30.

Web.com (WWWW) reported fourth quarter earnings of $0.45 per share, $0.03 better than the Capital IQ consensus of $0.42, while revenues rose to $126.2 million versus the $125.18 mln consensus. Adjusted EBITDA was $37.4 million for the fourth quarter of 2012, compared to $24.8 million for the fourth quarter of 2011 and representing a 30% adjusted EBITDA margin. Web.com's average revenue per user (ARPU) was $13.77 for the fourth quarter of 2012, representing a sequential increase of 2.1% from $13.49 in the third quarter of 2012 and growth of 7.1% from the $12.86 pro forma ARPU in the fourth quarter of 2011.

Riverbed Technology (RVBD) reported fourth quarter earnings of $0.29 per share, excluding non-recurring items, in-line with the Capital IQ consensus of $0.29, while revenues rose 17.0% year/year to $238.7 million versus the $234.83 mln consensus. "Revenue dollars grew more than $111 million for the full year, with most of that growth from WAN optimization. Performance management was the fastest growing product line, underpinning our strategic decision to acquire OPNET. Looking ahead, we will benefit from continued growth in our WAN optimization business and performance management product suite. I am very optimistic as we enter our first year as a billion-dollar-plus revenue company."

Microchip (MCHP) reported third quarter earnings of $0.41 per share, excluding non-recurring items, $0.02 better than the Capital IQ consensus of $0.39, while revenues rose 26.4% year/year to $416 million versus the $411.78 million consensus. The company issued upside guidance for the fourth quarter with EPS of $0.45-0.49, excluding non-recurring items, versus the $0.42 consensus and revenues of $420.2-432.47 million versus the $416.85 million consensus.

LinkedIn (LNKD) reported fourth quarter earnings of $0.35 per share, excluding non-recurring items, $0.16 better than the Capital IQ consensus of $0.19, while revenues rose 81.0% year/year to $303.6 million versus the $279.6 mln consensus. The company issued upside guidance for the first quarter with revenues of $305-310 million versus the $301.16 million consensus. The company in-line guidance for fiscal year 2013 with revenues of $1.41-1.44 billion versus the $1.44 billion consensus.. Talent Solutions: Revenue from Talent Solutions products totaled $161.0 million, an increase of 90% compared to the fourth quarter of 2011. Talent Solutions revenue represented 53% of total revenue in the fourth quarter of 2012, compared to 51% in the fourth quarter of 2011. Marketing Solutions: Revenue from Marketing Solutions products totaled $83.2 million, an increase of 68% compared to the fourth quarter of 2011. Marketing Solutions revenue represented 27% of total revenue in the fourth quarter of 2012, compared to 30% in the fourth quarter of 2011. Premium Subscriptions: Revenue from Premium Subscriptions products totaled $59.4 million, an increase of 79% compared to the fourth quarter of 2011. Premium Subscriptions represented 20% of total revenue in the fourth quarter of 2012 and 2011.

OpenTable (OPEN) reported fourth quarter earnings of $0.46 per share, excluding non-recurring items, $0.03 better than the Capital IQ consensus of $0.43, while revenues rose 15.3% year/year to $42.9 million versus the $42.51 mln consensus. The company issued guidance for the first quarter with EPS of $0.39-0.44, excluding non-recurring items, versus the $0.46 consensus and revenues of $44.7-46.1 million versus the $45.75 million consensus. The company issued in-line guidance for fiscal year 2013 with EPS of $1.79-1.96, excluding non-recurring items, versus the $1.94 consensus and revenues of $186.1-193.1 million versus the $189.19 million consensus. North America Metrics: Installed restaurant base as of December 31, 2012, totaled 19,801, a 15% increase over December 31, 2011. Non-GAAP adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation and acquisition-related expenses) totaled $19.0 million, or 52% of North America revenues, a 16% increase over Q4 2011. International Metrics: Installed restaurant base as of December 31, 2012, totaled 7,716. Non-GAAP adjusted EBITDA totaled a loss of $0.1 million compared to a loss of $0.5 million in Q4 2011.

11:24 am Tech Sector trading higher by +1.2% today
The tech sector is trading higher today, ahead of gains in the broader market. Semiconductors are showing strength as well with the SOX trading 1.0% higher. Within the chip index, NXPI (+3.8%) is a notable standout. Among other major indices, the SPY is trading 0.5% higher today, while the QQQ is up 1.2% and the NASDAQ is trading 0.9% higher on the session. Among tech bellwethers, AAPL (+1.8%) is showing notable strength, while VZ (-0.2%) is under pressure.

In tech earnings last night, LNKD (+18.3%) reported a solid beat and upside guidance, RVBD (-18.4%) posted an inline qtr but guided much lower, ATVI (+13.8%) posted a beat and offered conservative guidance, and OPEN (+0.8%) reported a slight beat and guided just lower. Among rumors, there are reports of 5 inch AAPL (+1.9%) iPhone spotted at supplier are circulating this morning. There's also STX (+3.8%) LBO chatter making the rounds. Among notable analyst upgrades this morning in the tech space, NTES (+5.8%) was upgraded to Buy at Deutsche Bank, VOD (+1.9%) was upgraded to Buy at BofA/Merrill, ALU (+4.2%) was upgraded to Overweight at Morgan Stanley, ARMH (-0.5%) was upgraded to Outperform at Credit Suisse, ATVI (+13.9%) was upgraded to Buy at Sterne Agee and LNKD (+18.3%) was upgraded to Buy at Credit Agricole. Also of note, GOOG (+1.4%) was added to Best Ideas List at Morgan Stanley. Among downgrades, RVBD (-18.4%) was downgraded at FBR and Cantor, NUAN (-19.1%) was downgraded at Needham, Stifel, and Craig Hallum following dissapointing earnings, and IT (-1.1%) was downgraded to Neutral at Pipe

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Amateur Investors Weekend Stock Market Analysis (3/9/13)

http://www.amateur-investor.net/Weekend_Market_Analysis_Mar_9_2013.htm

As the S&P 500 nears its all time high NYSE Margin Debt has exploded once again to the upside as investors are massively borrowing money to invest in the market. Apparently investors have learned nothing from the previous two events when the Inflation Adjusted Margin Debt exceeded 350 Billion Dollars as both were followed by tops shortly thereafter.



Meanwhile as I have mentioned before the overall pattern in the S&P 500 since early 2000 may end up being a large Broadening Top similar to the one that occurred from the mid 1960's through early 1970's. Hopefully we will not see a repeat of the large correction that developed after the last Broadening Top pattern completed in the early 1970's. However with the extremely large amount of margin debt, if these investors are forced to liquidate their positions due to margin calls, things certainly could become very volatile.

[ReturntoSender]

InvestmentHouse Weekend Market Summary

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

- New post-bear market highs all around (less SOX) after an iffy start.
- Stocks try to give up gains post-jobs report but even that dip is used to buy as the latecomers are diving in.
- Jobs report trounces expectations, but that doesn't make it great: more people leave the workforce (pushing that number to a record) than get jobs.
- Denying the facts?: pundits' excitement over market new highs has them slobbering over economic data that is worse than what was reported same time last year, and we know how 2012 went.
- Nine days into the rally, looking for some better entry points this coming week, but even without a test there are still some decent buys out there as liquidity rules.

Up again after trying to throw it away early in the day.

It was jobs Friday and jobs as well as the unemployment rate (7.7%) handily beat expectations. Good news to the headline readers, but the interesting aspect is that futures were up and up big from very early in the morning, hours before the jobs report. When the news came futures jumped then dropped, trading in a choppy fashion into the open but to be fair, holding some post jobs report gains.

Then the market opened, higher of course, and stocks plunged as the morning gains were lost. Poof. We expected some profit taking on a good number and a surge, but not from the opening bell.

It happened so fast, however, that it was out of the system before the crowd really got going. And yes, with the bond market selling off it is clear that retail investors left that building and are pushing and throwing elbows as they try to get through the stock market's doors.

By 10ET the selling ended and that early intraday dip was used as a buying opportunity. Talk about wanting to get into stocks.

Two reversal bars on the low and stocks were off to the upside, jumping back to the early morning futures highs, testing at lunch, and then sprinting to the close in the afternoon. Sellers did return . . . in the last ten minutes of trade, but didn't change the outcome. No harm, no foul.

SP500 6.92, 0.45%
NASDAQ 12.28, 0.38%
DJ30 67.58, 0.47%
SP400 0.87%
RUTX 0.85%
SOX 0.13%

Volume was trending up on NYSE, down on NASDAQ, identical to Thursday, but then NYSE volume faded and they were both down for the session. Breadth not bad, a bit better at 2:1 on both NYSE and NASDAQ.

With the bond market diving, it would seem the holdouts from the twice-burned last generation of retail investors that found refuge in the bond market for years have turned away from debt investing and are now committed to the stock chase. Four years late, but just in time to drive the market absurdly high before it tops.

OTHER MARKETS

Dollar: 1.3011 versus 1.3105 euro. Gained some ground on the euro as you would expect, really ramping in the dollar index, moving to a new rally high.

Bonds: 2.05% versus 2.00% versus 1.94% 10 year. Still in full submersion mode, gapping below the January/February lows. The former retail bond buyers are retail bond sellers. Flee, flee for your lives . . !

Oil: 91.95, +0.39. Oil actually moved higher for the week, bouncing, sort of, off the 200 day SMA and the 61% Fibonacci retracement. Up but not impressive.

Gold: 1576.90, +1.80. Gold traded sharply lower pre-market, but interestingly gold recovered from its lows and showed a very tight doji, tapping just over the February selloff low. Still looks as if gold is ready to bounce.

THE NEWS

Jobs report gives those wanting it a warm feeling. Great for the stock market, but let's keep a reality check in terms of the economy.

Nonfarm Payrolls, February (8:30): 236K actual versus 165K expected, 119K prior (revised from 157K)

Nonfarm Private Payrolls, February (8:30): 246K actual versus 178K expected, 140K prior (revised from 166K)

Unemployment Rate, February (8:30): 7.7% actual versus 7.9% expected, 7.9% prior

Hourly Earnings, February (8:30): 0.2% actual versus 0.2% expected, 0.1% prior (revised from 0.2%)

Average Workweek, February (8:30): 34.5 actual versus 34.4 expected, 34.4 prior

Certainly looks like improvement . . .

Improvement from where is the question. Compared to Q4 and its GDP of 0.1% as of the second revision as well as the January revision of the non-farm numbers DOWN 38K, yes the number looks better. But are they worthy of the game-changing, economy saving praise heaped upon them Friday?

As they say in the old NFL commercial, you make the call.

The rate of jobs growth is at an 18 month low.

At this rate it will take until 2017 to reach pre-recession levels.

Labor force participation fell to 63.5%, the lowest since 1981. That was a deep recession. Here we are supposedly 4 years out from when the recovery started and jobs participation is at the lows of the 1981 deep recession?

89.3M people are not in the labor force, a record.

More people left the workforce than jobs created: 236K non-farm versus 296K moving out of the labor force.

Only 58.6% of US citizens are working versus 60.6% when President Obama took office versus the 20 year average of 63%.

Yet, even with so few working, there are four applicants for every job even with a record number of workforce dropouts.

Long-term unemployed rose 90,000 and up 1M since June 2009 when the recovery officially began.

The economy remains 3M jobs below where it was at the prior peak. In real terms, factoring in population growth the deficit is almost 10M.

January and February 2012 jobs created: 311K and 271K
January and February 2013 jobs created: 119K and 236K

A 'better' report with year over year data falling and all of the other issues in the report? Hate to be a downer, but spin is spin and reality is reality.

'Denying the Facts.' Good to see economic pundits are as loony as Senator McCain.

Rick Santelli put it well following the February jobs report amid the afterglow from the likes of Austan Goolsbee and Jared Bernstein: are we that far down in the hole that we can't normalize rates after this "great" jobs report? The answer is no we can't because yes we are.

The glowing reports about the February jobs report would make you think we have hit nirvana. There was talk that now the Fed's liquidity, juicing as some call it, is spilling over into the economy, and the jobs report is some proof of that. After the close Friday I even heard one analyst from Cabot saying that to not accept the jobs report and other economic reports of late as proof of recovery is to 'deny the facts.'

Whoa there oh respected and praiseworthy giants from the pundit class. Just what facts? As seen in the discussion of the jobs report, jobs to start 2013 are WORSE than the start of 2012.

ISM? January was lower than last January (53.10 versus 53.70). February posted a beat year/year, but the reads from early 2011 to the fall of that year easily trumped the current data. Heading in the wrong direction, not the right direct.

The same can be said for regional reports. New York PMI was -7.78 in January versus 12.12 in 2012. February turned positive to 10.04, but that was a far cry from the 18.31 from February 2012.

GDP growth is a mixed batch at best. 0.1% Q4 versus 4.1% Q4 2011.

So at the risk of being accused of living in denial, I will simply note that the vast majority of the recent data points classified as 'clearly showing recovery' are BELOW the levels hit at the same time 2012.

So we are guaranteed a recovery this time with subpar data points compared to year over year reads and with companies guiding lower for the current quarter and 2013? Yes it may look better given we are coming off a flat at best Q4 GDP, but that does not automatically chalk these gains up as guarantors of an economic recovery, boomlet, or whatever you want to call it.

What makes these numbers that are lower than the year over year numbers better this time? What dynamic has changed to elevate worse numbers to better numbers? The trend is AT BEST mixed. The trend since 2010 is lower as that year was the peak in the recovery. Is it merely time?

The Answer: the belief that weaker data is better data smacks of euphoria over the market coming to life in a big way as retail investors finally make their way to the stock market, clearly giving up bonds as bond yields spike. Many of these pundits likely don't even KNOW the data is worse because they never check, just shoot from the hip.

Indeed, the pundits appear almost amorously aroused by the stock market moves, and as is sometimes the case, they are not thinking with the right . . . well let's just say they are not thinking clearly. Lower data is not better data unless you are looking for continued free money in the form of Fed liquidity. Indeed in 2011 and 2012 worse data led to worse economic times. Seems simple. It may be different this time, but that is always a tough argument. The clearer explanation is getting too emotional over data that is better because things were so bad in Q4. They are failing the first part of Casey Kasem's motto: keep your feet on the ground.

TECHNICAL SUMMARY

INTERNALS

NASDAQ
Stats: +12.28 points (+0.38%) to close at 3244.37
Volume: 1.596B (-3.86%)

Up Volume: 1.02B (-80M)
Down Volume: 543.16M (-20.18M)

A/D and Hi/Lo: Advancers led 2.11 to 1
Previous Session: Advancers led 1.53 to 1

New Highs: 258 (+66)
New Lows: 10 (-2)

S&P
Stats: +6.92 points (+0.45%) to close at 1551.18
NYSE Volume: 628M (-0.63%)

A/D and Hi/Lo: Advancers led 1.99 to 1
Previous Session: Advancers led 1.46 to 1

New Highs: 585 (+182)
New Lows: 55 (+17)

DJ30
Stats: +67.58 points (+0.47%) to close at 14397.07

BREADTH: Improved even more to 2:1 on both NYSE and NASDAQ. Good to see and of course aided by the small and midcaps putting in gains in excess of 0.8%.

VOLUME: Down on both NASDAQ and NYSE, considerably below average on NASDAQ. As noted before, they both got the volume when they needed, i.e. when they broke to new rally highs.

THE CHARTS

SP500. Nice break higher after two lateral sessions, still moving higher in the channel. Volume might be sliding, but the momentum is pushing SP500 to the top of the channel. The financials helped out the large caps this past week. Whatever works.

NASDAQ. Gapped upside to a new rally high and even filled the gap with that quick morning dip. Volume is weaker to end the week, falling below average Thursday and Friday. Weakening but not stopping NASDAQ. Now can it try for a new all-time high? Sure - - in another 1900 points. Just riding higher for now on the back of GOOG.

DJ30. Another day, another new high. This is the one whipping everyone into a froth as it moves higher on low, below average volume. Doesn't seem to matter; liquidity is driving it higher and higher.

SP400. Finally a new post-bear market high again, and of course that pushes the midcaps to an all-time high as well.

Russell 2000 small caps: Gapped to a new post-bear market high with more authority. The small caps have caught up.

SOX. Edging a bit higher but no new post-bear market high here, just following along. No issues, at least nothing that the others don't have, e.g. lower MACD.

SUMMARY: Nine days into the rally off the 50 day EMA, new post bear market highs for the indices we follow except SOX. MACD is lower on the new price highs but it is turning upside, trying to follow the indices. Money is pushing into the market and stocks are again proving they can rally farther than you would think. Not the best risk/reward at this point but the market is finding leadership from a lot of areas. It may want to come back and test some this coming week but already some leaders took a breather and are in position or darn close to break higher once more.

LEADERSHIP

Big names. GOOG is already in a nice lateral move and setting up for the next move. AMZN ditto. AAPL might even put in a move of its own. EBAY showed a doji with volume, perhaps ready for an ABCD move.

Financials. Mixed but really added to the SP500 gains for the week. C is at a new rally high with a strong move off the 50 day EMA. BAC was rejected from a new high but looks decent. MA looks a bit sloppy but V is still setting that handle for a new upside break.

Industrial machinery. DE still trying to set a move off the 50 day EMA. Decent but there are better patterns. CAT is still working at its 200 day SMA. Trying but not making the move with the rest of the market.

Semiconductors. KLAC still solid, BRKS in a flat consolidation. Others bounced on the week, e.g. XLNX, but could not take out the prior highs. Improved but not a big leader category.

Energy. Stepping up a bit more with HAL continuing higher off the 50 day in services. OII in the same group looks interesting as well. DO may try a 200 day SMA bounce in offshore drilling. NBL in the independents bounced off its 50 day EMA. Improved as a group.

Drugs/Healthcare. Still testing the recent moves and setting up again, e.g. SNSS, NKTR. ARAY may try to come off its 2 month selloff as MACD is rising. CELG is running higher yet again.

Retail. LULU looks ready to bounce a la DECK. PII appears ready to resume the upside in its channel.

THE MARKET

SENTIMENT INDICATORS

VIX: 12.59; -0.47
VXN: 13.72; -0.51
VXO: 11.62; -0.37

Put/Call Ratio (CBOE): 0.9; +0.07

Bulls versus Bears

The strange case of a market rise and yet lower and lower bullishness. After hitting a peak of 54.7% 5 weeks ago, bulls have faded with each gain in the market. The skepticism of the run that started over a month back was fueled by the late February sharp decline, and the recovery this past week has not changed animal spirits much. The bears were more sanguine, holding at 21.1% for the fourth out of five weeks. They appear uncertain about the move but not ratcheting up their worries. This is something of the old wall of worry, and that, in the world of sentiment and its inverse indicators, a good thing.

Bulls: 44.2% versus 46.3% versus 48.4% versus 52.6% versus 54.7% versus 54.3% versus 53.2% versus 51.1% versus 47.8% versus 46.8% versus 45.7% versus 43.6% versus 39.3% versus 37.2% versus 38.3% versus 43.6. Over the September 2012 level. Last time the market hit that level SP500 corrected 9% over the next two months. Background: Undercut 35%, the threshold for bullishness, in early June. 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: 21.1% versus 21.1% versus 22.1% versus 21.1% versus 21.1% versus 22.3% versus 22.3% versus 23.4% versus 24.5% versus 24.5% versus 23.4% versus 25.5% versus 27.7% versus 27.7% versus 28.7% versus 27.7%. Summary: 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.

MONDAY

The big news on the jobs report is out and it was widely perceived as very good news. It was, at least in terms of 2013 and Q4 2012, as the economy is recovering out of that sharp slowdown to end 2012. As for the macroeconomic picture, it is not that great as the numbers are lower year over year (not only in the jobs report) and more people dropped out of the labor pool than got jobs. High praise indeed.

The point is, some big news is out of the way. It was palatable to the market, even evoking some excitement. Earnings season, even though it just ended it seems, has a month before it gets into warnings season. The Fed is squarely on board even with 7.7% because Bernanke and company said it would take until 2015 to get unemployment down to 6%, apparently even if everyone leaves the workforce in wholesale numbers to take advantage of all of the benefits out there a person can get versus having to work for it.

Sad truth is, you can do darn little and have as much disposable income as someone working and making $69K per year and receiving no benefits. That backwards incentive is one of the problems as to why the economy is not recovering. If there is no incentive to work then a person is less likely to work, taking benefits that tap those who are working and creating. Ultimately, as Margaret Thatcher so famously put it, this kind of socialism fails because it runs out of other people's money. Too bad Greece, Spain, Italy and others, including the UK, did not listen.

I miss the iron lady. I am sure the UK does as well.

But I digress. There is news this coming week with retail sales, industrial production, and some regional PMI's (okay, just one), and there no doubt will be more from China and its efforts to withdraw liquidity and fight its own version of the currency war as well as from Europe and its ongoing hapless struggles. On a relative basis, however, it will be hen scratch compared to the recent calendar.

So the market is on its own. It has from here to QEternity despite the jobs report, it has a diving bond market shooing out the last retail investors, and it ahs those retail investors looking at the stock market as a bus that is leaving the station. Thus you get the kind of move that actually accelerated on Friday a bit as stocks continue to find money on each dip. As seen Friday, that can be an intraday dip given the surge off that initial gap and flop.

Seems everything is in gear for a continued move higher as even after 9 days of this particular rally leg there are still stocks setting up to lead the next move. That is the effect of money continuing to move into the market: leaders are already off to the races so money looks for other areas to move into. The funds try to buy slowly so you still see stocks that are not on the retail buyer's hot list setting up patterns. They break higher and a new wave helps push the market. As long as the money comes, wave after wave of different areas hit. Even now some 'names' everyone likes that led earlier are consolidating a bit for a new move even as the market rallied, e.g. GOOG and AMZN. Thus you see household names moving as well as the not so well known.

What could be more perfect right? I guess not much. But, that is when you need to be a little cautious as the late Casey Kasem used to say at the end of his American Top 40 broadcast: 'keep your feet on the ground but reach for the stars.' Not bad advice and he obviously followed it himself. Translated into market terms, realize this is a liquidity rush. The Fed has led it for years and finally the twice-burned generation of investors that swore off stocks after 2000 and 2008 have no choice: massive declines in bond values and associated losses force them out of that market to look for retirement funds. All that is making any return is . . . stocks. So here they come again, hoping the third time is the charm. Don't fear the reaper, right?

The Blue Oyster Cult classic

Well, they may have to dance with stocks again, but that doesn't mean don't have a healthy respect for this action. Corrections can still come, but as we noted just before that sharp February drop and as it started, these liquidity driven markets can sell sharply and on high volume just as happened in February, and then bounce right back. We cited Thanksgiving 1999 in that historic NASDAQ run to over 5000 as an example. This run may not have that kind of power, but the money is there and the response to the selling was the same: buy more please.

Dangerous but profitable run, holding the tiger by the tail. It will have its ups and downs, but what you do in this market is look at some good stocks that keep getting money thrown at them, e.g. GOOG, AMZN, PII as part of what you buy along with less well known stocks that have great patterns and can return you large percentage gains. These may be less well known stocks but they are not unknown dogs either. Money is seeking returns. Some will stay with the stodgy slow movers. Some will stay with the big names. A lot will seek what are considered 'undervalued' areas and push them up. We identify those buy looking at bases in stocks that didn't move as much as the early leaders or stocks that sold down to key support in trading ranges and are showing signs they want to move. These last groups can yield very larger returns, nicely augmenting the big name gains we make.

So, even after 9 days up you look for opportunity. Friday we were not chasing because there were stocks still setting up, some big names such as GOOG and AMZN, and they suggest there could be some anti-climatic action this coming week, a bit of softness before a new move. That of course allows them to finish setting up and then when they make the move, everything goes again. We just need to be ready with good plays in hand when that happens.

Have a great weekend!

Support and resistance

NASDAQ: Closed at 3244.37

Resistance:
3280 is the upper channel line for the November 2012 to present uptrend
3321 from April 2000
3401 is the May 2000 closing low

Support:
3227 is the April 2000 intraday low
3197 is the September 2012 post-bear market high
3171 is the October intraday high
The 50 day EMA at 3143
3134 is the March 2012 post-bear market peak
3130 from some January 2013 lows
The 2011 up trendline at 3121
3104-3112 from August and mid-October peaks.
3101 is the August 2012 high
3090 is the mid-March interim high
3076 is the late April 2012 high and the 1/2013 low after gapping higher
3062 is the December 2012 prior peak
3042 from 5/2000 low and several other price points
3024 is the gap point from early May
The 200 day SMA at 3022
3000 is the February 2012 post-bear market high
2999 is the bottom of the August 2012 consolidation
2988 is the July 2012 high
2977 to 2980 is the bottom of the late October 2012 consolidation, July 2012 peak
2962 is the April 2012 low
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2900 is the March 2012 intraday low
2858 is the late July 2011 peak
2847 is the mid-May 2012 low
2838 from the July 2012 lows

S&P 500: Closed at 1551.18

Resistance:
1556 from July 2007
1576 from October 2007, all-time high

Support:
1539 from June 2007
1531 is the recent high
1499 from January 2008
The November up trendline at 1498
The 50 day EMA at 1496
1475 is the September 2012 high
1471 is the October 2012 intraday high
1466 is the September 2012 closing peak and rally closing high
1440 from November 2007 closing lows
1434 from early November 2012
1433 from August 2007 closing lows
1427 is the August 2012 peak
1425 from May 2008 closing highs and the October 2012 low
The 200 day SMA at 1418
1408 is the late October 2012 range closing low
1406 is the early May 2012 peak
1402.22 - 1400 is the closing low of the August 2012 lateral consolidation
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
1332 is the early March 2011 peak

Dow: Closed at 14,397.08

Resistance:
Now 9% above its 200 day SMA, still leaving DJ30 room to run before it gets too top heavy on this run and has to test.

Support:
14,198 from the October 2007 high
14,149 is the February 2013 high
14,022 from 7-07 peak
The 50 day EMA at 13,806
13,692 from 6-2007 peak
13,668 from 12-2007 peak
13662 is the October 2012 intraday high
13,653 is the September 2012 high
13,557 to 13,662
13,413 from the late September 2012 low
13,300 to 13,331 is the August 2012 post-bear market high
13,297 is the April 2012, prior post bear market high
The 200 day SMA at 13,195
13,058 from the May 2008 peak on that bounce in the selling
13,056 is the February 2012 high
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012
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

March 5 - Tuesday
- ISM Services, February (10:00): 56.0 actual versus 55.4 expected, 55.2 prior

March 6 - Wednesday
- MBA Mortgage Index, 03/02 (7:00): 14.8% actual versus -3.8% prior
- ADP Employment Change, February (8:15): 198K actual versus 150K expected, 215K prior (revised from 192K)
- Factory Orders, January (10:00): -2.0% actual versus -2.2% expected, 1.3% prior (revised from 1.8%)
- Crude Inventories, 03/02 (10:30): 3.833M actual versus 1.130M prior

March 7 - Thursday
- Challenger Job Cuts, February (7:30): 7.0% actual versus -24.5% prior
- Initial Claims, 03/02 (8:30): 340K actual versus 350K expected, 347K prior (revised from 344K)
- Continuing Claims, 02/23 (8:30): 3094K actual versus 3100K expected, 3091K prior (revised from 3074K)
- Trade Balance, January (8:30): -$44.4B actual versus -$43.0B expected, -$38.1B prior (revised from -$38.5B)
- Productivity-Rev., Q4 (8:30): -1.9% actual versus -1.6% expected, -2.0% prior
- Unit Labor Costs -Rev., Q4 (8:30): 4.6% actual versus 4.2% expected, 4.5% prior
- Natural Gas Inventories, 03/02 (10:30): -146 bcf actual versus -171 bcf prior
- Consumer Credit, January (15:00): $16.2B actual versus $12.8B expected, $15.1B prior (revised from $14.6B)

March 8 - Friday
- Nonfarm Payrolls, February (8:30): 236K actual versus 165K expected, 119K prior (revised from 157K)
- Nonfarm Private Payrolls, February (8:30): 246K actual versus 178K expected, 140K prior (revised from 166K)
- Unemployment Rate, February (8:30): 7.7% actual versus 7.9% expected, 7.9% prior
- Hourly Earnings, February (8:30): 0.2% actual versus 0.2% expected, 0.1% prior (revised from 0.2%)
- Average Workweek, February (8:30): 34.5 actual versus 34.4 expected, 34.4 prior
- Wholesale Inventories, January (10:00): 1.2% actual versus 0.2% expected, 0.1% prior (revised from -0.1%)

March 12 - Tuesday
- Treasury Budget, February (14:00): -$205.0B expected, -$237.7B prior

March 13 - Wednesday
- MBA Mortgage Index, 03/09 (7:00): 14.8% prior
- Retail Sales, February (8:30): 0.5% expected, 0.1% prior
- Retail Sales ex-auto, February (8:30): 0.5% expected, 0.2% prior
- Export Prices ex-ag., February (8:30): 0.5% prior
- Import Prices ex-oil, February (8:30): 0.2% prior
- Business Inventories, January (10:00): 0.4% expected, 0.1% prior
- Crude Inventories, 03/09 (10:30): 3.833M prior

March 14 - Thursday
- Initial Claims, 03/09 (8:30): 350K expected, 340K prior
- Continuing Claims, 03/02 (8:30): 3103K expected, 3094K prior
- PPI, February (8:30): 0.7% expected, 0.2% prior
- Core PPI, February (8:30): 0.2% expected, 0.2% prior
- Current Account Balance, Q4 (8:30): -$112.3B expected, -$107.5B prior
- Natural Gas Inventories, 03/09 (10:30): -146 bcf prior

March 15 - Friday
- CPI, February (8:30): 0.5% expected, 0.0% prior
- Core CPI, February (8:30): 0.2% expected, 0.3% prior
- Empire Manufacturing, March (8:30): 6.5 expected, 10.0 prior
- Net Long-Term TIC Flows, January (9:00): $64.2B prior
- Industrial Production, February (9:15): 0.4% expected, -0.1% prior
- Capacity Utilization, February (9:15): 79.4% expected, 79.1% prior
- Michigan Sentiment, March (9:55): 77.8 expected, 77.6 prior

[ReturntoSender]

From Briefing.com: Weekly Recap - Week ending 05-Apr-13

Dow -40.86 at 14565.25, Nasdaq -21.12 at 3203.86, S&P -6.70 at 1553.28

The major averages ended today's session with modest losses. The S&P 500 shed 0.4% while the tech-heavy Nasdaq lost 0.7%.

The bulk of today's selling occurred at the open as three points of concern sent investors in search of safety. Headlines from Asia indicated North Korea has not toned down its war rhetoric and South Korean officials confirmed that the North has moved a pair of mid-range missiles to its east coast.

In addition to the Korean concerns pressuring the broader market, disappointing second quarter guidance from F5 Networks (FFIV 73.21, -17.21) contributed to the relative weakness of the tech sector, which ended as the day's biggest laggard.

While the two items pressured index futures in pre-market trade, a disappointing March nonfarm payrolls report ensured a sharply lower start to the cash session.

Nonfarm payrolls added just 88,000 new jobs in March. That was down from an upwardly revised 268,000 (from 236,000) additions in February and was the smallest increase in jobs since June 2012. The Briefing.com consensus expected payrolls to add 192,000 jobs.

Although the three headwinds caused the S&P 500 to start lower by 1.3%, the benchmark average notched its lows during the opening minute before spending the remainder of the day in a steady climb.

The morning developments sparked a safety bid across the Treasury complex. As a result, the 10-yr yield fell to its lows before recovering three basis points into the close. However, Treasuries ended near their best levels of the week with the 10-yr yield down 17 basis points at 1.70%.

The technology sector felt the brunt of today's selling pressure as F5 Networks' cautious guidance weighed on other networking companies. In addition, large cap tech names saw outsized losses as well. The largest tech component, Apple (AAPL 423.20, -4.52), lost 1.1%, and settled near its 52-week low. Notably, chipmakers underperformed in early trade, but finished the day ahead of the tech sector. The PHLX Semiconductor Index shed 0.5%.

Although growth-oriented sectors were among the biggest decliners in early trade, those groups were able to climb off their lows. Financials, industrials, and materials outperformed the defensively-minded consumer staples and health care sectors.

It should be noted that health care and consumer staples are the top performing sectors year-to-date, therefore some profit taking may have played a part in their underperformance today.

On the upside, telecoms and utilities settled in the black. The SPDR Utilities Select Sector ETF (XLU 39.57, +0.17) added 0.4%, and was the top performing sector ETF as investors sought higher-yielding equities.

While the broader market finished well off its lows, the Dow Jones Transportation Average was able to stage a stunning reversal. The bellwether complex was down as much as 2.2% at the start of the session before ending with a gain of 0.5%. Truckers were among the top index performers as Con-way (CNW 34.01, +0.96) advanced 2.9%.

Looking back at the day's final sector performance, technology (-1.0%), consumer staples (-0.7%), and health care (-0.6%) were among the biggest laggards. Meanwhile, utilities (+0.4%), telecom (+0.4%), energy (UNCH), and industrials (-0.2%) outperformed.

Reviewing today's remaining economic data, private nonfarm payrolls rose 95,000, but that was still well below consensus forecasts (210,000), and what was added in February (254,000).

The unemployment rate dipped to 7.6% in March from 7.7% in February. The decline in the unemployment rate, however, was not due to job growth. The labor force participation rate dropped to levels not seen since the late 1970s and caused the unemployment rate to decline. If the labor force participation rate had remained at February levels, the unemployment rate would have increased to 7.9%.

The U.S. trade deficit narrowed in February, dropping from $44.5 billion in January to $43.0 billion. The Briefing.com consensus expected the deficit to increase slightly to $44.7 billion.

Consumer credit increased by $18.1 billion in February after increasing a downwardly revised $12.7 billion (from $16.2 billion) in January. The Briefing.com consensus expected consumer credit to increase by $14.0 billion.

There is no economic news of note scheduled for a Monday release.

On Tuesday, February wholesale inventories will be reported at 10:00 ET.

Week in Review: S&P 500 Alternates Between Gains and Losses

On Monday, stocks saw little change at the start of the session with European markets shuttered for Easter Monday. However, that changed quickly once the March ISM Index was reported below expectations. The Index was reported at 51.3, which was its lowest reading since December, and it sent the major averages to their lows with cyclical sectors pacing the decline. The SPDR Industrial Select Sector ETF (XLI 40.97, -0.08) fell 1.2%. Transportation-related stocks did their part in pressuring the space as the Dow Jones Transportation Average ended lower by 1.5%. All 20 stocks comprising the Transportation Average settled in the red, and truckers were among the weakest performers. Ryder System (R 57.83, +0.33) and Landstar (LSTR 55.55, +1.24) saw respective losses of 1.8% and 2.4%.

Equities spent the bulk of Tuesday's session near their highs before a late afternoon stumble dropped the S&P 500 back near the middle of its range. As a result, the benchmark average finished higher by 0.5%. Notably, the Russell 2000, which tracks small cap stocks, ended lower by 0.5% after losing more than 1.0% on Monday. The health care sector showed strength out of the gate with managed care stocks jumping after the Centers for Medicare and Medicaid Services said 2014 Medicaid Advantage and prescription drug benefit rates will increase by 3.3%. Dow component UnitedHealth Group (UNH 62.10, +0.07) gained 4.7%.

Wednesday saw a steady decline and the S&P 500 settled lower by 1.1%. Notably, small cap stocks extended their recent weakness as indicated by a 1.7% decline in the Russell 2000. The Dow Jones Transportation Average finished lower by 1.3% with airlines leading the decline. Delta Air Lines (DAL 14.39, -0.36) and United Continental (UAL 29.27, -0.03) both lost 2.5%. Notably, Wednesday marked the third consecutive session which saw the bellwether complex end with a loss of at least 1.0%.

On Thursday, equities began the day on a mixed note. The S&P 500 climbed higher out of the gate while Nasdaq slipped into the red, where it spent the majority of the session. After the prior day's selloff caused the benchmark average to slide 1.1%, a handful of Wednesday's underperformers began among the leaders. However, the early leadership did not hold into the afternoon as some defensive sectors began appearing atop the leaderboard. Counter-cyclical telecoms and utilities climbed throughout the day, and saw the largest gains.

 
 Index	  Started Week	 Ended Week   Change  % Change	YTD % 
 DJIA	    14578.54	  14565.25   -13.29	-0.1	11.1 
 Nasdaq	     3267.52	   3203.86   -63.66	-1.9	 6.1 
 S&P 500	1569.19	   1553.28   -15.91	-1.0	 8.9 
 Russell 2000  951.54	    923.28   -28.26	-3.0	 8.7

4:41PM Cymer: U.S. Department of Justice clears ASML acquisition of Cymer (CYMI) 94.80 +0.56 : ASML Holding NV (ASML) and Cymer (CYMI) announce that the Antitrust Division of the United States Department of Justice has cleared the previously announced merger between Cymer and affiliates of ASML. Clearance of the merger has previously been granted by the U.S. Committee on Foreign Investment in the United States (CFIUS), as well as the Taiwanese, German and Israeli antitrust authorities. Furthermore, Cymer stockholders have approved the merger agreement. Completion of the merger remains subject to additional customary closing conditions and receipt of approvals under competition laws in South Korea and Japan. Cymer and ASML continue to expect the transaction to close in the first half of 2013.

AMD (AMD) announced its collaboration with Adobe Systems (ADBE) to deliver OpenCL hardware-accelerated video editing for the first time on the Microsoft Windows platform with the next version of Adobe Premiere Pro.

10:49 am S&P Information Technology Sector trading +1.7% following weak jobs report

The tech sector is trading lower today, trailing narrower losses in the broader market. Semiconductors are showing relative weakness as well with the SOX trading 2.0% lower. Within the chip index, ALTR (-3.4%) and CRUS (-3.4%) are notable laggards. Among other major indices, the SPY is trading 1.2% lower today, while the QQQ and the NASDAQ are trading 1.5% lower on the session. Among tech bellwethers, only FB (+1.0%) is showing strength, while CSCO (-3.7%) is under heavy pressure.

In tech earnings last night, FFIV (-19.3%) guided Q2 below consensus. CSCO (-3.7%) and JNPR (-5.6%) are lower in sympathy. This morning, SSNLF (0.0%) and RDWR (-19.6%) each guided Q1 below consensus. In news, Ray Lane is stepping down as HPQ (-1.8%) Chairman, Ralph Whitman will replace him. SABA (-2.3%) disclosed its under an SEC investigation. NIHD (+13.1%) announced the sale of Nextel Peru to Entel for $400 mln. Among notable analyst upgrades this morning in the tech space, Argus upgrades FB (+1.0%) to Buy and Stifel upgraded TDC (+0.2%) to Buy. Among downgrades, FFIV (-19.3%) was downgraded at a host of firms, VTNC (-4.6%) was downgraded to Hold at Cowen, and JNPR (-5.6%) was downgraded to Equal Weight at Barclays.

09:04 am Facebook upgraded to Buy at Argus; tgt $36: . Argus upgrades FB to Buy from Hold and sets target price at $36. On 4/4, FB announced "Facebook Home," not just a new mobile phone application, but rather a completely redesigned way for users to interact with Facebook through mobile devices. Firm sees Facebook Home as a way for the company to strengthen its presence in mobile computing without jumping into the hardware business or even developing its own operating system. It's raising its 2013 EPS estimate to $0.48 from $0.45 and its 2014 forecast to $0.67 from $0.55. FB shares are trading well below their recent high of more than $32 and in its view now offer a favorable entry point.

F5 Networks (FFIV) issued downside guidance for the second quarter with EPS of $1.06-1.07, excluding non-recurring items versus the $1.23 consensus ($1.21-1.24 previous guidance), with revenues of $350.2 million versus the $376.05 million consensus ($370-380 mln previous guidance). John McAdam, F5 president and chief executive officer, said the revenue shortfall resulted primarily from a slowdown in North American and to a lesser extent EMEA sales, while sales in Japan and Asia-Pacific were essentially in line with the co's expectations. "From a market perspective, Telco bookings were down sharply on both a sequential and year-over-year basis. U.S. Federal sales were also down significantly from the second quarter a year ago. Currently, we are looking into all the factors affecting the quarter's results and we plan to provide more color during our regularly scheduled release and conference call on April 24."

Xyratex (XRTX) reported first quarter loss of $0.13 per share, $0.05 better than the Capital IQ consensus of ($0.18), while revenues fell 33.8% year/year to $195.6 million versus the $177.31 million consensus. The company issues in-line guidance for the second quarter with EPS of ($0.15) - $0.09 versus the ($0.13) consensus and revenues of $190-220 million versus the $202.74 million consensus. Gross profit margin in the first quarter was 18.9%, compared to 17.9% in the same period last year and 14.5% in the prior quarter. Today, the Company also announced that its Board of Directors has approved a quarterly cash dividend of $0.075 per share, unchanged from the prior quarterly dividend.

Hewlett-Packard (HPQ) announced changes to its board of directors. Raymond J. Lane has decided to step down as chairman of the board, to be replaced on an interim basis by Ralph V. Whitworth. The board is commencing a search for a permanent nonexecutive board chairman. In addition, John H. Hammergren and G. Kennedy Thompson, after eight and seven years of service to HP stockholders, respectively, have decided to leave the board. Both directors will continue to serve until the May board meeting. The board is commencing a search for two or more new independent directors. With Lane stepping down as executive chairman, the role of lead independent director, currently held by Rajiv L. Gupta, is no longer necessary and will be eliminated. Gupta will remain on the board and will replace Thompson as chairman of the Audit Committee. Gary M. Reiner will replace Gupta as chairman of the Nominating and Governance Committee. With Hammergren's departure, Whitworth will become chairman of the Finance and Investment Committee.

Radware (RDWR) issued downside guidance for the first quarter with lowered EPS to $0.30, excluding non-recurring items, from $0.40-0.43 versus the $0.42 consensus and lowered first quarter revenue guidance to 45 mln from $48.5-49.5 million versus the $49.15 million consensus. "While we realized strong sales in the U.S. market during the first quarter of 2013, the co experienced weaker than expected results in EMEA and China. This resulted in lower quarterly revenues than we anticipated."

[ReturntoSender]

6-Month Unfavorable Seasonality Period Approaches
by Carl Swenlin

http://blogs.decisionpoint.com/chart_spotlight/2013/04/20130425cs.html

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From Briefing.com: Weekly Recap - Week ending 07-Jun-13

Dow +207.50 at 15248.12, Nasdaq +45.16 at 3469.21, S&P +20.82 at 1643.38

Equity indices entered the weekend on an upbeat note as the S&P 500 settled higher by 1.3%, ending just three points below its 20-day moving average.

Stocks spent the bulk of today's session near their highs after receiving a pre-market boost from the nonfarm payrolls report.

Nonfarm payrolls increased by 175,000 jobs in May. That was up from a downwardly revised 149,000 (from 165,000) new jobs in April, and ahead of the Briefing.com consensus, which expected nonfarm payrolls to add 159,000 new jobs in May.

Even though payrolls beat expectations, the underlying trends point toward a stable, not upward moving, labor market and a slow-growth economy. Specifically, the increase in jobs was not enough to cause a sizable jump in income levels. That means retail sales growth will likely be soft for a second consecutive month.

Private payrolls added 178,000 jobs in May, up from 157,000 jobs in April, and above the 175,000 expected by the consensus.

The unemployment rate ticked up to 7.6% in May from 7.5% while the consensus expected the unemployment rate to remain at 7.5%.

The increase, however, was the result of improving confidence in economic conditions. The labor force increased by 420,000, topping the 319,000 increase in the number of employed.

While the headline number surprised to the upside, the increase in the unemployment rate suggests the Federal Reserve will maintain its accommodative policy course in the immediate term.

Cyclical sectors ended among the leaders as financials, industrials, and discretionary shares all gained more than 1.7%.

The industrial sector stood out as transportation and defense companies rallied broadly. The Dow Jones Transportation Average settled higher by 2.4% as 11 of 20 Index components added more than 2.0%. Airlines received clearance for take-off with United Continental (UAL 32.94, +2.27) soaring 7.4%. Contributing to United's outperformance was a Goldman Sachs upgrade of the stock to 'Neutral' from 'Sell.'

With regards to defense names, the PHLX Defense Index rose 1.9%.

The discretionary sector added 1.8% as retailers provided a measure of support to the growth-oriented space. Gap (GPS 42.09, +1.11) jumped 2.7% after reporting May same store sales growth of 8.0% while the broader SPDR S&P Retail ETF (XRT 78.32, +1.23) rose 1.6%.

Many of today's outperformers included recent laggards. Homebuilders saw early gains, but ended the day in mixed fashion. The iShares US Home Construction ETF (ITB 23.82, +0.06) ended with just a slim gain of 0.3%.

Elsewhere in high-beta land, small cap stocks trailed behind the broader market throughout the session as the Russell 2000 gained 0.8%.

Interestingly, the materials sector rallied despite weakness in metals. Gold fell 2.6% to $1378.40 per ounce while silver dropped 5.2% to $21.52 per ounce. For its part, copper declined 1.6% to $3.267 per pound. Steelmakers also lagged as the Market Vectors Steel ETF (SLX 40.16, -0.14) shed 0.4%.

The CBOE Volatility Index (VIX 15.03, -1.60) fell early, and remained near its lows after spiking to its highest level in more than three months.

Today's nonfarm payrolls report sparked daylong selling across the Treasury complex. As a result, the benchmark 10-yr yield rose nine basis points to 2.175%.

Looking at today's leftover economic data, the average workweek remained at 34.5 in May after a slight upward revision in April (from 34.4). Average hourly earnings growth was flat.

According to the Federal Reserve, consumer credit increased by $11.1 billion in April. This follows the prior month's revised increase of $8.4 billion, and is lower than the $13.2 billion that had been broadly expected among economists polled by Briefing.com.

There is no economic data of note scheduled for a Monday release.

Week in Review: Stocks Wobble Ahead of Jobs Data

On Monday, The major averages registered modest gains with the Dow Jones Industrial Average leading the way, adding 0.8%. The Nasdaq eked out a gain of 0.2% while the S&P 500 climbed 0.5%. The Dow outperformed as Merck (MRK 48.19, -0.41) and Intel (INTC 24.59, -0.06) boosted the price-weighted index from the opening bell. Merck rose 3.8% after the company presented the interim results of one of its trials while Intel gained 4.0% following the weekend public debut of its fourth generation processors.

Tuesday's session ended in negative territory as the S&P 500 shed 0.6%. Equities opened the session on an upbeat note as the Dow Jones Industrial Average appeared poised for its 21st consecutive Tuesday of gains. However, that changed midway through the trading day when the major averages dipped into the red, where they remained until the close. The afternoon weakness left eight of the ten sectors in the red, but was most noticeable among cyclical groups as energy, financials, and industrials lost between 0.6% and 0.9%.

The S&P ended Wednesday's session with a loss of 1.4% after steady selling persisted throughout the day. All ten sectors ended in the red as declining issues outpaced advancers by a 4.4 to 1 ratio. Cyclical groups were among the main casualties of today's selloff as four of six growth-oriented sectors saw losses in excess of 1.6%. The materials space fell 2.1% amid sector-wide weakness. Only gold miners were able to escape the selling pressure as the Market Vectors Gold Miners ETF (GDX 28.99, -1.31) added 0.3%.

On Thursday, the S&P 500 settled higher by 0.9% despite having to endure early weakness brought on by volatility in the foreign exchange market. The Dollar Index faced heavy selling pressure into the early afternoon, and was down as much 1.8% before bouncing off its 200-day moving average. Although many currencies were boosted by the dollar selloff, none was greater than the strength of the Japanese yen, which at its best levels was up more than 3.0% against the greenback at 95.89. The significant movements in the foreign exchange market were followed by chatter suggesting a forced liquidation trade may have been the culprit behind the sharp downdraft in the dollar.
Index Started Week Ended Week Change % Change YTD %
DJIA 15115.57 15248.12 132.55 0.9 16.4
Nasdaq 3455.91 3469.22 13.31 0.4 14.9
S&P 500 1630.74 1643.38 12.64 0.8 15.2
Russell 2000 984.15 987.62 3.47 0.4 16.3

2:40AM Advanced Semi reports May revs of NT$17.44 bln, +11.5% YoY, +4.3% sequentially (ASX) 4.05

4:26PM This week's biggest % gainers/losers (SCANX) : The following are this week's top 20 percentage gainers and top 20 percentage losers, categorized by sectors (over $300 mln market cap and 100K average daily volume).

This week's top 20 % gainers

Technology: ET (33.62 +46.13%), BV (9.51 +23.1%), MKTG (11.51 +20.99%), OVTI (18.93 +20.85%), CIEN (19.75 +14.74%), OIBR (2.26 +13.2%), MRGE (3.67 +12.65%)
Services: KKD (18.04 +23.14%), DANG (7.34 +16.4%)
Healthcare: CLVS (71.83 +95.8%), TEAR (11.84 +16.75%), TSRO (39.81 +16.47%), MNKD (7.46 +16.26%), CADX (7.43 +15.77%), ACAD (17.01 +15.47%), AVNR (3.77 +13.31%), IDIX (5.25 +12.75%)
Consumer Goods: GIII (48.78 +17.06%)
Basic Materials: MHR (4.05 +16.91%), RBY (1.84 +12.5%)

This week's top 20 % losers

Technology: SCTY (35.97 -21.35%), PANW (46.2 -17.26%), ZNGA (2.84 -16.91%), MKTO (19.94 -16.05%), UBNT (16.02 -14.17%), RST (15.75 -13.72%)
Services: P (15.12 -17.95%), GA (7.33 -17.36%), GOL (3.95 -16.63%)
Healthcare: SNTA (4.55 -40.3%), INFI (18.13 -36.06%), RIGL (3.56 -24.95%), ASTX (4.57 -16.67%), ARRY (5.01 -16.53%), CCXI (12.46 -15.49%)
Financial: NBG (5.5 -19.24%)
Consumer Goods: PAY (17.09 -26.12%)
Basic Materials: MTL (2.91 -20.34%), PDH (12.14 -13.98%), KWK (2.22 -13.62%)

[ReturntoSender]

InvestmentHouse Weekend Market Summary:

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

- Jobs report beats, revisions solid, but futures fell on the news: taper reality.
- ECB states it is ready to continue its policies forever. Futures jump, dollar surges.
- 'No doubt' jobs market is in recovery say some, but a surge in part-time jobs is hardly a victory as the structural jobs change becomes entrenched.
- Dollar surging, Oil surging, Bonds tanking, Gold dives but holds 1200.
- It's earnings season. And all that implies.

Stocks rally, but hard to tell if it was jobs or the ECB.

Lots of excitement about a jobs report that was good on numbers, bad on quality, and ugly on those wanting fulltime work, but not finding it.

The Good: 195K June jobs. May revised: 195K from 175K. April: 199K from 149K

The Bad: 360K part-time jobs (557K YTD) for 28.059M total, an all-time high. -240K fulltime jobs (just 130K YTD). ONLY 47% OF US CITIZENS HAVE FULL-TIME JOBS!

The Ugly: U6 (underemployed due to economic conditions) 14.3M from 13.8M in May.

Household Survey:

Unemployment: 7.6% versus 7.6% expected versus 7.6% May. Longest stretch of 7.5+% unemployment (54 months) since record keeping started in 1948!
Participation Rate: 63.5% versus 63.4%
Household jobs gained: 160,000.
Manufacturing jobs fell for the fourth straight month. Only +13K YTD
Restaurants and Bars: +51.7K, +239K YTD. 10,339,800 current, an all-time high.

Non-Farms Report Internals:
Restaurants +37K
Leisure and hospitality: +75K
Education, Health, Temporary: +23K
Manufacturing -6K

What does this show? The continued surge in part-time hiring that was ignored until last month's jobs report when the Wall Street Journal and others finally picked up on the argument we made for months, i.e. the jobs quality was bad because companies were hiring to minimize costs ahead of the full implementation of the Affordable Healthcare Act.

I suppose the President will now want to amend the legislation to lower the hours to 25 per week in order to avoid the impacts, but that doesn't matter now that the employer applicability was put off until 2015, once again conveniently avoiding showing just how onerous, unworkable, and expensive the legislation will be until after a national election.

The conclusion: get used to it. Too many regulations on those who would create new companies and new jobs here in the US, so the bulk of jobs created will be at the lower end . . . just as what has transpired the past several months.

ECB has more of an impact on US stocks.

But did jobs make the difference for stocks? It was clear early on that was not the case. Futures were up on the ECB's pronouncement on July 4 that it would maintain its easy policy for a long time to come, scrapping its 'we don't give no stinking guidance' positions. Draghi last year said he would do anything, and he has augmented that to do anything forever.

Futures loved the ECB stance. Futures jumped early. Jobs hit, they dipped. It was not until an hour into the session that they found their footing and rallied, more or less steadily, into the close.

SP500 16.48, 1.02%
NASDAQ 35.71, 1.04%
DJ30 147.29, 0.98%
SP400 1.26%
RUTX 1.44%
SOX 1.35%

Why no jump on the jobs report? Perhaps the headline numbers were too strong for those worrying about a taper. Perhaps stocks saw through the raw numbers and looked at the number of part-time and the number of underemployed seeking fulltime work and figured the taper might be less likely. What IS less likely is those in the latter camp getting what they want. The Fed is going to taper starting in September.

In the end it didn't seem to matter. Stocks rallied, albeit on low volume, with SP500 and other indices clearing some resistance. Not bad ahead of a weekend with plenty of geopolitical intrigue.

CHARTS:

SP500 played with the 50 day SMA all session, breaking it, giving it up, but then breaking above it for good as stocks jumped to session highs in the last 45 minutes of trade. Clearing this type of resistance is always a process, but the move was solid on rising, albeit still low volume (holiday, right?), closing out at session highs.

DJ30 broke its 50 day SMA as well, bouncing off a four day lateral move. Not bad.

NASDAQ gapped, filled the gap and then closed at the session high, just below the November trendline. NASDAQ is through the June gap and looks solid as it continues its two week recovery.

RUTX moved to a new all-time closing high, also filling its gap early and then recovering.

SOX moved through its 2011 peak and is now looking at the mid-June high again.

Leadership

As interest rates rise, there are definite impacts on several sectors.

Internet stocks are still strong: WWWW, GOOG. AWAY remains in good shape to move after a short pullback.

Housing is hit but it is setting up for a relief move: DHI, TOL, PHM

Banks are jumping: JPM broke higher. STT is up and running along with many regional banks.

OTHER MARKETS

Dollar surging even more: 1.2830 versus 1.2976 euro. The dollar index has now cleared the May peak as the ECB commits to forever liquidity and the US posts 'strong' jobs.

Bonds: 2.71% versus 2.50%. Bonds imploded and rates took off. The TLT gapped below the June low. Rates are surging.

Oil continues its run: 103.22, +1.98. Breaking through the top of the old range. US jobs, Egyptian violence worsening (10 dead, over 280 injured, surely more to come).

Gold down hard again: 1212.50, -39.40. After bouncing up to the 10 day EMA, gold rolled over Friday. It held over 1200 and that was noted as a positive. That means little, however, without a bounce off of that level.

MARKETS:

TECHNICAL SUMMARY

INTERNALS

NASDAQ
Stats: +35.71 points (+1.04%) to close at 3479.38
Volume: 1.242B (+32.83%)

Up Volume: 872.11M (+341.85M)
Down Volume: 362.34M (-20.45M)

A/D and Hi/Lo: Advancers led 2.71 to 1
Previous Session: Advancers led 1.27 to 1

New Highs: 310 (+200)
New Lows: 30 (+13)

S&P
Stats: +16.48 points (+1.02%) to close at 1631.89
NYSE Volume: 571M (+18.46%)

A/D and Hi/Lo: Advancers led 1.16 to 1
Previous Session: Decliners led 1.47 to 1

New Highs: 263 (+186)
New Lows: 207 (+92)

DJ30
Stats: +147.29 points (+0.98%) to close at 15135.84

SENTIMENT INDICATORS

VIX: 14.89; -1.31
VXN: 14.91; -0.89
VXO: 14.62; -1.56

Put/Call Ratio (CBOE): 0.97; -0.17

Bulls and Bears:

Well, it looks as if the convergence that was the most since November 2012 is over. Bulls and Bears looked at each other to end June, gave each other the cold shoulder and bounced back. Bulls pretty solid, bears a big decline with a 4.2 point drop. Looks as if they got their upside impetus as the indices bounced right back up. The Fed taper concerns did not make a difference this time around as the prior readings helped bounce the market.

Bulls: 43.8% versus 41.7% versus 46.8% versus 43.8% versus 45.8% versus 52.1% versus 54.2% versus 52.1% versus 47.9% versus 44.3% versus 47.4% versus 50.5%.

Background: Undercut 35%, the threshold for bullishness, in early June. 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: 20.8% versus 25.0% versus 21.9% versus 22.9% versus 20.8% versus 19.8% versus 19.8% versus 19.8% versus 18.8% versus 19.6% versus 20.6% versus 20.6% versus 19.4% versus 19.6% versus 18.6% versus 18.8% versus 21.1% versus 21.1% versus 22.1% versus 21.1% versus 21.1% versus 22.3% versus 22.3% versus 23.4% versus 24.5% versus 24.5% versus 23.4% versus 25.5% versus 27.7% versus 27.7% versus 28.7% versus 27.7%.

Summary: 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.

MONDAY

Back from the holiday and a clearer read on the market's direction. Wednesday and Friday were not bad days as the indices broke higher with some clearing resistance, e.g. SOX, SP500, DJ30. Held the gains off the recovery bounce, and are now attempting to extend them.

The key remains the leadership, and while some interest sensitive negative sectors are getting hit (e.g. housing), many other sectors look quite solid, and it just so happens they still have some good-looking buys in the ready position. We, of course, will be looking at those in the coming week.

To end the week we let most positions run as there were some soaring positions we didn't want to get in front of e.g. WWWW, CLDX, but did take some gain on the SSO as it hit the target; sticking to the plan. Others look ready to break, e.g. NFLX. Again, there are stocks from several sectors that look ready to roll for next week, and if the market continues this upside break as bonds fade, well, we will participate.

That doesn't mean concerns about the Fed killing the rally are gone from my market outlook. I still think the market likely tops given the Fed withdrawing the stimulus that the overall weak economy uses to limp along, but for now the money is still buying stocks, apparently for lack of any other alternatives. As long as that money is pushed into stocks then we will play the leaders as they make their moves.

Of course there is always a rub. That would be earnings season, and all that implies.

It is something of an enigma that stocks continue to rise even on relatively poor earnings growth the past two quarters, i.e. bottom line beats on cost adjustments while posting top line misses. From the headlines it appears this season is not expected to be any different.

The question is, how long can stocks rise on the bottom line beats if the realization is the Fed is going to withdraw stimulus and companies fail to post top line beats this quarter? We will see soon enough as the market gets the 'gist' of the season in a couple of weeks.

With earnings that means even with leaders in good technical position, plays may entail the additional earnings risk. We typically try to avoid plays with earnings close, but also recognize that a good pattern can yield a pre-earnings run as well. Thus you don't avoid plays near earnings, you just need a clear understanding as to why you are in the play.

Have a great remaining Independence Day holiday and weekend!

Support and resistance

NASDAQ: Closed at 3479.38

Resistance:
3486 is the November 2012 up trendline
3521 is the August 2000 low.
3532 is the early May high and 2013 high
3578 is the upper channel line for the November 2012 to present uptrend

Support:
The 50 day EMA at 3396
3295 is the June 2013 low selloff
The 2011 up trendline at 3275
3227 is the April 2000 intraday low
3197 is the September 2012 post-bear market high
The 200 day SMA at 3188
3171 is the October intraday high
3134 is the March 2012 post-bear market peak
3130 from some January 2013 lows
3104-3112 from August and mid-October peaks.
3101 is the August 2012 high
3090 is the mid-March interim high
3076 is the late April 2012 high and the 1/2013 low after gapping higher
3062 is the December 2012 prior peak
3042 from 5/2000 low and several other price points
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
2977 to 2980 is the bottom of the late October 2012 consolidation, July 2012 peak
2962 is the April 2012 low
2950 is the mid-April closing low

S&P 500: Closed at 1631.89

Resistance:
1654 is the June 2013 peak
The November up trendline at 1675
1687 is the May high and post-bear market high
1762 is the upper trendline in the channel

Support:
The 50 day SMA 1626
The 50 day EMA at 1612
1576 from October 2007, the prior all-time high
1569.48 is the 78% Fibonacci retracement of the April to May 2013 run
1560 is the June 2013 reversal low
1556 from July 2007
1541 is the April 2013 closing low in that pullback inside the uptrend
1539 from June 2007
1531 is the recent high
The 200 day SMA at 1514
1499 from January 2008
1475 is the September 2012 high
1471 is the October 2012 intraday high
1466 is the September 2012 closing peak and rally closing high
1440 from November 2007 closing lows
1434 from early November 2012
1433 from August 2007 closing lows
1427 is the August 2012 peak
1425 from May 2008 closing highs and the October 2012 low
1408 is the late October 2012 range closing low
1406 is the early May 2012 peak
1402.22 - 1400 is the closing low of the August 2012 lateral consolidation

Dow: Closed at 15,135.84

Resistance:
The 50 day SMA at 15,072
The November up trendline at 15,540
15,542 is the May 2013 high

Support:
The 50 day EMA at 14,965
14,888 is the April peak and prior all-time high
14,844 is the June intraday low
14,551 is the June 2013 intraday low on the selloff
14,198 from the October 2007 high
14,149 is the February 2013 high
The 200 day SMA at 14,035
14,022 from 7-07 peak
14,010 from the early February 2013 consolidation
13,784 is the late February 2013 closing low
13,692 from 6-2007 peak
13,668 from 12-2007 peak
13662 is the October 2012 intraday high
13,653 is the September 2012 high
13,557 to 13,662
13,413 from the late September 2012 low
13,300 to 13,331 is the August 2012 post-bear market high
13,297 is the April 2012, prior post bear market high
13,058 from the May 2008 peak on that bounce in the selling
13,056 is the February 2012 high
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012

Economic Calendar

July 1 - Monday
- ISM Index, June (10:00): 50.9 actual versus 50.5 expected, 49.0 prior
- Construction Spending, May (10:00): 0.5% actual versus 0.5% expected, 0.1% prior (revised from 0.4%)

July 2 - Tuesday
- Factory Orders, May (10:00): 2.1% actual versus 2.0% expected, 1.3% prior (revised from 1.0%)
- Auto Sales, June (14:00): 5.3M prior
- Truck Sales, June (14:00): 6.8M prior

July 3 - Wednesday
- MBA Mortgage Index, 06/29 (7:00): -11.7% actual versus -3.0% prior
- Challenger Job Cuts, June (7:30): 4.8% actual versus -41.2% prior
- ADP Employment Change, June (8:15): 188K actual versus 150K expected, 134K prior (revised from 135K)
- Initial Claims, 06/29 (8:30): 343K actual versus 348K expected, 348K prior (revised from 346K)
- Trade Balance, May (8:30): -$40.8B expected, -$40.3B prior
- Continuing Claims, 06/15 (8:30): 2933K actual versus 2955K expected, 2987K prior (revised from 2965K)
- Trade Balance, May (8:30): -$45.0B actual versus -$40.8B expected, -$40.1B prior (revised from -$40.3B)
- ISM Services, June (10:00): 52.2 actual versus 54.0 expected, 53.7 prior
- Crude Inventories, 06/29 (10:30): -10.347M actual versus 0.018M prior
- Natural Gas Inventories, 06/29 (24:00): 72 bcf actual versus 95 bcf prior
- Initial Claims, 06/29 (8:30): 343K actual versus 348K expected, 348K prior (revised from 346K)
- Continuing Claims, 06/15 (8:30): 2955K expected, 2965K prior

July 5 - Friday
- Initial Claims, 06/29 (8:30): 348K expected, 346K prior
- Continuing Claims, 06/15 (8:30): 2955K expected, 2965K prior
- Nonfarm Payrolls, June (8:30): 195K actual versus 166K expected, 195K prior (revised from 175K)
- Nonfarm Private Payrolls, June (8:30): 202K actual versus 180K expected, 207K prior (revised from 178K)
- Unemployment Rate, June (8:30): 7.6% actual versus 7.6% expected, 7.6% prior
- Hourly Earnings, June (8:30): 0.4% actual versus 0.2% expected, 0.1% prior (revised from 0.0%)
- Average Workweek, June (8:30): 34.5 actual versus 34.5 expected, 34.5 prior

July 8 - Monday
- Consumer Credit, May (15:00): $13.2B expected, $11.1B prior

July 10 - Wednesday
- MBA Mortgage Index, 07/06 (7:00): -11.7% prior
- Wholesale Inventories, May (10:00): 0.3% expected, 0.2% prior
- Crude Inventories, 07/06 (10:30): -10.347M prior
- FOMC Minutes, 6/19 (14:00)

July 11 - Thursday
- Initial Claims, 07/06 (8:30): 345K expected, 343K prior
- Continuing Claims, 06/29 (8:30): 2949K expected, 2933K prior
- Export Prices ex-agriculture, June (8:30): -0.7% prior
- Import Prices ex-oil, June (8:30): -0.3% prior
- Natural Gas Inventories, 07/06 (10:30): 72 bcf prior
- Treasury Budget, June (14:00): -$59.7B prior

July 12 - Friday
- PPI, June (8:30): 0.3% expected, 0.5% prior
- Core PPI, June (8:30): 0.1% expected, 0.1% prior
- Michigan Sentiment, July Preliminary (9:55): 84.8 expected, 84.1 prior

[ReturntoSender]

From Briefing.com: 4:15 pm : The S&P 500 settled lower by 0.5% after broad-based selling persisted throughout the session.

Equities were confined to a downtrend from the open, and even the news of the first expansionary eurozone GDP reading in 18 months could not spark a bid.

Nine of ten sectors registered losses while technology posted a fractional gain of 0.01%.

The tech sector climbed into the lead early this afternoon as Apple (AAPL 498.50, +8.93) advanced 1.8% after Omega Advisors disclosed having a position in the stock. The relative strength of the largest sector component overshadowed the underperformance of chipmakers. The PHLX Semiconductor Index lost 1.6%.

While technology was able to end in the green, the materials sector shed 0.2% after spending the majority of the session in positive territory. Gold miners made a significant contribution to the sector's outperformance as the Market Vectors Gold Miners ETF (GDX 28.70, +1.51) spiked 5.6%. On a related note, gold futures climbed 1.1% to $1334.60 per troy ounce.

Outside of materials and technology, only energy (-0.4%), financials (-0.4%), and telecom services (-0.2%) ended slightly ahead of the broader market. Meanwhile, several influential sectors weighed. Health care (-0.8%), consumer staples (-0.7%), consumer discretionary (-1.1%), and industrials (-0.8%) lagged.

Notably, industrials slumped amid weakness in transportation-related companies. The Dow Jones Transportation Average fell 0.8% as 16 of 20 components ended in the red.

The discretionary sector was another significant laggard. Retailers registered losses and Macy's (M 46.33, -2.17) fell 4.5% after missing on earnings and revenue. In addition, the company lowered its full-year 2014 earnings guidance below consensus.

Home builders also contributed to the sector's underperformance. The iShares Dow Jones US Home Construction ETF (ITB 20.81, -0.46) lost 1.9% to widen its August decline to 6.6%.

Elsewhere, treasuries were trapped in a narrow range, and the benchmark 10-yr yield shed one basis point to end at 2.71%.

Below-average volume was the story once again as only 622 million shares changed hands on the floor of the New York Stock Exchange.

Today's economic news was limited to just two data points.

July PPI was unchanged (0.3% Briefing.com consensus) while core PPI ticked up 0.1% (0.2% Briefing.com consensus). The halting aspect of the report is that the lack of inflation pressure isn't really indicative of an economy that is gaining momentum. The PPI report is a data point that the Fed could view as a reason to hold off on tapering in September.

Separately, the weekly MBA Mortgage Index remained in a downtrend as today's 4.7% fall marked the twelfth decline out of the past fourteen readings.

Tomorrow, weekly initial claims, July CPI, core CPI, and August Empire Manufacturing will all be reported at 8:30 ET. June net long-term TIC flows will be released at 9:00 ET while July industrial production and capacity utilization will be reported at 9:15 ET. The busy day of data will be topped off with the 10:00 ET release of the August Philadelphia Fed Survey and the NAHB Housing Market Index.DJ30 -113.35 NASDAQ -15.17 SP500 -8.77 NASDAQ Adv/Vol/Dec 1034/1.55 bln/1443 NYSE Adv/Vol/Dec 976/621.8 mln/2046

3:30 pm :

Sep crude oil spent most of today's pit trade in negative territory, touching a session low of $105.60 per barrel. The dip came despite inventory data that showed a draw of 2.812 mln barrels when a smaller draw of 1.5 mln barrels was anticipated. However, the energy component managed to erase the earlier losses as it headed into the close and settled 0.1% higher at $106.86 per barrel.
Sep natural gas traded higher in a fairly tight range between $3.33 and $3.38 per MMBtu. It eventually settled 1.5% higher at $3.34 per MMBtu.
Precious metals rose today as the dollar index traded in negative territory.
Dec gold came off its session low of 1318.40 per ounce and settled with a 0.9% gain at $1333.10 per ounce, or just below its session high of $1334.90 per ounce.
Sep silver lifted off its session low of $21.42 per ounce and booked a 2.1% gain as it closed at $21.78 per ounce.

4:30PM Motorola Solutions names Gino Bonanotte as acting Chief Financial Officer (MSI) 57.71 -0.13 : Co announced that Gino A. Bonanotte has been named acting chief financial officer. Bonanotte, 48, will report to Chairman and CEO Greg Brown and will replace Ed Fitzpatrick, who will be leaving the company. The company has initiated a search for a permanent CFO and is targeting to complete that process by the close of 2013. Bonanotte, previously corporate vice president overseeing financial operations for the company's sales and product operations organization, joined Motorola in 1988.

4:11PM Agilent beats by $0.06, reports revs in-line; guides Q4 EPS in-line, revs below consensus (A) 46.51 -0.41 : Reports Q3 (Jul) earnings of $0.68 per share, excluding non-recurring items, $0.06 better than the Capital IQ Consensus Estimate of $0.62; net revenues fell 4.1% year/year to $1.65 bln vs the $1.64 bln consensus.

Co issues guidance for Q4, sees EPS of $0.75-0.77, excluding non-recurring items, vs. $0.76 Capital IQ Consensus Estimate; sees Q4 revs of $1.70-1.72 bln vs. $1.73 bln Capital IQ Consensus Estimate.

Co reported orders of $1.60 bln down 4% YoY.

"Although we are operating in a very challenging economic environment, we are pleased with our operational performance, as we continue to make progress improving our manufacturing efficiency and streamlining our expense structure. The result has been better than forecasted operating margins."

4:08PM Cisco Systems beats by $0.01, reports revs in-line (CSCO) 26.38 +0.06 : Reports Q4 (Jul) earnings of $0.52 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus Estimate of $0.51; revenues rose 6.2% year/year to $12.42 bln vs the $12.41 bln consensus.

Cash flows from operations were $4.0 billion for the fourth quarter of fiscal 2013, compared with $3.1 billion for the third quarter of fiscal 2013, and compared with $3.1 billion for the fourth quarter of fiscal 2012.

Cash and cash equivalents and investments were $50.6 billion at the end of the fourth quarter of fiscal 2013, compared with $47.4 billion at the end of the third quarter of fiscal 2013, and compared with $48.7 billion at the end of the fourth quarter of fiscal 2012.

Cisco repurchased ~47 million shares of common stock under the stock repurchase program at an average price of $24.80 per share for an aggregate purchase price of $1.2 billion.

4:03PM NetApp beats by $0.04, misses on revs; guides Q2 EPS in-line, revs in-line (NTAP) 42.33 +0.04 : Reports Q1 (Jul) earnings of $0.53 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.49; revenues rose 4.9% year/year to $1.52 bln vs the $1.53 bln consensus.

Co issues in-line guidance for Q2, sees EPS of $0.60-0.65 vs. $0.63 Capital IQ Consensus Estimate; sees Q2 revs of $1.56-1.66 bln vs. $1.62 bln Capital IQ Consensus Estimate.
"NetApp delivered solid results and innovation with the latest release to our clustered Data ONTAP operating system... Despite an uneven macro environment, our branded business was strong, with 9% year-over-year growth. This is evidence of the tremendous value we are delivering to customers today and their confidence in our long-term strategy to enable them to navigate the future."

Large Cap Gainers

NEM (31.92 +6.12%): Strengh in gold companies: ABX, GG also higher
WY (27.89 +3.33%): Wall Street Journal reporting that prospective bidders submitted expressions of interest in a deal for the company's home-building unit
BBY (31.86 +3.24%): Target raised to $38 from $30 at Barclays; mantioned positively by Jim Cramer

Large Cap Losers

M (46.49 -4.14%): Missed quarterly EPS by $0.06 ($0.72 vs $0.78 estimate, revs fell 0.8% yoy to $6.07 bln vs $6.25 bln estimate; sees FY14 EPS of $3.80-3.90 (lowered from $3.90-3.95) vs $3.94 estimate
CBS (52.69 -1.79%): Bloomberg reporting that prime-time viewership has declined 4.7% in first week after dispute with Time Warner Cable (TWC) that led to a blackout of ~3 mln homes
DAL (19.28 -1.38%): Downgraded to Neutral from Overweight at JP Morgan

Mid Cap Gainers

BRCD (7.91 +14.64%): Beat quarterly EPS by $0.07 ($0.19 vs $0.12 estimate), revs fell 3.4% yoy to $536.6 mln vs $518.88 mln estimate; sees Q4 EPS of $0.17-0.19 vs $0.15 estimate, revs of $545-565 mln vs $548.49 mln estimate; target raised at ISI Group, BMO Capital Markets, UBS, and Needham
KGC (5.75 +6.64%): Strength in gold/silver companies: AU, GFI, IAG, PAAS, EGO, SLW, AUY, BVN, FNV also higher
SLT (5.44 +3.03%): Mentioned positively in blog article

Mid Cap Losers

CREE (61.12 -19.32%): Beat quarterly EPS by $0.01 ($0.38 vs $0.37 estimate), revs rose 22.2% yoy to $375 mln vs $376.93 mln estimate; gross margin decreased 60 basis points to 38.2% on a non-GAAP basis; sees Q1 EPS of $0.36-0.41 vs $0.43 estimate, revs of $380-400 mln vs $399.57 mln estimate; downgraded at Northland Capital, DA Davidson, Susquehanna
PT (3.89 -7.38%): Co reported Q2 earnings of EUR 0.28 per share vs EUR 0.08 in prior year; revs fell 5.5% to EUR 1.54 bln vs EUR 1.52 bln estimate
MYGN (28.47 -5.88%): Beat quarterly EPS by $0.09 ($0.53 vs $0.44 estimate), revs rose 30.9% yoy to $174.1 mln vs $159.69 mln estimate; sees FY14 EPS of $1.87-1.94 vs $1.86 estimate, revs of $690-710 mln vs $665.58 mln estimate; downgraded to Market Perform from Outperform at Cowen

12:08PM Semiconductor Hldrs ETF extends to new session high (SMH) 38.49 -0.10 : Noted some intraday relative strength in the 11:10 update after the SMH had tested support near its 50 ema/sma (session low 38.13) with the recovery extended to 38.49 in recent trade. Top performers include: NVDA +4%, AMD +3.2%, ASML +1.4%, AMKR +1.3%, INTC +0.9%, MRVL +0.6% ,TER +0.5%, BRCM +0.4%.

10:27AM IBM awarded 10 year $1 bln cloud hosting services contract to assist US Department Of Interior's move to cloud computing (IBM) 188.67 +0.25 : Co announced it will work with the United States Department of the Interior (US DOI) as the Department embarks on a decade long transformation of their information technology (IT) systems to a cloud computing model. As part of an indefinite delivery/indefinite quantity (IDIQ) contract, valued for IBM up to $1 billion, the Department may use IBM cloud computing technologies, services and hosting as the foundation of their next generation infrastructure.

Skyworks Solutions (SWKS) announced that MediaTek is leveraging several of Skyworks' front-end solutions in their dual-core MT6572 platform which is supporting multiple leading tier-one smartphone manufacturers in emerging markets.

6:35AM JA Solar announces $96 mln registered direct offering (JASO) 8.30 : Co announced that it has entered into a Securities Purchase Agreement with a single institutional investor to issue securities in a registered direct offering that will result in gross proceeds to the co of up to $96 million, before deducting the placement agent fees and estimated offering expenses. This amount does not take into account any proceeds from the Series B Warrant, which is not exercisable for one year following the date of issuance.

Under the terms of the Securities Purchase Agreement, the co has agreed to sell an aggregate of 15,228,425 ordinary shares, $0.0001 par value per share, of the co, represented by 3,045,685 ADSs, at a price of $7.88 per ADS, which is 94% of the volume-weighted average price of the co's ADSs on Aug 13, 2013. The co has also agreed to issue to the Investor a warrant to acquire up to 12,724,164 Ordinary Shares represented by 2,544,833 ADSs within three months after the issuance date at an initial exercise price of $1.886 per Ordinary Share, subject to adjustment and subject to reset in certain circumstances, a warrant to acquire up to 12,724,164 of Ordinary Shares represented by 2,544,833 ADSs within six months after the issuance date at an initial exercise price of $1.886 per Ordinary Share, subject to adjustment and subject to reset in certain circumstances, a warrant to acquire up to 12,724,164 Ordinary Shares represented by 2,544,833 ADSs within nine months after the issuance date at an initial exercise price of $1.886 per Ordinary Share, subject to adjustment and subject to reset in certain circumstances, and a warrant to acquire up to 50,896,656 Ordinary Shares represented by 10,179,332 ADSs at an initial exercise price of US$2.18 per Ordinary Share, subject to adjustment and subject to reset on the date that is nine months after the date it is issued. Barclays acted as the exclusive placement agent in connection with this offering.

6:30AM Taiwan Semi held a meeting of the Board of Directors, which approved capital appropriation of ~$1.925 bln for the purpose of installing, expanding and upgrading advanced technology capacity, as well as $37.8 mln in R&D capital appropriations (TSM) 16.27 :

11:03 am Technology Sector trading lower along with the broader market
The tech sector is trading lower today, along with losses in the broader market. Semiconductors are showing relative weakness with the SOX trading 1.5% lower. Within the chip index, CREE (-20.3%) is a notable laggard. Among other major indices, the SPY is trading 0.3% lower today; the QQQ and the NASDAQ are trading 0.3% lower on the session as well. Among tech bellwethers, AAPL (+1.6%) is showing notable strength, while MSFT (-1.2%) is under pressure. In notable tech earnings last night:

CREE (-20.6%) beats by $0.01, revs in-line; guided Q1 EPS below consensus, revs in-line
JDSU (-1.4%) reported EPS in-line, missed on revs; guided Q1 revs below consensus
BRCD (+14.1%) beat by $0.07, beat on revs; guided Q4 EPS above consensus, revs in-line
MM (-17.1%) beat by $0.03 and missed on revs

In news, AAPL (+1.6%) remains strong after Icahn reported a large position in the stock yesterday afternoon. In rumors, we are hearing that SSNI (-22.3%) is under pressure after it lost a major contract. Among notable analyst upgrades in tech this morning, CBB (+2.2%) was upgraded to Neutral at BofA/Merrill, MRVL (-0.1%) was upgraded to Buy at B. Riley, SINA (+1.7%) was upgraded to Buy at Citigroup, CHL (+0.1%) was upgraded to Neutral at UBS, and INFY (-1.1%) was upgraded to Buy at Nomura. In downgrades, MM (-17.1%) and CREE (-20.6%) were both downgraded at a number of firms, UMC (-2.5%) was downgraded to Sell at Goldman, CHA (+0.1%) was downgraded to Neutral at UBS, and BR (-3.6%) was downgraded to Underweight at JP Morgan. CSCO (-1.0%), A (-0.4%), and NTAP (-0.6%) are the notable names in tech scheduled to report after the close.

Cree (CREE) reported fourth quarter earnings of $0.38 per share, which is better than expected, while revenues rose 22.2% year/year to $375 million which is line with expectations. Gross margin decreased 60 basis points to 38.2% on a non-GAAP basis. The company issued guidance for the first quarter with EPS of of $0.36-0.41 which is below expectations and revenues of $380-400 million which is line with expectations. "Our fiscal fourth quarter was a strong finish to a great year, with record revenue and good earnings growth in line with our targets," stated Chuck Swoboda, Cree Chairman and CEO. "Total company backlog is ahead of this point last quarter and we are targeting solid growth in LED lighting in Q1..."

JDS Uniphase (JDSU) reported fourth quarter earnings of $0.13 per share, which was in lien with expectations, while revenues fell 2.9% year/year to $421.3 million which is below consensus. The company issued guidance for the first quarter with revenues of $410-430 million which is below expectations.

Brocade (BRCD) reported third quarter earnings of $0.19 per share, which is above expectations, while revenues fell 3.4% year/year to $536.6 million which is above expectations. The company issued guidance for the fourth quarter with EPS of $0.17-0.19 which is above expectations with revenues of $545-565 million which is in line with expectations. For Q4, co expects SAN revenue to be up 1% to 4% quarter-over-quarter as the current demand for storage is improving but remains softer than last year. Non-GAAP gross margin was 65.6% in Q3, up 190 basis points from Q3 12 and up 50 basis points from Q2 13. The year-over-year improvement in gross margin was due primarily to a more favorable mix within our Ethernet product sales, a higher percentage of SAN products in our overall revenue, and lower spending. Non-GAAP operating margin was 21.6% in Q3, up 210 basis points from Q3 12 and up 260 basis points Qtr./Qtr., due to improved gross margins and lower spending. Based on the company's performance in Q3 and the outlook for Q4, we expect full-year FY13 gross margin to be more than 65%, above the two-year target model range of 63% to 64%, and FY13 operating margin to be at the high end of the two-year target model range of 19.5% to 22.0%. "In Q3, Brocade exceeded our guidance for revenue, non-GAAP operating margin, non-GAAP EPS, and cash flow," said Lloyd Carney, CEO of Brocade. "The storage market is recovering more quickly than we had anticipated entering our third quarter and, coupled with continued strong adoption of Gen 5 Fibre Channel, contributed to good Storage Area Networking (SAN) revenue results. In IP Networking, our Federal sales were disappointing while Brocade VDXTM switch revenue showed continued strong growth in Q3, underscoring our leadership in Ethernet fabrics. We are making great progress toward our spending-reduction goal, and are already seeing the benefits in our financial results and cash flow."

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From Briefing.com: Weekly Recap - Week ending 20-Sep-13

Dow -185.46 at 15451.09, Nasdaq -14.66 at 3774.73, S&P -12.43 at 1709.91

The S&P 500 settled lower by 0.7%, but managed to end the week with a solid gain of 1.3%. The major indices spent the entire session in a steady retreat off their opening levels with industrials and materials leading to the downside.

Sellers remained in control throughout the day amid divisive headlines from Washington. The House of Representatives passed a continuing resolution bill to fund the government through December 15, but the inclusion of a provision to defund Obamacare means the bill will most likely be voted down in the Senate.

In addition, participants heard from two Fed officials whose remarks reflected quite a bit of static on the Fed's open line of communication with the market. During a morning interview on Bloomberg TV, St. Louis Fed President James Bullard said the Fed could taper at its October meeting, but added that the current low rates of inflation suggest the central bank should be patient in its assessment of Quantitative Easing.

Meanwhile, Kansas City Fed President Esther George expressed some disenchantment that the Fed did not taper at the September meeting despite believing the markets were ready. Ms. George added that she thinks the Fed lost some credibility by not following through with the taper.

Although all ten sectors ended in the red, nine finished the week with a gain while today's weakest performer (telecom services) closed the week flat.

Elsewhere, the industrial sector (-1.4%) weighed on the broader market as defense contractors lagged after Rockwell Collins (COL 70.00, -4.28) issued downside guidance for fiscal year 2014. The broader PHLX Defense Index fell 1.7%.

Also of note, the materials sector (-1.2%) finished among the laggards as steelmakers and miners slumped. The Market Vectors Steel ETF (SLX 45.81, -1.01) slid 2.2% after AK Steel (AKS 4.08, -0.36) said it expects a larger third quarter loss than what analysts had estimated. Miners lagged as gold fell 3.2% to $1326.10 per troy ounce. The Market Vectors Gold Miners ETF (GDX 25.76, -1.60) tumbled 5.9%.

With the stock market ending on its lows, only financials (-0.5%) and health care (-0.2%) outperformed while technology (-0.7%) and discretionary shares (-0.7%) ended in-line. In the technology sector, Visa (V 198.83, +4.12) added 2.2% ahead of its entry into the Dow Jones Industrial Average along with Goldman Sachs (GS 169.75, +1.97) and Nike (NKE 69.37, -0.37). The three names will replace Alcoa (AA 8.29, -0.15), Bank of America (BAC 14.44, -0.17), and Hewlett-Packard (HPQ 21.22, -0.09) in the price-weighted index.

In stock-specific news, Blackberry (BBRY 8.72, -1.80) plunged 17.1% after cutting its second quarter guidance well-below consensus estimates. The company also announced plans to cut its global workforce by 40%.

Treasuries ended near the middle of their range with the benchmark 10-yr yield slipping two basis points to 2.74%.

Aided by quadruple witching, trading volume was strong as 2.06 billion shares changed hands on the floor of the New York Stock Exchange.

There is no economic data scheduled to be reported on Monday, but global markets will be reacting to the results of the German federal election. While Chancellor Angela Merkel is not expected to lose her seat, the anti-euro party has been polling close to the 5.0% threshold needed to enter parliament.

Week in Review: Taper Schmaper

On Monday, the S&P 500 added 0.6% after a pair of weekend headlines provided an opening boost to equities. Stocks began the session sharply higher after Larry Summers, who was thought to be the hawkish frontrunner, withdrew his name from consideration to be the next chairman of the Federal Reserve. In addition, news that Russia and the United States have signed an agreement to decommission Syria's chemical weapons within a year also contributed to the early bid. With Larry Summers out of the running, bonds and equities rallied while the dollar slipped. The benchmark 10-yr note was up close to a point before surrendering most of its gain into the close. The 10-yr yield ended lower by two basis points at 2.87%.

There wasn't much to be said about the trading action in the stock market on Tuesday because there wasn't a whole lot of trading action. Volume at the NYSE totaled a piddly 577 million shares versus an average of 661 million shares. The light volume reflected a wait-and-see mindset ahead of Wednesday's highly-anticipated announcement from the FOMC on whether it has decided to begin curtailing its asset purchase program.

On Wednesday, the S&P 500 jumped 1.2%, closing at a record high of 1,725.52 after the Federal Open Market Committee failed to announce plans to reduce the pace of its asset purchases, as many had expected. Although the Federal Reserve did not make a tapering announcement, the policy statement did contain updated economic projections. Notably, the forecast for 2013 and 2014 GDP was lowered with the Committee expecting this year's growth between 2.0% and 2.3% (2.3%-2.6% June forecast) and 2014 growth ranging between 2.9% and 3.1% (3.0%-3.5% June projection). During his press conference, Mr. Bernanke said economic data received since June has not been strong enough to justify scaling back asset purchases just yet. The Fed Chairman also said that recent tightening of financial conditions, as well as the ongoing fiscal uncertainty, played a part in the decision to maintain asset purchases at a pace of $85 billion per month ($40 billion in mortgage-backed securities, $45 billion in Treasuries). Similar to equities, Treasuries and precious metals welcomed the lack of a tapering announcement. The 10-yr note rallied more than a point, pushing its yield down 14.5 basis points to 2.71%. This marked the lowest close for the benchmark yield since August 12.

Thursday's session did not generate many headlines as the S&P 500 shed 0.2% while the tech-heavy Nasdaq added 0.2%. After spiking to new record highs on Wednesday, the Dow, S&P 500 and Russell 2000 spent the entire session in a slow retreat off their opening levels. Seven of ten sectors finished in the red while industrials (+0.1%), technology (+0.2%), and discretionary shares (+0.01%) posted modest gains. The discretionary sector received support from retailers as the SPDR S&P Retail ETF (XRT 82.30, -0.42) added 0.2%.

 
 Index	   Started Week	 Ended Week    Change  %Change	YTD % 
 DJIA	     15376.06	  15451.09	75.03	 0.5	17.9 
 Nasdaq	      3722.18	   3774.73	52.55	 1.4	25.0 
 S&P 500	1687.99	   1709.91	21.92	 1.3	19.9 
 Russell 2000  1053.98	   1073.82	19.84	 1.9	26.4

This week's top 20 % gainers

Technology: MKTG (17.27 +26.85%), GTAT (8.23 +25.75%), OIBR (2.17 +24.56%), GSAT (1.04 +20.45%)
Services: RAD (4.65 +26.87%), DRYS (3.48 +24.05%), VIPS (60.07 +22.34%), ULTA (117.62 +18.56%), SWY (31.39 +18.41%)
Industrial Goods: GFA (3.24 +16.9%)
Healthcare: GERN (2.49 +38.02%), VPHM (39.05 +31.15%), RPRX (28.17 +22.71%), ONVO (5.75 +21.57%), KYTH (41.33 +20.78%), CLDX (29.03 +20.47%), OSUR (6.24 +18.7%)
Consumer Goods: BZ (12.54 +30.87%)
Basic Materials: AUQ (4.31 +18.72%), IPI (16.66 +17.14%)

This week's top 20 % losers

Technology: FLTX (38.52 -17.95%), EZCH (22.33 -7.83%), SREV (12.11 -7.42%)
Services: OUTR (46.38 -16.86%), PIR (20.53 -9.16%), LRN (33.04 -7.95%), ABFS (25.72 -6.97%)
Industrial Goods: JKS (17.34 -8.29%), TGI (69.39 -6.52%)
Healthcare: AVNR (4.34 -13.23%), HWAY (18.2 -7.79%), ATRS (4.05 -7.37%), WLP (82.35 -6.7%)
Financial: TWGP (9.19 -27.74%), BPOP (26.65 -8.15%)
Consumer Goods: BERY (20.73 -14.27%)
Basic Materials: LNCO (29.05 -9.21%), LINE (26 -6.85%), ROYT (16.6 -6.69%), GORO (6.93 -6.6%)

Large Cap Gainers

AVGO (42.17 +3.48%): Seeing reports of positive analyst commentary as supplier of components for iPhone 5S
NFLX (312.10 +2.16%): Seeing reports that co may have doubled its Canadian subscriber base in the past year
A (52.00 +2.00%): Target raised to $57 from $50 at UBS

Large Cap Losers

COL (69.35 -6.64%): Reaffirmed FY13 EPS of ~$4.55-4.60 vs $4.62 estimate, revs of $4.65 bln vs $4.64 bln estimate; sees FY14 EPS of $4.30-4.50 vs $4.85 estimate, revs of $4.5-4.6 bln vs $4.99 bln estimate
IBN (32.34 -4.94%): Weakness in Indian stocks following central bank's unexpected decision to increase interest rates by 25 bps to 7.5%
NEM (28.63 -3.86%): Initiated with a Neutral at Goldman

Mid Cap Gainers

SSTK (67.69 +12.22%): Priced 4.6 mln share follow on offering of common stock at $60 per share; co selling 1 mln shares, existing shareholders selling 3.6 mln shares
TECH (81.7 +5.12%): Upgraded to Outperform from Neutral at R.W. Baird
NPSP (30.43 +4.89%): Initiated with an Overweight at JP Morgan, target $40

Mid Cap Losers

Z (89.67 -8.75%): Reiterated with a negative outlook at Citron Research
IAG (5.33 -7.94%): Initiated with a Sell at Goldman
DRI (46.33 -6.02%): Missed quarterly EPS by $0.17 ($0.56 ex items vs $0.70 estimate), revs rose 6.1% yoy to $2.16 bln vs $2.19 bln estimate; reaffirmed FY14 EPS of -3% to -5% (~$2.97-3.04 bln) ex items vs $2.99 bln estimate; same restaurant sales grew 0.5%

1:19PM Microsoft continues to weigh on Dow, slides back toward morning low at 32.68 (MSFT) 32.71 -0.92 : The stock is probing a support zone between 32.74 and 32.63 which marks its 50 ema/sma and the 38% retrace of its Sep rally.

STMicroelectronics (STM) and Movea announced their agreement to integrate Movea's SmartMotion technology into the STM32F401 microcontroller operating as a low-power sensor-hub controller.

09:32 am ARM Holdings target raised to $60 at Canaccord Genuity: . Canaccord raises its ARMH tgt to $60 from $57 after AAPL announced the iPhone 5S model featuring a 64-bit A7 SoC, the first 64-bit ARM processor featured in a smartphone or tablet. SSNLF executives have been quoted in the press confirming 64-bit SoCs on their mobile roadmap, and firm believes other prominent ARM licensees will be forced to follow. Firm maintains its belief ARM is well positioned to exceed consensus in the medium term driven by an expanding royalty rate in ARM's key mobile markets as newer Cortex-A, big.LITTLE, and ARMv8 chip volumes increase and by market share gains in underpenetrated markets including digital TVs, networking, embedded, and M2M.

Marchex (MCHX) announced that it will not pursue a spin-off of its domains-related assets into a stand-alone, publicly-traded company at this time and that Archeo will continue to operate as an independent division of Marchex. Marchex came to this conclusion as part of a recent strategic review which determined that the incremental costs and complexities associated with taking Archeo public at this time would be prohibitive, and that Archeo's value to shareholders is best recognized as a segmented division of Marchex. The company also announced that its Board of Directors has approved a plan to allocate a portion of Archeo's cash flow to fund an ongoing quarterly Marchex shareholder dividend, subject to capital availability. Marchex anticipates it will fund a $0.02 per share quarterly dividend beginning in the first quarter of 2014. The aggregate quarterly dividend for the first quarter of 2014 is estimated at ~ $720,000. This dividend plan replaces, and depending on Archeo's cash generation, may increase and potentially exceed Marchex's prior dividend, which was put in place in November, 2006.

TIBCO Software (TIBX) reported third quarter earnings of $0.28 per share, excluding non-recurring items, which is better than expected, while revenues rose 6.2% year/year to $270.9 million which is higher than expected. The company reported License revenue of $105.2 million. Non-GAAP operating income for the third quarter of fiscal 2013 was $64.2 million, resulting in a non-GAAP operating margin of 23.7%. This compares to non-GAAP operating income of $68.8 million, or a 27.0% non-GAAP operating margin in the third quarter of fiscal 2012. "We saw further signs of operational improvement this quarter, as our focus on execution generated renewed growth in our infrastructure business," The company sees fourth quarter revenues of $307-315 million which adjusted EPS of $0.38-0.40 versus which is line with expectations.

Moneygram (MGI) announced it has acquired Advanced ChronoCash Services and has signed an agreement to acquire MoneyGlobe Payment Institution S.A., which are both based in Athens, Greece. MoneyGram acquired super agent ACCS through a share purchase agreement. ACCS has been a MoneyGram agent since 2003, and has now grown to more than 400 locations with a loyal base of retail agents. The acquisition establishes a direct retail network for MoneyGram in Greece, enabling a closer relationship with its consumers. Additionally, MoneyGram has signed an agreement to acquire the shares of MoneyGlobe Payment Institution S.A., a provider of cash-to-account money transfers from Greece to Bangladesh. The transaction is subject to closing conditions and regulatory approvals.