Replies to post #976 on Your Economy (No Politics) (YE1)

[FinancialAdvisor]

Thanks Bullwinkle, for getting this post up, this is what I've been trying to tell people since Friday, great post!

[Myself °¿°]

schedule? What schedule?:)

[Bullwinkle]

CYCLE/TREND Update for the Week Ahead

In my previous update with which this post replies, I was looking for some consolidation or even some upside. What we got was a lot of volatility and any upside was met with a stronger downside the following day. This has been a somewhat brutal correction and it epitomizes just the opposite of what we had last year where dips were being bought and an upside reward received, now the rallies are being sold and lower lows are being achieved. Gee, that kind of rhymes... Anyway, I expect this action to continue for the rest of this year and possibly well into next, but I digress. Let's focus on what is in front of us and let the cards fall where they may. Next week we will be getting a Cycle turn date on/around July 30th. This is an important date as it should be a trend reversal with a low being established, but before we delve into what to expect for the coming week, let's review the Econ #'s first and go from there.

Econ #'s have been very important as of late, they tell a tale and this weeks numbers as few as there were reported are saying that a slowing economy is upon us. Building Permits and Housing Starts were down, Inital Jobless Claims came in lower than expected and the LEI was quite disappointing. The LEI was probably the biggest factor of the week and looking back you can see that it has been moving lower since topping out in March of this year. On tap for next week we have New/Existing Home Sales, Consumer Confidence, Durable Orders, Fed's Beige Book, Employment Cost Index, Initial Claims (which just seems to teeter between 330-350K give or take 10K), Help Wanted Index, Chain Deflator, GDP, Michigan Sentiment and Chicago PMI. Should be a lively week...

While this slowdown probably should be expected, add the continuing Iraqi conflict, high oil prices, seasonality, the issues surrounding terrorism, the uncertainty of this coming election and what we have here is a scenario ripe for a continued cycle of lower highs and lower lows (an unwinding of the echo bubble if you will). New highs? I don't see how or why. This is not a wall of worry to be scaled, it is a mountain and Mr. Market does not like uncertainty, something with which we have more than our fair share of presently.

With that said, what can we expect for the week to come? Well I believe we will see a lower low than where we presently sit. We have the big turn date dead ahead and hopefully the new low will be set. I have my eye on the COMPQ 1840 area with my target being 1835, but I would not be surprised to see us go to the 1820's (maybe lower?). The good news is that the Slow Stoch is or has been as low as we have seen since May'02. Along with that there are several other indicators I follow that show me the end of this downtrend should be nearing an end. I believe this week could be a lot like last week where volatility is at an extreme.

New Note: While I have never disclosed my stock market plays in the past, I will start to do so with a portion of fun money that I am using in a trading account. My trading account is fun money to me because it is not retirement funds, I can afford to lose it although I have no intention of letting that happen. As of late I have not been trading stocks, only the ProFunds USPIX and UOPIX and I plan to stick with these as opposed to individual stocks (just play the trends and nothing else). I currently have a position in USPIX established on June 8th (prematurely ahead of the June 17th cycle turn, shame on me for not waiting) and will be flipping it to UOPIX on July 30th. This disclosure is not a recommendation to buy or sell, it is for no other purpose than to let people know what it is I am doing and create a track record. Rightly or wrongly this is my plan for next week, it just seems right to me...