Replies to post #1724 on Your Economy (No Politics) (YE1)

[Myself °¿°]

Bullwinkle that's not a pitchfork and...


Linear chart.......................................................................................................................................................... Logarithmic chart
.

Linear chart with pitchfork
http://dictionary.reference.com/search?q=linear
.



Logarithmic chart with pitchfork
http://dictionary.reference.com/search?q=logarithmic
.

[Bullwinkle]

>>>CYCLE/TREND Update for the Week Ahead>>>

Overview:
Euphoria, exuberance or whatever you want to call it, the bulls are in control and this train is a rollin'! As mentioned in my previous update with which this post replies: We are currently in overbought territory and about to test walls of resistance created throughout the year across most/all of the indices. We still have room to run, but the big question is will the technicals take hold? So far, in a word, No... The market only paused slightly on a couple of occasions over the last 13 trading sessions as barriers of resistance have so far been of no consequence. This could change in the upcoming week, but before getting into that let's review the Econ #'s...

Economic #'s:
If one were to read between the lines one would see that this past weeks #'s were nothing worth writing home about, but on the surface they were respectable and since headlines are the attention grabbers, this supplied some Ooomph. Wholesale Inventories dropped slightly while Import/Export Prices rose. Initial Jobless Claims edged up a bit by 2K to 333K, but the Trade Balance and Treasury Budget both came in lower than expected and this was most likely one of the main catalysts for continuing strength across the board. Retail Sales were up a tad, Michigan Sentiment came in strong and Business Inventories fell slightly. Also as everyone is aware, the FOMC met on Wednesday and Big Al raised the lending rates by .25% (no surprise there and no real change in dialogue).

For the upcoming week we have a busy schedule starting out with the NY Empire State Index, PPI/Core PPI, Building Permits, CPI/Core CPI, Housing Starts, Capacity Utilization, Industrial Production, Initial Claims, LEI and Philly Fed. Also we have Options Expiry due as well...

As a side note, there has been an extraordinary amount of spin lately; Privatization of Social Security, peace in Palestine and Oil being cheap. First off, it is highly unlikely that Social Security gets privatized in any significant way and any talk about extra money flowing towards the market is premature at best. If anything this probably gets filibustered, especially if it is over-reaching. Arafat's death probably could not have come at a worse time and while some view this as a new start towards peace, Hamas and Jihadists will probably run amuck along with an insurgency of OBL followers. Peace? I'll believe it when I see it... Oil is being considered cheap @ $47bbl, compared to what? Subtract the $10-15 terror tax and we are still well into the 30's. Last but not least, if it weren't for the soft dollar the Econ #'s would most likely be much worse than they have been as of late. If the dollar continues to weaken, well ... let's just say that for every action, there is a reaction...

What can we expect now?:
Where to begin... For starters the total Put/Call Ratio is .76 with Equity Put/Call @ .64. VIX/VXN are @ 13.33 and 18.82 respectively and about as low as I recall them ever being. Bullish Advisors @ 58.1% with Bearish Advisors @ 22.6%. The INDU, SPX and COMP 5-Day RSI's are extremely overbought at 94.5, 92.4 and 89.9 respectively. The INDU and SPX 5-week RSI's are overbought @ 72.5 and 78.7 respctively with the COMP being extremely overbought @ 85.5. We are currently riding the upper BBand on the COMP (quite similar to that of Jan'04) and have only experienced minor stalls along the way. We are also entering Options Expiry with the QQQ's currently @ $38.66 and MaxPain @ ~36. Unless MaxPain is no longer an issue, this should get some play this week. The 50SMA is approaching the 200SMA for an apparent attempt at a crossover, whether this acts as resistance or not is still to be determined. While cutting through resistance with relative ease, the broader indices may have a harder time as we approach new highs for the year, specifically the INDU, COMP and RUT. The SPX has already established a new high for the year although we are talking a relatively smaller basket of stocks than the aforementioned indices. Last but not least, the past Bradley dates have presented nothing more than what appears to be continuation patterns, although we are still within the timeband margin for error of +/- 4 days. So what does it all mean? It means we should pull back, but the market could remain bullish longer than one can wait for the reality of technicals and fundamentals to take hold. This week should be the real test...

NOTE: I continue to hold a USPIX position although I am contemplating on flipping this fund into TGLDX.

Disclaimer: This disclosure is not a recommendation to buy or sell or to do as I do. It is to let people know what I am doing and give my thoughts on current market conditions. I am not a day trader, I only attempt to identify up/down trends and play the swings.