Replies to post #2117 on Your Economy (No Politics) (YE1)

[Bullwinkle]

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

Overview:
I would like to start this weeks update by wishing eveyone a Merry Christmas and give special thanks to all who read and/or participate on the "Your Economy" board. I truly appreciate the input and I only wish that we can all benefit from what is posted here in some way, shape or form. Now, let's get down to business! As mentioned in last weeks update with which this post replies; What we will be waiting to see from here is if we continue higher or stall out and reenter the atmosphere. Well so far, we are still waiting. We do appear to have stalled out this week, but it is still undiscernable as to whether we will get a breakout to the upside or downside. I have to say that if I had to venture a guess I would say that around months end we breakout to the upside. This would be based solely on seasonality and the January effect, but beware! The other side of the coin does reveal poor fundamentals, major complacency and a major run since prior to the election with no real pull backs along the way. Too many people expect a further rally, so all I can say is "expect the unexpected".

Economic #'s:
Looks like we are back to getting a mixed bag of signals, but the indicators carrying the most weight are still relatively poor. Retail Sales inched up, Business Inventories came down considerably with Capacity Utilization down a touch and Industrial Production up just a bit. The two biggies, the Trade Balance and Account Deficit set new all time records by widening to $55.5 Bln and $164.7 Bln respectively. Everyones favorite Uncle raised lending rates by .25% while the NY State Empire Index and the Philly Fed rose sharply. Housing Starts tumbled, Building Permits were off slightly and Home prices hit new highs. Initial Jobless Claims came in 25K less than expected at 317K total and last but not least CPI and Core CPI came in at a tame 0.2% just as forecast, but for some reason these CPI numbers sure seem suspect to me.

As for next week we start off with LEI then GDP, Durable Orders, Initial Jobless Claims Personal Spending, Mich Sentiment and New Home Sales. A relatively quiet week, but if these numbers are poor (especially with GDP being finalized and Mich Sentiment revised) we could see it reflected in trade.

Very interesting week indeed and all is not what it seems. I feel compelled to remind people that this sure feels like Y2K with the Fed raising rates, M&A activity on the rise and complacency at an all time high not seen since since Dec 1999 (last week I said Dec 2000, but hopefully people knew what I meant). With PFE pulling a Merck (so to speak) I get the feeling a lot more surprises are ahead. We have earnings coming up and so far a lot of preannouncements. The U$D did not hold water for very long before springing a leak although the jury is still out on that as to whether it will hold the low 80's. Oil with which many are counting out has picked itself up off of the mat and is back on the rise. When this stuff starts moving, it moves fast. Seems like we were just about to break below $40bbl and now we are about to break above $46bbl. We could be close to $50bbl again before year end. Last but not least, Gold is on the move again. A small corrective phase and a mighty bounce off the double top support in the $430's and this could very easily be back in the $450's before year end. I don't believe Gold will be revisiting sub $400 anytime soon.

What can we expect now?:
I think we get a heavy dose of more of the same, a lot of basing and bouncing around or as they say, "all dressed up, but no place to go". This could change on news (good or bad) as news seems to be having an effect again. Bullish Advisors are at 62.1% and Bearish Advisors are at 21.1% (complacency abounds!). VIX/VXN are still heading down and are at or near all time lows. The Equity P/C is .535 and $NASI has turned down. The $NAHL, Tick and Trin are all oscillating and BP% is flat lining. Across the board RSI 5-Days have fallen considerably although RSI 5-Wks are still overbought. On the COMP some interesting events are taking place, we have a double top in the 2160 area and the RSI and MACD are diverging from the price action. The best I can tell is a catalyst is needed, either fabricated or real to get this moving solidly in one direction or the other, but as stated above I would not expect much until after Christmas.

NOTE: I continue to hold a USPIX position and have decided to put some $$$ to work. The positions I have taken are of a longer term time horizon, roughly 4 years. Basically I spread the exposure over a small basket of funds and for anyone interested in what these funds might be they are HSGFX, PCRDX, PRPFX, QRAAX and TAVIX. These have done well over the last 4 years and I suspect they will do well over the next.

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 and only attempt to identify up/down trends and play the swings.

For some reason I am having trouble accessing Stockcharts and some other websites, so I will not be posting any charts in this weeks update...