Replies to post #2163 on Your Economy (No Politics) (YE1)

[Newly2b]

...and a very Merry Christmas to you, too, Bullwinkle (enjoy your weekly updates).

Newly

[SteveO]

Bullwinkle-- Thanks for the funds. I have been happy with a mix of HSGFX, HSTRX, PRPFX, and DODBX. I am a bit concerned about your mix of funds. I got bit in March when I dumped a chunk of money into these when rolling over a 401-k. Although they are all well above water now, they took a beating, down about 7% in total initially. I wish I ahd waited until May. If the dollar does stage some kind of bounce your funds are going to get murdered. What makes you think that this is the time to enter?

[Bullwinkle]

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




Overview:
It's that time once again to review the past week and look into the next. As mentioned in last weeks update with which this post replies; 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". That was pretty much the case. We have tested the 2160 area on the COMP a few times now and it will be interesting to see if we bust out to the upside on this 3rd move up into this area or if it fails and trails off. One thing that caught my eye is that this past 3 week trend looks somewhat similar to that of the 3 month trend we had coming off of the Jan'04 high. Naturally this trend is of a smaller duration and inverted, but there are 5 small waves similar to what we have seen recently. Back then we broke down and into an island reversal move to the upside. Does any of this mean anything and could we gap up into an island reversal to the downside? I really don't know, it is just an observation although it would not surprise me if we gapped up on Monday Dec 27th which is coincidentally a Bradley turn date (+/- 4 days). I will be watching for such a move, but not taking it to the bank.

Economic #'s:
Another mixed bag of numbers that look good on the surface, but once you look past the headline they are not what one might be led to believe. We started out with the LEI which rose 0.2% and was the first rise in 6 months, but it is only a meager rise compared to the -0.4% reading we received last month. GDP was revised upward by 0.1% to 4.0%, this was mainly attrributable to a minor decrease of imports. Inflation seemed to remain muted at 0.9%, but this was due to personal consumption expenditures minus food and energy. Factor these in and the number would be closer to 3.7% (some difference, eh? Like these do not effect the average persons spending habits). Durable Orders rose a staggering 1.6%, or did they? Exclude Autos and that number would be -0.8% with last month's reading coming in at -0.9%. Initial Claims came in at 333K or 17K higher than the last report, but 2K less than what was supposedly expected. Personal Spending was up 0.2% while Personal Income inched a little higher to 0.3%, hey more income than spending for a change! Then again when compared to last months numbers, Spending was at 0.8% and Income was at 0.6% and you can see that this months numbers retracted signifigantly (and during what is the biggest amount of spending for the year). Michigan Sentiment was revised upward from 95.7% to 97.1% and there still appears to be a disconnect from reality going on here. Mortgage Applications remained unchanged, but New Home Sales took a nosedive to 1.125M or the lowest number recorded in 10 years. Last but not least, Oil Inventories rose by 600K bbl's to 119.9M bbl's. With winter upon us and cold fronts moving across the midwest into the east, I do not know if these surpluses will hold up. As for next week, a very quiet one indeed with only Consumer Confidence, Existing Home Sales, Initial Claims and Chicago PMI being reported...

Economic numbers really do mean nothing these days. Let me explain... The headline grabs your attention and the market reacts to what is printed, but unless you dig below the surface you do not get the WHOLE story. What's more is that these numbers are so manipulated and massaged that you cannot believe anything you read. What were once seasonally adjusted numbers are now seasonally adjusted on a monthly basis. The most important parts of these indicators are left out by our officials because they find them unfavorable, so they are excluded. Even what is supposdly expected by the street cannot be counted on to be of a truthful expectation. The dumbing down continues at an extraordinary level and on many fronts, but what we see is what we get.

What can we expect now?:
As mentioned last week; 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. The coming week should give us a pretty clear signal of what "da boyz" have planned. Technicals or news (good or bad) may be that catalyst. While we have no control over news related events, we do have technicals so technically speaking we are overbought. As you may remember before the 9% rally from the post election took place, the INDU & SPX were on the decline while the COMP held its ground relatively well. The COMP led us out and to the upside, well now we have just the opposite occurring. The COMP has been weakening and the INDU & SPX are holding ground (actually new highs have been made). So if the COMP led us up, could it now be leading us down? Bullish Advisors are still at 62.1% and Bearish Advisors are still at 21.1%, VIX/VXN are still heading down and the Equity P/C Ratio is .567. The RSI 5-Days and RSI 5-Wks are very overbought on the INDU & SPX while the COMP RSI 5-Day is nuetral and RSI 5-Wks is overbought. The $NASI is still heading down, $NAHL is oscillating, Volume is down considerably from the prior week (although it is a holiday and was a trade shortened week) $TICK is at -250 and $TRINQ is at 0.73 with $BPCOMPQ flat lining. While these indicators are relatively mixed, I am not so sure that these are the kind of numbers from which a major rally begins. Time will tell...

NOTE: I continue to hold a USPIX position. I also mentioned last week some positions I have taken which are of a longer term time horizon, roughly 4 years or so. Well I forgot to mention one other that I had added to that basket and that one is RSNRX. The others already mentioned were HSGFX, PCRDX, PRPFX, QRAAX and TAVIX.

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.

I added the approximate 25% and 75% Fib tines as these may come into play in the following week(s)...