Replies to post #4228 on Your Economy (No Politics) (YE1)

[FinancialAdvisor]

Always a treat Winkle, and to add to your 'Spin of the Day' on "inflation," also consider that the government has planned to mint a new 24 karat gold coin: #msg-6088271

A direct quote in the news piece: "The purpose of rolling them out, the Mint is making clear, is to make money -- perhaps a lot of it."


Words can't describe how honest & bluntly truthful your 'Spin of the Day' is...

[Chris McConnel]

Looking at the charts, last week's action looks like a low volume rally back up to the resistance zone.

[Bullwinkle]

~:~:~Market Trend Update for the Week Ahead~:~:~



Overview:
Another week under the belt and another week of unpredictable range like volatility. As mentioned in the previous update with which this post replies; Being as we are near the top of these ranges that have been outlined, I believe we may see some movement towards the bottom of the ranges. While we could just as easily retest the high end of the ranges set into motion last week, I believe we will see a sideways to downward movement for the week ahead. This was pretty much the case in which 2 of 3 major indices headed lower with the SPX and DJIA weakening while the COMP somewhat surprisingly held its footing. The movements seen may be nothing more than rotation, albeit Tech does not seem to be a desirable place to hide for any length of time. I find it interesting what occurs in support of this market. As of late it has been the rolling out of billionaires who are taking positions in some rather undesirable equities. Unfortunately it does not change the underlying story and by the time this news is doled out and the herd jumps on, the big money is probably selling out. Of course this is just my opinion. I know if Kerkorian sold on GM’s $4 bump he made a bundle. Of course to follow was a junk bond status rating and now the hedgies are getting their heads handed to them, but I digress… We also have a role reversal occurring last week between the NYSE & COMP where new Lows to new Highs, A/D line and Up/Down Volume have turned sour on the NYSE. Up until last week these characteristics were mainly attributable to the COMP. While the COMP internals are nothing worth writing home about, they have improved nonetheless. Other indices of note are the R2K, which is not following the COMP’s lead and the TRANS, which too is heading lower. The COMP appears to be the lone star for the week. Equity Fund inflows increased last week by $4.4 Bln with most finding its way into the market via ETF’s, the big winner being SPDR Select Energy. Excluding ETF activity, cash inflows of $785 Mln found its way into Equity Funds with $478 Mln or 61% going to domestic funds and $307 Mln or 39% going towards non-domestic funds. As for CoT data on the major indices, open interest has turned down on the NDX and DJIA, but is turning higher on the SPX. Then we had Oil hitting $48bbl and is quickly approaching its 200DMA, the U$D has finally bolted through 85 and reached 86, with it Gold moves down to the $419 level. All in all, another strange week which appears to be the norm these days…

Economic #’s:
For the most part Econ #’s were pretty good again this week with the exception of Import/Export Pricing and Mich Sentiment…

Wholesale/Business Inventories rose 0.4% to a seasonally adjusted $1.295 Tln which was lower than the previous months 0.6% rise and expectations of 0.7%. An increase in business sales of 0.7% or $985 Bln was considered responsible for a decline in inventories. The inventory-to-sales ratio fell to 1.31 months from 1.32 months in February.
Trade Balance fell to $55 Bln as the trade gap narrowed by $5.6 Bln in March from the revised February trade shortfall of $60.6 Bln. The trade gap narrowed 9.2% as exports increased by 1.5% to $102.2 Bln and imports dropped by 2.5% to $157.1 Bln.
Treasury Budget showed a surplus of $57.7 Bln in April, compared with a $17.6 Bln previously reported although this fell in line with expectations which had been for an increase of $58 Bln. It is the largest surplus for the month of April since 2002 with receipts rising 26.1% from a year ago, while outlays rose 8.6% from a year ago. For the first 7-months of the fiscal year, the government has run a deficit of $236.9 Bln, down 16.5% from the deficit of $283.8 Bln in the same period a year ago.
Retail Sales rose 1.4%, well above the previous months 0.4% and beating market expectations for a rise of 0.7%. While vehicle sales and gas prices led that jump, sale excluding autos rose 1.1% vs. a 0.5% forecast. Sales excluding autos and gas climbed 1.0%.
MBA Mortgage Applications Mortgage applications activity rose 9.4% in the week ended May 6 compared to the prior week. On a seasonally adjusted basis, Refi applications were up 9.8% and applications to buy homes increased 9.4%. Refi’s had accounted for 39.2% of total applications last week, up from the prior week's 39.1%, while adjustable-rate mortgages came in at 35.3% as opposed to 33.4%. Average contract interest rates for 30- and 15-year fixed-rate mortgages rose to 5.77% and 5.34%, respectively, from 5.74% and 5.31% on a week-to-week basis. The rate on one-year ARMs climbed to 4.20% from 4.14%.
Initial Jobless Claims rose 4K to 340K with expectations having been for an 11K decrease to 325K. The 4-week moving average of new claims rose by 2K to 324K in the week. The number of former workers receiving state unemployment checks rose by 15K to 2.60 Mln in the week ending April 30. The 4-week average of continuing claims dipped 14.25K to 2.59 Mln. The insured unemployment rate, representing the percentage of covered workers receiving checks remained at 2%.
Import/Export Pricing imports rose 0.8%, expectations had been for a 0.4% increase. Excluding petroleum, import prices rose by 0.4% in April and are 3.0% higher year-over-year. Export prices were up 0.6%, compared with forecasts for a 0.2% increase and the same-sized rise in March.
Oil Inventories as reported by the DoE (Dept of Energy) and API (American Petroleum Institute). Crude according to DoE rose 2.7 Mln bbls, but according to API fell 6.1 Mln bbls. Gasoline according to DoE rose 200K bbls, but according to API rose 84K bbls. Distillates according to DoE rose 1.7 Mln bbls, but according to API rose 2.2 Mln bbls.
Michigan Sentiment fell to 85.3 from 87.7 and is the lowest level recorded in 2 years, with forecasts having been for a rebound to 88.2. The decline in the sentiment index was driven by the expectations index, which dropped to 73.7 in May from 77.0 in the previous month, the lowest since March 2003. The current conditions index fell to 103.3 in May from 104.4 in April, the lowest since December 2003.
WLI (Weekly Leading Index rose to 134.9 in the week ended May 6 compared with a downwardly revised 134.3 in the prior week. The index's annualized growth rate, which smoothes out weekly fluctuations, is down to 2.9 percent compared to 3.0 percent in the prior week.

Next week we have on deck NY Empire State Index, Building Permits, Housing Permits, PPI/Core PPI, CPI/Core CPI, Capacity Utilization, Industrial Production, Initial Jobless Claims, LEI and the Philly Fed…


Are you disenchanted with the direction our country is moving? Do you find yourself disagreeing with the policy that is being pursued? Do you find the daily minutia of media crap aggravating? I know I do. If you feel like I do, then you probably wonder to yourself what it is you can do to change things. We need to take back our country and when I say “we” I mean those of you that feel like I do. While our right to vote is one way to bring about change, it is not always an effective tool. After all, elections are held once every 4 years and the time in between is spent just living with the way things are, hoping things will work out for the best, but not really doing anything about it or thinking someone else will fix our woes. This is NOT the way to bring about change. This is why things are the way they are. I know, right about now you are probably saying to yourself “so what can I do to change things” or “just what is Bullwinkle smoking”. Your voice, my voice, everyone’s voice needs to be heard. Whether it is praise for a job well done or an article that irritates you, an idea that you have & support or just a rant of anger, your voice needs to be heard. We do not have to live with anything we do not like. An effort needs to be made to let those in office (who “we” pay) know just how dissatisfied we are with the way issues are being handled or the direction our leaders are taking us. This is what we can do, we write… Write your Senator, write your House Representative, write your Governor, that’s how. Write them once a week, once a month, twice a year, whatever. While writing the Federal Gov’t will get you nowhere, writing to those of whose constituency you are a part of will get you an ear. More times than not, they are more concerned about the people they represent than you may think. Your thoughts and ideas will not fall on deaf ears and if enough people make noise, we will be heard. Those in Congress may seem like selfish uncaring people, but if they hear from enough people they will bring it to the attention of the floor. They want to keep their jobs just as much as we want to keep ours. I have written my representative (Zoe Lofgren) on a number of occasions. I have always received a timely response and a feeling of satisfaction knowing that she bothered to read my letter and show genuine concern about the issues I had raised. I am also on her newsletter list, which keeps me abreast of upcoming events, issues to be voted on and once in a while includes a poll to gauge her constituents feelings and concerns. I want to urge everybody and anybody that reads this to write their state leaders. Then I want you to tell your family and friends to do the same. Remember, we put these people in office to take care of our business and they are there to serve us, not special interest groups. Let’s make them earn their keep. We need to let them know how we feel and what bothers us. Let them here your thoughts and ideas. We need to start somewhere, let this be it, here and now. Please pass on the word -- we want OUR country back! I am but one person and can only do so much. As said in the movie Jerry Maguire, “help me, help you”. So to help you get started, I have included a couple of links where contact can be made. It’s easy, choose one and run with it or cc: several if you like. In this wonderful world of technology it only takes a few minutes to send off an e-mail. I spend many hours every week writing this update, so to write a letter to my Senator or House Representative requires little effort, trust me. If I can find the time, so can you. Many of you probably have material right here on iHub that you have already written and can copy/paste/send. Better yet, send a link. I have seen many ideas and great discussion wasted on these message boards. If we spent a fraction of that time and energy sending those writings to our Reps, we CAN make ourselves heard and we CAN make a difference. Do not for one minute think someone else is going to do it for us, it does not work that way. It is up to us to grab the bull by the horns and bring about change. In my next letter to Zoe Lofgren (which I will be sending this weekend), I am going to invite her to visit the Your Economy thread to read what is being written and urge her to read some of the articles posted there. Who knows, maybe she will even become an iHub lurker or member >8^) Do you consider yourself to be patriotic? Then do it for your country, do it for your children, do it for yourself, JUST DO IT… Here are the links:
http://www.congress.org/congressorg/dbq/officials/?lvl=L
http://www.house.gov/writerep/

What can we expect now?:
Like a broken record, I expect more of the same this week (range bound volatility). All of the indices are moving toward the lower end of their outlined ranges with the exception of the COMP. Those ranges are +/-10 pts for COMP 1900-1970, SPX 1125-1170 and DJIA 10000-10450. While the COMP did move out of this range on an intraday level 1990, the highest print was 1979 and just within my specified number. The COMP romp is about done and is tipping the upper Bband, something to watch. Also the SPX and DJIA are sporting bear flags and in the case of the COMP, a bearish pennant. Should we test the DJIA 10000 mark, a print below 10000 is a possibility although it may still be a little early for such a move. If this were to materialize, then I believe it will drag the other averages down with it. Last week we had a Fib timeline on the 10th in which a trend reversal was to occur. I think it is safe to say the micro-trend within the overall trend has reversed and is currently heading down. This last week has been strange to say the least, possibly a last ditch effort to avoid the inevitable with the COMP being the only area of strength, but I do not expect this to last when considering overhead resistance. Some heavy lifting will be required to get back to 2000 and nothing short of a break above 2024 would really get my attention. Also Options Expiry has been unforgiving as of late and it will be interesting to see how it is negotiated. Remember open interest is quite low, so I would not be surprised to see another sell off. For those of you keeping track, MaxPain for QQQQ = 36, SPY = 117 and DIA = 102. Last but not least we have some Econ #’s that may cause some uneasiness, namely PPI and CPI. These are highly massaged numbers, so it will be difficult to know how the market will interpret those numbers, but one thing is for sure, Mr. Market will react. As for Oil I believe we will find support around $46-47bbl. This is where the 200DMA resides along with a 38.2% Fib retrace. Both of these have proven to be strong support in 3 of 4 instances since the run began. If not, then we can look to $42bbl or a 50% Fib retrace. While a retrace of this magnitude has occurred only once since the run began, it cannot be ruled out. The U$D has moved to 86 after a considerable battle with the 85 area, but much heavier resistance resides at 87.5 to 90 area, a shelf of resistance so to speak. This still affords the U$D some room to roam before resuming its downtrend and Gold on the other hand will not be rewarded unless it can decouple itself from the U$D. Gold has decent support at the $420 area, this is probably why it did not stay at $417 for very long before heading back up. Below that resides support at the $408-410 area and if that should not hold then an inevitable test of $400 may be in the cards. A lot of traffic resides at $400 and I highly doubt we see sub $400. With that said, I had been looking for a May rally in Gold, but it does not appear to be in the cards. So while anything is possible, I would be so inclined to buy as many Gold rounds as possible at sub $400, but that outlook too can change if deflation risk overrides inflationary fears.

On a technical note, Bullish Advisors are at 46.2% with Bearish Advisors at 28.0% and a bullish move compared to last week, which was at 43.5% and 30.4% respectively. The bearish sentiment was as high as I have seen it since the bull run ensued. The VIX/VXN trends are both keeping to their bullish flag like chart patterns. CBOE Equity P/C Ratio is at .722 with a 21DMA of .704 and the range is ever tightening. Like a coil, it is bound to spring to an extreme one way or the other someday soon. The RSI 5-Days and RSI 5-Wks are Neutral across the board with the exception of the RSI 5-days on the DJIA being Oversold. The $NASI Daily (Summation), The $NAMO Daily (McClellan), The $NAHL Daily (Highs/Lows), The $NAAD Daily (Advance/Decline) and BP%'s are all in downward trends where the 50DMA has clearly crossed under the 200DMA. The VIX has a 50DMA cross above the 200DMA, may be noteworthy…

Charts for all of the indicators mentioned are posted below for your viewing pleasure…


























NOTE:
I continue to hold a USPIX position, which I will flip to UOPIX when appropriate.

CORE:
Funds; HSGFX, PCRDX, PRPFX, QRAAX, RSNRX ,TAVIX. Individual Stocks; ANO, BHP, SWWC

SWING: BGO, GSS, NXG

Disclaimer:
This disclosure is not a recommendation to buy or sell or to do as I do. It is only to give my thoughts on current market conditions and share the positions that I am holding for tracking purposes only. I am not a day trader and only attempt to identify up/down trends and play the swings.