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InvestmentHouse - Oil Bounced but Looks Ready to Sell (Weekend Newsletter)

http://www.investmenthouse.com/weekendmarketsummary.htm

- Stocks finish the week adding to the relief rally, but the move didn't scare the sellers.
- July retail sales not bad considering the period it covered, but August Michigan sentiment considers more recent events and dives below expectations.
- Oil has bounced but looks ready to sell again. Doesn't speak well for world economies, but works for lower gas prices.
- Market has nothing to seriously rally for without some kind of further economic change or aid.
- Private insurance mandate overturned by appeals court, setting up a summer 2012 Supreme Court date.
- Still looking for a continued upside relief rally, but for now looks only like a . . . relief rally.

MARKET SUMMARY

Relief bounce continues, but it hits some headwinds Friday.

Stocks finished the week continuing the relief rally that started to gel this past week. "Relief rally" is an awkward term, however, given that the market bounced back and forth each session. For three days in a row, SP500 either gained 50 points or lost 50 points. Friday was the rubber match. It bounced higher, and all the indices managed to put in respectable gains. They were not huge gains, and they certainly did not scare any of the sellers out there. Stocks did close off their highs significantly, and I will talk more about that later. SP500 gave back two-thirds of its gains after stalling below the 10 day EMA. It did not even come close to the November peak.

The Friday session started out all right. It was under water early in the day, but then retail sales came in better than expected. They put in a 0.5% gain, which was in line. The June number was revised upward to 0.3% from just a 0.1% gain previously reported. If you take out autos, they were still solid, coming in at 0.5% again. That was much better than the 0.2% expected. Importantly, June was revised higher again up 0.2% from flat. It is always great to see the revisions to the data, because it shows the experts are too pessimistic. They cling to their old beliefs of weakness or strength just as, I suppose, a lot of America clings to their religion and guns. But I digress. The experts are made to change their ways by the change in the data. I am not saying retail sales are about to explode to the upside, but they are tenaciously hanging on despite all of the weakening indicators in the economy and the negativity in the sentiment.

Another important thing to consider is that retail sales just measure gross dollars. It does not matter if they sell more or less of a product; it is all about price. If the price goes up and they sell less, it may still look like Retail Sales are strong. If we have a lot of inflation, retail sales can literally be inflated by inflation. There would be no net benefit in gained sales, however. You also have to factor in a lot of the expense in retail sales each month. Gasoline builds a lot of the prices. The price of gas has been rampaging. You have to cut that out of the equation because gasoline just represents money we burn in the tank. We do not produce anything with it. We still have to get to work, those who have work, that is. There are 14M+ unemployed. But we have to use the gas regardless. If it goes up in price it makes it look like Retail Sales are stronger, so you have to ex out gas as well. Ex out gas and autos, and you then have a 0.3% gain, and that is still very respectable. It is tenaciously hanging in there despite all the negatives we have here and elsewhere.

On Friday we had the same issues about France. Again the worries were that there would be a downgrade. Industrial production was down in June in the EU overall, and there were more rumors that France would go under or be downgraded. Indeed, Italy has passed an emergency package this weekend to try to stave off any kind of collapse.

Stocks were able to rebound on the retail numbers, and that bolstered the open and got stocks moving well. Then a half hour into the trade, we had another important economic report. The preliminary Michigan Sentiment for August was much lower than expected at 54.9 versus 62.5 expected. People felt it would fall anyway, but it was not believed it would fall to these very weak levels that scream recession.

There was a lot to impact people's psyches here. You had the budget debate, and maybe that is what impacted it. You have people thinking, "What do we do? This is such a mess." Congress cannot get its act together and the President can't agree with them either, but that is the way our system works. Sausage-making is not pretty, and unlike the President and many others in Congress republicans and democrats alike it is their job to represent the people who elected them and do what they say. You cannot blame them for doing that. That is what they are supposed to do, and that is what makes the process like kind of ugly.

That is the way the process works, and we need to know how it works. We do not need to be so thin-skinned about it. We need to have principle people there who, whatever side they are on, stick to their guns and try to get the best deal they can. That is what they were doing. It was not a great deal, and it will not really do anything. It did not help prevent a down grade. SP said if we did not do "X," we would get a downgrade, and we did not do "X." It was not even a "Y" we just did something strange.

In any event, it is done. We just have to deal with it and stop being so thinned-skinned. It is good to see retail sales were not bad in the face of all the negative economic data. Of course these were July numbers. A lot of what happened recently was in August, and that was not factored into the Retail Sales numbers. But, as it turns out, people tend to be more thin-skinned than their wallets. Historically that is the case, so I would not expect too much damage from the sausage-making being done in Washington over the debt deal.

Stocks managed to recover, but they were still just a shadow of what they were before the news came out. They were moving well and looked strong, then the rest of the data just was never the same. It kind of frittered away the gains toward the end, and the indices gave up quite a bit of ground.

NASDAQ, +0.6%; SP500, +0.5%; Dow, +1.1%; SP600, +0.34%; SOX, -0.4%. SOX is really being the anchor chain on the market. The chart of the SOX is not great, as you would expect.

Again, this action left stocks with decent gains on the day, all things considered for such a wild week. But they were well off their session lows. Looking at the charts, it looks like they were giving up or running out of gas well below the November peak. NASDAQ is the same thing. It reached up and actually gapped to a doji below the 10 day EMA, right in the middle of the November range. Not great action. The DJ30 did the same thing. It surged to the upside, fell way off the high, not coming close to the November peak. It looks as if they are running out of gas on this relief bounce before they ever got started.

That is going to be the question of the week. Do they turn over right here or will they continue to put forth the relief bounce spawned from the extreme internals and the sharp selling over the last couple of weeks? We also have to worry next week about the European issue and, of course, the U.S. data. There will be a lot out. But a lot of people are pointing only to Europe as its problem. The U.S. has its troubles as well. The data shows that the economy is hanging on, but it is hardly growing after two years of "stimulus," the "Summer of Recovery," and two rounds of Quantitative Easing thrown in by the Federal Reserve. It is pathetic. We are talking 1930's and 1970's kind of growth, which should be no surprise since we are promulgating 1930's and 1970's style economic policies.

OTHER MARKETS

Dollar: 1.4249 versus 1.4223. Off modestly Friday, not moving much on the week. If Europe is in such dire straits, the dollar would be surging. It would but for the fact that the U.S. is not that strong either. Remember, the Fed is keeping interest rates at 0% for the next two years. At least that is offsetting any issues in Europe. As noted, the US economy is not diving, but it is not growing. It has been trailing off all of 2011. That explains why the dollar is not going anywhere versus the Euro even though there are legitimate worries out of the EU.
Click to view the chart

Bonds: 2.25% versus 2.33% 10 year U.S. Treasury. Bonds recovered. It was a huge two weeks for bonds. Bonds are not doing what you would expect if the U.S. economy was performing well. Bonds should be selling off, so bonds are telling the story that the U.S. economy is not as strong as some say it is. Larry Kudlow is saying, "What recession? What recession?" Well, I would say, "What grand expansion?" They are all saying things will be fine and dandy, but bonds are not forecasting that. Bonds are forecasting a weak economy and more Fed Quantitative Easing. What they are not forecasting right now is more inflation, but that will be baked into the cake. With the Fed saying we will have 0% interest rates for two years, it is just a matter of time before the seeds of inflation are seriously sown in our economy.
Click to view the chart

Gold: 1743.20, -8.30. Gold continued its decline for the second day. It has not been a massive rollover. We were looking for a move back down to the gap point, but it may not make it. It may come back down to the 10 day EMA. If it does, we have to be ready to move out of our downside positions if it holds and tries to bounce at that level. Gold is hardly in any kind of serious trouble; it is just making a normal pullback. That is what we have to playing with the GLD puts. We also have our IAU position that is returning nicely for us. We are just letting it test before it continues its run to the upside.
Click to view the chart

Oil: $85.24, -0.48. Oil rebounded all week, doing exactly as expected. I figured it would rebound this week after it came down and tapped support. It reversed and moved higher. It is now at the 10 day EMA and at the gap point from February. It is showing a doji at that level. I do not think oil will go much higher. Maybe I am wrong. Maybe some economic news will come out and it will bounce to the upside, but it is not forecasting a lot of economic strength. It has broken its trend. It broke again and then very sharply over the last three weeks. It is not showing that it is ready to race to the upside. But watch it and we will see. This is not any ABCD pattern at least not to the upside. I think oil may head lower after this modest bounce from last week.
Click to view the chart

TECHNICAL SUMMARY

INTERNALS.

The internals and volatility hit levels that would warrant a reversal. Many extremes were popped in. There was the put/call ratio, and then the VIX hit 48 on the close last week. That almost matched the intraday high back in May of 2010 during that summer base and selloff. We had new lows spike to almost 1500-2000. Two days of very high new lows on the NYSE. We had huge negative breadth at almost -19:1 and -20:1 as well. Those are extremes. They sow the seeds of a rebound, and the stock market is trying the make that bounce. As I noted, it has not been scaring anyone on the move, especially on Friday, but it is trying to make the bounce. In theory it should make the bounce.

Volume. Volume fell 30% on NASDAQ and the NYSE.

It was not a powerful upside day at all. It was a late summer, Friday, "Let's get the heck out of the office and go home after a crazy week" kind of volume session. There was not a lot of power here. It does not tell you a lot about the session, and that tells us why the indices closed well off the highs on the day. There was not any staying power late in the day to keep bids there to close out the indices to the upside. That is why I am still thinking this is likely a continuation move of the relief rally to come this week.

Breadth. Friday was not any great shakes. The advance/decline line was flat on NASDAQ and +1.8:1 on the NYSE.

CHARTS

SP500. SP500 tapped at the 10 day EMA and faded, giving back two-thirds of its gains. It was not a strong move, but it was a move to the upside. It was probably mitigated for the reasons stated: Late on a Friday, an exhausting week, and everyone wanted to get out of dodge.

NASDAQ. NASDAQ gapped up, showing a doji below the 10 day EMA. It has just about filled the gapdown point from two weeks back. It is still well below the November peak. Has not even made that level. Trying to move up, but not scaring anyone with its move.

SP600. SP600 was up 0.34%. It gapped to a doji. It is right in the middle of the November range, still well below 10 day EMA. Not a lot of strength there.

SOX. SOX gapped higher, rolled over, and closed negative. It is right at the 10 day EMA. It is well below its November peak. It is mired in this range, and I think there could be downside coming. If it does, that will drag the rest of the market. Ultimately I think it will pull the rest of the market down. I really view this as just a relief bounce, and nothing fancier than that in the market. This is, as I have always said, a relief bounce that we want to play. I think it is a tradeable one given the massive negative extremes in the sentiment and internal indicators.

It is trying to bounce. Friday did not look great, so we have to be very aware of that next week in case things deteriorate and the move collapses. Again, we know it was a tough week. The market was moving fine until late in the session when basically everyone had left for the day and the bids dried up. Volume tumbled and stocks just managed to close out to the upside. Thus I still feel there is more upside room on this relief bounce and that Friday was not necessarily indicative of what it will do next week.

Again, you have to look at the patterns, and the patterns are showing a little weariness. If they do not pan out, then you need to get out of the upside.

LEADERSHIP

Internet. There are a lot of categories to cover, and I will just talk about one stock in the internet sector has been performing well for us. We saw NTES come off of this low with an island reversal. There is the gap down and the gap back up. We have been playing it to the upside. It came off of a support level in doing this, so it is just a classic rebound. Note it is not a stock necessarily in a great position. It is in a rolling range. We can play that, but it does not look ready to break out to a new high on this run.

Healthcare/Medical Appliance. Healthcare has been one of the best performers. ISRG continued its move on Friday, although it also closed well off of its high. Health insurance stocks may not belong here, but I am putting anything related to health in this category. LPHI continues higher with a 9% gain on Friday. Just churning it out. RTIX is in medical appliances. It posted a nice 6%+ gain on Friday. This is an area that is making moves.

Energy. Energy is making moves as well, just not in the right places. It bounced last week. Nice run and rebound, but it does not look that powerful. MRO gapped higher as most of the refiners did on Friday, but it just hung onto part of the gain. Very much a bear flag, bouncing back and still looking weak. CVX gapped higher upside as well on Friday, but it gapped to a doji that tapped the 10 day EMA on the high and faded. Bear flag. Lots of resistance. BTU gapped higher to the 10 day EMA and reversed. It is the definition of a bear flag: a sharp selloff and a weaker lower-volume recovery to the upside.

Industrial. CAT gapped to the upside Friday, but it is still an ugly pattern. Maybe it can make some more headway here and the market could use it. It did bounce off of a support level. We will see if it can rally back up to this key range. As I said, the market could use its help.

CMI gapped up as well. It gapped through some resistance. We will see what happens, but that is an ugly pattern. Lower high, lower lows, and it is not an ABCD by any stretch. UTX was up. Industrials were trying to recover. After a hideous beating they are rebounding, and UTX put in an almost 4% move on Friday. There is recovery, but it is only recovery; these are not leadership patterns ready to spark rallies to the highs.

Technology. AAPL is coming back. It held last week on these lows from early in the year that marked the top of that range. It gapped higher on Friday and held much of the gains. It is trying to come back. GOOG is hanging on. It held a key support level and bounced on Thursday. Now it is trying to hang onto that move. The big technical story at the end of the week was CSCO actually getting back to profitability. It beat the street, showing good revenues and decent outlook, and it gapped over the 50 day EMA and managed to hold that level on Friday.

Retail. JWN gapped up on Friday on a good earnings report. It gapped through some resistance. We will see if we can make something out of it, but it still kind of an ugly pattern with a lot of technical damage at this point. TJX is a discounter, and it is bouncing nicely off of a support level. Not bad. Looking like it will try to put in a higher low and try to rally toward that last higher high. It is one I have looked at and watched. Just goes to show you that you cannot watch stocks and expect to make money off of them.

COST is not great. It bounced a bit last week, but it got torched and is not getting itself up off the ground. RL reported great earnings last week, and it is looking for a new high. What a move. It was tailing off and put in a big reversal. If you were watching and RL was one you tracked all the time, you would have seen this and would have wanted to buy into it. We have a sharp selloff and a massive reversal. That was your only chance because it gapped higher the next session and then it was gone.

We watch a lot of stocks so we can try to capture these, but on something like this you have to be watching it intraday. It was diving the day before and then it gapped higher the next day and had a wild session. Some of them you just have to watch. If you have favorites, watch them. We do the same, but there is no way I could have issued anything on this in a report basis because the move was over in a day.

Restaurants had a good end of the week. EAT had good earnings on the week, and it had a nice rebound. But look how it has come back to this massive resistance range. That is what you call overhead supply. A trading range, it tried to break out, and then it rolled over. All of this is just massive overhead, particularly here when people bought into it as it started to move higher again. Now they have to clear out all of this overhead before it can rally. The odds are it may have to come back down and sell some more.

Metals. Metals are not pretty. FCX sold off with a nasty gap a week ago. It has recovered, but look where it has hit and rolled over on Friday right at serious resistance. It does not look good. AKS had a massive selloff. Weak rebound to the 10 day EMA, setting up a bear flag.

There are a lot of issues with leadership. There is not the clear-cut leadership because there was a lot of technical damage done last week in the selling. Nonetheless, there are stocks able to bounce off the bottoms of trading ranges. Those are what we have been mostly moving into. We are able to pick up some here and there. And a good pattern or two out there were providing plays as the market started to rebound. But overall a lot of damage is done in leadership, and the ranks are very thin. That, of course, makes it difficult for a market to rally if there are not a lot of good stocks in good position to make credible runs at new rally highs. If they are just rebounding off the lows, you can make money off of that, obviously. But longer term, it does not mean the market is ready to break out. If there is no leadership, the market has trouble making further moves to new highs.

THE MARKET

SENTIMENT INDICATORS

VIX: 36.36; -2.64
VXN: 35.22; -2.63
VXO: 37.37; -2.85

Put/Call Ratio (CBOE): 1.09; +0.06

Bulls versus Bears:

This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market, then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market does not have the cash to drive it higher.

Bulls: 47.2% versus 46.3%. Bulls bouncing, heading back toward 49.5% hit three weeks back. Holding higher even in the turmoil, perhaps seeing the selling as overdone. This, however, a contrary indicator and if they are not scared out then it is not working in terms of an upside advance. Highs from April and December (60% readings spanning December through early May 2011). The 5 year high is 62.0. The crossover level at 29% bulls from July 2010 is long gone. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 23.7% versus 24.7%. Wrong way as well, falling versus rising in the turmoil. Still up from the 21.5% three weeks back and still off the July high near 28%. The 35% level is considered bullish for the market overall. For more reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.

NASDAQ

Stats: +15.3 points (+0.61%) to close at 2507.98
Volume: 2.224B (-28.74%)

Up Volume: 1.37B (-1.41B)
Down Volume: 802.11M (+710.99M)

A/D and Hi/Lo: Advancers led 1.08 to 1
Previous Session: Advancers led 5.08 to 1

New Highs: 8 (0)
New Lows: 61 (-87)

NASDAQ CHART: Click to view the chart

NASDAQ 100 CHART: Click to view the chart

SOX CHART: Click to view the chart

SP500/NYSE

Stats: +6.17 points (+0.53%) to close at 1178.81
NYSE Volume: 1.205B (-29.45%)

Up Volume: 2.92B (-3.84B)
Down Volume: 2.04B (+1.786B)

A/D and Hi/Lo: Advancers led 1.8 to 1
Previous Session: Advancers led 7.15 to 1

New Highs: 31 (-5)
New Lows: 30 (-126)

SP500 CHART: Click to view the chart

SP600 Chart: Click to view the chart

DJ30

Stats: +125.71 points (+1.13%) to close at 11269.02
Volume DJ30: 228M shares Wednesday versus 393M shares Thursday.

DJ30 CHART: Click to view the chart

MONDAY

There is a lot of data out next week. There are a couple of manufacturing reports from the regions one starts the week and one ends the week. New York is early and Philly Fed comes late. There are housing starts, there are existing home sales. The CPI is coming out. There is industrial production and capacity and leading economic indicators, which have not been very accurate. They never really are. It has been showing things are improving, and they are not.

Lots of data to digest as the market tries to make its rebound. Looking at the market, there is plenty of room for stocks to rebound. But looking at the economic data in the US and the problems out of Europe, there is not a lot of reason for the market to rally without some kind of economic aid, whether from the Congress and the administration or from the Federal Reserve.

The economic data has been waning. The indications are not good for any kind of pickup, so everyone has their eyes on the Fed to see if it will do something. No one really expects anything out of Congress or the administration since they could barely get a budget detail because there was supposed to be no more spending.

Of course, there is the perverse idea in Washington, DC that cutting taxes and giving incentives to invest in the U.S. is spending. That is not spending because it is not their money in the first place. It is OUR money. It is not spending to let people keep their money. It is a philosophy about government and economics, but it is not spending.

The market really needs something to make a new, sustained rally. I am talking about just a relief rally, right? That is all I am viewing this as. I am not viewing this as any nirvana move to a new high. We just want to scratch out a rally either to the top of the November low which is our low point or, better yet, up to the neckline in the SP500's head and shoulders near 1260. That is what we want to play. That is what we have positioned ourselves in as the market positioned itself to bounce higher, given the extremes and the indicators it put in earlier in the week. It very well could continue; it is set up quite well to do so. I think Friday it was just fading back because of a late-afternoon lack of bids on a "Let's get out of dodge" Mentality after a very tough week.

We are looking for further upside this week. The caveat is that the patterns are what the patterns are. On Friday there was low volume as they bounced up toward the 10 day EMA and could not hold the move. They looked tired. If they roll over, we have to be ready to deal with reality and take what the market gives. That means playing some of those downside patterns that look so good.

We are going to have downside patterns at the ready. We already have some, and we are looking at other plays we can take advantage of as well. There are a lot of them out there. Just by preponderance, you would think the market may want to turn lower given the technical picture. That is why we have to be ready to take it that way if that is where it wants to go. We will be ready to do that. But if it continues the rally, which would be the unexpected course for many people, then we stick to the same plan we had already. We will let our positions we have purchased move higher. Some that are still in good position can run for us without needing a huge gain in the market overall. In other words, they are well-placed and ready to move. We can pick up some of those. We already have many in hand that we want to let run. We do not want to get too extended on this move. It is just a relief rally, and they can reverse at any point in time.

We will play any further move with those plays. We will let the positions we need to have recover do so. If they run out of gas, we will close them. Then we will be ready to initiate the downside plays and make more money downside when what I think is a relief rally caps out either at the 10 day EMA, at the November peak, or even up at the neckline from the SP500 head and shoulders.

Have a great weekend! I will see you on Monday with that ton of economic data and the test of key near-term resistance on the indices.

Support and Resistance

NASDAQ: Closed at 2507.98
Resistance:
2532 is the August gap down point
The 10 day EMA at 2540
2540 is the early November 2010 lower gap point
2569 is the November gap up point through the April 2010 peak
2580 is the November 2010 closing high
2599 is the June 2011 low
2603 is the March 2011 intraday low (post-Japan low)
2645-2650ish from December 2010 consolidation
2676 is the January 2010 low
2686 is the January 2011 closing low
The 50 day EMA at 2694
The 200 day SMA at 2709
2706 to 2705 is the April 2011 low and the February 2011 and consolidation low (bottom of the trading range) 2723 to 2705 is the range of support at the bottom of the January to May trading range
2759 is the May low
2762 is the February low
2796 is the February gap down point
2816 is the early April peak.
2825 is the 2007 closing peak.
2841 is the February 2011 peak
2862 is the 2007 peak
2879 is the July 2011 peak
2888 is the May 2011 peak

Support:
2469 is the November 2010 low
2331 from October 2010 low and the August 2011 low
2305 from the August 2010 peak (summertime base)
2139 is the May and June 2010 low
2123 is the August 2010 gap down point
2100 from the August 2010 lows

S&P 500: Closed at 1178.81
Resistance:
1127 from August 2010
1178-1180 is the October 2010/November 2010 consolidation low
The 10 day EMA at 1196
1196 is the November 2010 consolidation peak
1220 is the April 2010 peak
1227 is the November 2010 peak
1234 is the August 2011 low
1235 is the mid-December 2010 consolidation low
1249 is the March 2011 low (post-Japan)
1255 is the late December 2010 consolidation range
1275 is the January 2010 low, early January 2011 peak
The 50 day EMA at 1274
The 200 day SMA at 1286
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1313 from the August 2008 interim peak
1318.51 is the May low
1325-27 is the March 2008 closing low and the May 2006 peak.
1332 is the early March peak
1340 is the early April 2011 peak
1344 is the February 2011 peak is being challenged again
1357 is the July 2011 peak
1364 is the March 2007 low
1370 is the August 2007 low
1371 is the recent May 2011 peak

Support:
1101 is the August 2011 low
1099 from the mid-July interim peak
1040 from the August 2010 lows and May/June 2010 lows
1011 is the summer 2010 low

Dow: Closed at 11,269.02
Resistance:
The 10 day EMA at 11,38911,452 is the November 2010 peak
11,555 is the March low
The August low at 11,700
11,734 from 11-98 peak
11,867 from the August 2009 high and peak on that bounce in the selling.
11,893 from March 2008 closing low
The June low at 11,897 (closing)
The 50 day EMA at 12,040
The 200 day SMA at 11,992
12,094 is the April 2011 low
12,110 from the March 2007 closing low
12,283 is the March 2011 peak
12,391 is the February 2011 peak
12,876 is the May high
12,754 is the July intraday peak
13,058 from the May 2008 peak on that bounce in the selling

Support:
11,178 from November 2010
10,978 is the bottom of the November 2010 consolidation
10,750 from September 2010
10,705-710 from January 2010 peak
10,694-700 from August 2010 peak
9938 is the August 2010 low

Economic Calendar

August 9 - Tuesday
- Productivity-Preliminary, Q2 (8:30): -0.3% actual versus -0.6% expected, -0.6% prior (revised from 1.8%)
- Unit Labor Costs, Q2 (8:30): 2.2% actual versus 2.2% expected, 4.8% prior (revised from 0.7%)
- FOMC Rate Decision, August (14:15): 0.25% actual versus 0.25% expected, 0.25% prior

August 10 - Wednesday
- MBA Mortgage Index, 08/06 (7:00): +21.7% actual versus +7.1% prior
- Wholesale Inventories, June (10:00): 0.6% actual versus 1.0% expected, 1.7% prior (revised from 1.8%)
- Crude Inventories, 08/06 (10:30): -5.225M actual versus 0.950M prior
- Treasury Budget, July (14:00): -$129.4B actual versus -$132.0B expected, -$165.0B prior

August 11 - Thursday
- Initial Claims, 08/06 (8:30): 395K actual versus 409K expected, 402K prior (revised from 400K)
- Continuing Claims, 7/30 (8:30): 3688K actual versus 3700K expected, 3748K prior (revised from 3730K)
- Trade Balance, June (8:30): -$53.1B actual versus -$48.0B expected, -$50.8B prior (revised from -$50.2B) v August 12 - Friday
- Retail Sales, July (8:30): 0.5% actual versus 0.5% expected, 0.3% prior (revised from 0.1%)
- Retail Sales ex-auto, July (8:30): 0.5% actual versus 0.2% expected, 0.2% prior (revised from 0.0%)
- Michigan Sentiment, Preliminary August (9:55): 54.9 actual versus 62.5 expected, 63.7 prior
- Business Inventories, June (10:00): 0.3% actual versus 0.5% expected, 0.9% prior (revised from 1.0%)

August 15 - Monday
- NY Empire Manufacturing, August (8:30): -0.4 expected, -3.76 prior
- Net Long-Term TIC Fl, June (9:00): $23.6B prior
- NAHB Housing Market Index, August (10:00): 15 expected, 15 prior

August 16 - Tuesday
- Housing Starts, July (8:30): 608K expected, 629K prior
- Building Permits, July (8:30): 606K expected, 624K prior
- Export Prices ex-ag., July (8:30): 0.0% prior
- Import Prices ex-oil, July (8:30): -0.1% prior
- Industrial Production, July (9:15): 0.4% expected, 0.2% prior
- Capacity Utilization, July (9:15): 77.0% expected, 76.7% prior

August 17 - Wednesday
- MBA Mortgage Index, 08/13 (7:00): +21.7% prior
- PPI, July (8:30): 0.0% expected, -0.4% prior
- Core PPI, July (8:30): 0.2% expected, 0.4% prior
- Crude Inventories, 08/13 (10:30): -5.225M prior

August 18 - Thursday
- Initial Claims, 08/13 (8:30): 400K expected, 395K prior
- Continuing Claims, 08/6 (8:30): 3698K expected, 3688K prior
- CPI, July (8:30): 0.2% expected, -0.2% prior
- Core CPI, July (8:30): 0.2% expected, 0.3% prior
- Existing Home Sales, July (10:00): 4.87M expected, 4.77M prior
- Philadelphia Fed, August (10:00): 1.0 expected, 3.20 prior
- Leading Economic Indicators, July (10:00): 0.2% expected, 0.3% prior

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From Briefing.com: Weekly Recap - Week ending 19-Aug-11Stocks started the week strong, but economic uncertainty took hold and sank risky assets across the world with the S&P 500 falling 4.7%. Treasuries rallied, with the 10-year yield hitting a record low below 2.0% and gold advanced to an all-time nominal high.

Uncertainty regarding the state of Europe pressured stocks, especially financials. Germany's economy grew by just 0.1% in the second quarter and the eurozone GDP increased by just 0.2%. Germany's DAX equity index fell 8.6% for the week and is now down 21% this year. Asian indices also posted steep losses. Japan's Nikkei fell 2.7%.

Cyclical sectors took a pounding, while defensive sectors outperformed as investors positioned themselves for a potential downturn. Tech dropped 8.0%, industrials gave up 7.1% and materials shed 6.9%. Defensive investments utilities climbed 1.9%, consumer staples and telecom ended with slight losses near the unchanged mark.

Within the tech sector Google (GOOG -12.9%) shed 13% after the company announced it will acquire Motorola Mobility (MMI 54.7%) for $60 a share, a 60% premium.

Dell (DELL -5.9%) came under pressure as the company's downside guidance cast a pall over its upside earnings surprise. Pessimism about the company's near-term prospects lends credence to concerns that some analysts have about tech spending amid a slowdown in macro activity.

Hewlett-Packard (HPQ -27.0%) plunged 27% on word that the company plans to sell its PC business and purchase UK-based data analytics company Autonomy for $11 bln. HP also is pulling its devices based of a WebOS, which it acquired with the $1.2 bln purchase of Palm.

In other corporate news, retailers Home Depot (HD 4.3%), Target (TGT 3.0%) and Wal-Mart (WMT 5.1%) posted better-than-expected EPS.

Treasuries rallied as investors sought a safe haven. The 10-year yield dipped below 2.0% and settled the week at 2.07%, a decline of roughly 20 basis points from the start of the week.

Gold prices rallied 6.3% as the precious metal broke through another all-time nominal high. Crude oil fell 3.8% on concerns of a slowing global economy. The dollar index fell 0.8%.

 
 Index	  Started Week	Ended Week   Change  % Change   YTD % 
 DJIA	    11269.02	 10817.60   -451.42    -4.0    -6.6 
 Nasdaq	     2507.98	  2341.84   -166.14    -6.6   -11.7 
 S&P 500	     1178.81	  1123.53    -55.28    -4.7   -10.7

09:22 am Dell initiated with a Sell at Ticonderoga; tgt $9.25: . Ticonderoga initiates DELL with a Sell and price target of $9.25. Despite the transformation of Dell's portfolio that we believe will ultimately have a long-term positive impact on the company, they cannot overlook Dell's high exposure to the public and consumer markets in a period of growing austerity programs and weakening consumer demand. At the same time, they have concerns regarding Dell's surging operating expenses as the co invests in new businesses that they believe will result in incrementally higher operating leverage in a tough environment and could cut more deeply into profits versus the last downturn. Valuation may appear attractive but not with the risks they see.

09:22 am Rubicon Tech initiated with a Sell at Ticonderoga; tgt $9: . Ticonderoga initiates RBCN with a Sell and price target of $9.Rubicon is a leading provider of sapphire wafers serving the LED, RF chip and optoelectronics market. While the co has benefited from excess profits throughout 2010 and 1H11 due to LED wafer supply constraints, current excess inventory and new entrants are accelerating wafer commoditization and eroding margins over the long term for Rubicon. believe with Rubicon's gross margins likely to trend downward towards 30% over time, they believe the stock should be valued at 1.5x Price/FTM Sales for a $9 tgt.

09:22 am Aixtron initiated with a Buy at Ticonderoga: . Ticonderoga initiates AIXG with a Buy. AIXTRON is the current market leader in process equipment primarily serving the LED market. As the current market leader in MOCVD process tools, AIXTRON is poised for strong secular growth as LEDs are expected to have a 25-30% CAGR during the next several years. Given the company's dominant market position in an oligopolistic market, we believe AIXTRON will maintain attractive margins during this high-growth period.

09:21 am Cree initiated with a Buy at Ticonderoga; tgt $39: . Ticonderoga initiates CREE with a Buy and price target of $39. With gross margins appearing to have bottom in the June quarter and pricing pressure subsiding, we believe Cree, along with the LED industry, is in a cyclical recovery driven by improving general lighting demand applications. As both revenue and gross margins recover, they believe Cree should command a 4x Price/FY12 Sales valuation consistent with other historical chip leaders such as QCOM, (cell phone enabler), INTC, (PC enabler) and BRCM (WiFi enabler) when comparing P/S versus gross margin percentage for a $39 tgt.

2:08 pm S&P Tech Sector Trades About Two Percent Lower

The tech sector is trading lower and is the worst performing S&P sector today. Semiconductors are showing relative strength in the tech space, however, with the Philly Semi Index trading 0.3% lower. Among chips in the index, MRVL (+6.4%) is a notable leader, while RBCN (-3.1%) is lagging. Among other major indices, the S&P 500 is trading 0.6% lower, while the NASDAQ is trading 0.6% lower. The QQQ, meanwhile, is trading 0.5% lower. Among tech bellwethers, ORCL (+0.04%) is showing relative strength, while IBM (-2.7%) is under pressure.

In earnings last night, HPQ (-20.1%) reported an inline quarter and guided lower, CRM (-0.7%) and ADSK (-10.5%) posted beats with slightly upside guidance, MRVL (+6.4%) posted an inline quarter and guidance, and INTU (+9.3%) reported a beat with inline guidance.

In news, HPQ (-20.1%) confirmed it will acquire Autonomy and evaluate strategic alternatives for its PSG. In rumors, we are hearing continued M&A interest in IDCC (-1.2%) making the rounds.

Among notable analyst upgrades this morning, RIMM (+4.5%) was upgraded to Hold at Jefferies and Needham upgraded DELL (+2.7%) to Buy. In downgrades, HPQ (-20.1%) was downgraded at a host of firms including Needham and Deutsche Bank.

11:50 am S&P Health Care Sector Outperforming The Broader Market

The Healthcare sector +0.4% is outperforming the weakness in the S&P 500 -0.04%.

News: SGNT +10% launches Vecuronium Bromide for injection, CYTK +3.4% announces Phase I and Phase IIa clinical trial results for Omecamtiv Mecarbil Published in the Journal Lancet, FURX +1.4% enters into loan agreement for up to $15 mln, UTHR +0.8% S.A.C. Capital reports a 3.6% passive stake in the co, ARRY -0.68% BVF Partners reports a 6% stake in the co, and CVM -5.7% announced that it has received and responded to a Warning Letter issued to the Co by the Division of Drug Advertising Marketing and Compliance.

Broker Research: NKTR +3.6% initiated with a Buy at MKM Partners, CERN +1.6%, upgraded at Cowen, SSRX +0.4% initiated iwth an Outperform at Cowen, HLS -0.9% initiated with a Buy at Mizuho.

10:15 am LDK Solar Lowers Revenue Guidance (LDK)

LDK Solar (LDK $5.80 -0.77) lowered its second quarter revenue guidance to $480 million to $500 million, down from $710 million to $760 million versus the $716.40 million Capital IQ Consensus Estimate.

With wafer shipments between 1.8 gigawatts (GW) and 2.0 GW, and gross margins between 15% and 20%. The co previously forecasted wafer shipments between 2.7 and 2.9 gigawatts (GW), module shipments between 800 MW and 900 MW, in-house polysilicon production between 10,000 MT and 11,000 MT, in-house cell production between 500 MW and 600 MW and gross margin between 24% and 29%.

For its fiscal year 2011, the company lowered its revenue guidance to $2.5 billion to $2.7 billion from $3.5 billion to $3.7 billion versus the $3 billion Capital IQ Consensus Estimate.

The company is expecting wafer shipments between 410 and 430 megawatts (MW). As a result of the significant drop in market price for wafers and modules during the second quarter of 2011, LDK Solar expected to write-down $55 million to $60 million of inventories and expected the gross margin for the second quarter of 2011 to be between 1.5% and 2.5%.The company previously forecasted Q2 wafer shipments between 500 MW and 550 MW, and gross margin between 22% to 26%.

10:03 am Salesforce.com Tops Second Quarter EPS And Revenue Expectations (CRM)

Salesforce.com (CRM $118.51 +4.45) reported second quarter earnings of $0.34 per share, $0.04 better than the Capital IQ Consensus Estimate of $0.30. Non-GAAP results include a one-time charge of $0.04 per diluted share associated with the legal settlement disclosed in the Form 8-K filed on June 15, 2011.

Revenues rose 38.6% year/year to $546 million versus the $528.9 million consensus.

The company issued guidance for the third quarter with EPS of $0.30 to $0.31 versus the $0.31 Capital IQ Consensus Estimate and revenues of $568 million to $570 million versus the $556.82 million Capital IQ Consensus Estimate.

The company also issued guidance for fiscal year 2012 with EPS of $1.30 to $1.32 versus the $1.32 Capital IQ Consensus Estimate and revenues of $2.22 billion to 2.23 billion versus the $2.18 billion Capital IQ Consensus Estimate.
Russell 2000 697.50 651.69 -45.81 -6.6 -16.8

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From Briefing.com: Weekly Recap - Week ending 02-Sep-11Aggressive selling on Friday extended a slide that started on Thursday. That effectively erased gains staged in the first half of the week, giving the stock market a fractional weekly loss.

An upward trend carried stocks higher at the start of the week. Buyers were encouraged by signs of improved sentiment in Europe, where news of consolidation in Greece's banking industry was regarded as a step toward stabilizing the country's banking system. Stocks even overcame an abysmal Consumer Confidence Index reading of 44.5 for August; it was the worst level for the Index since April 2009.

Stocks climbed in seven out of eight sessions for a cumulative gain of more than 8% before becoming winded on Thursday, when the stock market attempted to bounce in response to a better-than-expected August ISM Manufacturing Index reading of 50.6. The move failed to hold when the S&P 500 encountered resistance near the 1230 zone, which marks the 50% retracement level between the July high and August low. Some conceived that the better-than-expected ISM reading, though relatively neutral on its own, could stand as evidence against the case for further monetary policy.

Speculation about a third round of quantitative easing has been rampant, but minutes from the most recent FOMC meeting failed to make note of any such plans. Instead, only a mention of the Fed's intent to monitor conditions and take action, if determined necessary, was made.

Still, talk of further easing resurfaced again on Friday, when stocks slumped 2.5% -- their worst one-day percentage drop in two weeks -- in response to a disappointing monthly payrolls report. According to official data, no nonfarm payroll additions were made during August. That contrasted with the consensus call for an increase of 70,000. Even nonfarm private payrolls increased by a mere 17,000, which is far less than the 110,000 that had been generally expected among economists polled by Briefing.com.

Concern that the disappointing employment data reflected weakness in the broader economy sent oil prices 2.9% lower to $86.33 per barrel, but the want for safety bolstered buying among precious metals, such that gold prices spiked 2.6% to $1877.20 per ounce and silver prices surged 3.8% to $43.12 per ounce on Friday. Treasuries climbed sharply, too, such that the yield on the benchmark 10-year Note returned to 2.0%.

Financials suffered the worst fate during the back-to-back losses. The sector shed 2.4% on Thursday then surrendered another 4.0% on Friday. The latest leg of losses was exacerbated by news that a dozen banks are the target of federal accusations regarding mortgage securities misrepresentation.

There wasn't a great deal of share volume at week's end, but that's mostly because many trading desks were thinly staffed ahead of the three-day weekend -- U.S. markets are closed on Monday in observance of Labor Day.

..Nasdaq 100 -2.3%. ..S&P Midcap 400 -3.2%. ..Russell 2000 -3.6%. ..NYSE Adv/Dec 443/2595. ..NASDAQ Adv/Dec 380/2186.

 
 Index	  Started Week  Ended Week   Change  % Change  YTD % 
 DJIA	    11284.21     11240.26   -43.95     -0.4   -2.9 
 Nasdaq	     2479.80	  2480.33     0.53      0.0   -6.5 
 S&P 500	     1176.80	  1173.97    -2.83     -0.2   -6.7 
 Russell 2000  691.79	   683.36    -8.43     -1.2  -12.8

11:24 am S&P Tech Sector In The Red, In-line With The Broader Market

The tech sector is trading lower today, inline with losses the broader market. Semiconductors are also trading in line with weakness in the tech space with the Philly Semi Index trading 1.8% lower. Among chips in the index, AMD (-4.2%) and WFR (-4.2%) are notable laggards. Among other major indices, the S&P 500 is trading 1.7% lower, while the NASDAQ is trading 1.6% lower. The QQQ, meanwhile, is trading 1.7% lower. Among tech bellwethers, ORCL (-2.7%) is showing relative weakness.

In earnings, FNSR (+15.3%) reported a slightly better than expected quarter and guidance.

Among notable analyst upgrades this morning, Oppenheimer upgrades LQDT (-1.7%) to Outperform, WIT (-0.1%) was upgraded to Overweight at Morgan Stanley, and BCSI (-4.7%) was upgraded to Neutral from Sell at Lazard.

There are no notable tech names set to report results today after the close.

09:59 am Finisar Tops First Quarter Earnings Expectations (FNSR)

Finisar (FNSR $20.45 +1.86) reported first quarter earnings of $0.21 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus Estimate of $0.18.

Revenues rose 9.8% year/year to $228.2 million versus the $228.5 million consensus.

For the second quarter, the company expects to see earnings of $0.20 to $0.24, excluding non-recurring items, versus the $0.20 Capital IQ Consensus Estimate; sees second quarter revenue in the range of $235 million to $$250 million versus the $236.27 million Capital IQ Consensus Estimate.

Gross margin decreased to 29.1% of revenues from 34.1% in the first quarter of the prior year and from 31.6% in the preceding quarter.

The company stated, "We expect production of this product to start to ramp during the second quarter of fiscal 2012. In addition, on June 29, 2011, we successfully closed our previously announced cash tender offer for the remaining outstanding shares of Ignis ASA and now hold 100% of the outstanding shares of Ignis."

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From Briefing.com: Weekly Recap - Week ending 23-Sep-11The stock market mustered its first gain of the week on Friday. The gain, although modest, came as participants moved to cover their positions following four days of concerted selling.

Action in the final session of the week was a bit boring, given the volatility of the preceding sessions. Stocks essentially spent the session chopping along in mixed fashion. The action came as participants displayed a sense of uncertainty regarding the market's treatment of headline risk related to tenuous global economic conditions and precarious financial conditions in Europe ahead of the weekend. Just last week traders were feeling more confident about those themes, resulting in five straight gains for stocks.

Following only the second weekly advance in almost two months, the risk trade was abruptly switched off at the start of this week. Traders showed disappointment over the lack of progress by Greece in establishing an austerity plan that would secure it financial assistance from the Troika. Reflecting the deterioration of financial conditions in the Eurozone's periphery, Italy had its debt downgraded by analysts at Moody's, but that decision really wasn't too surprising.

Sentiment really began to sour with the midweek announcement by the FOMC that it will purchase $400 billion of Treasuries with maturities of six years to 30 years, while selling an equal amount of Treasuries with a remaining maturities of three years or less, by the end of June 2012. The plan, labeled "Operation Twist" by traders, was generally in-line with what had been expected on Wall Street, but it seemed less than accommodative in light of the Fed's statement that downside risk to economic growth remain high.

Stocks responded to the Fed's statement by tumbling to a loss of almost 3%. Stocks then fell more than 3% the next day as selling pressure was perpetuated by aggressive selling abroad. Although the bloodletting eased on Friday, the stock market still suffered a weekly loss of 6.5%. That marks the seventh weekly slide in nine weeks time.

The resumption of the stock market's downtrend drove masses of traders into Treasuries. As a result, the yield on the benchmark 10-year Note dropped to a record low of less than 1.70%. It moved back above 1.80% on Friday, though.

The dollar also benefited from a flight to safety. Relative to a basket of major foreign currencies, the greenback climbed to a seven-month high, but wavered a bit in the final session of the week.

Interestingly, gold failed to attract safety seekers. Instead, the precious metal was caught up in the sell-off that slammed other commodities. Gold prices finished pit trade on Friday at $1645 per ounce for a 5.6% loss, but for the week the precious metal fell about 9%. Overall, commodities fell almost 7%, according to the CRB Commodity Index.

..Nasdaq 100 +1.0%. ..S&P Midcap 400 +1.3%. ..Russell 2000 +1.4%. ..NYSE Adv/Dec 1901/1102. ..NASDAQ Adv/Dec 1750/818.

 
 Index	   Started Week  Ended Week  Change  % Change  YTD % 
 DJIA	     11509.09     10771.48  -737.61    -6.4   -7.0 
 Nasdaq	      2622.31      2483.23  -139.08    -5.3   -6.4 
 S&P 500	      1216.01      1136.43   -79.58    -6.5   -9.6 
 Russell 2000   714.31       652.43   -61.88    -8.7  -16.7

3:15PM Skyworks: AnalogicTech (AATI) files petition to initiate arbitration related to pending acquisition by Skyworks (SWKS) 20.78 +0.47 : Advanced Analogic Technologies announced that it has filed a Petition for Arbitration in the Delaware Chancery Court seeking specific performance of the Company's merger agreement with Skyworks Solutions and to order Skyworks to close the transaction. AnalogicTech is seeking declaratory judgment from the Court that (1) AnalogicTech has not breached the merger agreement, (2) no "material adverse effect" has occurred with respect to AnalogicTech, and (3) Skyworks has breached its obligations under the merger agreement. In accordance with the rules of arbitration in the Delaware Chancery Court, the petition is filed under seal and all proceedings will be confidential. As per the terms of the merger agreement, CO does not intend to comment or provide information regarding this matter until the arbitration process is concluded, unless required by law.

8:13AM Mattson appoints Michael Dodson as CFO; effective October 11, 2011 (MTSN) 1.29 : Co appointed Michael Dodson as executive vice president and CFO effective October 11, 2011. As previously announced, Andrew Moring will transfer the CFO responsibilities to Dodson effective upon the appointment but will remain with the company through the end of 2011. Dodson served as Senior VP and CFO of DDi Corp (DDIC) from 2010 until joining Mattson Technology. From 2006 to 2009, he was SVP and CFO of eTelecare Global Solutions.

7:07AM Am Superconductor announces nearly $100 mln in new contracts across product lines and geographies (AMSC) 4.47 : Co announced its recent successes in the wind power and power grid markets, including nearly $100 mln in new contracts since the start of the co's fiscal year on April 1, 2011. AMSC signed contracts with wind turbine manufacturers in China, India and Korea. Within its Grid segment, AMSC received orders for its grid interconnection and high voltage stability solutions in the U.S. and Europe and made a key high temperature superconductor wire shipment to South Korea.

7:06AM Am Superconductor reports FY10 results and Q1 FY11 results; include previously announced restatements (AMSC) 4.47 : Co reports FY10 EPS of ($3.95) and revenues of $286.6 mln. FY10 includes the impact of applying a cash basis of accounting to recognize revenue for shipments to certain customers in China as of September 1, 2010 and for shipments to Sinovel Wind Group as of October 1, 2010. The FY10 net loss includes $158.5 mln in aggregate one-time asset write-downs, impairments and accrued charges recorded primarily in Q4 FY10 associated with the accounting judgment that its relationship with Sinovel will not continue. Co reports FY10 non-GAAP EPS of ($0.27) vs $0.70 yr ago... Revenues for Q1 FY11 were $9.1 mln. This compares with $97.2 mln for the first quarter of fiscal 2010. The decline is due primarily to a lack of revenue from Sinovel. Co reported a net loss for the quarter of $37.7 mln, $0.74 per diluted share. This compares with net income of $9.2 mln, or $0.20 per diluted share, for the first quarter of fiscal 2010. The company's non-GAAP net loss for the first quarter of fiscal 2011 was $30.8 mln, or $0.61 per diluted share. This compares with non-GAAP net income of $13.0 mln, or $0.28 per diluted share, for the first quarter of fiscal 2010.

3:27AM LDK Solar provides an update on debt repurchase activity (LDK) 3.47 : Co reports it repurchased $10.8 million nominal value of the co's 4.75% convertible senior notes due 2013 in an open market purchase for ~$7.4 million, reflecting a discount from par. The co also repurchased $10.7 mln nominal value RMB USD-settled 10% senior notes due 2014 in an open market purchase for ~$8.2 mln, reflecting a discount from par.

Last night, Cavium Networks (CAVM $28.61 -2.60) reported that it sees third quarter revenue -4 to -6% quarter over quarter to approximately $67.3-68.7 million versus the $73.45 million Capital IQ consensus. The company expects that non-GAAP gross margins and non-GAAP operating expenses in the third quarter will be consistent with previous guidance. "Customer revenues have been weaker than expected this quarter, in the enterprise market as well as recognized software services revenue. Sales into the enterprise market were affected by a much larger than expected impact of a hub transition at one of our major customers as well as lower demand from other enterprise customers as they adjust their supply chain inventory due to the softer demand environment. However, we continue to experience high levels of design win activity across multiple product families and are confident that we are well positioned for the future."

Last night, TriQuint Semi (TQNT $5.46 +0.29) lowered third quarter EPS guidance to $0.09-0.11 versus the $0.16 Capital IQ consensus, down from $0.16-0.18. The company also lowered revenue guidance to $210-215 million versus the $228.6 million consensus, down from $225-235 million. The company said, "The reduction in expected revenue and profitability for the third quarter is primarily the result of reduced demand from the Company's largest customer, weakness in the communications infrastructure market and softening demand from the China market. Product mix and costs associated with ramping new products are the largest drivers of the sequential reduction in non-GAAP gross margins. The co expects a return to strong sequential revenue growth in the fourth quarter of 2011. No conference call will be held in conjunction with this financial outlook update."

Hewlett-Packard (HPQ $21.78 -1.02) has confirmed that its board of directors has appointed Meg Whitman as President and CEO. In addition, Ray Lane has moved from non-executive chairman to executive chairman of the board of directors, and the board intends to appoint a lead independent director promptly. These leadership appointments are effective immediately and follow the decision that Leo Apotheker step down as President and CEO and resign as a director of the company.

11:00 am S&P Tech Sector Up Modestly, About In-line With Broader Markets (HPQ)

The tech sector is trading higher today, just ahead of the broader market. Semiconductors are showing relative strength in the tech space with the Philly Semi Index trading 1.3% higher. Among chips in the index, NVDA (+3.2%) is a notable leader. Among other major indices, the S&P 500 is trading 0.3% higher, while the NASDAQ and the QQQ are trading 0.6% higher. Among tech bellwethers, CSCO (+1.8%) is outperforming, while IBM (-0.6%) is under pressure.

In earnings last night, CAVM (-12.4%) and TQNT (+5.6%) issued downside guidance. Also, TIBX (+2.8%) posted a Q3 beat.

In news, HPQ (-4.1%) confirmed it has named Meg Whitman President and CEO. Also, MOTR (+4.3%) announced it hired an advisor to pursue strategic options.

In rumors, we are hearing renewed YHOO (+3.9%) takeover chatter making the rounds.

Among notable analyst upgrades this morning, The Benchmark Company upgraded OTEX (+1.4%) to Hold, TXN (+2.1%) was upgraded to Above Average at Caris and YOKU (+16.2%) was upgraded to Positive at Susquehanna. In downgrades, CAVM (-12.4%) was downgraded to Hold at Deutsche Bank and TQNT (+5.6%) was downgraded to Sector Perform at Pacific Crest.

10:07 am Cavium Networks Guides Third Quarter Revenue Below Consensus (CAVM)

Cavium Networks (CAVM $26.96- 4.25) expects to see third quarter revenue decline -4% to -6% quarter/quarter to approx. $67.3 million to $68.7 million versus the $73.45 mln Capital IQ Consensus Estimate.

The company expects that non-GAAP gross margins and non-GAAP operating expenses in the third quarter will be consistent with previous guidance.

"Customer revenues have been weaker than expected this quarter, in the enterprise market as well as recognized software services revenue. Sales into the enterprise market were affected by a much larger than expected impact of a hub transition at one of our major customers as well as lower demand from other enterprise customers as they adjust their supply chain inventory due to the softer demand environment. However, we continue to experience high levels of design win activity across multiple product families and are confident that we are well positioned for the future."

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From Briefing.com: Weekly Recap - Week ending 11-Nov-11Stocks finished the week on a strong note, booking gains of about 2%. The effort marked the fourth advance in five sessions.

A strong, broad bid at the open lifted the major averages to big gains in the early going. The move attracted additional interest, adding to early gains, before stocks set adrift in afternoon trade. From then out support remained steady.

Consumer discretionary plays scored the strongest gains with a 2.5% climb, thanks to leadership from Disney (DIS 36.70, +2.06), which set a multi-month high on the back of a better-than-expected quarterly report. The stock's strength also helped the Dow maintain a modest lead over its counterparts for the duration of trade. All 30 of its components closed in positive territory.

Telecom was the worst performing sector on Friday, but even it scored a 1.0% gain.

Bolstering buying interest was another rally by Europe's bourses -- in broad terms, the EuroStoxx 50 bounced 2%. Underpinning the performance is an increased tolerance for risk as the region moves forward with efforts to stabilize precarious fiscal and financial conditions, especially in Italy, where a new austerity plan is gaining momentum in the legislative process. Yields on Italy's debt were down for the second straight session.

The only dose of data today came from the University of Michigan, which posted its preliminary Consumer Sentiment Survey for November. The Survey improved to 64.2 from 60.9 in the prior month, although it had only been expected to come in at 61.3.

Limited economic releases and corporate announcements likely prevented many market participants from taking positions, effectively keeping a cap on share volume. It probably didn't help that the bond market stayed closed in observance of Veterans Day, keeping many traders away from their desks. Fewer than 800 million shares were traded on the NYSE today.

Such thin share volume may prompt the more cynical market watchers to question the conviction underlying today's climb, especially since each bid carries a greater relative weight on light volume days. Nonetheless, the S&P 500 booked its best single-session percentage gain since the end of October. For the week, stocks advanced almost 1% and are now marginally positive for the year.

Market participants had displayed a renewed tolerance for risk on Thursday, reacting to improved market conditions in Europe and news of a successful debt auction by Italy. Although the auction came at a cost, demand for the country's debt was taken by the market as a sign of confidence.

The only loss of the week was suffered on Wednesday, but it was the worst one-day percentage drop for the S&P 500 about three months. Many were spooked by the specter of contagion as Italy's debt yields climbed to record levels and the notion that Italy's economy is far too large to be aided by a bailout.

Concerns about Italy and its ability to establish a unified political front were also at play as the country looked to replace its prime minister, but stocks were still able to overcome those concerns and score strong gains.

Greece was in focus at the start of the week, when it was announced that Prime Minister Papandreou would step down from his post. Later in the week it was announced that Lukas Papademos will succeed him. Papandreou's resignation came after he had unnerved many officials, and markets for that matter, by proposing a referendum for the country's bailout package.

There wasn't a great deal of data earlier this week, but traders took note of the latest weekly initial jobless claims count, which totaled 390,000. That is less than than 400,000 claims that had been exected, on average, among economists polled by Briefing.com and is also 10,000 less than the prior week total.

The trade deficit for September was also posted. It contracted to $43.1 billion from $44.9 billion in the prior month. A $45.9 billion deficit had been generally expected for September.

The Treasury also posted its budget, which had a deficit of $98.5 billion. A $105.0 billion deficit had been broadly expected to follow the $140.0 billion deficit reported for the prior month.

The pace of earnings announcements slowed this week. Among the more widely held names that reported, Cisco (CSCO 19.04, +0.43), Best Buy (BBY 28.09, +0.79), and General Motors (GM 22.51, -0.19) all bested expectations for the bottom line. Shares of GM cast a pall over its report by issuing a disappointing outlook, however.

There were a handful of debt auctions this week, but results were mostly mixed. The yield on the benchmark 10-year Note ended the week a few basis points above 2.0%.

..Nasdaq 100 +1.9%. ..S&P Midcap 400 +2.3%. ..Russell 2000 2.6%.

 
 Index	   Started Week  Ended Week  Change  %Change  YTD % 
 DJIA	     11983.24	 12153.68    170.44    1.4    5.0 
 Nasdaq	      2686.15	  2678.75     -7.40   -0.3    1.0 
 S&P 500	      1253.23	  1263.85     10.62    0.8    0.5 
 Russell 2000   746.49	   744.64     -1.85   -0.2   -5.0

SunPower (SPWRA) announced that the company has begun designs for a 13.78-megawatt solar photovoltaic power system at Naval Air Weapons Station China Lake in California and intends to break ground next month.

NVIDIA (NVDA $14.33 -0.14) reported third quarter GAAP earnings of $0.29 per share, $0.03 better than the Capital IQ Consensus of $0.26, while revenues rose 26.3% year/year to $1.07 billion versus the $1.06 billion consensus. The company issued in-line guidance for the fourth quarter with revenues of -2 to +2% quarter/quarter to approximately $1.045-1.088 billion versus the $1.07 billion consensus. GAAP and non-GAAP gross margins are expected to be flat to up 0.5 percentage points from the respective GAAP and non-GAAP gross margins in the third quarter. Third quarter GAAP gross margin was 52.2 percent, a fifth consecutive record, compared with 51.7% in the previous quarter and 46.5% in the same period a year earlier.

09:11 am Entegris initiated with a Buy at Stifel Nicolaus; tgt $12: . Stifel Nicolaus initiates ENTG with a Buy and price target of $12 saying they believe the company is well positioned to benefit near term from an impending recovery in the semiconductor market (both units and capital spending), and in addition, Entegris has taken tangible steps to position itself favorably for long-term growth.

10:47 am Sentiment Improves to its Highest Level Since June
The University of Michigan Consumer Sentiment index increased from 60.9 in October to 64.2 in the preliminary reading for November. This is the strongest reading since June. The Briefing.com consensus expected the Sentiment Index to increase to 61.3.

Both future expectations and current conditions improved in November. The Expectations Index strengthened from 51.8 in October to 56.2. The Current Conditions Index increased from 75.1 to 76.6.

The increase in sentiment in November most likely stems from the strong growth in stock prices over the past few weeks. Other areas that tend to produce notable effects on consumer attitudes -- employment, oil prices, and media reports -- were essentially unchanged over the last month.

The November increase in sentiment does not necessarily mean that consumption is headed for stronger growth. Consumption is highly reliant upon income growth and fluctuates with the employment situation, not sentiment.

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From Briefing.com: 4:30 pm : The major equity averages finished mixed as market participants opted to take a break from the action after stocks had rallied more than 7% during the course of the three previous sessions. Today's headlines weren't enough to motivate a follow-up effort.

The ISM Manufacturing Index improved in November to 52.7 from 50.8 in the prior month. Moreover, it exceeded the expected reading of 51.0. In contrast, China's PMI Manufacturing figure decreased to 49.0 in November from 50.4 in October. The eurozone's reading for November stayed at 46.4.

Domestic construction spending increased by 0.8% in October, besting the 0.3% increase that had been broadly expected.

Weekly initial jobless claims increased from an upwardly revised 396,000 to 402,000 in the face of calls for a total of 390,000 initial claims.

Retailers and auto makers came into closer focus today. Retailers offered up their latest same-store sales results, which proved relatively uninspiring. However, Aeropostale (ARO 16.19, +0.68) fought off a weak start that was owed to the apparel retailer's disappointing forecast. Even Guess? (GES 29.61, +1.49) scored a strong gain after traders dismissed its downside forecast.

Auto makers had a mixed session amid monthly U.S. sales numbers. General Motors (GM 20.96, -0.33) posted a 7% year-over-year increase in U.S. sales for November, while Ford (F 10.59, -0.01) offered up a 13% increase from the prior year. Toyota Motor (TM 65.72, -0.19) had an increase of little more than 2%.

Advancing Sectors: Tech +0.6%, Health Care +0.1%
Unchanged: Consumer Discretionary
Declining Sectors: Utilities -0.2%, Industrials -0.2%, Consumer Staples -0.3%, Telecom -0.4%, Materials -0.6%, Energy -0.7%, Financials -1.0%DJ30 -25.65 NASDAQ +5.86 NQ100 +0.6% R2K -0.9% SP400 -0.6% SP500 -2.38 NASDAQ Adv/Vol/Dec 927/1.83 bln/1599 NYSE Adv/Vol/Dec 1203/855 mln/1812

4:08PM Magma Design beats by $0.02, beats on revs - co announced last night that Synopsys will acquire LAVA (LAVA) 7.13 +1.41 : Reports Q2 (Oct) earnings of $0.10 per share, $0.02 better than the Capital IQ Consensus Estimate of $0.08; revenues rose 13.0% year/year to $38.3 mln vs the $37.83 mln consensus.... Co announced last night that Synopsys (SNPS) would acquire LAVA for $7.35/Magma share in cash

8:39AM FSI Intl received follow-on orders for its ORION Single Wafer Cleaning System from two semiconductor producers (FSII) 2.60 : Co expects to ship these systems in fiscal 2012.

OCZ Tech (OCZ $7.59 +0.60) issued upside guidance for the third quarter with revenues of $100-105 million versus the $89.55 million Capital IQ consensus, The company issued upside guidance for fiscal year 2012 with revenues in excess of $350 million versus the $340.94 million consensus. "We expect to report record revenue in Q3'12, driven primarily by increased traction for our enterprise and server SSD offerings along with initial shipments of our new PCIe-based offerings. Based on the exit bookings rates from November, interest in these products is exceeding our expectations, due to accelerated adoption of our SSDs by server OEMs and enterprise customers." Co filed a $150 million common stock offering last night.

Last night, Semtech (SMTC $24.20 +1.00) reported third quarter earnings of $0.52 per share, may not be comparable to the Capital IQ Consensus Estimate, while revenues fell 4.9% year/year to $123.9 million versus the $123.87 million consensus. The release of reserves for uncertain tax positions benefited non-GAAP net income by approximately 5 cents per diluted share in the quarter. The company issued downside guidance for the fourth quarter with EPS of $0.27-0.33, excluding non-recurring items, versus the $0.43 consensus and revenues of $102-108 million versus the $119.14 million consensus.

Last night, Finisar (FNSR $17.12 -1.32) reported second quarter earnings of $0.23 per share, excluding non-recurring items, $0.01 better than the Capital IQ Consensus of $0.22, while revenues rose 0.2% year/year to $241.5 million versus the $242.23 million consensus. The company issued downside guidance for the third quarter with EPS of $0.20-0.24, excluding non-recurring items, versus the $0.26 consensus with revenues of $235-250 million versus the $250.02 million consensus.

Seagate Tech (STX $17.24 +0.14) was upgraded to Buy from Hold at Argus saying the company has turned supply constraint into a margin booster. The Firm says due to the Thai flooding and related hard disk drive component shortages, they believe Seagate is focusing on building mainly high-end HDDs for enterprise server and upscale notebook and desktop PCs. They also believe the HDD makers such as Seagate are directing available supply first to their most enterprise-centric clients such as H-P and Dell, next to the mid-tier pricing PC companies such as Acer, and last to the PC ODMs and distribution channel.

11:55 am Technology Sector Trading Lower Today, Outpacing Broader Market (HPQ)

The tech sector is trading slightly lower today, outpacing losses in the broader market. Semiconductors are showing relative weakness in the tech space, however, with the Philly Semi Index trading 0.6% lower. RBCN (-3.7%) and MU (-3.6%) are notable laggards in the chip index. Among other major indices, the S&P 500 is trading 0.4% lower, while the NASDAQ is trading 0.2% lower and the QQQ is 0.1% higher on the session.

Among tech bellwethers, GOOG (+1.7%) is showing strength, while MSFT (-1.2%) is a notable underperformer. In earnings last night, FNSR (-10.4%) reported Q2 results in line with consensus and guided lower, while SNPS (-1.0%) posted an inline qtr and guided higher. This morning, OCZ (+5.6%) offered Q3 rev guidance above consensus and raised guidance for FY12. In news, SNPS (-1.0%) announced it will acquire LAVA (+24.5%) for $7.35/Magma share in cash. Also, CLWR (+24.2%) and S (-0.2%) announced agreements potentially worth up to $1.6 bln over the next four years in payments for WiMAX services.

Elsewhere, OPEN (+2.5%) and TECD (+1.3%) announced share repurchase programs. In M&A, there were reports out last night suggesting an Alibaba-led group preparing bid for all of YHOO (+3.0%). Also, we are hearing MSFT (-1.0%) for RIMM (+2.4%) making the rounds.

Among notable analyst upgrades this morning, HPQ (+1.5%) was upgraded to Sector Perform at Pacific Crest, IRF (+0.5%) was upgraded to Outperform at JMP Securities, Argus upgraded STX (-0.5%) to Buy and SOHU (+3.1%) was upgraded to Buy at UBS. Among downgrades, WBMD (-2.3%) was downgraded to Neutral at Cowen, FFIV (-3.4%) was downgraded to Hold at Noble Financial and Brigantine downgraded ADBE (-0.6%) to Sell.

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InvestmentHouse Weekend Market Summary:

http://www.investmenthouse.com/weekendmarketsummary.htm

-Stocks overcome minor selling attempts on the week, post gains along with some new post-bear market highs.
- Still feels as if you have the tiger by the tail, but thus far the tiger has not tried to swat us.
- Gallup puts Unemployment at 19.2% as CBO tells us long-term unemployed still at 40%, where they were in 2009.
- Philly Fed forecasting 30K jobs created in February. Why won't people hire?
- CPI 'lighter' trumpet the headlines, but the core is hot and getting hotter: beware gasoline prices.
- Sticking with what is working but the ranks of quality new plays are growing thinner.

Stocks hit some bumps but continue higher.

Let's face it, we all have to be traders to a certain extent right now, like it or not. Although we do still have investments. What about PCLN? You remember this company we bought way back in 2010 at $188, and today it was trading at $582. It was breaking out, as a matter of fact.

SOX overcame some minor selling on the session and on the week to post relatively nice gains. After all, stocks were trading laterally the prior week, and this week, even though they had issues getting away from that lateral range, they overcame them and rallied Thursday and Friday. We have had a few bumps along the way. Last Friday the stock market sold. It looked a bit shaky. Monday it bounced right back, but we had those sell on close orders. Wednesday the market sold back down, but it held the 10 day EMA again. Thursday it was back up, but there were those sell on close orders once again. Some former big buyers were now pretty big sellers, dumping shares. Friday did not seem to cause much of a problem, however.

Stocks were starting to the upside. They sold off and gave it all back early in the day, but then a slow, steady melt higher once more as another dip (this one intraday) was used as a buying opportunity. Looking at the SP500 chart, there were dips last Friday, then on Wednesday, but buyers stepped in and used the dips as an entry point as they have all along in this rally. There was no grand breakout move. Just more upside. That is not too bad given where the indices are. SP500 is still trying to get through its May peak. Other indices made it. NASDAQ continued to move higher above its prior post-bear market high. The Dow finally made more of a substantial move on Friday, clearing this two-week range where it played footsie with the old post-bear market high. Now looks like it might try to motor a bit. There was a good volume spike, but it was expiration Friday, so we cannot put too much into that.

All in all, it is hard to complain about the action on the week, particularly given that there were some hiccups. There was some actual selling showing up, but the market overcame it. The bids are still there. I was worried a few weeks back and spoke of the bids running out. They keep bumping up against the same resistance as the indices were bumping up against those prior highs, and there is the inability to break through. Sometimes that wears out the bids, so to speak. It exhausts the buyers and the sellers just wait them out. Once the buyers do not have anything left, the sellers can swoop in and knock stock prices backward. They took their shots last week, but they just were not able to knock them back. On Friday stocks managed to post gains and put in some decent moves on the indices.

SP500, +0.23%; NASDAQ, -0.27%; Dow, +0.35%; SP600, -0.03%; SOX, -0.88%; NASDAQ 100, -0.31%.

The SOX was up over 2% on Thursday and posted another solid gain on Wednesday as well. It was doing just fine. Why would the NASDAQ 100 be down? Big cap techs. AAPL was flat on the day. Some big names were unable to rally, and AAPL had that reversal on Wednesday. It looked like things were okay on Thursday. It held the 10 day EMA on a gap lower and reversed off of that, but it takes time for this kind of pattern to work through the system. I suppose it is good that they did not break down further, but it is not out of the woods yet given that Wednesday reversal.

All in all, not a bad week for stocks. Although there are still issues that I talked about last weekend that are still in play. That would be the double bout of selling attempts over the past week. They were not successful but, again, on the bounces at the end of the day there were sell on close orders and some big volume. That means there is some big money dumping shares the day after a selloff on a rebound. They are closing out their positions anyway. They were not buying into the dip as many were. They were selling at the peak of the dip. If they had been buying on the dip, obviously it would have been a bigger move. They were waiting, and they sold when the market went to close. Just so happens that, thus far, the market still found enough bids to overcome those sellers.

I talked about AAPL with its Wednesday reversal day. It held up, and that is good, but the jury is still out. Looking across the market, there are fewer stocks out there with those nice rounded bottoms that we can catch. We caught many of these in Q4 for the run higher to end 2011 and begin 2012. Those provided great gains for us to the upside. Now there are not that many. As noted last night, it is the missing demographic in the continued attempts for the market to move higher.

At the same time, there are more downside setups showing up. Some are in key areas such as the transports. KSU is a stock that we have been looking to play to the downside. We are seeing more topping patterns develop. Not more topping patterns than upside -- not at all. Just that more of them are developing. We are still looking at it for this weekend, but at this juncture I do not see a plethora of rounded tops that would be the antithesis of these rounded bottoms.

I talked a lot in October and November about the rounded bottoms that were setting up. I was excited about it. We felt that meant we were going to get the market rally. That was the whole point behind our thesis that we would get the run up to the prior highs in the SP500 and the other indices. That is exactly what happened. We rode these stocks to the upside. Others were already on the way as well; it was not all the rounded bottoms, but they provided a big foundation for the market to rally. We are watching for rounded tops. Not as many are setting up now, but some of those patterns look like they may be setting up a pennant. Those can give you a bit of a curve ball sometimes. Not that FTK is negative. We were looking at it as an upside play, but you can see what happened. MACD came up and hit a new high. It is just rolling over. It is not able to do anything with it. No major breakdown. It could just be a shakeout. We are watching it. You have to start watching patterns like this. There are some even bigger than this, stretching out over two or three months. Those are more of a worry than FTK. We see rounded tops forming, just not nearly as many as the rounded bottoms. If we saw multiple rounded tops in key stocks as well, that would be the indication that we would get a pullback, and a pretty good one at that. We are just not seeing that right now.

The overall economic data is solid. Retail Sales were not as great as expected, but if you ex out the autos, they were solid. And there were great revisions. The manufacturing numbers were good with Empire Manufacturing and the Philly Fed. Industrial Production and Capacity where not bad. Capacity was quite solid, thank you. Initial claims continued to improve. Housing Starts were higher than expected with a 1.5% rise. You can see what I am talking about. Where he getting better data, and that is on top of other data that was solid as well.

The U.S. data is looking good and, by golly, Europe seems to have it under control. I am not saying it is for certain, but it is giving the appearance of control whether it is in charge or not. Looking at the LIBOR rates, the dollar LIBOR went down to a new low on this selloff at 0.49. For the second day in a row, Friday, it continues to show less stress between the banks. The bond markets are improving. Portugal, Italy, and Spain yields are dropping significantly. If you are going to trust any market, typically it is the bond market. Of course there has been a lot of monkeying around with bonds given the government interventions, but they are showing that things are improving. LIBOR and the bond markets give pretty good insight that things are getting a bit better on the continent.

So is everything all candy and nuts now and we are all going to be happy at Christmas because of this? Everyone seems to think so. There is a lot of bullish sentiment out there. We had Barron's with its Dow 15K headline. We had the almost unending run higher in AAPL. And it is not just AAPL. CMG is running higher as well, day after day to the upside. COH is moving higher day after day. Well known, well loved, and moving higher. TJX is clicking them off with these slow moves right up the 10 day EMA. Just working its way higher.

A lot of people think we have hit nirvana when it comes to stocks with their steady moves and not giving any back. That is when you have to be a little worried. There is never nirvana in the market, although it seems like it sometimes. Everyone was partying too hard for too long back in 1999 and early 2000. They had a really bad headache afterwards... for years. The point is that we are getting pretty ebullient about stocks -- although the retail investor is not really in the market. Nonetheless, there is getting to be a lot of whipped-up sentiment, and people are coming around. It is ironic that AAPL made that great move and almost to the day that Barron's put out the Dow 15K article, AAPL surged and then reversed on high volume. Maybe that was just outstanding timing or maybe it is a little bit of foreshadowing.

Last week I said we had the tiger by the tail, and I think we still do. He may have seen us and tried to shake us off a little over the past week with those two downside days, but they were immediately followed by buying. Maybe he is planning something. Maybe he knows we are back there now and is scheming. We had those sell on close orders for two days. Big sells. We had AAPL reversing. We had a lot of great feelings in the market that everything is fine, and we have a lot of feeling in the economy that everything is fine. I have chronicled over the week that the economy is actually a piece of crud, although it is improving. Maybe it does not smell as bad and looks a little better, but crud is crud.

You can see what I am getting at. You have to be careful. Everyone is getting somewhat complacent. The tiger knows we are there. We will keep hanging onto that tail and following him along, but if he turns around and starts swinging at us, we will get out of the way pretty quickly. We are already moving into some downside plays, and we got knocked back on one of those this week had to close it. But we had some other good entries that I think could make us some money. If things keep hiccupping along, there will be some early fallout stocks that could make us money to the downside. That is the way it always is. There are always early leaders to the upside that everyone on follows, and there are always early leaders to the downside that most everyone follows that way.

The tiger is still running, and we are running with it. We are trying to figure out what tree are we going to jump off on. We were all laughing about it in the office today. If a stock looks at us sideways, we all said we would get out of them. We may be hyper paranoid right now, but we are seeing stocks do some pretty strange things on the day. HMSY sold off sharply. It rebounded, but it never really regained its trend. It closed below the 20 day EMA. It has been holding that for months on end. I like JAZZ a lot, but it sold off hard. It came back. We were just about to leave it because it was above the 2012 trend, but then it faltered. Got away from it.

We have some stocks that performed very well and have been market leaders. They are now coming under fire. The tiger is taking a swat here and there. It is just a matter of time before the tiger comes back to take a swipe at us. How do I know that? Because of history. I do not know precisely when it will happen; no one does. A lot of people think they do. What is more likely is the pullback similar to the one in Q4 of 2010. It was after that inverted head and shoulders bottom over the summer of that year, the rally back up to the prior highs, and JUST ABOVE the prior highs. Does that not sound familiar? And then the fade to test. But Quantitative Easing was still in place, so the rally continued.

We have not had our real test yet. We moved laterally, but that was not really a test. I still think we could come back and sell. We are starting to see more action that would line up with that idea and pull us to the downside. But it has not happened yet, so we are running with the tiger. We are still going into stocks. We saw buys we wanted like PCLN today. Long base, broke out, and tested it. That was a beautiful setup. I do not care if the market is at a zenith; PCLN looks like it wants to go up to $1000 again. I am not saying that is your target -- because I am not that stupid -- but I also bought some stock back at $188 and now it is trading at $582. You can still invest is some of these. I am not buying stock right here, although maybe it is a good play to do so. Maybe LEAPS could be a good thing to buy on PCLN if we are planning on it going potentially to $1000. That is something to consider. WFM is in its mid range, and it broke to the upside. It did a nice job of it, too. It still has room and could make us money. We are not looking for it to go up to $500. We are looking for it to trade up to the top of the range near 90. That is a start. That makes us some good money and puts the kids into college a bit better.

We have the tiger, but we still have some great stocks that are running along and will run interference for us. Maybe they are showing that the tiger does not really care about us right now. He just wants to head down the road. Since we are not holding him back, maybe he will let us ride along.

OTHER MARKETS

Dollar. 1.3158 versus 1.3132 euro. The dollar had a rough day, but it had a good week overall. It closed sharply lower against the euro. The yen is stinking so badly this week that the DXYO did not tank. Indeed, it gained on the week. The euro was up sharply on the week and the yen was down sharply on the week versus the dollar. That left the DXY0 up but off its highs on the week.

Bonds. 2.01% versus 2.00% 10 year U.S. Treasury. Bonds were flat on the day. Back down at the bottom of the range, but still holding the range. Bonds are not giving up. They are not totally convinced that everything is fine in Europe. If it was, then money would be fleeing back to the continent and our bonds would go down in price and up in yield. They are up in yield, but they have not broken through the bottom of the range.

Gold. 1,725.70, -2.80. Gold was flat on the week. Flat is not bad. Gold is holding the test of the breakout of the channel. Not bad action at all. It still think gold is going higher from here. Why? The EU is adopting all the U.S. strategies on how to liquefy your way out of problems. Ultimately that leads to some pretty hellish inflation, and that is what will put gold to the upside. The thing holding gold back this week was the lack of fear. It was the fear being taken out of the equation in Europe. Inflation will take charge again. We saw it in the U.S. CPI numbers. When that happens, gold will head back to the upside.

Oil. 103.27, +0.73. Oil looks unstoppable. It is right at the top of its range. International pressures are adding to it as well as simple stupidity in the U.S. Gasoline hit a new high at 3.53 per gallon. That was up from last week, and it is up 92% since President Obama took office. Oil will create problems for the economy, no doubt.

The other markets were acting like you would expect them to act. That is not necessarily good for us when looking at the price of oil and how gold is setting up, looking at inflation over the long run. But the market has not stopped. It has overcome the little bit of adversity that has been thrown its way, so we keep running with the tiger. We have him by the tail. He could turn around and maul us at any time, but we will run with him for as long as he will let us.

TECHNICAL SUMMARY

Volume. NASDAQ, +1.5%; NYSE, +11%. It was expiration, so you would expect a little higher volume. That is what we got, and it still was not very high volume at that.

Breadth. NASDAQ +1:1; NYSE +1.4:1

THE CHARTS

SP500. The notables: On Friday a break lower and rebound. Wednesday a break lower. Thursday a rebound. Now a new rally high. Still not over the prior post-bear market highs, but moving in that direction up toward 1375. It will be the moment of truth. It may stop these moves or it may not, but it looks like the SP500 will be the last of the majors to make it to that level.

DJ30. DJ30 finally broke out of its highs a bit decisively. Looks like it could put some moves on it if it wants to. Lateral consolidation for two weeks, breaking higher. Could be off to the races like PCLN. We will see.

NASDAQ. NASDAQ pulled back on the day. AAPL and the big boys were not helping out, but it extended its lead over its prior 2011 post-bear market highs. NASDAQ continues to be the leadership index.

SP600. The small caps made a decent comeback on Thursday. Friday they were matching the prior bear market highs, but still below the nominal new high hit in early February. This is the lick-log point for the small caps. Will they be able to break through and extend the move like NASDAQ and perhaps the Dow? Or will they be stuck here spinning their wheels?

SOX. The SOX had a very good week. It was up nicely Tuesday, Wednesday, and Thursday. Gapped higher and sold back on Friday. Technology had a bit of trouble. Growth had trouble on Friday, but this did not turn the tide on this move. A nice breakout over the November and December peak, and there is a good rally to the upside underway. It even cleared that July 2010 high. Still a lot of resistance ahead, no doubt. One of the major points of resistance is at 450-455. About the best the SOX could do was 439. It still has room to run. If the rest of the indices wants to move, SOX can help push in from below

LEADERSHIP

It was not a bad week for leadership. I will go through several different stocks that performed fairly well.

STX gapped higher on earnings. It has moved laterally nicely. Looks like it wants to make the break to the upside. Of course there is the PCLN juggernaut. It came to life in mid-January and it is looking super to the upside. Not bad at all. TXN is a key chip stock. It is still struggling to get over those prior peaks, but it has put in something of an ascending triangle. Maybe it can make the move. TEX has really been interesting. It continues to move to the upside. TJX is continuing to move higher up the 10 day EMA and 20 day EMA. These stocks are showing continued buying. Another building-related company is TREX. It has had a bit of trouble at the end of the week, but it came right back.

As long as these stocks keep performing as they are, we have that tiger by the tail. We will let him keep running. We do not see the breaks. We do not see the rounded tops yet. We do not see those clear flags that tell us to get out. We are not seeing that at all, but we are being careful. If we see a stock that looks like it will get in trouble, we take it out and shoot it before it shoots us or drags us down. We do not want to be like one of those guys caught on a line in "Deadliest Catch." They are out catching crabs, and when a guy goes overboard he is frozen like a popsicle and dead in two minutes. That is what happens when a stock starts dive on you and you do not cut the cord rapidly enough. It does not necessarily kill you (although it can), but it bleeds our gains away. Just do not do it. If the market keeps going up, we will other opportunities. We still have many great plays to continue higher for us.

We still have leaders that are running. We just do not have a lot of those in the rounded-bottom genre. There are a few out there. We will continue to put them on the report, but they are not showing up as fast as they used to. That is just a factor of how far the market has run right now. We have that tiger by the tail. We are letting him run, and we still have leaders running. They are making us money, and we will not say no to that.

THE ECONOMY

Gallup pegs the accurate unemployment rate.

Philly Fed and jobs: the connection.

CPI core is showing inflation.

TO VIEW THE ECONOMY OVERVIEW CLICK THE FOLLOWING LINK:
Economy Summary Video

THE MARKET

SENTIMENT INDICATORS

VIX: 17.78; -1.44
VXN: 19.76; -1.13
VXO: 16.33; -0.8

Put/Call Ratio (CBOE): 0.75; -0.13

Bulls versus Bears:

This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market, then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market does not have the cash to drive it higher.

Bulls: 52.1% versus 48.9%. After a dip from 50.0% bulls are picking up steam. At the highest level since April and May of 2011, the peak of the post-bear market high. Now the indices are back at that level and so are the bulls. All the more reason to watch this action at the prior highs. 35% is the threshold measuring bullish versus bearish action. Six weeks the bulls were below bears. A powerful sentiment signal but now dissipating. Highs from April and December (60% readings spanning December through early May 2011). The 5 year high is 62.0. The crossover level at 29% bulls from July 2010 is long gone. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 28.7% versus 29.8%. Still around the 30% level but starting to back off, matching the same level as three weeks back. A bit less fearful as the indices probe the prior highs. Not at a bearish level but they are growing more confident even as the market hits the prior highs and is not blasting on through. For more reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.

NASDAQ

Stats: -8.07 points (-0.27%) to close at 2951.78
Volume: 1.933B (+1.52%)

Up Volume: 836.27M (-783.73M)
Down Volume: 1.08B (+779.13M)

A/D and Hi/Lo: Advancers led 1.02 to 1
Previous Session: Advancers led 3.23 to 1

New Highs: 126 (+11)
New Lows: 12 (-1)

SP500/NYSE

Stats: +3.19 points (+0.23%) to close at 1361.23
NYSE Volume: 831M (+11.24%)

Up Volume: 1.99B (-1.46B)
Down Volume: 1.66B (+1.107B)

A/D and Hi/Lo: Advancers led 1.4 to 1
Previous Session: Advancers led 3.01 to 1

New Highs: 174 (+39)
New Lows: 2 (-5)

DJ30

Stats: +46.02 points (+0.36%) to close at 12950.1
Volume DJ30: 234M shares Friday versus 134M shares Thursday.

TUESDAY

There is a three-day weekend, so we will be starting things off on Tuesday. That could be interesting because Monday brings the interminable votes with respect to the Greece bailout. They have a few votes a week. Maybe they voted on the week before, but that was not binding so they have to vote again. And this other one was not really the right vote. You get the idea. We have that on Monday. They are planning to put the serious news out on Tuesday when the U.S. markets are open so they can react to that. That is what we hear. There will be something happening. In Europe there always is, right? No big deal there. The issues are if something happens in Iran or someplace similar. But no one can control that anyway.

It is a three-day weekend. What do you do? No one was selling, that is for sure. There was no real desire to sell. It was expiration, so that colors the tape a bit. It is hard to complain about the way things closed. Tuesday is a whole new story, and we will see what happens. The data does not come out until Wednesday. Existing Home Sales come out a half hour into trade. They are important. Then we have the usual Initial Claims on Thursday. On Friday we have the Michigan Sentiment final for February and New Home sales. Some important reports, although backing off.

What do we do at this point in the market? We continue doing what we have been doing all along in this rally. Of course we cannot do it to the same degree we were because we do not those nice, rounded bottom plays coming off of the double bottoms or the rounded bottoms or the cup with handles, or whatever they were forming down there. We had inverted head and shoulders, triangles. We saw a bit of everything. The common denominator was that they were putting in some form of a bottoming pattern, and they have broken higher and run for two to three months on top of that. We will stick with that because it has not changed.

We do not see dramatic changes in leadership, although we do see some that are having problems. The problem is the ranks of the upside quality plays are growing thinner. We are trying to stick to well-known names in great position if we can. There are other stocks in great position that have great patterns but are not as well known. That is not bad, but if the market starts to buck those are stocks that are jettisoned first. People do not really know them, so they just hang on to the household name stocks like AAPL. You do not want to get too heavy into lesser-known stocks just as you think the market might be moving toward some kind of top before a pullback.

That leaves you in a dilemma. You want to stick with quality, but you have to have quality names that give you the right kind of risk/reward. You do not want to put a dollar at risk for a dollar risk of loss. That is a losing proposition over the long run. You want to get those odds in you are favor. You want to have three points to make to the upside without having to break any resistance to one point to the downside to your support. There should be a support level there, and your stop loss can be right underneath that as a little firewall. As they said in Gettysburg, "This is damn good ground." That is good ground, and you want that big support (or resistance if you are playing downside) between your stock and where your stop is. That gives your play a chance to run even if it wants to test. It will hold at that support and bounce again.

You want to find those plays, but they are harder to find. They hate me here in the office because I keep saying "That will not work. That is not good enough. No. That will not be a play with enough quality." It is driving the guys crazy, but that is where you get the big bucks. That is why we keep finding those and it is what we will focus on. We will stick with what we are doing. We will hang onto that tiger's tail, letting our positions run, but we will be ruthless in protecting them as we have been.

We have a list of stocks that are on the bubble. Positions that are not maybe working as well as we wanted them to given the market rise. The patterns are not exactly what we want to see, but they are still working on it. But if they get in trouble then, boom, they are gone. The list is shorter because we have closed a lot of those positions. We have been fortunate that we can still close them with gains. We are not losing any money and actually putting more money in the bank as we do close them. We will continue to look that way, but we have to be flexible. We will be looking more downside as well. Keep your eyes open for rounded tops, head and shoulders setting up. Things that go bump in the night where you have highs and highs, but lower MACDs and the higher high. Just as we had higher MACD at the lower lows on the bottom. That is the circle of life. It goes up; it goes down. It is the symmetry of it all that is so compelling. We will have problems when we start seeing more tops like this, bottoms like this, or stocks that are still continuing to put those little pyramids one on top of another as they hold their trendline. We are not there yet, but we will probably see more of those as time goes on in this rally.

We will just take what the market gives along the way, adjusting accordingly. We will naturally move from a bullish, upside bent to a more bearish downside position as the market morphs into the pullback stage. I want to reiterate, as I did on Thursday, that I am not talking about a major selloff. I am talking about a pullback to test the October highs or the 50 day EMA, similar to what the market did in Q4 of 2010. It came back to test after matching (or just besting) the original rally high off of the bear market low.

I will see you on Tuesday. Have a great weekend!

Support and Resistance

NASDAQ: Closed at 2951.78
Resistance:
3026 from 10/2000 low
3042 from 5/2000 low

Support:
The 10 day EMA at 2919
2888 is the May 2011 peak and post-bear market high
2879 is the July 2011 peak
The 20 day EMA at 2875
2862 is the 2007 peak
2841 is the February 2011 peak
2825 is the 2007 closing peak.
2816 is the early April 2011 peak.
The 50 day EMA at 2778
2754 is the October 2011 high
2706 to 2705 is the April 2011 low and the February 2011 and consolidation low (bottom of the trading range) 2723 to 2705 is the range of support at the bottom of the January to May trading range
2686 is the January 2011 closing low
2676 is the January 2010 low and the December 2011 peak
The 200 day SMA at 2665
2645-2650ish from December 2010 consolidation
2643 is the September 2011 high
2612 is the late August 2011 peak
2603 is the March 2011 intraday low (post-Japan low)
2599 is the June 2011 low and NASDAQ
2593 is the November intraday high
2580 is the November 2010 closing high
2572 is the November 2-11 gap down point
2555 is the mid-August 2011 peak
2546 is the early September 2011 gap down point
2535 is the November island reversal gap point
2532 is the early August gap down point
2469 is the November 2010 low
2441 is the November 2011 low
2331 from October 2010 low and the August 2011 intraday low
2305 from the August 2010 peak (summertime base)
2139 is the May and June 2010 low

S&P 500: Closed at 1361.23
Resistance:
1364 is the March 2007 low
1370 is the August 2007 low
1371 is the recent May 2011 peak

Support:
1357 is the July 2011 peak
1344 is the February 2011 peak
1340 is the early April 2011 peak
The 20 day EMA at 1335
1332 is the early March 2011 peak
1325-27 is the March 2008 closing low and the May 2006 peak.
1318.51 is the May low
1313 from the August 2008 interim peak
The 50 day EMA at 1302
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
1258 is June 2011 intraday low
The 200 day SMA at 1257
1255 is the late December 2010 consolidation range
1249 is the March 2011 low (post-Japan)
1235 is the mid-December 2010 consolidation low
1231 is the late August 2011 peak
1227 is the November 2010 peak
1220 is the April 2010 peak
1209 is the mid-August 2011 high
1196 is the November 2010 consolidation peak
1178-1180 is the October 2010/November 2010 consolidation low
1158 is the November 2011 low
1131 - 1127 from August 2010 base peak.
1119 is the early August closing low
1109 is the mid-September 2010 gap up point
1101 is the August 2011 low
1075 is the October 2011 intraday low
1099 from the mid-July interim peak

Dow: Closed at 12,949.87
Resistance:
13,058 from the May 2008 peak on that bounce in the selling

Support:
12,876 is the May high
The 20 day EMA at 12,771
12,754 is the July intraday peak
The 50 day EMA at 12,508
12,391 is the February 2011 peak
12,284 is the October 2011 peak
12,258 is the December 2011 peak
12,110 from the March 2007 closing low
12,094 is the April 2011 low
The 200 day SMA at 11,993
The June low at 11,897 (closing)
11,893 from March 2008 closing low
11,867 from the August 2009 high and peak on that bounce in the selling.
11,734 from 11-98 peak
11,717 is the late August 2011 peak
The August low at 11,702
11,555 is the March low
11,452 is the November 2010 peak
11,178 from November 2010
10,978 is the bottom of the November 2010 consolidation
10,750 from September 2010
10,720 is the August closing low
10,705-710 from January 2010 peak
10,694-700 from August 2010 peak
9938 is the August 2010 low

Economic Calendar

February 14 - Tuesday
- Retail Sales, January (8:30): 0.4% actual versus 0.8% expected, 0.0% prior (revised from 0.1%)
- Retail Sales ex-auto, January (8:30): 0.7% actual versus 0.5% expected, -0.5% prior (revised from -0.2%). Largest rise since 2/11.
- Export Prices ex-ag., January (8:30): 0.0% actual versus -0.2% prior
- Import Prices ex-oil, January (8:30): 0.1% actual versus 0.2% prior, +7.1% yr/yr
- Business Inventories, December (10:00): 0.4% actual versus 0.5% expected, 0.3% prior

February 15 - Wednesday
- MBA Mortgage Index, 02/11 (7:00): -1.0% actual versus 7.5% prior
- Empire Manufacturing, February (8:30): 19.5 actual versus 14.0 expected, 13.5 prior
- Net Long-Term TIC Fl, December (9:00): $17.9B actual versus $61.3B prior (revised from $59.8B)
- Industrial Production, January (9:15): 0.0% actual versus 0.6% expected, 1.0% prior (revised from 0.4%)
- Capacity Utilization, January (9:15): 78.5% actual versus 78.6% expected, 78.6% prior (revised from 78.1%)
- NAHB Housing Market Index, February (10:00): 29 actual versus 26 expected, 25 prior
- Crude Inventories, 02/11 (10:30): -0.171M actual versus 0.304M prior
- FOMC Minutes, 1/25 (14:00)

February 16 - Thursday
- Initial Claims, 02/11 (8:30): 348K actual versus 365K expected, 361K prior (revised from 358K)
- Continuing Claims, 02/04 (8:30): 3426K actual versus 3505K expected, 3526K prior (revised from 3515K)
- Housing Starts, January (8:30): 699K actual versus 671K expected, 689K prior (revised from 657K)
- Building Permits, January (8:30): 676K actual versus 675K expected, 671K prior (revised from 679K)
- PPI, January (8:30): 0.1% actual versus 0.3% expected, -0.1% prior
- Core PPI, January (8:30): 0.4% actual versus 0.2% expected, 0.3% prior
- Philadelphia Fed, February (10:00): 10.2 actual versus 10.0 expected, 7.3 prior

February 17 - Friday
- CPI, January (8:30): 0.2% actual versus 0.3% expected, 0.0% prior
- Core CPI, January (8:30): 0.2% actual versus 0.1% expected, 0.1% prior
- Leading Indicators, January (10:00): 0.4% actual versus 0.5% expected, 0.5% prior (revised from 0.4%)

February 22 - Wednesday
- MBA Mortgage Index, 02/18 (7:00): -1.0% prior
- Existing Home Sales, January (10:00): 4.63M expected, 4.61M prior

February 23 - Thursday
- Initial Claims, 02/18 (8:30): 355K expected, 348K prior
- Continuing Claims, 02/11 (8:30): 3450K expected, 3426K prior
- FHFA Housing Price Index, December (10:00): 1.0% prior
- Crude Inventories, 02/18 (11:00): -0.171M prior

February 24 - Friday
- Michigan Sentiment - Final, February (9:55): 73.0 expected, 72.5 prior
- New Home Sales, January (10:00): 315K expected, 307K prior

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From Briefing.com: Weekly Recap - Week ending 24-Feb-12A modest advance by stocks put the S&P 500 at its best level in about 10 months, the Dow at its highest level in nearly four years, and the Nasdaq at its highest point in more than a decade, but gains were checked by some afternoon selling.

Consistent with recent sessions, early trade was relatively choppy as many market participants showed skepticism about the stock market's ability to keep climbing without consolidative activity following its climb in recent weeks -- the S&P 500 scored a 0.3% gain this week, booking its seventh weekly advance in eight.

Early headlines had little, if any, influence over the direction of broad market trade. As such, better-than-expected earnings from AIG (AIG 28.41, +0.42), Gap (GPS 22.57, -0.95), and JC Penney (JCP 41.72, -0.21) saw mixed reactions.

In a similar vein, there was hardly a reaction to economic data that featured an improvement in the Consumer Sentiment Survey for February from the University of Michigan to 75.3 from the 72.5 that had been posted in the preliminary reading. Economists polled by Briefing.com had expected, on average, that the Survey would improve to just 73.0. Released just minutes later, new home sales during January were said to have hit an annual pace of 321,000 units, which is down from the upwardly revised rate of 324,000 units set in the prior month, but better than the rate of 315,000 units that had been broadly expected.

Despite listlessness in the early going, stocks eventually worked their way higher. The move initially encountered resistance, but stocks were able to overcome it in a second attempt. That allowed the broad market to add incrementally to its multi-month intraday high. Although tech stocks traded with relative strength and settled with a 0.6% gain, the sector never really displayed the leadership necessary to drive a broad market rally.

Strength in the tech sector was partly offset by weakness in the highly influential Financial sector, which lagged for virtually the entire session and settled with a 0.4% loss.

As stocks appeared unable to extend their climb some participants opted to take some profits, dropping the S&P 500 to the flat line before it could find support.

Share volume this session was paltry, reflecting apathy among investors. The final tally on the NYSE was barely 640 million shares. Although volume trends have been low for several months, some question whether or not stocks can continue to climb if there isn't conviction among market participants.

Oil prices extended their climb again -- the energy component closed at a new multi-month high of $109.76 per barrel for a 1.7% gain. That move helped drive the CRB Index to a 0.8% gain for the day and 2.7% gain for the week. That stands as the CRB's best one-week performance of the past two months.

In the backdrop, the dollar dropped to a new two-month low against a basket of major foreign currencies. It was especially weak against the euro, which was quoted at $1.345 for a gain of about 0.6% by session's end.

Advancing Sectors: Tech +0.6%, Utilities +0.5%, Health Care +0.4%, Energy +0.4%, Consumer Staples +0.3% Unchanged: Materials, Industrials Declining Sectors: Telecom -0.1%, Consumer Discretionary -0.1%, Financials -0.4%

..Nasdaq 100 +0.4%. ..S&P Midcap 400 +0.0%. ..Russell 2000 -0.3%.

 
 Index	  Started Week  Ended Week  Change  % Change  YTD % 
 DJIA	    12949.87    12982.95    33.08      0.3    6.3 
 Nasdaq	     2951.78     2963.75    11.97      0.4   13.8 
 S&P 500	     1361.23     1365.74     4.51      0.3    8.6 
 Russell 2000  828.68	  826.92    -1.76     -0.2   11.6

Semiconductors N.V. (NXPI), and FeliCa Networks announced that their collaboration will ensure interoperability between NXP's family of NFC radio controller solutions and the Japan infrastructure compliant with FeliCa.

Marvell (MRVL $16.17 +0.12) reported fourth quarter earnings of $0.21 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.18, while revenues fell 17.5% year/year to $743 million versus the $740.2 mln consensus. Non-GAAP gross margin for the fourth quarter of fiscal 2012 was 54.5 percent, compared to 56.8 percent for the third quarter of fiscal 2012 and 59.4 percent for the fourth quarter of fiscal 2011. Non-GAAP gross margin for fiscal year 2012 was 57 percent compared to 59.7 percent for fiscal year 2011.

Cirrus Logic (CRUS $22.81 +0.58) was upgraded to Outperform from Perform at Oppenheimer and the firm set a target price at $28 saying the company remains a top back-door play on the growth and success of Apple. Since winning an initial audio codec socket in the classic iPod, CRUS now effectively owns AAPL's audio codec business and they do not expect to see any lost share this year.
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InvestmentHouse Weekend Market Summary:

http://www.investmenthouse.com/weekendmarketsummary.htm

- Stocks rise after a 3-day pullback, ending 'losing streak' and keeping the same action in place, just don't generate any pre-weekend excitement.
- Oil, gold jump ahead of a weekend as weekends now have to factor in rising geopolitical issues.
- There they go again: European bond yields screaming back up.
- KB Homes demand plunges, New Home Sales drop versus the expected rise, and large revisions to prior data are discouraging.
- Lots of data next week but watch for earnings warnings thanks to higher prices, tougher comps (remember FedEx).
- Market character has not changed so we look to play more emerging leaders while tending current leaders that may be losing the mojo.

No change at all as market shakes off negatives to rally back from a weak open.

The market did what you would expect it to do in an uptrend after a three-day pullback: It bounced on Friday. It ended the "losing streak" that I heard talked about before the open. Yes, the market was in a three day, horrid losing streak where it had rallied and retraced roughly a third of the move off of that last low and was holding over support. That left it in position to what? End its losing streak, I guess. It was preposterous. Listening to the financial stations you will get that kind of nonsense. It is totally out of perspective. They say "Today oil is surging" or "Today oil is plunging." It all depends on whether it is holding the trend or breaking the trend. You get the idea.

Stocks bounced as we would expect them to do after a three-day pullback given that they are still in this uptrend. Everything was normal. Nothing changed as of Friday. Of course, the bounce was rather anemic. It did not do a lot to change the situation, particularly on SP600 as it is still below the prior bear market high. It has yet to make a breakout that will stick above that prior peak. It is in position to move, making a higher low; but it has done that before as well. Maybe MACD will pick up the pace and it will make the break. Again, on Friday it did not do anything to change the character of the market. That in itself did not answer a lot of questions.

Looking at the action on the day, the futures were all over the map. They were down but moving higher up toward the flatline before the open. But they sold off sharply when the news came out that New Home Sales for February were worse than expected. There were some pretty ugly revisions. They did not make the headlines, but I think the market saw some of that. It did not last for long, however. Look at that reversal doji. A big reach lower, a reversal, and volume picked up on the move. Voila. The bids came back in on the dip, investors rallied stocks once more on a pullback. This is very instructive. You see the dip, the reversal, the rally. Note how it made it up to these prior levels, stalled a bit, and then burst through.

Often it will not come up and touch it; they will stall and consolidate before they get there and then explode through there. That is exactly what happened. It came back to test sitting right on top of that early session double top. It does not matter if it was premarket or not because that is where the trade was. It formed those pyramids higher for the rest of the session, riding up the 15 minute moving average. A nice spurt at the end of the day did not hurt at all.

It was not a grand day. There were relatively modest gains.

SP500, +0.3%; NASDAQ, +0.15%; Dow, +0.27%; SP600, +0.98%; SOX, +0.26%

NASDAQ 100 was down, meaning the large cap tech stocks were not performing that well. AAPL had an interesting day. The BATS exchange IPO was out. It was trading its own stock on its own exchange, and it was trading for 0. Not the day they expected. There were some other mixups as well. On that exchange, on the day of your IPO, AAPL sold at $452. That triggered the circuit breakers and the trades were cancelled, but it was a travesty for the IPO and for the company. Before the day was over, they stopped trading and just pulled the IPO. Those poor son of a guns. But it was not a good day. The BATS exchange was referred to as the "bats-it" exchange after that, if you get my drift. It was comical in a sad way; you had to feel sorry for them.

The market moved to the upside. Nothing grand, but after three days the market did rise again. It was not any kind of glory, though, just a bounce off of near support. Given it was a weekend, we were not too excited about the move. If it had done something extra special, we may have been engaged, but there was no point with SP600 still below its prior peaks. With so much intrigue potential over the weekend with the Iran/Israel situation, it is not worth moving into those plays. Indeed, there are plenty of good setups for next week, and we can participate in those if the market wants to continue the rally. Perhaps we would see SP600 break out and join SP500, the Dow, and NASDAQ above its prior bear market highs.

OTHER MARKETS

Dollar. 1.3258 versus 1.3181 euro. The dollar sold off. That was interesting given some geopolitical intrigue. Perhaps it was the economic data that was somewhat disappointing. New Home Sales were not that great. On the other hand, there were problems in Spain and Greece with their bond yields surging back to the upside. For whatever reason the dollar sold off. It is still holding up right at the 50 day EMA. It still has to prove itself. Looking back, it is just below some important levels but is holding some interim peaks.

Bonds. 2.23% versus 2.29% 10 year U.S. Treasury. Bonds had a good day. A good upside week for bonds, recovering from the gutting they took the week before. Now they are up in this gap zone. We will see if they can continue to rally and move back above this key level that marked the bottom of the triangle. It was a week that saw some interesting moves in bonds as money continued to run their way. Yesterday we saw the 10 year TIPS trade at a negative yield. Pretty crazy, but that is the way things go when you have problems all over the world.

Gold. 1,662.50, +20.00. Gold responded favorably to the issues in the Middle East. There was a little fear trade going. It is not a recovery by any means. Gold has been beaten about the head and shoulders, but it is still fighting back and holding where it needs to hold.

Oil. 106.86, +1.52. Oil also enjoyed the old pre-weekend Iran/Israel issues. Oil rose and held the lateral pennant after the breakout. Oil is going to hold that until something happens in Iran. Either there is no issue or there is a break and oil surges.

TECHNICAL SUMMARY

VIX. VIX is down at lows. It is below the 2011 low, so surely that must mean that the market will sell off. It can mean that, but it does not have to mean that. It is still above lows hit in 2006 and 2007 before the market started to sell off. People associate that selloff with the mere fact that volatility is low. That is incorrect. Just because volatility is low does not suggest a selloff. A long time ago the market broke free of the notion that volatility was normal between 20-30. That is no longer the case. Volatility and how it impacts the market depends on whether a relationship is set up between the market moves, as it does from time to time (but those are short term moves). Longer term, volatility rises ahead of a selloff even as stocks rise. That is the key for the major moves that people look at volatility to suggest. Traders always talk about the correlation. Sometimes it sets up short term, but it is always present longer term, i.e., stocks rise and volatility rises as we saw in 2007. That is a signal that the market is ready to sell off big.

That is exactly what happened in 1999 into early 2000. Volatility started to run higher at the turn of the year in 2000 as the stock market ran higher. That was a telltale sign that the market was topping. We do not have that right how. Volatility is not running higher as the stock market is running higher. The mere fact that it is low does not mean that it will sell off. We have had volatility much lower for much longer periods of time, and these were prosperous times for the market. I hope I have made that point clear. I have to make it from time to time because I hear so many people on the financial stations misrepresenting what volatility means.

Volume. NASDAQ, -5%, 1.41B; NYSE, -6%, 662M. The day was nothing special. We had an upside day where volume fell. On Thursday we had a downside day that saw volume rise on the NYSE. We had more selling volume than we have had upside volume. That is not a good thing, but (and this is a big but), it is not hugely big volume either way. I know volumes overall are down a good 25% from years gone by, but my point is the relative volume from day to day is low and the change in the relative volume is low. It is not a situation where you are seeing big spikes of volume one way or the other. There are days where you get an outsized volume day such as February 29, or again on the selloff day of March 6. Volume cracked above average. Then we got an upside volume day on March 13, again on the March 14, and one more on March 15. They were upside volume, and then we had expiration; throw that one out the window.

Then on the downside, the volume was not bumping as high as it was to the upside on this run. It was not nearly as high as it was on the earlier time. We are not getting that distribution that would suggest the market is emptying out the cupboard, so to speak. What do I mean by that? If there is a lot of downside volume in other words on days that stocks sell, volume is high and it is low as the market rebounds, then you are taking the goods off the shelves on the down days. You are not restocking them on the up days as much as you are taking off the shelves on the down days. If you keep that up for enough days (usually a week or so on that action), then all of the goods are off the shelves, and it is time to restock. To do that the market has to go down to the store, restock, and then move back to the upside. That is my simplistic grocery store analogy, but I think it is clear. We are not getting that here. The market is mostly rising, lately on higher volume, than it has been declining. That makes this a perfect 1-2-3 test with a further reach down on Friday and a reversal, as you can see on the SP500.

Breadth. NASDAQ, 2:1; NYSE 2.5:1. The NYSE was pushed buy those small caps that were performing quite nicely.

Bulls versus bears. I am borrowing this from Investor's Business Daily. A big jump in bulls up to 48.4 from 43.6. At the same time, bears fell to 23.6 versus the 26.6 shown last week. What does this mean? Investors were turning more bearish with bulls falling and bears rising even as the market rose. The breaks to the new highs by SP500 joining the Dow and the NASDAQ broke sentiment higher as well. A lot of investment advisors took this as a positive and are back on the "everything is roses" parade. This is not an extreme level, but it is approaching the highs that were hit in past peaks. In April of 2011 as the market peaked out, you were looking at highs near 60 as close as February. A good selloff took some of the froth out of the investment advisors and sentiment, and it put it on a better track to move higher. This is another indication, similar to VIX but somewhat different, that the market can continue higher. In other words, this will not prevent the market from moving higher from here just as volatility at the low level it is right now will not prevent the market from moving higher either.

THE CHARTS

SP500. There was the breakout by SP500 a couple of weeks back, the additional rally, and then this week's pullback. A nice Tuesday, Wednesday, Thursday pullback to support. The Friday tap a little lower, and then a reversal to the upside. Volume did not scream higher. Obviously it was lower, so maybe a little distribution Thursday, maybe no accumulation Friday. But that is the way it has been on this rally. You are playing patterns more than anything else. Volumes count when volumes say something, but they are not saying much. Overall, volumes are telling you this rally cannot last, and ultimately we will have an ugly ending. Overall, that is what will likely happen. It is going on happen someday, but the question is when. Right now there is nothing suggesting that it will turn. Leaders are still hanging in there, and other leaders are trying to emerge to take their spot in case they do falter.

DJ30. DJ30 had its pullback, but it was not a 1-2-3. It was kind of a 4 out of 5 to the downside, but it held the 20 day EMA and the prior peak. It even tapped at it on the Friday low and Thursday as well. Then it reversed for a gain. Not a barn burner, not setting any records, but looking decent. MACD is worrisome, but it is shaping up. It did not do anything to change the trend of modest pullbacks and buys on the dip.

DJ20. We got that flop back to the 50 day EMA on Thursday, but an undercut and a rebound. Maybe the transports will try to drag their sorry rears back to the upside. This even with FDX saying they have issues with their business. People are going to trucks versus airfreight because it is so expensive. In any event, the transports can put in a higher low and break to the upside. Maybe they can take out this prior peak that they failed to do last time. That would be the transports, the small caps, and the semiconductors failing to take out those prior highs, but at least they are keeping themselves in the game and giving themselves shots to do it by making higher lows.

NASDAQ. NASDAQ was a leader all week and indeed on this rally. It faltered and had somewhat of a pullback, but it was not much of one. It still showed great relative strength even as it tested. Very strong, holding above the 10 day EMA, tapping below it on Friday but recovering as well. I guess it got a bit of an AAPL dip there, even though that trade was canceled. Very sold. 1-2-3 pullback and not even that because NASDAQ held up very well on the week.

SP600. The small caps remain the issue, and I am a broken record to this. They are making a higher low just as the transports are. They are trying to hold, at a logical level at that April 2011 peak. They want to mount another bounce off of that level. They are not dead yet (the old Monty Python and the Holy Grail mantra) and it is hanging in there. Maybe they can make the move. Why? They are so important because they are an economic harbinger, blah, blah, blah. You get the point. It will be one to watch again this week.

SOX. We should watch the semiconductors as well. They look pretty good. They did not pull back much, very much like NASDAQ. A simple, easy, shallow slide to the 10 day EMA. Maybe this higher low sets up the break over that February peak. Something it has not been able to do.

Where does that leave us with the indices? Not in bad shape. Same position. Showing the overall upward bias even with the small caps bumping up against that high and not able to make the break yet. They have not made the break, but here is an important point: They have not broken down either. They have had all kinds of chance to do it, but they have not. That speaks fairly loudly if you ask me.

LEADERSHIP

Retail. RL had a tough day, and it had a tough Thursday as well. It broke lower on Friday but managed to rebound. It managed to hold, reverse, and hold above the lows in its range after the breakaway gap. That fact kept us in the play. We will see if it can continue to move to the upside. NKE had a tough day after earnings. It did not perform well, but it held the 50 day EMA and bounced. Now we see if it can recover and move to the upside. COH looks like it is having a little issue as well. It has done this before and bounced right back. Note how on Friday it recovered nicely on volume as the buyers came back in.

Various apparel makers are having a bit of an issue, but not rolling over. DRI has been reporting some less-than-stellar earnings of late. It saw better results at its Olive Garden. Still lagging and bounced off of the 50 day EMA. Maybe there will be something there that will send it to the upside. PNRA was moving laterally in its trend last week, but not being spectacular. We are noticing that on a lot of these plays. They maybe moving higher, but not spectacularly so. Then you throw in one like TJX, and it continues to perform well with a great move over the past month. But it, too, may flatten out. It has not yet, but it may. Okay, we will not worry about that. As long as it runs, we are more than happy. HLF is one that has run. It has come back to test. Normal test thus far, and it looks fine to continue. Will it? WFM has broken below its trendline. It is trying to move up. It will be an important week for it as well. Some leaders may be coming under fire, and that is something we have seen in many of the different sectors.

Industrial. CAT bounced on Friday. Lower volume on the bounce. It may fill that gap and give us the downside play we were looking for initially.

Financial. Banks and financials overall had a pretty good week even though they were down to end the week. WFC closed at its 10 day EMA, hardly in any danger. MS actually bounced Friday. The regional banks are holding up. HSBC and HBAB, this is a nice pullback to test the breakout. That could be an interesting play. It has a lot of resistance overhead, but it is working its way back to the upside. The financials still look good, and if they find support, the market will perform well.

Technology. VELT is a small software company with a nice pattern. GLUU had a 21% move today. Not bad. Some of the small techs are actually able to produce some solid moves. ATHN is trying to make the break to the upside. CHKP is breaking higher. If it continues to move, it looks pretty good to pick up.

There are a lot of stocks in patterns that are not extended. That is what I have been saying for the last two weeks. They will lead this market. If they do continue to move higher and move up to leadership status, the market will look good working its way forward.

THE ECONOMY

That was a short respite: European bond yields jump.

Is the Financial Facility losing its efficacy in the European recession?

The new 2023 (10 year) Greek bonds, just two weeks old, are experiencing a rough childhood. Prices plunged 17.5% and sent yields over 20%. Ten year yields over 20%. Two bailouts in the bank and bonds are still unable to hold any value. Bailout three is apparently coming but will Germany agree to part with more money without something in return, say the Greek islands themselves?

Spanish bonds are starting to get edgy as well. They were starting to behave after the financial facility was placed, but now Spanish 10 year bonds are yielding over 5.5%, the highest in 11 months.

It appears as if the carefully planned EU recovery is not holding to plan. The problem is a recession is the last thing the Continent needs as the economic activity needed to bring the Greek and other debt to GDP ratios in line according to the bailout cannot occur without robust growth. But the austerity is preventing growth as well. Double edged sword and frankly things do not look good for the EU.

New Home Sales sports worrisome numbers and KBH misses big on sales.

New Home Sales, February (10:00): 313K actual versus 323K expected, 318K prior (revised from 321K)

The numbers look relatively innocuous with a 1.6% drop. A 1.3% gain was expected, however.

Revisions: 318K from 321K does not look bad either. BUT . . . that is down from 336K in December, -5.5% month/month. That is the largest decline in over a year.

Inventories: Total units for sale remained at 150K for the second month but with the lower sales numbers that pushed inventories to 5.8 months to deplete.

This is an ALL-TIME low (since records started in 1963) in new homes available for sale. All time. I searched Bloomberg, Briefing.com, and other financial sites. CNBC actually noted the 150K was a record low. Bloomberg made no mention of the 150K number, record low or no. Is that good news or bad? There need to be fewer homes for sale to ultimately firm prices and turn the market. Consider, however, the following.

KB Homes reported earnings and also that orders for new homes dropped 9% in the quarter. Not great, but then figure that +20% was expected. Thus the above 150K figure is not because of a lot of sales, but also drops in new home construction. Combined with the distressed sales of existing homes that still make up over 30% of the market and you get the lowest number of new homes on the market since the records were kept.

Chart anticipating a drop? Double top, lower MACD on a nominal, low volume new high.

TO VIEW THE ECONOMY OVERVIEW CLICK THE FOLLOWING LINK:
Economy Summary Video

THE MARKET

SENTIMENT INDICATORS

VIX: 14.82; -0.75
VXN: 16.57; -0.26
VXO: 14.41; -0.68

Put/Call Ratio (CBOE): 1.05; -0.06

This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market, then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market does not have the cash to drive it higher.

Bulls: 48.4% versus 43.6%. Bouncing right back up after three week decline. 47.9% before that and 51% even before. Bullish sentiment is returning. Again, it is not excessively bullish. They are off the 55+ level even near the highs as investors get a bit pensive. Bigger picture that is good for the upside. That was the highest level since April and May of 2011, the peak of the post-bear market high. Now the indices are back at that level and so are the bulls. All the more reason to watch this action at the prior highs. 35% is the threshold measuring bullish versus bearish action. Six weeks the bulls were below bears. A powerful sentiment signal but now dissipating. Highs from April and December (60% readings spanning December through early May 2011). The 5 year high is 62.0. The crossover level at 29% bulls from July 2010 is long gone. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 23.6% versus 26.6%. After a three week stint near 25 to 26% bears are falling. As with bulls, not excessive either way. Solidly lower after spending weeks at 30%ish. Not at a bearish level but they are growing more confident even as the market hits the prior highs and is not blasting on through. For more reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.

NASDAQ

Stats: +4.6 points (+0.15%) to close at 3067.92
Volume: 1.414B (-5.29%)

Up Volume: 695.89M (+232.17M)
Down Volume: 711.23M (-318.77M)

A/D and Hi/Lo: Advancers led 2 to 1
Previous Session: Decliners led 2.27 to 1

New Highs: 72 (+16)
New Lows: 20 (-1)

SP500/NYSE

Stats: +4.33 points (+0.31%) to close at 1397.11
NYSE Volume: 662M (-6.1%)

Up Volume: 2.39B (+1.929B)
Down Volume: 956.62M (-2.283B)

A/D and Hi/Lo: Advancers led 2.47 to 1
Previous Session: Decliners led 2.85 to 1

New Highs: 75 (+23)
New Lows: 11 (-8)

DJ30

Stats: +34.59 points (+0.27%) to close at 13080.73
Volume DJ30: 130M shares Friday versus 122M shares Thursday.

MONDAY

Next week we have a full slate of economic data from Monday through Friday. We start with Pending Home Sales on Monday. More housing data. It played a big role this week. Case/Shiller, Consumer Confidence, Durable Orders. They we come back with the third iteration of GDP. Initial Claims on Thursday with that. Then Friday Personal Income and Spending, Chicago PMI, and Michigan Sentiment. This will be the final for March. We got a load of data coming out. We will be able to ride the rails with that, not to mention the geopolitical data and what is going on with Europe with the bond yields starting to spike again.

That is all important. It will be very important, and the political campaign will be important. But we are also coming into earnings season. That will be important because we are anticipating that earnings will start to abate. The comparisons are tougher, and the growth has been less. Despite all of this talk about expanding economic recovery, we will have lower earnings. We saw NKE's gross margins falling. Why? Costs. Costs will play a role across the board. There has been a lot of good cost management to this point, but companies have done about all they can do to cut the fat. They have not hired anybody or have not been higher much. They have been holding on to their money because they anticipated higher costs ahead. Higher costs for the raw materials or from regulations such as Obamacare or EPA mandates about what they have to do with respect to their energy consumption. The Energy Department is putting coal companies out of business and raising the energy cost to heat and cool buildings. And then the farmers with the Labor Department passed a bunch of regulations about what kids can do on the farm. A lot of kids now cannot even ride the golf cart down to take care of the animals if they are not 16. It is insane, but that is what we have.

There are a lot of extra costs built in. These regulations are not free. Those costs go up to companies, and they will pass the cost onto us sooner than later. It will be one crescendo. We have energy cost going up, we have the cost of regulations going up, and looks like we will have taxes going up. Do you wonder why companies are hoarding all that money? They know taxes will go up. They have this money that they made and paid tax on, so will they spend it? They will be very careful with what they do with it.

We think earnings warnings could start up this coming week. We could see some problems. Some of the stocks that are already kind of wobbly could be an issue. We need to be diligent with our positions. If they break down (and that is what happens, leaders break down and recycle through the market), we need to go ahead and book the rest of the gains on them and put our money in the stocks that are the up-and-comers I have been talking about. They are out there, and they have some interesting patterns. ABCD patterns. Here is SZYM with a nice flag pattern. There are many different solid patterns out there on the up-and-comers that we can take advantage of.

We will focus on those still as our next battery of upside. Nothing has really changed in the market to alter the character of the modest rallies followed by modest pullbacks, followed by modest rallies. We will keep an eye on the SP600, of course, because it is something of an issue not being able to make the break. That may just be a formality as it makes a higher low. If the market wants to rally next week, odds are it will pull SP600 with it.

What do we do? We want to be at the table to eat when hedge funds and money market funds put their money to work in these other stocks. You can see them developing their patterns. We made money on many of the stocks when they came off of the lows and made us some great gains as they broke higher out of those nice, rounded bottoms. The ones that are doing it now, we want to do the same thing and make great gains on them. All the while protecting what we have made on those that have rallied but may be showing a bit of wear-and-tear.

Have a great weekend! I will see you on Monday for the start of a busy week.

Support and Resistance

NASDAQ: Closed at 3067.92
Resistance:
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
3042 from 5/2000 low
3026 from 10/2000 low
The 20 day EMA at 3015
3000 is the February 2012 post-bear market high
The 50 day EMA at 2922
2910 is the recent March 2012 low
2900 is the March 2012 low
2888 is the May 2011 peak and PRIOR post-bear market high
2879 is the July 2011 peak
2862 is the 2007 peak
2841 is the February 2011 peak
2816 is the early April 2011 peak.
2754 is the October 2011 high
2706 to 2705 is the April 2011 low and the February 2011 and consolidation low (bottom of the trading range) 2723 to 2705 is the range of support at the bottom of the January to May trading range
The 200 day SMA at 2691
2686 is the January 2011 closing low
2676 is the January 2010 low and the December 2011 peak
2645-2650ish from December 2010 consolidation
2643 is the September 2011 high
2612 is the late August 2011 peak
2603 is the March 2011 intraday low (post-Japan low)
2599 is the June 2011 low and NASDAQ
2593 is the November intraday high
2580 is the November 2010 closing high
2555 is the mid-August 2011 peak
2535 is the November island reversal gap point
2441 is the November 2011 low

S&P 500: Closed at 1397.11

Resistance:
1425 from May 2008 closing highs
1433 from August 2007 closing lows
1440 from November 2007 closing lows

Support:
The 20 day EMA at 1383
1378 is the February 2012 peak
1371 is the May 2011 peak, the post-bear market high
1357 is the July 2011 peak
The 50 day EMA at 1352
1344 is the February 2011 peak
1340 is the early April 2011 peak
1332 is the early March 2011 peak
1318.51 is the May 2011 low
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
The 200 day SMA at 1264
1258 is June 2011 intraday low
1255 is the late December 2010 consolidation range
1249 is the March 2011 low (post-Japan)
1235 is the mid-December 2010 consolidation low
1231 is the late August 2011 peak
1227 is the November 2010 peak
1220 is the April 2010 peak
1209 is the mid-August 2011 high
1196 is the November 2010 consolidation peak
1178-1180 is the October 2010/November 2010 consolidation low
1158 is the November 2011 low
1131 - 1127 from August 2010 base peak.
1119 is the early August closing low
1109 is the mid-September 2010 gap up point
1101 is the August 2011 low
1099 from the mid-July interim peak
1075 is the October 2011 intraday low

Dow: Closed at 13,080.73
Resistance:
13,058 from the May 2008 peak on that bounce in the selling
13,668 from 12-2007 peak
13,692 from 6-2007 peak
14,022 from 7-07 peak

Support:
13,056 is the February 2012 high
12,876 is the May high
The 50 day EMA at 12,841
12,754 is the July intraday peak
12,391 is the February 2011 peak
12,284 is the October 2011 peak
12,258 is the December 2011 peak
12,110 from the March 2007 closing low
12,094 is the April 2011 low
The 200 day SMA at 12,063
The June low at 11,897 (closing)
11,734 from 11-98 peak
11,717 is the late August 2011 peak
The August low at 11,702
11,555 is the March low
11,452 is the November 2010 peak
11,178 from November 2010
10,978 is the bottom of the November 2010 consolidation
10,750 from September 2010
10,720 is the August closing low
10,705-710 from January 2010 peak
10,694-700 from August 2010 peak

Economic Calendar

March 19 - Monday
- NAHB Housing Market , March (10:00): 28 actual versus 31 expected, 28 prior (revised from 29)

March 20 - Tuesday
- Housing Starts, February (8:30): 698K actual versus 705K expected, 706K prior (revised from 699K)
- Building Permits, February (8:30): 717K actual versus 695K expected, 682K prior (revised from 676K)

March 21 - Wednesday
- MBA Mortgage Index, 03/17 (7:00): -7.4% actual versus -2.4% prior
- Existing Home Sales, February (10:00): 4.59M actual versus 4.60M expected, 4.63M prior (revised from 4.57M)
- Crude Inventories, 03/17 (10:30): -1.160M actual versus 1.750M prior

March 22 - Thursday
- Initial Claims, 03/17 (8:30): 348K actual versus 355K expected, 353K prior (revised from 351K)
- Continuing Claims, 03/10 (8:30): 3352K actual versus 3363K expected, 3361K prior (revised from 3343K)
- FHFA Housing Price I, January (10:00): 0.0% actual versus 0.1% prior (revised from 0.7%)
- Leading Indicators, February (10:00): 0.7% actual versus 0.6% expected, 0.2% prior (revised from 0.4%)

March 23 - Friday
- New Home Sales, February (10:00): 313K actual versus 323K expected, 318K prior (revised from 321K)

March 26 - Monday
- Pending Home Sales, February (10:00): 0.5% expected, 2.0% prior

March 27 - Tuesday
- Case-Shiller 20-city, January (9:00): -3.8% expected, -4.0% prior
- Consumer Confidence, March (10:00): 70.0 expected, 70.8 prior

March 28 - Wednesday
- MBA Mortgage Index, 03/24 (7:00): -7.4% prior
- Durable Orders, February (8:30): 2.5% expected, -3.7% prior (revised from -4.0%)
- Durable Orders -ex Transports, February (8:30): 1.0% expected, -3.0% prior (revised from -3.2%)
- Crude Inventories, 03/24 (10:30): -1.160M prior

March 29 - Thursday
- Initial Claims, 03/24 (8:30): 350K expected, 348K prior
- Continuing Claims, 03/17 (8:30): 3385K expected, 3352K prior
- GDP - Third Estimate, Q4 (8:30): 3.0% expected, 3.0% prior
- GDP Deflator - Third, Q4 (8:30): 0.9% expected, 0.9% prior

March 30 - Friday
- Personal Income, February (8:30): 0.4% expected, 0.3% prior
- Personal Spending, February (8:30): 0.6% expected, 0.2% prior
- PCE Prices - Core, February (8:30): 0.1% expected, 0.2% prior
- Chicago PMI, March (9:45): 62.0 expected, 64.0 prior
- Michigan Sentiment - Final, March (9:55): 74.3 expected, 74.3 prior

Don't miss our Market Summary each evening. It is part of "The Daily" which is available at InvestmentHouse.com. The Daily focuses on enhancing returns through strategic investing using various tools including stock options. The Daily is a must for anyone with an IRA or anyone that enjoys investing in individual stocks.

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From Briefing.com: Weekly Recap - Week ending 27-Apr-12Dow +23.69 at 13228.31, Nasdaq +18.59 at 3069.20, S&P +3.38 at 1403.36

Trade this week started on a soft note, but stocks were able to rebound for four consecutive gains that too, the S&P 500 back above 1400 for a 1.8% weekly gain. That stands as the best weekly performance for the broad market measure in six weeks.

Overall action was relatively quiet on Friday as market participants shrugged off news that analysts at S&P issued another downgrade of Spain's debt, which now sits at BBB+. There was also a relatively muted response to an advance reading of first quarter GDP that suggested the economy grew 2.2%, which is less than the 2.5% rate that had been expected, on average, among economists polled by Briefing.com. Some pundits point out that even though the growth rate was weaker than what had been widely anticipated, it wasn't so poor as to rekindle calls for further quantitative easing, although the dollar did lose ground against competing currencies today.

Consumer Discretionary stocks led for virtually the entire day. The sector's 1.3% gain today came with help from Amazon.com (AMZN 226.85, +30.86), which rallied to a 2012 high in response to earnings that easily exceeded what had been widely expected. A handful of analyst upgrades helped the case for shares of the internet-based retailer. Expedia (EXPE 40.31, +7.68) benefited from a similar response on the back of its better-than-expected report. For the week, Consumer Discretionary advanced 2.8%.

Typical leaders Tech, Financials, and Energy all lagged. As such, they finished the session at the flat line. For the week, Tech advanced 2.4%. Although it was hampered on Friday by a sharp drop in shares of Western Digital (WDC 37.93, -6.17), which plunged when disappointing commentary from management cast a pall of what was otherwise a strong quarterly report, earlier in the week shares of Apple (AAPL 603.00, -4.70) rallied hard to lift the Tech sector after the company had reported another thoroughly impressive quarterly report. Interestingly, shares of AAPL had suffered in the prior session because of concern about a decline in the number of products it has had hooked up to data networks. Meanwhile, both Financials and Energy booked weekly gains on the order of 2%. On Friday Energy giant Chevron (CVX 106.20, -0.02) reported earnings that exceeded what had been expected, contrasting the earnings miss that Exxon Mobil (XOM 86.08, +0.01) posted earlier in the week.

Softness at the start of the week came in response to news that China's latest manufacturing reading still pointed to tighter activity, despite its improvement from the prior month. Manufacturing readings from both Germany and France were also disappointing. France further stoked eurozone concerns because reports suggested that the country may experience a political shakeup, which could carry implications for fiscal and financial reform there. Additionally, failure by fellow eurozone member Netherlands to agree on a budget evoked the threat of a change in leadership there.

Things firmed up after the S&P 500 was able to find support at its monthly closing low of 1358, which is also only a single point above its monthly intraday low of 1357. Stocks began their rebound from there.

The Fed was busy this week as the FOMC surprised few by keeping its fed funds rate at 0.00% to 0.25%, and noting that it anticipates exceptionally low levels of the fed funds rate at least through late 2014. Although it was acknowledged that inflation has picked up somewhat, the outlook for inflation over the medium run remains subdued. In fact, the Fed forecasted that inflation for the next couple of years will not surpass 2.0%.

The Fed added 20 basis points to both ends of its forecast for 2012 real GDP so that the range is now from 2.4% and 2.9%, but the forecast for 2013 was trimmed by 10 basis points to range from 2.7% to 3.1%. Longer run growth is still expected to range from 2.3% to 2.6%.

In a follow-up to the FOMC statement and forecast, Fed Chairman Bernanke held a press conference, during which he stated that the FOMC is prepared to take additional actions, if necessary. That was widely regarded by many market participants as a tacit sign that further quantitative easing is not off of the table.

Leading up to the GDP report on Friday morning, participants digested several important pieces of data, including news that new home sales for March hit an annualized pace of 328,000, which is greater than the clip of 318,000 that had been broadly anticipated. Moreover, prior month numbers were revised upward to reflect an annualized pace of 353,000. Pending home sales reportedly spiked in March by 4.1%, which is far greater than the 0.5% increase that economists polled by Briefing.com had generally expected.

The Consumer Confidence Index for April eased back to 69.2 from 70.2 in the prior month, but on Friday it was reported that the final Consumer Sentiment Survey for April from the University of Michigan improved to 76.4 from the preliminary reading of 75.7.

Total durable goods orders dropped in Mach by 4.2%, which is steeper than the 1.7% decline that had been broadly expected. Prior month numbers were revised lower to reflect an increase of 1.9%. Excluding transportation items, durable goods orders declined in March by 1.1%, which comes in stark contrast with the 0.5% increase that had been broadly anticipated. Orders less transportation for the prior month had increased by an upwardly revised 1.9%.

Weekly initial jobless claims totaled 388,000, which is greater than the 373,000 claims that economists polled by Briefing.com had generally expected. The prior week tally was 389,000 claims.

..Nasdaq 100 +0.6%. ..S&P Midcap 400 +0.5%. ..Russell 2000 +0.9%.

 
 Index     Started Week  Ended Week  Change % Change  YTD % 
 DJIA	    13029.26     13228.31   199.05    1.5    8.3 
 Nasdaq	     3000.45      3069.20    68.75    2.3   17.8 
 S&P 500	     1378.53      1403.36    24.83    1.8   11.6 
 Russell 2000  804.05       825.47    21.42    2.7   11.4

7:42AM Nokia comments on Standard & Poor's credit rating downgrade: 'Nokia is in the middle of a transformation program' (NOK) 3.66 : Timo Ihamuotila, Nokia's Executive Vice President and CFO, comments on today's rating announcement from Standard & Poor's:

"As we have detailed in recent announcements, Nokia is in the middle of a transformation program which encompasses every aspect of our business. We are implementing a decisive action plan to position our company for future growth and success. The main focus of these actions is on lowering the company's costs, improving cash flow and maintaining a strong financial position, while bringing attractive new products to market."

As of March 31, 2012, Nokia had gross cash balances of EUR 9.8 bln, and a net cash position of EUR 4.9 bln.

10:12 am Technology sector trading lower along with broader market

The tech sector is trading lower today, along with losses in the broader market. Semiconductors are showing relative weakness with the Philly Semi Index trading 0.7% lower. KLAC (-5.9%) is under pressure, while NXPI (+4.3%) is a notable leader in that chip index. Among other major indices, the SPY is trading 0.2% lower today, while the QQQ is trading 0.1% higher and the NASDAQ is trading 0.1% lower on the session. Among tech bellwethers, ORCL (+0.9%) is showing notable strength.

In earnings last night, WDC (-12.8%) posted a quarterly beat with upside guidance, but offered cautious commentary during the call. Elsewhere, FIO (-8.7%) and SKWS (+9.0%) posted beats with upside guidance, while ZNGA (-6.3%) and KLAC (-6.1%) reported beats with inline guidance. In news, there are reports out overnight discussing ongoing investigations into GOOG (-0.6%).

Among notable analyst upgrades this morning, SNDK (-0.6%) was upgraded to Buy from Hold at Jefferies, ZNGA (-6.3%) was upgraded at JP Morgan and BofA/Merrill, SLAB (+0.6%) was upgraded at Lazard and Citigroup. While in downgrades, AMCC (-10.9%) was downgraded to Hold at Wunderlich, STX (-8.3%) was downgraded at BofA/Merrill and Craig Hallum, PCS (-1.3%) was downgraded at Deutsche Bank, Argus, Canaccord and Wells Fargo, CTCT (-15.2%) was downgraded at William Blair and Janney and WDC (-12.8%) was downgraded to Neutral at BofA/Merrill.