Replies to post #7207 on Your Economy (No Politics) (YE1)

[brant_point]

Thanks BW

Great reading, truly appreciated.

Tom

[Bullwinkle]

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



OVERVIEW:
As another week comes to a close it is that time once again to try and make heads or tails of the week ahead. We are nearing a wrap on the year and for all pretensive purposes Santa arrived early. Now the big question is will he hang around for the New Year’s Party? This past week once again was an interesting one as the market in general seems to no longer be impervious to bad news as we saw a negative reaction to the ISM Services report earlier in the week. The U$D continues to lollygag around, Gold went on to 24-yrs highs, Oil has reestablished itself and the indices started out strong but finished flat and/or lower on the week. As mentioned in the previous update with which this post replies: So many mixed messages may lead to some cooling or chop and slop followed by range like activity. A top could be closer at hand than most believe, but whether it be through a liquidity push, geo-political events or just plain good ole jawboning and table pounding, one last surge is most likely still in the works. Chop and slop followed by range like activity indeed, but a top? Still too early to say, but we should find out soon enough if there is more fuel in the tank or if it has been spent. The Gold market certainly seems to be telling a tale of inflation and a weaker dollar going forward. Oil certainly seems to be telling a tale of higher energy costs being a way of life for the unforeseeable future. Stocks are telling a tale too, but it is not clearly evident what that tale is because the stock market tends to send mixed signals. Here’s a couple of canaries worth mentioning that were at the forefront this past week; INTC and TOL, both of which narrowed or cut profit forecasts. INTC narrowed forecasts at their mid-Qtr update and back in Oct stated that sales could be affected by supply constraints and a buildup in client inventory. TOL on the other hand reported stellar earnings, but cut its profit outlook for the current year and put its 2007 forecast in doubt, citing a slowing U.S. housing market. TOL has been sinking since splitting the stock back in July and insiders have been dumping all year. So just what is going on with stocks? The indices are telling us one story and bellwethers are telling us another. I think the bottom line here is that all is not what it seems in stock-land. It’s all about who blinks first as all things will not move up together for any length of time, something has to give. The CoT data remains much the same as last reported, open interest remains relatively low historically speaking on the majors while heading lower on Gold and higher on Oil. Some small short Commercial positions seem to be getting taken up on the majors with the exception of the DJIA although Commercial Longs have been paring back. Gold has a ton of Commercial Shorts and Large Spec Longs and Oil seeing just the opposite. The CoT data graphs can be viewed at #msg-7253670 -- Equity Fund flows as detailed by AMG Data Services reported net cash inflows totaling $2.312B and outflows totaling -$1.906B excluding ETF activity in the week ended December 7th. International Equity funds reported net inflows of $632M and outflows of -$326M excluding ETF activity. Most intriguing is the Money Market funds which reported net inflows of $39.3B the largest inflows to money market funds since 6/25/03. As for the U$D, Gold and Oil we saw the U$D remains in a tight but weakening range of 91-92, closing at 91.26. Gold went off the hook touching $530, but closing out at $526 and Oil has moved off of its 200DMA and briefly visited $60bbl before closing the week at $59.39bbl. The CRB has come back to life and reasserted itself after testing the 200DMA by closing the week at $327.81. The 10-yrs and 30-yrs T-Note yields continue to find support at their 50DMA’s closing out at 4.537% and 4.736% respectively…


ECONOMIC #’s:
Not too busy of a week, but that all changes in the next…

ISM Services – Nov = 58.5 vs 60.0 expected 59.0
#msg-8756205

Productivity-Rev - Q3 = 4.7% vs 4.1% expected 4.5%
Factory Orders – Oct = 2.2% vs -1.4% expected 2.2%
#msg-8772823

Consumer Credit – Oct = -$7.2B vs -$0.1B expected $5.0B
#msg-8789661

Initial Claims - 12/03 = 327K vs 321K expected 318K
#msg-8804812

Announced Job Cuts – Nov = up 22% to 99,279 in a monthly tally released by consulting firm Challenger, Gray & Christmas
#msg-8789620

Mich Sentiment – Dec = 88.7 vs 81.6 expected 85.0
#msg-8823703

Wholesale Inventories – Oct = 0.2% vs 0.6% expected 0.5%
#msg-8823744

MBA Mortgage Applications – 12/07 = Increased 5.2% #msg-8789614

Oil Inventories – 12/07 as reported by the DoE / API:
(Crude bbls= +2.7M / +686K) (Gas bbls = +2.7M / +4.5M) (Distillates bbls = +2.7M / +3.6M)
#msg-8789602

ECONOMIC Calendar For The Week Ahead: http://biz.yahoo.com/c/ec/200550.html


I have read and heard many claim over the last couple of years that we are in a new bull market. I would agree to a point, but that point ends at which market it is you are talking about. So in my effort to help those who are bull or bear impaired, I am including some charts of what a bull and bear market looks like…

BULL


BEAR


BULL


BEAR


BULL


BEAR


Any Questions?…


WHAT CAN WE EXPECT NOW?:
This coming week will be anything but boring. We have a full week of Econ data from PPI to CPI, Budgets to Balances & Account Deficits, Retail Sales, etc. Throw in an FOMC meeting on the 13th and then top it all off with Options Expiry and a Bradley Turn on/around the 16th. It should be noted that there are varying models for the Bradley so a turn if it were to occur could happen as early as this week or not until on/around the 27th. A standard Bradley chart for 2006 can be viewed at #msg-8824340 if interested. Regardless, this could be a very volatile week and if not established in any positions this may end up being the type of week where one is glad to step aside or remain on the sidelines. My feeling is that no real direction is established until the following week once the dust settles. After that is anyone’s guess, but as I have mentioned on more than one occasion in previous updates: We have been on the move up since early October that historically would not have started until Nov or Dec. What may make perfect sense is that many expect a Christmas rally so to bring it sooner keeps many off guard for what is generally expected. The flip side of the coin is it could all end earlier than expected, say mid-Dec? It would not surprise me to see us find a new high directly off of this move and continue higher only to sell off prior to what people expect. The indices may be getting ready to roll over although another push is likely as we have yet to see the extremes associated with tops in the EPC and NAHL. Time will tell… As far as Oil, U$D, Gold and as mentioned in the last update: Oil appears to have found a bottom and I believe Oil continues to creep higher. The U$D most likely remains range bound and continues to oscillate in the 91-92 range although an attempt at 93 may be in the cards while Gold has taken out $500, but is getting a little long in the tooth, so a breather of sorts may be coming in here. If we are to continue higher we really need to see Gold take out $510 in the near future… The U$D may see that move off of the Fed meeting, Oil may base in this area until people realize that winter and cold weather will happen (duh!) and Gold blew right through $510, but is a top near? Maybe a respite, maybe not… Watch for the divergence between the gold price action and gold stocks, could be a message there.

Technically Speaking, Bullish Advisors are at 56.2% with Bearish Advisors at 21.9%. The VIX/VXN are in the 11’s & 15’s respectively (some spread) and beginning to trend up. The CBOE Equity P/C Ratio ended the week at .580 with a 21DMA of .585 and Total P/C ratio at .819 with a 21DMA of .847. The RSI 5-Days are Neutral across the board. The PC ratios, VIX/VXN, $NASI Daily (Summation), $NAMO Daily (McClellan), NAHL Daily (Highs/Lows), $NAAD Daily (Advance/Decline), stocks above 200DMA and Bullish %'s all can be viewed below along with the major indices…
































NOTE:

CORE Funds: QRAAX, RSNRX ,TAVIX, SRPIX, GSX
*Added some Euro & Yen to my World Currency Account, looking at a 6-12 month hold…

Speculative Stocks; ANO

SWING: USPIX, AGIX, DNDN
*Flipped PMPIX during the week to ENPIX

Disclaimer:
This disclosure is not a recommendation to buy, sell or do as I do. It is only to give my thoughts on current market conditions and share the positions that I am holding. I am not a day trader and invest mostly in funds or baskets of stocks and attempt to identify up/down trends while performing occasional swing trades. Data presented may not be 100% accurate as I do make mistakes from time to time.