DJIA: 9,505.96 10-YR TSY: 3.55% CRUDE OIL: $73.83
COMP: 2,020.90 GOLD: $953.70 $USD INDEX: 78.08
S & P 500: 1,026.13 SILVER: $ 14.15 VIX: 25.01
"No diagnosis, no prognosis. No prognosis, no profit.”- Jesse Livermore
US MARKETS:
Greetings stock fans. Despite a ‘slow start/stumble’ out of the gates early in the week (Monday), where it ‘appeared’ momentarily that we may be in for a ‘bumpy run’, the markets were able to regain their footing in a hurry and proceeded to put in yet another strong showing this past week with buyers taking control of the action and never looking back, while saving the ‘finishing kick’ coming into the homestretch during Friday’s option expiry.
As a result, the major indices (DJIA; COMP; S&P 500) not only tacked-on gains of 2% across the board, yet perhaps of more significant importance, all three indexes blew past short-term potential resistance levels with the Spoo’s (S&P 500) leading the way into higher ground and ‘taking-out/breaching’ with authority, on a ‘closing’ basis, the 1018 print of 8/7/09.
With that spoken, it’s clear that while many continue to seek a long overdue pullback/consolidation from the short-term overbought posture of the tape, Mr. Market has had zero intentions of complying or fulfilling such wishes/desires, thus far. Although we’ve witnessed a ‘blip/hiccup’ in recent weeks/months within the action, such stall/pause (if one should choose to classify as such) has been of an extremely short (no pun intended) and shallow nature and quite frankly, has not allowed those whom found/find themselves on the sidelines to enter at desired lower levels, which from our perch, has certainly exacerbated ‘performance anxiety’ recently noted to readers and evidenced in the chart below:
When observing the SPX 1-Year daily chart above, it’s evident that the tape remains in a very favorable posture as the Spoo’s find themselves perched well above their 20; 50 and 200-Day MA’s respectively. Additionally, we can also observe what ‘appears’ to be an inverted H&S pattern (bullish) with the left shoulder located in the 800-900 zone; head at the March low 666 figure and the right shoulder found at the 900-950 area, whereby both shoulder tops constitute the ‘neckline’ and since having been cleared with ease.
Thus, if we are indeed witnessing, and it appears to be so, the development and materializing of such pattern, the potential measured move may, and we emphasize ‘may’, perhaps suggest a target of SPX 1250 (in the future) by subtracting the ‘Head’ (SPX 666) from the ‘neckline’ (SPX 950), nearly 300 S&P points added to the top of the ‘neckline’ (SPX 950).
While we are certainly not in possession of a crystal ball, nor do we allow ourselves to impose our opinions/thoughts/beliefs upon the tape as Mr. Market is the ultimate Judge and Jury, we provide the potential scenario to readers for ‘food for thought’ and something to monitor as we navigate the landscape in the days/weeks/months ahead.
Nonetheless, this tape has yet to show any signs of ‘slippage/leakage’ of any significance thus far and until or unless proven otherwise, both investors and traders would be wise in heeding the ‘message of the market’, which remains in its positive bias.
GLOBAL MARKETS:
As we’ve referenced in recent past, Asian markets/bourses continue to find some headwinds/resistance at recent levels after their monster ’09 run into greener pastures and as a result, found the slope ‘slippery’ this past week with bourses experiencing a shade of red. While Australian and New Zealand markets have held together reasonably well, they too found selling pressure this past week while the Seoul Composite (S Korea) was able to regain the majority of its early week bleed. Moving on to Europe, the CAC; DAX and FTSE put in a positive week of trade and have seemingly broken their ‘neckline’ of the inverted H&S pattern (bullish) that we’ve been noting to members these past several weeks. Like the US, European markets/bourses find themselves in a favorable posture from a technical perspective.
BONDS:
We wish we had something of significance to mention with respect to the 10-Yr Treasury other than what we’ve been alluding during the past several weeks, however, we don’t. The 10-Yr continues in its range-bound trade mode of 3.2%-4% and until or unless either end of the spectrum succumbs, the action remains uninspiring with no real directional change/movement.
METALS:
It was a ‘whippy’ week of trade for the metals as both Gold and Silver found themselves riding the rollercoaster and experiencing a bit of turbulence. However, when the final buzzer had sounded to end the week, the ‘yellow-metal’ finished in the plus column just a tad under 1%, while ‘Hi-Ho Silver’ was sacked for a 3.8% loss. Nonetheless, the action in both remains constructive as we await further clarity with respect to the $USD from a short-term perspective, while our longer-term perspective suggests higher prices in the offing merely due to the monetary and fiscal policies of global central banks whom seem keen on further debasing of fiat (paper) currencies via the ‘printing (digitized keyboard) presses’. Think bailouts, and no, we’re not speaking of Main Street.
CRUDE OIL:
Well, after spending the past few months playing ‘ping-pong’ between our noted $55-$70 zone with a few blurps up to the $72-$73 area, crude put in a solid week of trade as black-gold ‘appears’ to have now ‘taken-out/breached’ our referenced potential resistance of $72.50-$73, closing the week with a 9.4% gain ($73.83). While our often noted $72.50-$73 level has been ‘overcome’, we’ll continue to monitor the action with a close eye in the event that the recent thrust higher proves to be a ‘fake-out’? Having said that, the next forty-eight (48) hours action should provide us with a clearer picture, albeit, from a technical view, crude looks poised for higher ground. Stay tuned and keep a close eye!
CURRENCIES:
As we noted in last week’s missive, many pundits have called for a bottom in the $USD index. While we have surveyed and recognize/acknowledge the evidence of a ‘potential’ inverted H&S pattern (bullish) developing in the ‘greenback’, we also stated that we felt it was a bit premature to label or classify such pattern just yet and welcomed further cards/evidence from the deck to be revealed before doing so. Furthermore, we also alluded to the declining 50-day MA as potential resistance (79.75-80) and lo-and-behold, the ‘buck’ flirted and was denied passage this past week at the figure, closing with a fractional loss (78.08). Thus, we continue to monitor the action and we’ll reserve and suspend our thoughts/opinions while heeding whatever the ‘message’ may be that is sent our way. Stay tuned and keep a keen eye for further clarity! In order for the $USD index to garner further upside mojo, the declining 50-Day MA will have to be surpassed and overcome (i.e. short-term resistance) which as of yet, has proven formidable.
US Markets:
Short-Term: Bullish- Positive Bias- Break-Out
Intermediate-Term: Bullish- Trend Continues To Improve
Long-Term: Bullish- SPX 1,000 Has Been ‘Re-Captured’
(Yet, within the confines of a secular-Multi
Year Bear based on Weekly charts)
POTENTIAL INDICES SUPPORT/RESISTANCE:
SUPPORT RESISTANCE
DJIA: 9,300; 9,115; 9,000 9,660; 9,800; 10,000
COMP: 1,980; 1,930-40; 1,900 2,050; 2,070; 2,100
S & P: 1,002; 980; 960 1,045; 1,073; 1,098
POTENTIAL SET-UP’S:
LONGS:
Natus Medical (BABY) 14.65; On pullbacks to 13.70 and more aggressively above 14.80
CBS Corp. (CBS) 10.74; On pullbacks to 9.60 and more aggressively above 11.65
Louisiana-Pacific Corp (LPX) 6.48; Back to 5.40 and more aggressively above 6.88
Newcastle Investment (NCT) 1.48; Back to 1.20 and more aggressively above 1.68
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