Schizophrenia
Ok I know that this is a serious mental condition so mean no disrespect but if
we say the market seems Slkitso I think you understand. It seems to have
an impairment in the perception or expression of reality with seemingly
totally opposite moods from one day to the next.
On Thursday the Dow was up over 200 points while oil gained over $5 so the oil
increases did not dampen stock buying as all seemed happy with the Wal-Mart
numbers and perhaps thought that those stimulus checks will help all retailers.
The sinking housing market or bank and debt crisis did not seem to matter that
day and the charts of the Russell 2000 and the Nasdaq 100 looked ready to break
out. Commenting about Thursday and Friday someone said "They couldn't snap them
up fast enough one day, and couldn't sell them fast enough the next".
On Thursday the European Central Bank said it might raise
rates to contain inflation and the US dollar dropped on that news and as a
result oil started running. On Friday there was some report that
the Israeli transport minister said an attack on Iranian nuclear facilities was
"inevitable." This added to the oil run and a short squeeze took over. Perhaps
the market again could have handled this oil increase but did not like the
attack idea as that could add to the rise in oil. Also on Friday we saw that
consumer net worth fell 2.9% and the unemployment rate went to 5.5% from 5.0%
This should not have been a big surprise as we showed the charts from the Matt
Trivisonno's blog of the money received by the US government from withholding
income and employment taxes and it is clearly in a down trend much more so than
the past official government employment reports suggested. On Friday the
official Bureau of Labor Statistics showed nonfarm payrolls declined by 49,000
positions in May. I have read that the average monthly
decline in recessions are well over 200,000 jobs. The official 49,000 loss is
only that low because of the birth/death modifiers used to adjust the figures.
Construction saw losses of 34,000, "goods
production" had a loss of 57,000 and manufacturing was down 26,000. There
was probably a loss of at least 100,000 jobs. The unemployment rate is figured
using different statistics so this spiked it up that 0.5%. The household job
survey found that the number of employed people fell by 617,000 last month. I
read that temporary employment is down 5.7% year over year and this is more of a
leading indicator as temporary workers are often the first to be let go.
Here is the Unemployment Rate chart.
This chart shows
however that jobless
claims declined 18,000 in the week ended May 31st to
357,000 from the previous week's revised figure of
375,000.
This chart used the official drop of 49,000 jobs.
For the week just ended, the
Dow fell -3.45%,
the S&P 500
-2.69%, Nasdaq
-1.35%, and
the Russell 2000
-.69%.
Since mid May the leader has been the Nasdaq 100, S&P midcaps and the Russell
200 small caps. This points to the possibility of a rally in the making after
this next pullback ends.
The top and bottom sectors from last week.
The leading and trailing industries from the past week.
On a bright side - we are in the
election year and the average performance since 1900 is
shown here and if we can only be average we will have
some decent days on the long side a bit later.
On Thursday we thought the Dow may bounce at the 62% retrace but it
powered through. It is at a possible support with another at 12,100. RSI is not
yet below 30 but if it drops below we will watch for a move back above ant
stochastics to come back over 20.
The Dow renko has been on a sell
since the fall from the first high in May near 12,800 so
has filtered out the noise for a month.
The transports have support at the 50-day EMA and trend line at 5200.
Below 5120 support of the May low 5120.
The Nasdaq made an attempted break out on Thursday but seems the May
high was too much on this try. The 50 and 200-day moving averages are
closing and a crossing would be bullish while a drop in price below the
50-day EMA at 2442 would be bearish.
The bullish percent index is at a new high for 2008.
The semiconductor index has the
stochastics just going under 80 so watching to see if
this is a sell in the sector.
The weekly Nasdaq 100 shows the sell off this week was in a smaller
range than the previous three weeks, still between the 62% and 50% retrace
lines.
The 60-minute chart of the Nasdaq 100 is in a trading channel since the March
low with a base now at the 200-day EMA at 1979. Stochastics are oversold and
RSI is close to being so.
The S&P 500 broke below its channel, 38% retrace and 50-day EMA on
Friday. 1350 is the 50% retrace. The general market is not so great but the
large cap tech stock still in demand.
The S&P bullish percent index gave a sell signal the last week in May.
The NYSE has pulled back to the trend line. This line however may not
hold.
On the weekly chart we see how this is so much weaker than the Naz 100, Mid
caps and small caps.
The percentage of stocks on the NYSE trading over their 50-day moving average
ran into resistance and their is no definable support.
The NYSE advance decline issues in the channel also.
The VIX volatility index made a big move on Friday up to near the
broken trend line. If it were a stock we may look to short it if it fails at
the horizontal or above at the trend line. As a tool to analyze the market
we will watch those areas as if this pulls back the market is likely to
rally.
This only another view showing how the 200-day moving average was support for
a year and it may now be resistance.
The Russell 2000 weekly and the chart dip is not yet significant.
This is a 15-min Russell 2000
chart and if it makes a successful test of trend line a
bit lower it will be bullish.
The S&P 400
mid cap index ran into resistance on Thursday and
gave it back up on Friday. This so far has not hurt the
bullish chart.
The Wilshire 5000 also still over its trend line and at former support.
The BKX bank index has mildly broken its trading channel bottom line. RSI
and stochastics both in oversold territory.
As a result of the above, the UltrShort ETF for financials SKF broke out.
Here the UltraShort SRS for the real estate sector. Now just under the
50-day EMA.
The EURO-Japanese yen ratio
chart broke above its trend line. We were hoping that
there would be one more pullback and let the market
rally some more. This break out corresponds to the
market retreat.
SGS is a commodity
index fund and it gapped up big on Friday. It is now
totally above the top Bollinger band so a pullback will
come this week. It may however keep going for a day or
so.
Oil is close to the top channel line and above the top Bollinger band.
There was more talk this week of $150 by 4th of July.
Oil monthly chart now nearing the top of this 9-year channel.
As oil makes new highs Exxon Mobile nears its lower channel line. This may show
that oil companies do not expect this price to be a long term situation. I
wonder how much of their production is hedged.
As the US dollar pulled back on Friday gold rallied up $23. Now just
under the 50-day EMA. The MACD histogram is still negative.
The gold renko chart did give a buy signal on Friday. This is a daily
chart and it had only 4 buy signals so far this year.
The gold "cloud" chart is again at resistance of the red cloud. With this
indicator the resistance is not just at one point but extends to the top of the
red cloud. Now that is from 910 to 940.
Gold and silver index XAU rallied some also on Friday but the bounce has
started at the triangle apex and the 200-day/trend lien on Thursday.
The 60-minute chart of the gold miners
GDX showing the recent buy signal on Thursday.
Silver bounced and stochastics moved back over 20 and it closed over the
50-day EMA. It has resistance as shown.
The US dollar put in what may be a double top this week and is pulling
back. Hoping it can hold the trend line and make a higher low but stochastics
have fallen under 80 and RSI under 50 so this is not bullish.
Weekly economic calendar from briefing.com We have
more talk from the Fed this week and reports on pending home sales, Beige Book, retail
sales, business inventories, consumer sentiment and the
consumer price index.
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