Easter.
The Spring Equinox was a few weeks ago but the date
for Easter, a bit flexible, has been a festive time for
thousands of years. It is probably named after the
Goddess of spring Eastre or sometimes spelled Eostre and
the word now means spring to most and on the day a
festival was held to honor this Goddess by the
Saxons living in Northern Europe. Her earthly symbol was
the rabbit, which was also known as a symbol of
fertility and we can suppose the later added eggs
symbolize new birth or beginning. Christians began
to add their own meaning to the day but kept it as a day
of birth or resurrection.
The markets celebrated
Thursday by jumping above the short term
downtrend and heading back up to the recent
top. A better-than-expected
earnings preannouncement from Wells Fargo
sent the financial sector up 15.5% and
brought in many other sectors as well,
Wells Fargo
WFC officially announces their first quarter
earnings results April 22, but came
out Friday morning to let investors know it
expects to earn $0.55 per share for the
quarter. Analysts had forecast earnings of
just $0.24 per share.
One month ago Citi Group
C kicked off this rally from an
oversold condition on an announcement of
profit so on Friday the WFC announcement had
the same effect on an oversold market. This
was a very good risk/reward situation as it
also happened on a day before a long weekend
which has a positive bias.
On the Wednesday night
video we showed this Dow 15-min chart and
talked of the nice bull flag it was in.
There was no assurance that it would break
out but if it did the target for these
patterns at first is the former recent top
as we point out when we are in a bullish
market. What it requires is good volume and
the volume did pick up.
We
were extremely well prepared for this likely
rally as we had a huge number of good
looking charts. We mentioned that in these
situations we normally have big moves that
drastically trim our watch list. Either a
big drop that moves many picks to far from a
break out so they are removed from the list,
or a large rally that breaks them out. This
is really a pretty good indicator that
a big move is coming. On Friday 7 of our
watch list picks gapped up on the open above
the normal buy price but an additional 15
moved over their target buy prices and could
easily be bought for excellent profits. 22
picks on one day and the Dow indeed did hit
its target that day also. This is the 15-min
Dow chart at the close.
The market short term is
getting oversold and many will expect that
the charts are making a top as they are
close to resistance. Later we talk of how at
some point this short term move up from the
March low will likely have a retrace to as
much as 50% of the gains so far. Earning
will start to pick up late in the weeks so
they will be a driver.
The Bank of England
announced that it is holding interest rates
unchanged at 0.5%. Since October 2008, the central bank
has been reducing rates to reinvigorate growth. With the
interest rates slashed to very low levels, it is
unlikely that the bank goes any further down, as the
profitability of the lenders are affected at these
levels.
U.S. trade
deficit narrowed to $26 billion in February from a
revised deficit of $36.2 billion in January. Economists
had estimated a widening in the deficit to $36.5 billion
in the month from the originally reported deficit of $36
billion for January.
The narrower deficit reflected a drop in imports. The
February exports were up $2 billion to $126.8 billion,
while imports fell $8.2 billion to $152.7 billion. The
goods deficit fell $10.1 billion to $36.9 billion and
the services surplus rose $0.2 billion to $10.9 billion.
Jobless claims declined by much more than analysts had
expected in the week ended April 4th compared to a
upwardly revised reading for the previous week.
The report showed that jobless claims fell to 654,000
from the previous week's revised figure of 674,000.
Economists had been expecting claims to decline to
660,000 from the 669,000 originally reported for the
previous week. The four-week average also declined 750
to 657,250.
Import prices rose 0.5% in March from a revised 0.1%
decline in the previous month. The increase reflected a
10.5% increase in petroleum import prices. On a
year-over-year basis, import prices were down 14.9%.
Export prices fell at a 0.6% rate in March compared to a
0.3% decline in February. Agricultural export prices
fell 3.5% compared to a 0.3% decline in export prices of
non-agricultural commodities. On a year-over-year basis,
export prices declined 6.7%.
Found this on the
site mentioned on the chart. The S&P for the
last 140 years. It is a logarithmic chart,
so it shows the impact of percentage rather
than absolute price moves, and prices have
been adjusted for inflation. Note that the
chart is price-only: It does not include the
impact of dividends. As they mention, we
were above the trend line for 20 years, so what we're seeing now could be
described as reversion to the mean (and a
couple of decades below trend wouldn't be
surprising).
The major indices
for the past week.
The
top and bottom sectors for the past week.
The best and worst
industries for the last week.
Our multi index chart.
The Dow almost to the trend line top of
channel and also horizontal resistance not
far away. The S&P over the trend line and
near horizontal resistance. The Russell also
at resistance.
The Dow weekly and
the stronger resistance not far overhead.
The transportation
index. If it does break out from here
the resistance is shown.
The utility index
has not been doing as well as money was
going into tech and some financials.
The Nasdaq is
close the the 1665 resistance and now has a
gap below.
This NAMO chart
shows that the movement on Thursday did not
take this to new highs so it could move
more.
NASI moved over
the resistance line that has held since June
of 2008.
This is a longer range
view shows some higher levels where past market
reversals started.
The VIX broke
below the first and second lows of 2009 to
levels not seen since last October.
Semiconductor index
SOX is close to the trend line which is
at the 200-day EMA also and the first
Fibonacci retrace line.
The Nasdaq 100 to S&P 500
ratio chart shows the tech stocks still in
favor as the index has a profit for the
year.
S&P 500 weekly longer
term guess as to what may happen. We are
calling this the major B wave up which we
think will at a later time fall into major
wave C down to finish the bear market. This
B up may also have three waves and this
first one we named "a" and may be followed by
a corrective wave "b" and then a final move
up in "c" which would finish major wave B.
S&P 500 monthly
with Fibonacci lines from the 1987 low and
the March 9th 2009 low.
l
S&P 500 daily with a break over the trend line. 875 to 880 are now the
in-play targets.
NYSE also just a bit over the trend line but it could also be a short
term top.
The advance/decline ratio of the NYSE has not made it back to the 50-day so far.
The percentage of stocks on the NYSE that are trading over their 50-day moving
average is now at 93%. This number for at least the last couple of years has
come near a time when the market pulled back.
The Value Line with obvious resistance overhead.
S&P 400 mid caps nice break also and 563 is the first resistance.
Russell 2000 daily right at horizontal resistance but RSI sill has room
to run. On shorter time frame chart it is oversold.
Russell 2000
60-minute chart
and a possible bearish wedge.
The financial spider XLF and its gap and run from Thursday.
Banking index BKX we
showed as a break out candidate and it ran
20% on Thursday.
London's FTSE was lagging the US on Thursday
and has a trend line not far.
China's FXI too many gaps for most
but may be ok on a decent pullback.
Russia's RTSI up 17% for the month.
Commodities index CRB with a break
out over 229 with first target 244.
Crude oil monthly
is V ish in shape so can go sideways first or
pull back but the broken trend line above is
an eventual target. Stochastics has yet to
get over 20.
Crude oil daily right at a break out level. the 200-day at 65 corresponds
pretty well with the trend line in the chart above.
US oil fund USO with 32 and 34 resistance areas.
Power shares crude oil ETF DXO also at a small break out level.
Gold weekly with 3 weeks down it may get a bounce but looks to be in a
longer term downtrend.
Gold cloud chart now has resistance
at the bottom of the cloud and extending to
the top of it.
GDX 60-min renko chart of gold miners had its CCI cross up over -100 for
a signal to cover and go long but the parabolic SAR has not yet confirmed this.
One way to handle this if you have good profits from the short side is to cover
- or partially - then wait for a confirming signal to go long.
This GDX chart has the main window showing only the 7 and 21 day EMA and
the crossovers. The shorter period has now again crossed below the longer period
and that is bearish.
Gold and Silver index XAU
is somewhat neutral as stochastics are under
20 so a bit oversold but not RSI.
Silver has the MACD that may crossover negatively soon.
The US
dollar is back over the 50-day EMA. By a
hair. Chart still more bullish than not.
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Butch Cooley Comments
(Butch is founder of
Leg Up House
and the
Butch Cooley Worldwide
Hunting and Fishing . He has
been an active trader for decades.)
Stock Market Comments
We are just continuing with amazing
news and a market that wants to continue on upward. We
closed at 8083 on the Dow, and on 3 month chart that is
very near a breakout. And we had a ton of volume on
Thursday. Tuesday and Wednesday the markets were
fearful of earnings, and it showed. But the Wells Fargo
"leak" on Friday morning just blew all of the fears away
and we took off for another rally. It's just amazing!
A week of more talk that the recession was making a turn
for the better just has everyone feeling "exuberant".
And money is definitely being made.
But....lets just take a good look at what all this might
really mean. I am thunderstruck by Wells Fargo's news
of record profits to the tune of $3.3 billion. During
the worst "recession/depression" in my 60 years. At
best, call me dubious. I don't care if Wells Fargo was
in a little bit better shape than Citibank or Bank of
America. They still needed $25 billion of TARP bailout
money. And, did you notice they really didn't give us
any figures on how this was accomplished and are going
to hold off for a couple of more weeks. Personally, I
don't believe any of this "nonsense". But that's just
me. I mean the banks aren't allowed to lie to us, or
not be truthful. They wouldn't be ethical if they did
that, would they. But these are the same Captains that
drove the ships up on the rocks to begin with. I don't
trust any of them. And I don't trust the news from
Wells Fargo. So, I am exercising caution. And I will
continue to exercise caution. What goes up, has to come
down, and with the stock markets, down happens extremely
fast sometimes.
But you have to admit, this has been pretty cool,
considering the last 18 months of market activity. It
"feels" pretty good.
The Stress Tests seem to be completed, and the Treasury
has leaked their news that all 19 banks that were stress
tested, all of them, passed the test. I wonder how hard
that test was? So, does this mean all the banks can now
pay back taxpayer borrowed money? Probably not.
Actually, somewhere in the leaks to the press, there is
mention that they still may need more money from the
TARP program. So I guess things aren't quite as good as
they would like us all to believe. Well, it won't be the
real TARP as it is running out of cash. Most likely,
Secretary Geithner is just preparing Congress to let
them know he's coming back for more. TARP II?? The
Sequel??
And so as not to confuse us all, Treasury decided not to
release the Stress Test data until after earnings
season. How thoughtful of them. I don't like to be
confused either. And most likely, when they do release
the numbers, so as not of confuse us even more, we will
be getting the diluted report, the watered down
version. They don't want to bore us with a lot of hard
to explain numbers.
So, are the banks lending? Is there an end in sight to
the credit crunch? Well, they claim they are. We shall
see. Again, "Danger Will Robinson". Caution bordering
dangerous? GOOG and INTC are coming up. Should give us
an idea what is in store for the Nasdaq. HOG and MAT
will give us an idea what consumers are really spending money
on. And of course banks are coming up shortly too.
I still am calling this the bear rally it is. Be
careful, don't get too exuberant. Don't get stupid as I
like to say. Ask yourself if the bigger economic
picture has really changed? In my opinion, it hasn't.
Reports this week the 654,000 jobless claims was
"better" news than last week.....hey come on!! That's a
lot of people out of work. Unemployment is an issue.
Banks aren't really lending. A lot of refinancing going
on for sure. And yes there are people buying houses
because housing is getting cheaper. A lot of
foreclosures are being picked up. But the housing
market has not hit bottom. I doubt seriously if it can
bottom before the end of 2010. Don't fall for the
Smiley Face attitudes that everything is coming up
roses. It's not. It's still pretty bleak out here in
the real world.
BC
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