Often on the day before a holiday the
market trades with a positive bias but it did not work
out that way on Friday as losses were near 1%. For the
week the Dow, S&P 500 and Nasdaq all lost over 3%. Now
that the uptrend line from the march low is broken it
does not look like the "the worst is over" rally
will resume soon though a strong bounce may take place
this week. In looking for short sale candidates an
overwhelming percentage of ones close to support, and
possibly breaking it, are financial related stocks. One
should not figure that the financial and credit problems
are going to end so soon. The markets though are
oversold and if this sell off is an A wave down of and
ABC correction than we would expect a B wave up followed
by another leg down afterwards.
The government report this
week showed that jobless claims fell to 365,000 from the previous week's revised
figure of 374,000. At the same time, the Labor Department said that the less
volatile four-week moving average edged up to 372,250 from the previous week's
revised average of 367,250.
From RTTNews -
The national median
existing home price were down 7.7% to $200,700. New home
inventories at the end of the month were up 1% to 4.06
million existing homes available for sale, representing
a 9.9-month supply at the current sales pace compared to
9.6-month supply in February.
While on housing -
here is the chart for the Ultra short Real Estate
ETF - SRF it made a double bottom and
bounced and is now just under the 50-day EMA and
stochastics are in the overbought area.
The major indices
for the week.
The top and bottom
sectors for the past week. Guess for the long weekend
folks thought beer sales would be high as the Brewers
were the best performing group. There was a report that
said that Belgium beverage company InBev is
interested in acquiring
Anheuser-Busch and this helped too :-)
The top and bottom
industries for the week.
The Dow broke below the
trend line on Tuesday with follow through the rest of
the week. Stochastic are oversold but not RSI so a
bounce followed by more correction may be in store over
the next week or two.
This Dow chart shows the Bollinger bands and that
the Dow now is oversold. It could rally back to the 50-day EMA or more so
watch for a set up on your futures or ETF trades.
Dow renko chart gave the sell signal. Watch for a stochastics move back
over 20 as a buy here but preferably a CCI move under -100 first.
Dow Jones Transportation nearing the trend line and 50-day EMA so likely
bounce point.
The Nasdaq longer term could not make it above resistance. So far has
stayed above the 2420 Fibonacci line and the 2416 50-day EMA.
Nasdaq shorter term near a trend line and 50-day EMA at 2416. The dotted
lines are showing two gaps below that eventually may fill.
For the semiconductor index SOX the pullback support to watch is the
former resistance line at about 380ish.
The top 100 market cap stock on the Nasdaq - the NDX chart weekly
similar to the NYSE weekly having a bearish engulfing candle this week. That
is when the body of the red candle totally covers the body of the previous
candle.
The S&P 500 monthly was above the 20-month EMA last week which would
have made a bull signal if the month closed that way but so far now it does
not look like that will happen.
The S&P 500 channel shows the
38% retrace and the channel trend line looking like a
good bounce point and the 50-day EMA also a bit lower.
The S&P 500 bullish percent chart is not to fast to
respond but so far has been pretty accurate though would give whipsaws if the
market did not trend a few days at a time. This gave a sell signal.
We pointed out the very steep trading channel last week on this S&P 400
mid cap chart and as the RSI dropped under 70 this was a clear short sell.
NYSE longer term still over the 50-dy EMA and trend line.
The NYSE weekly chart giving
up all the former week's gains and a bit more and
closing near the 50-week EMA.
The number of stocks on the NYSE that were trading over their 50-day averages
got to the upper range where earlier drops have occurred.
Later we mention technical analysis and here is a good example of it in play at
the trend line channel, the drop of the advance-decline on the NYSE.
The Russell 2000 was down 2.3% this week - better than the others. Shown
is the 50-day EMA support and next the 707 38% retrace.
It is hard to believe that there are still a lot of investors who think that
technical analysis is a bunch of hooey and it is only a rare coincidence that
some times a few things seem to line up. This week showed they all did it
together. Here the VIX bounced perfectly at its support showing the rise
in fear in the market. You did not even have to look at a market chart - you
could have shorted the market just using this. Not drawn but you can see it is
now at minor resistance and then again a bit higher.
The oil
monthly chart. John Mauldin of
frontlinethoughts.com
wrote this weekend in agreement of
what we mentioned a week or two ago about how the price
of oil is not so much about real demand but only contact
buys in the futures market. Actually the demand for oil
itself is down and much is just being stored in tankers
off shore just waiting for higher prices. Now if oil
starts to drop at some point all that supply sitting
will either have to hedge or go into port to sell and
that could cause a big price move. Similar to what we
wrote - John mentions that in
2003 there was $13
billion in commodity index funds. By March of this year,
that amount had grown 20 times, to $260 billion. These
buyers are he says, Corporate and Government Pension
Funds, Sovereign Wealth Funds, University Endowments and
other Institutional Investors. So all these respected
institution are contributing to the rise in oil and
wheat and all the commodities they buy contracts in yet
do not use. They are part of the driving force for
inflation. John also wrote this interesting idea, "Think
about it this way: If Wall Street concocted a scheme
whereby investors bought large amounts of pharmaceutical
drugs and medical devices in order to profit from the
resulting increase in prices, making these essential
items unaffordable to sick and dying people, society
would be justly outraged."
Well this is what is happening it
seems in many items as the new ETFs and investment
products have come about. It is not any longer about
supply and demand for products themselves but for those
pieces of paper representing them that drive up the
prices.
ExxonMobile XOM shown in
gold made a 4th attempt to break out but failed as you
see that oil underneath made new highs. This hesitation
for oil stocks to also make new highs suggests that the
oil companies or the investors in them do not expect
these high prices to last.
Gold is approaching
the 50% retrace which is also at the shorter trend line
drawn at about 940. There is a post on the
message board that
says in part "Demand for gold exchange-traded
funds doubled from the first quarter of last year, but
demand for the precious metal in terms of tonnage
dropped 16% to its lowest quarterly figure in five
years." So like oil, the ETF and futures market is in
charge it seems.
Gold renko chart still on the buy side this week until the parabolic SAR
moves back over the pattern and or stochastics drops below 80.
The gold Gold "Cloud" chart that we showed last week. Now we see the
resistance at the red cloud. The whole cloud is considered resistance not only
the bottom line of it.
This is the ETF GLD on the 3 line break chart. This seems even slower to
respond than the renko charts but using the CCI and custom stochastics plus the
parabolic SAR has produced wining trades so far with only being long 3 times and
short two time so far this year. In a trending stock this really cuts out the
noise and over trading.
Here the Gold Miners GDX
in a renko chart still on the long side.
This is the 60-minute chart
of the GDX showing the so-far good results of
using this renko for shorter term also.
Silver is getting
close to resistance at the $18.77 area. Stochastics are
high but not yet RSI and MACD just rising so a break out
could move but I think it will not happen now.
The Euro-Yen ratio chart still in the pattern. We are not showing the
apex of this triangle but it looks like there is room for another drop before a
move out of this pattern which could be another month or two. The EMAs though
have recently crossed over bullishly.
The US dollar
is at a trend support but not a strong one and has a
secondary one on the other trend line lower.
|
Butch Cooley Market Comments
(Butch is founder of
Leg Up House
and the
Butch Cooley Worldwide
Hunting and Fishing . He has
been an active trader for decades.)
Butch is still ill this week and we
wish him recovery soon. He is part of our original group
of about 6-8 people who had a private daily chat room
for several years ands we miss him.
Get well soon
Butch!
|
Weekly economic calendar from briefing.com Friday
the 30th looks like the big day with many items.
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stockcharts.com
accounts there is a space to put in a referral name
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stocktiger@stocktiger.com they give
us credit. Thanks!
Memorial
Day. It used to be called Decoration Day as people
decorate graves with flowers, flags and ribbons. I guess when it started it
was referred to as
Confederate's Day as a day to honor those who died fighting for the
Confederate States of America during the American Civil War. After World War
I, it was expanded to include those who died in any war or military action.
It includes the war in Iraq also where more that 4,000 US troops have died
and at least 100,000 Iraqi deaths and one study suggests over 650,000.
This has cost about $536 billion so far or about $1,745 per US person -
grownup or child. Iraq has a population of about 27.5 million so the cost is
$19,500 each person. The average "family" size is 6 people so the cost per
Iraqi family is $117,000. It may have been better to pay them or build
factories, schools and hospitals. Maybe someday there will be elected
politicians who understand that there are much better ways to settle
differences than war. Weapons and equipment are huge businesses so
they depend on war and can pretty easily sway politician's ideas but on
Memorial Day maybe it is good to not only remember those who have died in
wars but to think of ways to stop having them as it is surly not a civilized
way to behave. 
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