Market comments for Aug. 16th (UPDATES)

The Dow has been going back and forth between Dow 11,000 and 11,500 as I said it might in recent posts. It is not clear yet whether we are going to go and stay above 11,500 in order for it to become support for the Dow or whether we will test it and fall back down below and head back to test 11,000. The charts below, especially the 3 month chart shows the volume has been dropping off while we have risen from below 11,000.



Housing Starts and Building Permits data will be released at 5:30am PST and I will update the information here and make a comment or two on this and Industrial Production data, also to be released.

Watch for news coming out of Europe as a high profile meeting between Germany and France will be taking place discussing the European debt crisis and should provide a news aspect to the market.

UPDATE: 5:30am PST Aug. 16th

Futures are down significantly this morning. News from the Eurozone responsible for the decline. The Eurozone released its Q2 GDP number and it came in at almost no growth at 0.2%. This has caused the German DAX to drop over 2.3% and caused the Dow Futures to drop to -150 points. Later today Merkel and Sarkozy to announce the result of their meeting about Sovereign debt issues across Europe amd any actions they plan to take. They are going to propose a Financial transaction tax across the Eurozone.

Housing Starts data was released here and the data showed 607K starts for July. Data for June was at 629K starts and expectations for July were at 600K. Building Permits came in at down -3.2% at 597K units.

July Import Prices were up +0.3%. while Export Prices were down -0.4%.

It looks like we will not penetrate above the 11,500 resistance level today, but instead may go and retest 11,000 in the next few days. The Volatility Index should rise sharply today.

Market comments for April 19th on the Dow and CAT

Looking at yesterday's drop in the markets and specifically the Dow, you can see that again Caterpillar, symbol CAT, which has led the Dow rise over the past year was one of 2 stocks leading the Dow lower yesterday. I have posted 2 charts below of Dow and Caterpillar which shows the extent of CAT's move down lately. More is to come as the market goes lower, but there will be bounces up on the way down. Notice the volume to the downside for CAT yesterday. It was very high, suggesting more downside is to come.



Housing starts and Building permits data was released today and both showed better than expected numbers. While many see this as a positive for the Real Estate market, I see it as a negative because the supply of houses on the market or about to be put on the market much too high a supply. This will keep housing prices low and may drive prices even lower if this becomes a trend and continues.

Market comments for Oct. 19th

Today's economic data was released on Housing Starts and Building Permits, after the earnings data from IBM and Apple had already driven the markets down after hours yesterday on disappointing forward expectations by both companies. Today's data isn't important to offset this decline nor add much to it because it isn't as important as other numbers being released later this week on Initial Jobless Claims. Housing Starts data released this morning for September came in at 610K, compared to an expectation of 579K. Last month's data was revised upwards from 598K Starts to 608K Starts. Building Permits for September were down to 539K Permits versus an expectation of 565K. August's data was revised from 569K to 571K Permits.

If you haven't read my post from Saturday on Fundamental Analysis versus Technical Analysis be sure to do so as it explains much of what is going on in the market discord between both type of analysis and the conclusions each draws.

A special Birthday wish to my friend in Massachusetts this morning. He and I were in Carmel many years ago on the day back in the 1987 when the market crashed. We survived that one but not sure if we will on the next one. A very Happy Birthday, Lad.

Market comments for Sept.21st.

The big economic news today is Housing starts, Building Permits and The Fed FOMC meeting. The first data released this morning was Housing Starts for August. Expectations were for 540K and the number came in at 598K. For the prior month of July, the number was 546K so we are 10.5% higher than we were expecting. Futures reacted positively to the news.

Building Permits came in at 569K. Expectations were for 550K. The prior month was 559K. So this number along with Housing starts were better than expected and up from the previous month.

Later today the Fed will be meeting and announce whether interest rates will stay the same. The statement they make will be watched carefully.

This market, with a little good news could go to 11,200 on the Dow again. This is another 500 points. But it should not go higher. as it appears a Head-and-Shoulders pattern developed between May and mid-August of last year. So the shorts are going to have still yet a bit longer pain from this rally which will have moved 12% since it was 10,000 in August and 15% since it was 9700 in July. That is what has caused some pain for people like myself who are short right now. This too will pass and those short purchases now will provide the biggest gains when the market does turn. For me it is no time to be weak kneed. As this market rises to 11,200, I will add to my shorts and keep my fingers crossed. But I wouldn't make a move like "All In!" on this expected market rally.

Economic data released today, Aug. 17th (Update)

The beginning of economic data for the week was released this morning. First up was Housing Starts for July. They came in at 546K. Expectations were for 555K. The prior month was revised down to 537K from 549K. Building Permits for July came in at 565K. Expectations were for 573K. The previous month was revised down to 583K from 586K. While these numbers are lower than expected, it wasn't off by a lot so the market will look at these as good news.

The PPI number came in at +0.2%. The market expected +0.2%, so that was in line with expectations. The Core PPI came in at +0.3% for July. The market expected +0.1%, so this was higher than expected.

Industrial Production came in at +1.0%. The market expected +0.8%, again better than expected.

This has set up the market to rise as the Dow Futures now are +65 going into the open. Now we wait for the Initial Jobless Claims for Thursday and Continuing Claims. The Initial Jobless Claims will be the most important going into Friday's Option Expiration for August.

WallMart had better than expected earnings form oversees growth. That set the market up for a rise earlier. It is clear China is still dragging some of the world economies to a better than expected Q3 GDP number no matter what the final result would be. But if they slow down the world is screwed as is China as expectations have been building with the Chinese population of an ever growing improved condition in their lives. It's hard to get off that drug, once someone has had the initial taste as the Chinese will certainly find out some day. It is their only concern about destabilization within its borders.

UPDATE: 7:45am PST

Capacity Utilization data came in at 74.8%. This was exactly what was expected. It is an uptick from the prior month reading of 74.1%, so it is in the right direction. But Factories need to get to a minimum of 85% to be generating lots of jobs and we have a long way to go to get there. Here is a historical perspective on the data.



Average 1972-2009 79.2%
From 1988-1989 high 85.2%
From 1990-1991 low 78.7%
From 1994-1995 high 85.1%
From 2008-2009 low 68.2%
July 2009 69.1%

Now this is the progression for 2010
Feb. 72.4%
Mar. 72.8%
Apr. 73.1%
May 74.1%
Jun. 74.1%
Jul. 74.8%

So the data is definitely improving and going in the right direction for a recovery but at this rate it would take several years to get back up to 85%, assuming we don't have a setback.

Market outlook for July 20th: Rainy with Clouds

Well after the bell yesterday, IBM reported its earnings as did Texas Instruments. Both disappointed on top line Revenue expectations and that has set the stage for today's market action. Futures are down and Europe is down this morning. Also out this morning was Housing Starts and Building Permits. The news there was mixed. Housing starts came in at 549K for June compared to an expectation of 575K, which was worse than expected, and Building Permits came in at 586K compared to the expectation of 572K, which was better news than expected. That rallied the Futures a bit so they weren't as negative before the news came out Dow Futures were down about 100 before the Housing data, but after the data they came in at down only 75. However, currently the Dow Futures have slipped back down 93.

Expect today to show another leg down on this slowly unwinding market. I will post Updates here during the day today. So if you have read this once be sure to come back and see the Updates and commentary.

Also, news on Goldman Sachs missing expectations on their numbers also is causing some market turmoil. It is clear that the top line Revenue Growth is not there and the only way companies are making their earnings is but cutting costs. It isn't going to get better any time soon according to Pimco's Mohamed El-Erian, CEO and Co CIO who was on CNBC this morning.

I will also post today something on Silver and ZSL and that there is about to be a significant break below key supports on Silver and that this can be payed by buying ZSL or adding to previous positions. Look for tha post later this morning.

UPDATE: 9:45am PST

AS you can see from the above chart we started down about 125 for the Dow but have steadily risen up in spite of the news. Well the Dow formed a "W" pattern with the slant pointing down. We therefore should go lower from below the lowest leg of the "W" pattern. That would take us to Dow down over 100 again today.