Market comments for July 15th UPDATE

The CPI data came in at -0.2% in June, compared to +0.2% in May. Core CPI came in at +0.3% in June and was up +0.3% in May. This is showing that core prices are really rising as many feared. This economy is sounding more like we are in "stagflation". These CPI Core numbers are in line with what is happening with what has happened to the Core PPI numbers as well. In June Core PPI rose to +0.3% from a May reading of +0.2%.

The Empire State Index came in at -3.76 in July versus in June it was -7.96. Expectations for July were for the number to be 0.0, so this is not a good number and indicates a slowing business climate. That's hard to imagine given the business climate has felt like it has almost stopped the past 3 months. This data is in line with the Inventories data which is also rising and showing that Manufacturing is slowing down even further. This data is feeding into fears a double dip recession is going to occur.

Later this morning, Industrial Production data will be released for June, as well as Capacity Utilization and Michigan Sentiment data for July. Here's what to watch for Industrial Production came in in May at +0.1% and expectations for June are for a +0.3% reading. I expect the number to disappoint. Capacity Utilization came in last month at 76.7% and expectations are for a reading of 77%, indicating more usage of existing capacity. I think this number will disappoint as well and be below 77%. And lastly, Michigan Sentiment in June came in at 71.5, and expectations are for it to be 70.0% reading. I believe this number will be somewhere between 71.5% and 70.0% and will not be off by much, resonating with the general feelings in the country of negativity, partly based upon the politics of the moment on the issue of whether the Congress is going to raise the debt ceiling and also the higher Unemployment numbers this month. The trends are not good and we may be very close to going back officially into a recession.

Bah, humbug! The Futures look positive this morning in advance of this data. The Dow Futures indicated +44 before the CPI data came out and the Empire State Index. Now the Dow Futures indicate a +43 reading, so nothing has really changed with respect to the Futures.

Today is Options Expiration for July so expect high volume today.

UPDATE: 6:55am PST

Industrial Production came in at +0.2%, not +0.3% as expected. But the huge news is that the Michigan Sentiment came in at only 63.8 vs an expectation of 70.0 and a reading last month of 71.5!!! This is a huge disappointment but a realistic data point on how people are really feeling.

Capacity Utilization came in at 76.7%, same as last month and not the 77.0% expected.

Market comments for June 15th: Astonishing!

The Put to Call ratio today closed once again above the 1.00 level this time reaching 10 consecutive days the ratio has reached this occurrence. The last time the Put to Call ratio had a run like this was starting on June 26th, 2008 where for 13 consecutive days a 1.00 Put to Call ratio was observed. In the chart below, I have circled both occurrences with red circles and arrows pointing to both periods.

In the chart below, the Dow Industrials average is plotted so that you can see what turbulence followed just after the June 26th, 2008 period. It started the big selloff in the market.

The real question to ponder right now is whether we are at the precipice of the decline, as we were at roughly this time in 2008 as you can see from the chart. That was the beginning of the drop all the way down to Dow 6,500. Back in June 26th 2008, the Dow was at 11,500, which wasn't too far from where we are starting now, is it? :) Only time will tell and it will be hindsight as that. Coincidence or correlated? Cause or Effect? That is the real question. Astonishing!

UPDATE: 5:45am PST

The Core CPI for May came in at +0.3% or an annual rate of +3.6. Also, the Empire State Index dropped from + 11.88 in May to -7.79 in June and that isn't good! Dow Futures are down about 110 points and the Nasdaq Futures are down about -20 points. Adding to the drop in the Futures is the riots in Greece over the austerity required to get bailed out by the EU. The people don't want any part of it and have turned unfortunately to violence in the streets as tear gas and water cannons are now targeting those protesters.

Market comments for Oct. 15th, 2010

The big news today for me was Univ. of Michigan's Consumer Confidence number. It came in at 67.9 vs. 68.2 for September. So it is clearly lower. Market Expectations were for it to come in at 68.5. Other data released was CPI, which came in at +0.1% and Core CPI which came in at 0%. That is one of the reasons there will not be an increase in Social Security checks in 2011, there is no inflation according to these numbers which have been steady near zero, for most of the year.

Retail Sales improved +0.6% for September, was due to large purchase items they say. Expectations were for them to be 0.2%. Well it wasn't me that bought a large ticket item, just a small cute poodle. :)

Not much to crow about today for the Bulls as the market has dropped somewhat. The Dow is down about 25 points at the time of this post.

And as a Public Service announcement, today all late filers must file taxes which are due for State and Federal taxes. They must be postmarked with today's date in order to avoid late penalties.

Market comments for Sept. 17th (UPDATE)

Today is Options Expiration for September. The first economic data released this morning was the CPI for August. It came in at +0.3%. Expectations were for an increase of +0.1%, while for July the CPI came in at +0.3%.

Core CPI for August came in at +0.0%, while expectations were for +0.1%.

The third piece of data is that of University of Michigan Sentiment Index for September. Expectations are for 70, while last month a reading of 68.9 had been announced for August. This is the only number released this week, which is not subject to manipulation by neither the Fed nor the government. I will Update this post after the data is released.

UPDATE: 7:00am PST
Michigan Sentiment Index came in at 66.6 vs expectation of 70.0 and last month of a 68.9 reading. This is not good news for those hoping Consumers will be buying anytime soon. As soon as the number was released Volume jumped on the Dow to 161 Million shares and the market went form almost being up 40 points to dropping down 20 points so far! Remember 666 is the mark of the beast according to Christians, so beware! :) Here's a chart of the Index back in time. We have been going straight down in the past few months.

Yesterday’s data showed the Dow eking out a small gain of +22 points to 10,594. This resulted in a White Spinning Top candlestick pattern. For most of the day a Hammer pattern was in affect, but in the last 45 minutes manipulators came in to get the Dow into the positive. What was amazing was that many other indexes had candlestick patterns which were a Hammer and thus a Sell Confirmed signal was issued for these indexes. Those indexes are the following:

Dow Jones Composite Index
S&P Mid Cap
Dow Jones Banks
Dow Jones Air Freight
Dow Jones Broad Market
Dow Jones Cyclical
Dow Jones Durable
Dow Jones Industrials
Dow Jones Transport
Dow Jones Mid Cap
Dow Jones Oil Drillers
Dow Jones Container and Packaging

There were many more I did not choose to list. I think you get the idea. If you want a more complete list, click here.

I have done an analysis on Initial Jobless Claims, for comparative analysis purposes, from December 2004 through November 2007, as well as data from April 15th to yesterday's released data. It surprised me. During the 2nd half of the Bush term, from 2004 to 2007 you will notices that generally the data was in the range of between 290,000 and 350,000 Initial Jobless Claims per week.

The Unemployment rate during that same period was ranged by 4.6% to 5.5%. Here’s the Yearly data.
2004 5.5%
2005 5.1%
2006 4.6%
2007 4.6%
2008 5.8%

As you can see from the chart above, of the Weekly Jobless Claims, from April 15th, 2010 to Sept. 17, 2010, we have been range bound and there has been no appreciable difference in the data over the entire period. The solid straight horizontal dotted red lines show the range of the data from 2004 through 2007. We have a long way to go to get down to those levels. And looking at the chart below, an even more interesting the numbers go from 1967 to 2010. It is clear we are in a high range and are bound to stay that high until the economy improves. Government can't do the majority of the heavy lifting, but the Private sector can and will when Consumers are feeling better about their future.

Market comments for Aug. 13th: That's Friday the 13th bad luck! UPDATE

Here we stand on Friday the 13th all wondering whether the direction of the stock market will have a reversal today based upon the recent few days Candlestick patterns, because that is what the patterns say. We should have a minor reversal today. Economic data will not be the determinant today. It won't be the social mood of traders. It will be whether the Fed wants the market to go down another day ending the week.

Even though we expect CPI data today to come in near zero or a negative reading adding to the deflationary case that has been made by many including me, it will not be the decisive data to determine market trend. That direction will need one more week to be determined. Next Friday is Options Expiration for August and 2 weeks before the start of school. Speaking of the return to school, Retail Sales numbers will shed more light on the Consumer as its data is to be released momentarily. Dow Futures before the data release was at -27 for the Dow. So here is the data:

CPI for July came in at +0.3% The market had expected +0.2%. The prior month's reading was -0.1%
Core CPI for July came in at +0.1%The market had expected +0.1%. The prior month's reading was +0.1%

Retail Sales came in at +0.4%. The market had expected +0.5%. The prior month's reading was -0.5%.
Retail Sales ex Autos came in at +0.2%. The market expected +0.4%. The prior month's reading was -0.1%.

The Dow Futures have now moved more negative with the Dow Futures now at -50, so the initial quick reaction was more negative. TIME WILL TELL WHETHER THIS PLAYS OUT FOR THE ENTIRE DAY TODAY.

Michigan Sentiment comes in in about 1 hour and 25 minutes at 9:55am EST or 6:55am PST and I will update this post top add the data so be sure to check back if you are as interested as I am to post it. The market expects 70.0. The prior month's data was 67.80.

Be sure also to visit over the weekend as I will post some charts and show where we are headed and where resistance is on both the Dow and S&P 500. You see on a micro level it is much harder to determine short term market direction. But at a Macro level it is much clearer. Thanks for visiting the site. I also am going to post soon several non stock market commentaries. One will be on the Proposition 8 Court decision which took place this week reversing the ban on Gay Marriage on Constitutional Grounds. The other article I am working on is about opinions by the Chamber of Commerce on Prop 19 in California, which would legalize Marijuana use in California for adults. I have some definite thoughts on both topics.

As I finish writing this post, the Dow Futures have recovered to only -6. So it might not be that bad a Friday the 13th for the Longs but instead could be for the Shorts. Have a nice weekend.

UPDATE: 6:55am PST

Michigan Consumer Sentiment came in at 69.6%, which was not quite 70.0 but close and better than July.

Market outlook for July 16th (With continuous Updates)

Well the news came out this morning on CPI. First the actual data and then how the media is portraying it. The CPI for the month of June came in at -0.1%. For the month of May it was -0.2%. The Core CPI for June came in at +0.2% while for May it was 0.1%. That's the unvarnished data. Now here are the headlines I noticed across the internet this morning:

From Yahoo.com
Headline: Consumer prices dip for third straight month
Excerpt: "The Consumer Price Index, the government's most closely watch inflation barometer, dipped 0.1 percent in June, the Labor Department reported Friday. Less expensive energy bills were a big factor behind the drop. Prices for some food items, airlines fares, computers, telephone service and personal care products also fell last month."

From Bloomberg.com
Headline: Prices Excluding Food, Fuel in U.S. Exceed Forecast
Excerpt: "The cost of living in the U.S., excluding food and energy prices, climbed in June more than forecast, easing concern that a slowdown in growth will spur deflation. The so-called core rate of the consumer-price index increased 0.2 percent, the most since October and exceeding the 0.1 percent gain projected by the median forecast of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. Prices overall fell 0.1 percent, a third straight decrease and matching the median forecast."

So what's important to focus on her.I think the fact that the CPI is down for the 3rd straight month and in fact down for most of the past 6 months, but no one mentions that. You see yesterday in the NY Times, there was a column about the Fed being split at its latest FOMC meeting in that a number of them raised concern about Deflation for the first time. Quoting from the article, "Inflation has been running well below its unofficial target of 2%, so much that a few officials fear that the US is at risk of the kind of deflationary spiral that has hobbled the Japanese economy for the better part of 2 decades." So even here at the FOMC meeting is the deflation issue is creeping into the forefront of the news.

Now add to that how us real people feel and you get a better view of how things really are. Just out are readings of Consumer Confidence which is important because the Consumer makes up 70% of our economy they say. So here is the info on that: The survey's preliminary July reading on the overall index on consumer sentiment plummeted to 66.5 from 76.0 in June. So we know how things really are going and sooner or later the markets will have to follow suit and replicate the real economy no matter how much the Fed is pumping money into firms like Goldman Sachs and others to get them to manipulate the stock market by buying near the close of the market every day. Just look at 1 minute charts of the Dow or Nasdaq or any Index for the last hour of trading compared to the previous time during the day. You will be convinced if you are objective.

So the market has had a minor reaction to the news with the Dow down as much as about 180 points this morning. Let's see how the day ends. My guess as it always has been of late is that it SHOULD be down based on the evidence, but manipulation of the markets has not yet abated. Time will tell if sanity rules.

UPDATE: 8:00am PST
The Dow has managed to stay below the 50 day Moving Average again today and that is a good reversal from past couple of days. It puts the rise in the market on hold and sets up a declining trend. The 50 day MA is at about 10,250, while the 200 day MA is at 10,380. The other thing I like particularly about the day unfolding is that we are forming a Hammer pattern which stops the uptrend and reverses it. That would keep in tact the trend of lower highs (the first rally a month or so ago was to 10,594 and this one will have peaked at 10,400) and lower lows. This will mean that we will most likely go below the previous recent low of 9,614.

UPDATE; 8:30am PST
Volume is up significantly at 160 Million shares so far compared to yesterday's 210 Million shares traded on the Dow for the whole day!

Is the stock market trend up this week to be believed?

This week the markets have moved up steadily each day. The guests on CNBC and other networks are declaring once again things are getting better and while the jobs picture is still not recovered, we are doing better than we were a year ago. My goodness, with all this good news and the trend now going up in the markets, I should probably become a Bull and buy here, right? Wrong!

If you look at the chart above, the Volume is less than it has been when the market was going down just a month ago. This is not convincing to me. In fact it validates my conviction that it is an old con game designed to drive the market higher by enticing others to feel safe in the market only to have them get out at the top and the average person gets shafted again. Can the market go to 11,000? Yes it can. But is the enticement of a gain to the upside of the 500 points worth the risk of the market dropping 1000 -2000 points? I say it isn't, but heck, that's just me. You do what you want.

I am planning on doing a post soon with many charts you most likely haven't seen that hopefully will be illuminating. They will deal with historical data of the Dow, Gold, the US Dollar and the Core CPI among some of the correlations. Stay tuned!