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 Oct. 13th

September Import and Export prices were disclosed a minute ago. Import prices fell -0.6% while Export prices went up +0.3%. In August Import prices were +0.5% while Export prices were up +0.3%. The Futures market has the Dow up about 80 points this morning even before the news. After the news the Dow futures dropped a bit and is now up 68 points.

I was looking at the charts and noticed that the S&P 500 still has room to go up. It is my guess that it could go as high as 1250 before the reversal of the trend comes in to play. It closed yesterday at 1169, so that could still yield a 7% gain form here. Then it will be downhill, as the final head and shoulder pattern of this indicator has been formed. So it appears the conditions are ripe for the final phase of this Bear market rally is about to end. Most likely the timing will be after the election but it could start to unfold even before that. There will be a 3 month period where even if the Democrats lose the majority in the House of Representatives that it would be in Republicans interest to drive the market down while Democrats are still in control. The Republicans could then show how they came in and saved the day in January, when they are sworn in to their new seats, replacing Democrats and Speaker Pelosi. The only problem with this picture is that when the big boys start to sell there is no one to buy the stocks because all will be doing the same thing.

The Dow is within 180 points of the 11,200 level where I said that I had thought the top of this rally was. This is close to the 52 week high of the Dow which went to 11,258 previously.

I got a chart last night from Weiss Research and it was very interesting as you can see below. The number of Bulls is now close to extreme which is often an indicator of a trend reversal is in order. We shall see if this plays out as predicted.

Also of significance today is that Apple stock, symbol AAPL, went over $300/share and in pre-market is at $301,08, up $2.54/share.

And on a special note I am thrilled, along with the people of Chile, for the successful rescuing of its Miners. God bless them all and I hope for them to manage the psychological aftermath now with al the attention they will get. Chile did this rescue right!

Market comments for Sept. 15th (UPDATE)

Data released this morning shows the following. The Empire Manufacturing Index for Sept. came in lower than expected at 4.1 compared to an expectation of 5.0, which was lowered from an earlier expectation of 6.0 and last months reading of 7.1 disappointing the market. Last month this was a surprise to the upside because other Fed areas reported sluggish data and this one was a standout because it looked pretty good. Well that myth has been exposed. And yesterday's release of the Business Inventories number of an increase to +1.0% also disappointed the market because of building inventories instead of sales. It was interesting to watch the progression of the changes in the number. Last month the number was announced at +0.3% while today the number was adjusted upward to +0.5%, and the number expected today was initially at +0.7% and then adjusted upward again to +0.8% so you see a number of +1.0% is indeed disappointing for the market.

Import Prices for August were up +0.6%, while Export Prices were up +0.8%. Last month both numbers were negative at -0.2 and -0.3 respectively.

Industrial Production for August as well as Capacity Utilization will be out later at 6:15am PST.

Dow Futures went negative on the data to -40 points. S&P 500 Futures are down about 5 points.

Yesterday started off negative but then managed to end positive on a few Indexes, but not the Dow. The Candlestick pattern was the Black Spinning Top but the last 2 candlesticks did form a Bearish Harami pattern, as I had predicted in my previous post. Consequently a Sell-If signal was issued by Americanbulls.com. Any downward gap at the open validates the Sell signal.

UPDATE 11:15am PST

Industrial Production came in at +0.2% while expectations were for +0.3%. Interestingly, July's data was revised down from +1.0% to + 0.6%, which is a bigger decline.

Capacity Utilization came in at 74.7% for Aug., while the expectations were for 75.0%. July's data was revised down from 74.8% to 74.6%, again another revision of a number downward. Are you spotting a trend yet? :)