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 outlook June 22nd

Existing Home Sales were down 2.2% for May. This was lower than analysts expected and is not a good number. The stock market is near neutral this morning and making up its mind where it is headed. The Dow has had a 90 point range this morning going as high as 10,493, but has pilled back after the release of the Housing data. They are talking that this may be the beginning of a double dip in the recession. The Dow is now down 5 points but heading up again to the positive. I will post intraday charts of the Dow and make commentary throughout the day. But there is a tug of war to define market direction between the Bulls and the Bears. Check back, as a "W" pattern is being formed.

Update: 8:45am PST

The Dow and other indexes have been between positive and negative values today. Two "W" patterns emerged as is shown on the above chart. The first one I did not put a red line under, but it was not slanted and just before the one I did underline in Red. It seems like the market is trying to go up now as the slant indicates. I am not buying or selling today, as direction seems to be unclear today. And when I am in doubt, I go back to the question, What is the overall Trend of the market? The answer is down. So I do not buy when short term direction is unclear. Stay tuned for more updates.

Update: 11:30am PST

As you can see from the last "W" pattern above we are going lower than this last leg down on the "W" pattern. TZA Calls should be rising. Remember 10,393 on the Dow is at the S2 support level. For those long the market, you will want this level to hold. For those short, you will want this to go lower than 10,393 and stay below that level.

Update Noon PST

As you can see the market did follow the slanted "W" red line and went down over 100 points and broke through all Support levels. This market does have a negative bias and today just proves my point. Direction had been slightly positive and then negative teetering art the Unchanged line, but then made up its mind that the Bears are in control. We are in the last hour of trading so let's see what happens as there are no "W: patterns to get a clue from right now.

Update: 1:15pm

The market has closed and the Dow finished at 10,293, down about 150 points today. More interestingly, the Dow finished today below its 200 day Moving average which is at about 10,320. THE DOW MANAGED TO STAY ABOVE THE 200 DAY MOVING AVERAGE FOR 5 OUT OF THE 6 DAYS. Unfortunately for the Bulls, it has closed below that level and will make a rally above face more resistance. As can be seen in the 2 month chart of the Dow above, it has been down below the 200 day Moving Average from May 20th until June 15th, so this is a setback for the Longs. For the Shorts like myself, it is what I had expected. I did not sell any TZA Calls (which is the Triple ETF Ultra Short with goes inverted to what the Russell 2000 is doing. If the Russell drops 1% TZA goes up 3%.) TZA closed today just shy of $7.00/share for a 6.3% gain. Volume today was slightly ahead of yesterday's but is not that low low given it's the beginning of summer and many are on vacation this week as school is out. Check back tomorrow and every week day for market updates and on the weekends occasional commentary on the news of the day. Thanks!