Market Talk / June 25 - July 1

[Spaf]

The Kingdom of TSP
Sunday-Weekly
Early Edition
June 25, 2006​

Yak, Doodles, Tea Leaves & The Tin Box

Kingdom Yak:
Pro-Yak..................................Socks could go up! Market consolidating in mid-water. The economy is strong; awaiting Q2 results.

Con-Yak.................................Socks could go down! Rates haven't paused, crude is a worry, and we are in hurricane season.

Jester....................................The market is a donut! :nuts: Donut if up or down?

Doodles:
Socks [$SPX] Closed at.............1,244.50, dn -7.04 for the week.
Volume (CMF) (money flow)........-0.008, decreasing.
Averages (MACD) (trend)...........-10.297, increasing.
Momentum (S-STO) (signal)........43.90, increasing.
Strength (RSI) Overbought/sold...[70] 43.30 [30]

Lube (NYM) Closed at................70.87, up +0.60, for the week.
Oil Markers..............................<70= ok, 70-75= worry, >75= panic.

Tea Leaves:
Charts & Stuff..........................Yellow / Yellow [Doodles 0 / Lube > 70].

Tin Box:
Position...................................100% socks.
Stops [$SPX]............................Alert: 1243. Trail: 1230.

TSP (week ending)......G=11.42..F=10.54..C=13.63..S=16.62..I=18.54
....(1 week past)........G=11.41..F=10.58..C=13.70..S=16.58..I=18.46
....(2 week past)........G=11.39..F=10.65..C=13.71..S=16.75..I=18.58
....(3 week past)........G=11.38..F=10.65..C=14.09..S=17.47..I=19.71
....(4 week past)........G=11.37..F=10.61..C=14.00..S=17.22..I=19.54

 

[robo]

Stocks: Leading Sectors Pointing Up

Although they may be a bit premature, the jump in energy and metals sectors late last week signals that the trend is about to start turning up in the rest of the stock market. What is keeping the market at bay -- and the buyers sitting on the sidelines -- is the fear of the Fed continuing to raise rates and sending the economy into the ditch.

Those fears are quite justified since the Fed did exactly that on the last tightening cycle. Our measure of the economy shows it has basically lost all of its strength since the early part of the year and has slumped into the same ditch it was in following the hurricanes last year.

Now, since we get this data from the Federal Reserve itself, it's clear that the Fed officials know this very well and are probably a bit concerned that they might go too far. Although they are likely to raise rates 25 basis points (¼%) at this week's meeting -- after all, the markets have already priced in this hike and to do otherwise would disappoint them and raise fears of impending recession -- we suspect that they are going to drop a bone to the markets and hint that the steady hike regime may be coming to an end. But, since they don't want to spark excess bullishness, they are also likely to mention the possibility of high energy prices contributing to inflationary expectations, something they have already done in past announcements. Thus, the markets' reactions to the meeting announcement are likely to be short term volatile both up and down, but also likely to be positive longer term. The bond market should sense the end of the tightening cycle is coming and begin to lower long term rates. The stock market should also start to see buyers coming back in on the dips (we have already seen some of that happening, as a matter of fact).

We have some specific markets, sectors and timeframes which we think will be key to the bullish turn up that coming within the current bear market environment. We also have several methods which point to a specific timeframe for the end of the bear market which should be valuable for long term investors who are waiting patiently in cash. Subscribers should follow the link below for more specifics on stocks, bonds and some key opportunities in commodities as well.

http://marketclues.blogspot.com/

 

[robo]

Good Morning,

Please find here the link to the latest issue of the Investment Commentary.
Please download the pdf file by clicking on the following link: http://www.hable.ca/downloads/Commentary.pdf
(The link has been checked for viruses and worms, and does not contain any malicious software according to the latest scan)

Enjoy the weekend.

Sincerely,

Dr. Volkmar G. Hable

 

[robo]

Money Market Mutual Fund Assets

June 22, 2006
Washington, DC, June 22, 2006 - Total money market mutual fund assets increased by $6.21 billion to $2.113 trillion for the week ended Wednesday, June 21, the Investment Company Institute reported today.

Assets of Money Market Mutual Funds

http://www.ici.org/home/mm_06_22_06.html#TopOfPage

 

[robo]

MARKET COMMENT

June 22, 2006


Waiting around is a drag. Without a patient resolve an investor can get in trouble trying to outguess the powers that be. One day everything looks great and the next not.

Rumors were spreading that the Fed will raise rates 50 basis points next week. That pushed gold, stocks, bonds and currencies lower today reversing much of yesterday’s gains. At the same time, weaker economic data combined with inflationary concerns had pundits chatting about “stagflation”. Until the Fed sends its message, markets have become a guessing game. It’s this kind of day-to-day up/down environment that makes the sidelines appealing.

There will be more choppy days ahead as we wait for the Fed’s decision. Waiting is hard, but sometimes it’s the only smart thing to do.

http://www.etfdigest.com/daveDaily.php

 

[robo]

&P 500 Index (SPX) Nasdaq 100 Index (NDX) Chart Analysis
S&P 500 Index (SPX) Chart Analysis

Last week we wrote:

"... Thursday was definitely a day of fireworks. A huge 3% gain in the Nasdaq and 2% gains in both the S&P 500 and Dow. Up volume outpaced down volume by large amounts. For the NYSE it was 20 to 1. For the Nasdaq it was 15 to 1. Without a doubt these are incredible numbers and they are rarely seen."

This week:

After the huge triple digit rally day two weeks ago we were watching for a repeat. It is rare for the markets to have trading days when up volume exceeds down volume by more than 9 to 1. The NYSE had a 20 to 1 day in that rally.

On Wednesday this week we had another huge trading rally and by midday we were looking for a second better than 9 to 1 day. If it had occurred, it would be what is called a "double barrel buy signal" by Martin Zweig. Mr Zweig has written several books on market timing and this signal was a mainstay of his timing signals. We were huge followers of Mr Zweig back in the 1980s.

But this week's Wednesday rally fell flat. It started strong and reached 9 to 1 up/down volume by midday, but end of day selling came in and, though it was still a good advance, it did not achieve "double barrel buy" status. Plus, on the following two days traders could not sustain the rally. In fact, both days ended in declines.

It seems no matter how big the rally, they last no more than a day or two and then the sellers take over again.

This week ended with losses again for the SPX. But for all the fireworks, most of the days stayed within a tight trading range and the week was mostly sideways. You can see this in the below chart.

Could we have seen a bottom? Well, yes. The below chart shows a possible 3 Wave ABC decline. If this is what has occurred, the bottom will not be surpassed and we should see a sustained advance begin soon.

But if those lows are broken, we would expect to see much lower lows in coming weeks. All we can do is stay with the trend. Right now the trend id down. If it changes, so will we.

Support is still at SPX 1228. Resistance, if we move higher, is at SPX 1272 and then SPX 1285.

The trend for the S&P is bearish. We are in a BEARISH position in the Rydex Inverse S&P500 Fund (or other bearish S&P index fund).

S&P 500 Index (SPX) Daily Chart

http://timing.typepad.com/timer/

 

[robo]

TradingMarkets.com
How To Catch A Market Turn
Friday June 23, 9:44 am ET
By TradingMarkets Research


It isn't everyday that the market gives you a textbook pattern, so it's worth learning from examples as they arise. Take the intraday bottom we formed during Thursday's trade. It was as pretty a pattern as you're likely to see.

http://biz.yahoo.com/tm/060623/14442.html

 

[Birchtree]

http://www.financialsense.com/editorial/barbera/2006/0622.html

Put another way: in the past BEAR MARKETS and MAJOR CORRECTIONS have very often come to their end with the Summation Index below -3,000. This is not a short term or even medium-term gauge, but is instead a medium to long-term tool. As a result, readings below -3,000 on the Summation Index tend to imply serious stock market rallies, not stock market rallies that last a few weeks, but stock market rallies that last many months or more.

 

[Birchtree]

The link I tried to post is of an article by Frank Barbera dated 6/22 on the Financialsense web site.

 

[Fivetears]

As markets fret, Bernanke struggles with rift at Fed
Mr. Bernanke, who is nearing his six-month anniversary in the job, is struggling to convince investors that he's firmly in control of the U.S. central bank and its monetary policy. Some economists worry that an internal power struggle could cause the Fed to push too hard on the inflationary brakes with excessive rate hikes.
http://www.theglobeandmail.com/servlet/story/RTGAM.20060625.wfedd0625/BNStory/Business/home

 

[Fivetears]

New home sales rise 4.6 percent in May
Sales of new homes again defied predictions of a slowdown in May and rose 4.6 percent, but median sales prices fell and the U.S. Northeast experienced its slowest sales tempo in nearly two years, according to a government report on Monday.
The report follows a stronger-than-expected 5 percent increase in May U.S. housing starts last week. The Commerce Department earlier on Monday revised upward data for housing permits, showing that they fell just 1.4 percent in May, compared to an initially reported 2.1 percent fall.
http://news.yahoo.com/s/nm/20060626/bs_nm/economy_homes_dc_2

 

[Fivetears]

Federal Reserve's Bernanke should continue talking
Some on Wall Street think Ben Bernanke has a communication problem. They say he gives mixed messages about the economy and about the Federal Reserve's intentions, leaving investors confused.
But they're missing the point - the recent economic data isn't so clear cut either. And consider the alternative if he becomes tightlipped: There won't be any clues about where interest rates could go next.
http://www.clarionledger.com/apps/pbcs.dll/article?AID=2006606250336

 

[The_Technician]

"We will make sure that the Hamas government ceases to operate if the kidnapped soldier is not returned to us alive," the source told AFP.


Israel's market influence of the week......wonder what will happen....


Noticed today is going to finish on and upnote....does that mean tomorrow will start on a downstroke???

 

[Birchtree]

The Technician,

Go ahead and panic brother - it's all yours. How fast will that Trigger gallop, because we got some big ones on the way. Watch and be fascinated.

 

[Paul]

Haven't checked in for a while, thought I'd pop my head up and talk about my favorite subject, China. I think anyone with investments there should be taking a serious look at pulling them out real soon. Some big names are starting to take notice of the problems there and that will only hasten the fall. One good thing will be the flood of capital into the US economy as it flees China, which should help keep things upbeat here and spur the markets,
the I-fund may suffer though.
Good to be back, looks like there are plenty of smart people on the board.

 

[Spaf]

Daily Yak

The Kingdom of TSP
Daily Edition
June 26, 2006 Closing​

Yak, Doodles, Tea Leaves & The Tin Box

Kingdom Yak:
Pro-Yak...................................The triangle gets tighter each day!
Con-Yak..................................An Lube's a rising.

Doodles:
Socks [$SPX] Closed at..............1250.56, up +6.06
Volume (CMF) (money flow).........+0.043, decreasing.
Averages (MACD) (trend)............-9.347, increasing.
Momentum (S-STO) (signal).........48.14, increasing.
Strength (RSI) Overbought/sold....[70] 46.29 [30]

Lube (NYM) Closed at..................71.80, up +0.93
Oil Markers................................<70= ok, 70-75= worry, >75= panic.

Tea Leaves:
Charts & Stuff............................Yellow / Yellow [doodles 4-1, Lube > 70]

Tin Box:
Position.....................................100% socks
Stops [$SPX]..............................Alert: 1243. Trail: 1230.

 

[tsptalk]

Good to be back, looks like there are plenty of smart people on the board.

Good to see you back Paul!

 

[nnuut]

"We will make sure that the Hamas government ceases to operate if the kidnapped soldier is not returned to us alive," the source told AFP.


Israel's market influence of the week......wonder what will happen....


Noticed today is going to finish on and upnote....does that mean tomorrow will start on a downstroke???

Probably all day! I'm 60% in stocks, you know what that means!

 

[robo]

Short-Term Sentiment:
Positive.

Intermediate-Term Sentiment:
Very Positive.

Longer-term Trend: Positive.

Conclusion
The Senticator is Bullish so we will go long again. We have almost all the makings for a dandy rally. The Amateur Investors are Beared up (see AAII here http://www.equityguardiangroup.com/mv.htm ). The Amateur Speculators are about as Beared up as they get (see the RSO and the Rydex Ursa/Nova ratio and the cumulative asset flows into Ursa fund). Normally, that would be enough to spark a rally immediately. This time, it has not been. Our read is that this is because the market is now much more dominated by hedge funds. According to some reports, fully 30% of the market's volume is hedge fund trading. As such, we need to take their mentality into account. It is clear that unlike the average speculator, the hedge funds were much more Bullish on the way down. It's our guess that they were over exposed and that the market was weak until it wrung the excesses out. So, how do we measure this segment of the market's sentiment? Well, it's tricky. They are nimble and not always wrong. They're also relatively unregulated, which makes them hard to track. The closest we can really come is to look at nimble trader and professional sentiment. One measure is Investors Intelligence (which I've be under emphasizing for too long), and we can also build proprietary surveys.

Currently, Investors Intelligence is at levels not seen since the lows of 2002. We actually saw LESS Bearishness at the 2003 low. This isn't a perfect tool, but I think it's getting at a marked increase in Bearishness by at least one subset of professionals. Our "smart money" surveyees are also a more Bearish and I'm seeing some anecdotal increases in Bearishness elsewhere. The bottom line is that I think we have enough Bearishness amongst the hedge funds players to finally get a rally going. We can get more, but with so much additional energy built up, we have to be on the look-out for a huge rally soon. All we need is to confirm with a bit better breadth and a price strength. The NDX has already given an IT Buy and has confirmed. Remember, people sell at market lows for short-term reasons, so if this thing breaks and you find yourself wanting to short for that last leg down, don't overstay your welcome and make sure you are looking for a rally at any time. Also, watch closely for the "change up"--if they open it weak and close it strong, don't screw around, just get long.









http://www.decisionpoint.com/TAC/YOUNG.html

 

[Spaf]

Trading, ah the fun part​

In todays commentary tsptalk mentioned "pennant". Some know what it is, some don't. Also, it was mentioned that a breakout could be fake.

A fake is where it sputters and falls back into the range. If a higher low is established or several days of advances that could make the trend solid.

However, back to the pennant (and flags).

Flag and pennant patterns are in areas of consolidation, generally associated with higher highs and higher lows.

A pennant looks like a pennant. The support and resistance lines converge to a point. A flag pattern is bounded by parallel lines.

The key is the breakout. If the breakout is in the direction of the trend then the trend will continue, otherwise the trend could be over.

A flag or pennant near the top of the range suggests a breakout, that stocks are consolidating near the top, and selling pressure is dropping, and the stock is preparing to test the resistance zone. Also, the opposite is indicative.

A tidbit on flags and pennants!

Regards, and be careful!............... .................Spaf