New Earnings Reports and Other Reports 09-20-10

The S&P 500 ETF (SPY) 09-14-10

It is time for an update on the Spyder.  Price is at the second price objective for the move up and should run into some resistance in this area.  It was an up and down day today with the SPY closing at 112.65 down 0.08.  The target for this short cycle move up is 116.41.  Right now Max Pain for the SPY is at 110 and I will have to look tomorrow morning to see if there has been a major change in the open interest.  This hasn’t worked really well the past couple of expirations, but one never can tell when that will change.  The market was in rally mode all day after the open and then it took a nose dive in the last 15 minutes of trading and in the after hour trading as well.  For price to start a move lower it will have to go through 111.05 and then the first price objective will be 108.79.   The lower time frames have downside pressure being applied to price at the time and the daily chart has crossed over in an over extended area of the chart.  The problem is that it has done this before and then continued higher.  We shall see how the news tomorrow affects price action. 

Commentary 09-12-10

One doesn’t stand in front of a moving train and that is what the stock indexes have been for the past week or two.  Let us look at what could be in the wind.  All of my indicators are in an overextended area of the charts.  That is just a technical thing and there has been no entry to a downside move at this time.  Now let us look at what is actually happening fundamentally and the effect that it could have upon the markets.  With about 450,000 people a week losing their jobs and adding over 2,000,000 people a month to the unemployment rolls is not a good thing.   I don’t think the government can replace those jobs any time soon, even with their new programs.  Individuals are in a state of flux as to their personal finances and paying down debt and only purchasing the necessities they need for everyday life.   Those that are employed are worried that they could join the rolls at any time and are trying to buy down their outstanding obligations.  Even the Federal government in its last report stated that the economy is anemic and the numbers show that the GDP is being reduce with each passing quarter.  The Fed is printing money like it is going out of style and it is having little if any effect on the markets.   The Fed has not run out of options, but there are very few left.  The banks are not lending.  Why lend on car loans, business loans or mortgages that could be shaky at this time when they can borrow from the Fed at zero cost and then buy treasuries and gain the yield with zero risk?  With interest rates where they are and the fear factor driving money into treasuries the pundits are saying that a huge rally is in the works when that money shifts from bonds into stocks.  My thoughts are that there will be a downdraft in this market before any rally of substance can appear.  Whether it is a violent move down that has blood running in the streets or whether it will be a long drawn out, and nerve-racking, move down, I can’t tell at this time.  There can even be another short squeeze that jolts prices higher that will give everyone a chance to sell their stocks at higher prices. 

 Just an old man’s opinion,

Ira.

S&P 500 ETF (SPY) 009-12-10

Friday’s up move clicked the pressure indicator from down to up.  The problem is that is still divergence at the top and with all the upside pressure price hs not been able to close above the 200 day moving average or take out the key previous high.  With a close of 111.48 there seems to be a lose of momentum for the up move .  For Price to start a move down it would have to go through 109.44 and then the first price objective would be 107.20.  The next price objective for the move higher would be 113.35.  The indicators on the lower time frames are all over extended. 

E-Mini S&P

The e-mini S&P went to its first price objective of the move up at 1094 and so far has not been able to continue towards its second price objective at 1125 which is just about where the last down moves started from (the horizontal black bar marking a double top).  To start a new move down, price would have to go through 1084 and the first price objective would be 1062.  The indicator is extended in the overbought area.

Arthur

Crude Oil (October futures) and DIG (ETF for Crude Oil)

As posted in earlier charts below, Crude Oil rallied to its first price objective in the retracement move up at 76.40.  Its second price objective remains at 79.20 (marked in black).    Within that cycle, it has also hit a new entry up at 74.04 with the first price objective at 77.30 (marked in blue).  The indicator has turned up.  To start a retracement down, price would have to go through 75.27 and the first price objective would be 73.86 (marked in red).

The ETF for Crude, DIG has a similar formation with a first price objective for the move up at 30.38 and the second price objective for the retracement up at 31.28 (chart not shown).

Arthur

Commentary 09-06-10

I have a real problem with the euphoria that has been going on in the markets of late.  I am not a fundamental trader, but one has to look at what is going on around them in order to analyze what one sees on the screen.  I will not fighting the flow of the market, but at times one must question what one is seeing.  The housing market is not about to come back soon.  The boom last year came on the heels of an $8000 or $6500 government tax credit.  Did it really help anyone other than those that were already going to buy a home?  To get a tax credit you have to be employed and earning money and have taxes to pay in excess of $8000.  Can the government do this again? I doubt it.   What does that mean?  It means, in my opinion, that housing prices have not reached the bottom yet and foreclosures just keep on coming at a rapid pace.

Let us take a look at the employment numbers.  They jumped for joy and tossed millions into the stock market because there was an increase of 67,000 jobs.  There was no mention that the unemployment rate went from 9.5% to 9.6%.  There was no mention that the actual rate for those unemployed as well as those no longer on the rolls runs between 16% and 22%.  No one that I have seen has an actual number for that. Not to mention the underemployed.   In July and August there were about 54,000 jobs lost and in June 175,000.  To top that off, it is my understanding that there were an additional 3 million new people entering the job market.  Let us look at the other side and note that we added 650,000 jobs since the start of 2010, but that we have lost over 8 million jobs since December of 2007.

Europe is now going to add controls on their financial markets with a Systemic Risk Board.  This board will control banks, hedge funds, short selling, various financial instruments and derivatives and they are talking about establishing their own rating agencies.   They will even issue warnings on shady insurance policies.   This does nothing to solve the current sovereign debt crisis.  By drawing in their spending and trying to reduce their debt, they are taking funds out of the market place which in the long run should be good, but in the short run will have a negative impact upon growth. 

Now to the U.S.  So far this year Bernanke and the Fed have printed $1.5 trillion dollars to buy mortgage bonds, treasury bonds and government agency bonds.   While the government has been buying a lot of worthless paper the rest of the economy has been on a debt reduction binge.   Corporations are flush with cash and are cutting back upon their borrowing, banks have cut back on their lending and with the lowest mortgage rates in a generation there has been a mortgage reduction phenomena going on.  In spite of all the money printing and hoopla over 110 banks have failed this year. 

There is supposed to be no inflation.  That may be the case in the housing market and the electronic gadget market, but in the things that everyone uses on a daily basis prices are going higher.  Gasoline is at $3.19 here, health insurance costs are going up from 18% to 50% depending on your status, a peach in the market costs $1.00 and almost everything I look at is up in price.  Yes, many stores are having 50% off sales, but who is buying other than back to school items.  Parents are buying because their children have grown out of last years cloths.  How many people are there buying to expand their wardrobe?  Buying that new set of golf clubs?  And with the variation in the Yuan imports will become more expensive.  You are now just starting to see labor unions refusing to take any further cuts in benefits and asking for higher wages. 

Hate to rain on your Labor Day holiday, but I felt that someone had to say something.  Just the ramblings from an old man.

Ira

DIG (ETF for Crude Oil)

DIG is the positive ETF for oil.  Currently price stopped at the first price objective for the move up at 29.33, just short of closing the gap established in August.  The second price objective is 31.12 (not shown).  The indicator has entered the extended area.  To start a move down, price would have to go through 28.03 and the first price objective would be 26.49.

Arthur

IWM (ETF for Russell 2000 Index)

IWM is the ETF for the Russell 2000 Index of small stocks.  Often times I’ve found that this index leads the S&P and the Industrials.  The chart shows that a double bottom occured with the lows in July and August.  On Friday it gapped up, closing the downside gap established in August. Currently price is attempting to get to the second price objective of the move up at 65.27.  However, the indicator has entered the extended area putting pressure on the move up.  To start a move down, price would have to go through 62.40 and the first price objective would be 60.31.  This ETF closely follows the Russell 2000 futures.

Arthur

Reports and Earning For the Week of 09-06-10