Monday, April 11, 2011

Fed Makes Same Mistakes of the 1970's

 After 4 days of lateral consolidation SP500 dips to the 10 day EMA. Of course it must have been due to the pending government shutdown.
 Liquidity versus Oil: Oil breaks $112/bbl and may have finally hit consumers' choke point as Fed makes same mistakes of the 1970's.
 Bernanke, a Great Depression expert, needs to bone up on the 1970's.
 Rapidly declining dollar adding horsepower to the oil and commodity price spike, and consequently, inflation.
 Tired of whiners.
 Despite all the hoopla Friday, it was a pretty normal, and small, pullback.


A normal dip is packaged as a 'shut-down selloff.'

I had 'Wizard of Oz' d j vu today listening to the so-called financial stations covering the potential government shutdown. Listening to the sanctimonious leaders of the Senate and House, I was reminded of the phrase, "Lions and tigers and bears! Oh my!" One side argued that women were not going to be able to get their cancer screenings at Planned Parenthood while others argued over an amount of money that, with a deficit of $4B piling up per day in the US, was less than 10 days' worth of activity.

I am not sure how you spell futile, but looking it up in the dictionary they may have a definition that talks about our two-party system arguing over an amount that is 0.25% of our deficit. I heard a Congresswoman from Florida saying the 2012 budget proposed by Mr. Ryan would be a tornado through the rest homes of the elderly. Piled on top of the rest of the nonsense we have heard this week, it appears that our leaders' hypocrisy knows no bounds.

The government does not need to be shut down. What needs to happen is to get rid of all of these so-called leaders and I mean from the Senate, the House, and from the executive branch. We should start over with people who have backbones and can actually make decisions on how to run the country. Of course all of the networks and so-called financial stations feed right into the hyperbole and dogma by reporting breathlessly about this government shutdown and how it will impact the economy.

Looking at a chart on the session, it chopped around all day and then as the last two hours started, the market sold off for 45 minutes. You would have thought there was a 10.0 earthquake in Japan (or in DC, for that matter). Everyone said it had to be the shutdown that was imminent. Frankly, history shows us that the stock market does not sell off because the government shuts down. It kind of likes it. It feels like the government is taking a vacation and not spending money, so the stock market goes up. Maybe there was a bit of impact on the market. Maybe.

Let's take a look at a chart of the SP500. For the past week it has been moving laterally in a tight range. What have we said? It could either consolidate in a tight range or come back and test a bit. It only made it down just below the 10 day EMA on the Friday low and then rebounded to hold that on the close. It has had a three-week run to this level right before earnings. It went up to another resistance point on top of a big rally already, and then a decent-sized selloff. Does it make perfect technical sense that the market got a little ragged at the end of the day? Damn right.

Of course just when all the journalists who try to pass as market analysts got totally worked up about the selloff, it turned, reversed, and cut more than half of that last two-hour selloff heading into the close. Despite the market being petrified by a supposed imminent shutdown, buyers still stepped in and used the dip to buy. Could it also have been that there was some light volume on the session? Trade was very light. It made it quite easy for a mutual fund or two to take some profits after a nice rally and a lateral move below resistance that could not make the break. And right before a weekend. Did it make sense that they took some gains? You betcha. Sorry, I do not mean to quote Sarah Palin again, but that just rolls off the tongue. I cannot help myself.

So what was the problem? Was it a government selloff? Poppycock. Nonsense. I would call it something else, but some kids listen to this. There are some serious issues facing us versus less than 10 days' worth of our deficits. That has to do with oil, my friends. Looking at the chart, oil shot higher again to $112.79, up $2.49. It is exploding higher as our dollar swirls around in the toilet and is heading to the sewer right now. That is the problem.

The Fed has its massive liquidity versus a tanking dollar and, consequently, surging oil, surging gold, and surging all commodities. It is a game of the Fed and its liquidity trying to inflate our way out of our deficits versus the rest of the world taking action against too much liquidity (or actually having a strong economy, such as China). Also their currencies are inflating versus the dollar, thus we are getting it from both ends. The dollar is weaker, and then everything denominated in dollars is even more expensive. Every time the dollar drops, you have to pay with more dollars to get those commodities. It is a vicious cycle, and we could have some serious trouble ahead.

This break today was very important. A lot of very smart economists and investors are saying that $110 barrel of oil was the choke point. That is the critical level for the consumer and the US economy. Now we are blowing through that. It was a gusher through that level. It was a blow out. Yes, my hypocrisy knows no bounds either as I use painfully trite phrases, but you get the point. There is a serious dichotomy going on here, and we have a problem.

I am a bit off path from the way we normally do things, but these are important issues. We have a Fed chairman who is an expert in the Great Depression, and he does not want the same things that happened then to happen now. He is more worried about deflation. I heard the people on the left talking on TV last night about how we are in a deflationary environment. What world are they living in?

The Fed was talking about the iPad coming down in price the other day as if that was some proof of deflation. I'm sorry, but most of us do not buy more than one iPad a year. The problem we have here is this is not the Great Depression anymore. We foster the same policies we did after the Great Depression, but now this is something more akin to the 1970's on top of the Great Depression. What happened then? We had oil shocks. Oil spiked higher, the dollar dived, and inflation ran rampant. We do not have inflation running rampant yet, but we are sowing the same seeds we did in the 70's that led to the 22% interest rates and stagflation. The Fed is monetizing the oil rally. It is further deflating the dollar by pumping more and more liquidity and keeping interest rates low. The Fed did just that in the 1970's when it felt it had to monetize the economy in order to keep the consumer from completely going stagnant.

What happened? The consumer and businesses went stagnant because interest rates shot to the moon as did all commodities and other prices and nobody could afford anything. The Fed is doing the same thing by putting the pedal to the metal as oil rises. The Fed is guaranteeing that we will have inflation. It is guaranteeing stagflation. In trying so much to avoid the sins of the past and the Great Depression, it is committing the sins of another era. It has been blindsided by the 1970's. While it was looking for low and away just like Moonlight Graham when he was up to bat. They are looking for low and away when they should be looking for in their ear. And it will catch them in the ear.

That all sounds pretty gloomy. It is not a great scenario, but it did not really tear the market apart. Why not? The market is going to be a bit slow to come around because we have that battle ongoing. Liquidity provided by the Fed is good for financial assets. Inflation is starting to move up, but it is not ripping higher. It is not going to eat into the stock market and stock gains. Sometimes inflation actually helps stock prices initially. If the Fed even started to raise rates anytime soon, history shows that the stock market does not mind the initial wave of rate hikes. It even holds up well into the last round when the Fed gets aggressive. That is what finally turns the market down. The market is still enjoying the liquidity.

The dollar may be tanking, but it is doing okay because a lot of the stocks inside the SP500, NASDAQ, American Stock Exchange, et cetera, produce the commodities that are going up in price. They will do just fine. A lot of companies produce the equipment that helps to mine these commodities and bring them to market and refine them. They will do just fine as well.

The stock market can do well while Rome starts to burn. Eventually when Rome burns down, the stock market has a hard time. Some day we will get there, but we are not sure when that will be. We will keep watching the market, but we are still early in the progression. We may not see anything for quite some time. The worry near term is the price of oil and how it is exploding higher. That could be a very serious problem. Is it at an all-time high? No, but we are killing the dollar right now to get there.

We are pursuing a policy to prevent deflation when it is our opinion (and the opinion of many smart economists and other investors) that we are pursuing a policy that will create some horrid inflation. It is not the 1930's anymore. We have to fast forward into the 1970's. The problem is shifting. We better shift our policy with it, or we will throw ourselves from one crisis of the 1930's-era to the next in the 1970's. Been there. I do not want to go back to the 70's. Disco music, the Beatles had broken up it was not good. Let's not go there again. We need leadership. We are not getting it from the Washington, unfortunately. I think the leadership we are getting from the Fed is already outdated.

Looking at the market, the losses were not that severe. NASDAQ, -0.5%; SP500, -0.4%; Dow, -0.25%; SP600, -1.2%; SOX, -0.8%; NASDAQ 100, -0.5%. The SP600 took it on the chin. There are worries that the small caps will take the hardest hit if the government shuts down. This is one area where there may have been some selling with respect to a shut down, but there was nothing major. The market chopped around again and tried higher. The indices tried higher toward the February peak and could not do anything about that. It sold off and bounced off the 10 day EMA. No major damage done.


Dollar: 1.4453 Euro versus 1.4304. What a tail kicking. The dollar is getting blasted right now. It tried to bounce but failed, and now it has undercut this recent low. We will now see it head down to the Q4 2009 lows just before the market reversed and rallied. The question is if it will be able to hold at this support level or if it will dive down to the 2008 lows. We will see what happens here. The dollar has double topped in this range and it is in trouble. Does not look healthy at all.

Bonds: 3.58% versus 3.55% 10 year US Treasury. Bonds sold, but they came off of their lows. Looking at a daily chart, bonds have come off of their fear trade of something happening in the world. Now they are just recognizing that the Fed is creating an inflationary environment and are selling off.

Gold: $1,474.40, +15.10. Gold is heading to the moon as well. It was about a year and a half ago that I said gold would hit $1,500. It is within spitting distance now, and nothing is stopping it either. It is an inflation thing. The US is not taking care of business, and I think the market has figured out that it is more of a 1970's scenario versus the 1930's. It wishes that Bernanke would figure that one out as well. Again, the iPad comments go to show you how out of touch they are. They are into theories and models of the economy versus pragmatic looks as what is happening. That is always dangerous.

Of course you have to look at models, but you have to mesh it with history, reality, and the facts. I think Bernanke got a bit cocky, frankly, because everyone was saying that he has called it right thus far. I think he is missing the boat here. Maybe I am totally wrong. I hope I am. I hope he is just as brilliant as everyone says he is, but this could be a big mistake.

Oil: $112.79, +2.49. Oil has broken out and has gone straight up. It is not an all-time high. We had that way back at $145-147 in 2008. We are not there, but we are heading that way. As the dollar dives lower, it will accelerate the move.



Volume. It was a very light volume day. Volume fell 8.5% on NASDAQ to 1.65B. It dropped almost 10% on the NYSE to 821M.

Breadth. Breadth was more aggressive. -2.2:1 on the NASDAQ, decliners over advancers. -1.6:1 on the NYSE. Not nearly as bad, even though the small caps did take one square on the chin.


SP500. SP500 had a lateral move right up to resistance. Earnings are up ahead. It tried it one more time just as it did on Monday, Tuesday, Wednesday and Thursday. It was unable to make the move and it sold. It undercut the 10 day EMA. Wow, the 10 day EMA such a deep test! Then it rebounded to hold that level. No churn, no heavy selling, and volume was extraordinarily light. That is what allowed a couple of big funds to take some profits and push the market lower. That is all it was. As soon as they took some profits, buyers jumped back in and bought it back up.

It did not drive it all the way to positive, but it was not a day that would be positive. There was too much intrigue out there, and you have earnings coming next week. It is moving laterally. It could easily come back and test this February low and then rebound. As a matter of fact, I would prefer if it did that. That would give it more of a ramp to run into earnings and move after we get some good results.

NASDAQ. NASDAQ showed similar action. It gapped to the upside. Then could not hold the move and reversed, closing at the 10 day EMA. That is the nearest support you can get. It pulled back a little, but no volume whatsoever. It is below the March and February peak. We can live with that. Could it set up an inverted head and shoulders? I have to say it again: You betcha. I'm sorry. Perhaps I need to adopt a Trumpism since he is the new personality for this election cycle.

In any event, you can see it tried to set up. I do not see any danger here at all. It could happen. It could turn over and dump lower, but for now, the liquidity is trumping. Maybe the oil story beats it over the head and drives it lower, but we have had a nice rally. We are coming into earnings. We had a kickback here. Looks like a left shoulder, a head, and now it could form a right shoulder. We will see how it shakes out.

SP600. SP600 was down the worst, taking a 1.2% hit. It did close below the 10 day EMA, but as I said the other night, that is not out of the norm. Light-volume selling. It is still coming back to test the breakout. It has already broken through the February peak, so it has the luxury of coming back and making that test. If only the other indices had done that as well. They have not. SP600 is fully within its rights to come back and make this test. If it keeps selling, that is a problem. I bet you if any of this selling was related to a shutdown in the government, when they make a deal either tonight, the next day, or sometime early next week, it will bounce right back up. It just sets up a better ramp to the upside. I am not going to complain at all.

SOX. The semiconductors are a bit down, but no big deal. Still moving laterally, holding over the 50 day EMA that they gapped over on Tuesday. No big move by the semiconductors. They are struggling, no doubt, but they will follow along with the rest of the market if it decides to make the move higher. The question is whether they will make the move higher or if they just sell off near term. They may pull back some more next week. Earnings are coming out, and they may be a bit pensive. If we get a pullback down to this February peak or maybe just the 50 day EMA on the SP500, that gives the index and the market a much better ramp to rally up into earnings. You could also get a little inverted head and shoulders here with a pullback to the 50 day EMA as well.

While the action may have had a bunch of people lathered up and all in sweats on Friday, it was all pretty much as expected. It was interesting to a point watching all of the commentary about the government shutdown. It is history in the making, no doubt about that. It has been 15 years since we had a government shutdown, but if we ever needed one, this is the time. We have $4B added to the deficit every day. We are borrowing 40 cents on every dollar that the federal government spends. In 15-20 years, 100% of the tax revenue taken in by the federal government is going to go to entitlement programs such as Medicare, Medicaid, and Social Security. Yeah, this is a time to shut the government down. To reassess and get rid of a bunch of these agencies that have done nothing good for us.

Take the Department of Education. We doubled and tripled the spending, and what do we get? Test scores that are trending lower and abilities that are trending lower. After this period, I think it is time to make the cuts when you see a failure. Shut it down, but only if it leads to a reassessment of what the going on and not more finger pointing and name calling. I know, I must be dreaming with this pie-in-the-sky stuff. But that is exactly what is already happening, and it will happen anyway.

Like I said, we need to get rid of them all and start over with people who give a darn about actually fixing problems. I am painting with a broad brush; there are some very good people doing a good job and trying to focus on the right things on both sides of the aisle. There is hope, but after seeing today's display, I feel like hosing myself off a few times.


It seemed like everything took a hit on the session.

Financial. Financials gave back a bit of ground after looking good at the end of last week. JPM and GS came back a bit, but it did not disrupt their patterns. They can still make the break to the upside. In general, things gave back somewhat.

Industrial. CAT gave back a bit. DE tested and bounced. It may give us a good buy. We are looking at that flag. JOYG as an inverted head and shoulders that it broke out of, making a nice test of the 10 day EMA. Construction still looks fine.

Retail. Some of retail came under pressure on Friday. A lot of that was worries about what will happen to the consumer in the shutdown. We have a little pullback here. PNRA is selling off pretty good, taking it on the chin. BWLD is holding up quite well. What about some of the stores that did so well on the week with big moves? ANF came back a little bit. BKE moved well on Thursday, and it gave back a bit on Friday. There were no major selloffs. One we were really interested in today that actually performed very well was TRLG. It surged up 7%. Glad we are in that one. I was wondering why that would be up on a day like today? Maybe it is because our fearless leaders need to get some true religion and get back to the basics. I am going to throw out at aside here, just bear with me.

I was listening to some commentators talk about how the extreme Tea Party was causing problems. They said the Tea Party would have a bad image because they were trying to force social issues that we have discussed over the past 10, 20, or 30 years into this budget bill. One of those being the Planned Parenthood or abortion issue. The commentators are missing the point. They are not pushing that into the debate because they do not like abortions. Many of them do not, but the point is they do not believe that the Constitution allows federal money to be spent on that.

It is not that they are objecting to it; it is that the government should not be doing it. They are more libertarian in their views. It is a personal decision whether or not someone wants to do that. Whether you abhor it or you are pro-choice or whatever, the government should not be involved in it at all. That is the Tea Party position. That is why this is an issue. This money should not be spent there because that is not the purview of the federal government. But I digress. I will get back to talking about the market.

Metals. Gold really surged, but are the industrial metals doing any good? They tried. FCX is moving higher. That is the copper maker. It has been moving higher, but it is amazing. It gaps to the upside, and then it sells back. It gaps higher and then it holds. It gaps to the upside and sells back, etc. It is moving to the upside, but it is a slow slog. Steel, on the other hand, is having some issues. SCHN is trying to make a move, but it fell back to the 50 day EMA. They are struggling.

Industrial metals are struggling while the money is going into silver and gold directly not even into the companies that mine them necessarily. Very interesting money movements. Why are they moving this way? Is it because of the market? Yes. It is not because of demand. What our policy-makers are doing forces investors to go certain routes. The beauty of it is we still have many stocks across the market that are performing quite well.

Semiconductors. Even the semiconductors that have been under pressure are doing okay. FCS is doing pretty well. NVDA had a bad pullback of late, but it is trying to bounce off of the 28% Fibonacci retracement. That is a cool level to try to do it. There are others out there trying to same thing.

We are seeing good moves whether it is some tech, industrials, precious metals, or even retail. The question overriding all this for the next two to three weeks is how oil will bleed over into the stock charts of other leaders. How is that going to affect them? Will it start eroding them because the investor perception is that the consumer is going to run out of money? Is $110-112 going to be the literal choke point for the consumer in spending?

March Same Store Sales were great, but gasoline as gone up over 20 cents in a week. Oil is up 30% in two months. Can the consumer keep pace? The inflation in food and energy costs has now outstripped the additional monies that were saved and/or put in the pockets of consumers by virtue of the tax cuts (whether extended or the new tax cuts). When the money runs out, where will they spend? After the money is gone, we will see.


VIX. The VIX was up 4.5% on the session, but that is no surprise. The market actually did sell, and there was a lot of fear. There was a lot of lather and a lot of bogus fear in my opinion. In any event, the VIX is not showing any real danger that there is a major selloff in the works. A normal pullback? Of course. We have been talking about the potential for a normal pullback, but this chart does not show anything major in the works.

VIX: 17.87; +0.76
VXN: 19.76; +0.42
VXO: 16.53; +0.97

Put/Call Ratio (CBOE): 0.87; -0.02

Bulls versus Bears:

This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market, then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market does not have the cash to drive it higher.

Bulls: 57.3% versus 51.6%. Whoa there big boy. Bulls surged on the week, getting close to a more dangerous level. Getting close enough for discomfort. Whatever skepticism was holding the bulls back evaporated. Hit 55.1% in January and 58.8% on the December high on this leg. It is matching those readings in a string of high readings but below the 5 year high at 62.0. Fading back from the level considered bearish, i.e. where so many are in the market and believe it is going up that the ammunition to send it higher runs low. This is where you start to be careful and watch for breakdowns, but there is also a lot of liquidity being pushed into the market and that can continue the move despite excess bullishness. The crossover level at 29% bulls is long gone, but it did its job. The high on the last leg was 56.0% after starting at 35.6% on the low in February, the lowest it has been since July 2009 . . . until this last leg. 35% is the threshold level suggesting bullishness. Again, to be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 15.7% versus 23.1%. Falling like a stone, moving below the April 2010 low. 28.3% in September 2010. The 37.7% peak at the height of the crossover is well in the rearview mirror but bears remain well below the 35% level, above which is considered bullish for the market overall. Hit 18.7% on the low in April. Hit a high of 27.8% level on the prior leg in February. For reference, cracking above the 35% threshold considered bullish. Hit a high on the prior run at 47.2%. For more reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.


Stats: -15.72 points (-0.56%) to close at 2780.42
Volume: 1.659B (-8.55%)

Up Volume: 505.94M (-179.46M)
Down Volume: 1.07B (-40M)

A/D and Hi/Lo: Decliners led 2.21 to 1
Previous Session: Decliners led 1.77 to 1

New Highs: 72 (-45)
New Lows: 37 (+11)





Stats: -5.34 points (-0.4%) to close at 1328.17
NYSE Volume: 821.13M (-9.81%)

Up Volume: 252.17M (-132.41M)
Down Volume: 550.33M (+37.06M)

A/D and Hi/Lo: Decliners led 1.63 to 1
Previous Session: Decliners led 1.63 to 1

New Highs: 327 (+93)
New Lows: 40 (+17)




Stats: -29.44 points (-0.24%) to close at 12380.05
Volume DJ30: 123M shares Friday versus 158M shares Thursday.



There will be more scheduled data than this past week. There will be import and export prices, and that should be very interesting. Retail sales for March come out, and that should be decent given what we have heard from the Same Store Sales. We will also have the PPI and CPI along with more regional manufacturing reports and Industrial Production and Capacity. There will also be Michigan Sentiment. We will see how they are feeling up there in the cold north.

A lot of data coming out, but a lot of the focus will be on the oil prices. There will also be some focus on what the federal government is doing. We want to get them back to work as soon as we can; we do not want the whiners out there. There are definitely some whiners. I heard stories today and saw some on TV. Small businesses that have government contracts will not be able to work their people because the government is shutting down. They said they never expected that to happen, but it is like the people who joined the National Guard who never expected to go to war. It is just part of the deal.

Frankly, if you think you have the security of government contracts, I'm sorry, but this just makes you join the real world. Join the business world. Contracts can be canceled at any point with the government included. This is not even canceled. They will be back to work in short order, and the work will still be there. Quit your bellyaching. It reminds me of the people who get luxurious pensions and are worried about having to lose some of it. The rest of the private sector world is facing those issues every day, thank you very much. Join the real world. But I digress once again, and I am sure I have upset a few people. Sometimes I just cannot control myself.

In any event, let us talk about what we are looking at next week. We are getting what we want as far as the market. It is not rallying higher. That would have been nice, but we might get a bit of a pullback. That will give us a better ramp to the upside. Earnings will come out, so a little pullback would not hurt at all. It would make things all the better. Having rallied for three weeks ahead of this lateral move, the market is vulnerable to a pullback at this level just below resistance as initial earnings come out.

We do not expect them to be weak. We have hard very few warnings positive of otherwise so we are looking at basically in-line. Will in-line drive them further? Maybe not with oil at $113, the dollar sinking, and inflation rising. Any pullback we get ahead of that would be a good thing. If we get a pullback to the 50 day EMA or the February low, that might get very interesting. We have good stocks that are already in buy position. Take industrials such as JOYG and DE. They are out there. We want to be able to pick them up as they bounce, so we will be watching. A pullback is a good thing right here because it will put even more stocks in good position to buy.

We will mind our stops, of course. We watched the market bounce back after the selling today. It put a lot of our positions that were dancing around with our stop points back above them. We do not know how this oil thing will play out, so we will mind our stops and protect ourselves. We have some good gains and we do not want to lose them. Then we will see how things play out. If we get a pullback, we will be able to buy back in and make new good trades to the upside, whether short term or longer-term trades. We do not always do it over a day, a week, or three weeks. We have had trades for months and months and even years. You know we will let a trade run as long as it will run for us.

Watch the oil. Expect a pullback and do not get freaked out by that. Just be ready to move in and take advantage of it. We have some hedges. We have some downside plays, and we took some gain on one of them on Friday. If we get another pullback, we will be able to take some more on the SPYder play and others. We have ourselves a bit hedged. We will mind our stops, and we will look for opportunity while we wait and see how this plays out.

Try to enjoy what you are seeing somewhat. If we survive all of this, it will be interesting to tell the grandkids and the great-grandkids someday. You will also be able to tell them how you kept your head and were able to take advantage of it to build up the inheritance they will enjoy. Have an outstanding weekend. Enjoy the spring and do not let the shutdown worry you. Maybe the President will not get his trip for the weekend and that as him annoyed. Whatever. We are bigger than that and we see the big picture. We know what is going on, and we know the fight is to come when we try to rescue our country from this debt. I will see you on Monday, and maybe we will find the media a bit less lathered.

Have a great weekend!

Support and Resistance

NASDAQ: Closed at 2780.42

2796 is the February gap down point
2802 is the early March peak
2825 is the 2007 closing peak.
2841 is the February 2011 peak
2862 is the 2007 peak

2762 is the February low
The 50 day EMA at 2736
2729 is the 127% Fibonacci extension of the August 2010 run
2705 is the February 2011 and consolidation low
2686 is the recent January 2011 closing low
2676 is the January 2010 low
2645-2650ish from December 2010 consolidation
2603 is the March 2011 low
2580 is the November 2010 closing high
2569 is the November gap up point through the April 2010 peak
2550 from May and June 2008 peaks
2540 is the gap up point from early November
2535.28 is the April 2010 intraday peak
2530 is the April 2010 closing peak
2518 is interim peak from April 2010
The 200 day SMA at 2504
The November 2010 low at 2460

S&P 500: Closed at 1328.17
1332 is the early March peak
1344 is the February 2011 peak
1364 is the March 2007 low
1370 is the August 2007 low

1325-27 is the March 2008 closing low and the May 2006 peak. Bending.
1313 from the August 2008 interim peak
The 50 day EMA at 1306
1294 is the February 2011 and the consolidation low
1275 is the January 2010 low, early January 2011 peak
1255 is the late December 2010 consolidation range
1249 is the March 2011 low
1235 is the mid-December 2010 consolidation low
1227 is the November 2010 peak
1220 is the April 2010 peak
The 200 day SMA at 1201
1185 from late September 2008
1174 is the May 2010 high, 78% Fibonacci retracement of April peak
1173 is the November 2010 low
1170 is the prior March 2010 high
1156 is the Sept 2008 low
1151 is the January 2010 peak
1133 from a September 2008 intraday low
Bottom of the January 2010 consolidation 1131 to 1136
1129 to 1131 is the June and August 2010 peaks

Dow: Closed at 12,380.05
12,391 is the February 2011 peak
13,058 from the May 2008 peak on that bounce in the selling

12,283 is the March 2011 peak
12,110 from the March 2007 closing low
The 50 day EMA at 12,102
11,893 from March 2008 closing low
11,867 from the August 2009 high and peak on that bounce in the selling.
11,734 from 11-98 peak
11,555 is the March low
11,452 is the November 2010 peak
11,258 is the April 2010 peak
The 200 day SMA at 11,221
11,205 is the April closing high
11,100 from the 7-08 low
10,963 is the July 2008 low
10,920 is the recent May high
10,730 is the January 2010 peak

Economic Calendar

April 08 - Friday
Wholesale Inventories, February (10:00): 1.0% actual versus 1.0% expected, 1.0% prior (revised from 1.1%)

April 12 - Tuesday
Trade Balance, February (08:30): -$45.7B expected, -$46.3B prior
Export Prices ex-ag., March (08:30): 0.9% prior
Import Prices ex-oil, March (08:30): 0.3% prior
Treasury Budget, March (14:00): -$189.0B expected, -$65.4B prior

April 13 - Wednesday
MBA Mortgage Index, 04/08 (07:00): -2% prior
Retail Sales, March (08:30): 0.5% expected, 1.0% prior
Retail Sales ex-auto, March (08:30): 0.8% expected, 0.7% prior
Business Inventories, February (10:00): 0.8% expected, 0.9% prior
Crude Inventories, 04/09 (10:30): 1.952M prior

April 14 - Thursday
Initial Claims, 04/09 (08:30): 385K expected, 382K prior
Continuing Claims, 04/02 (08:30): 3700K expected, 3723K prior
PPI, March (08:30): 1.0% expected, 1.6% prior
Core PPI, March (08:30): 0.2% expected, 0.2% prior

April 15 - Friday
CPI, March (08:30): 0.5% expected, 0.5% prior
Core CPI, March (08:30): 0.2% expected, 0.2% prior
Empire Manufacturing, April (08:30): 15.0 expected, 17.5 prior
Net Long-Term TIC Fl, February (09:00): $51.5B prior
Industrial Production, March (09:15): 0.6% expected, 0.0% prior (revised from -0.1%)
Capacity Utilization, March (09:15): 77.4% expected, 77.0% prior (revised from 76.3%)
Michigan Sentiment, April (09:55): 66.0 expected, 67.5 prior

By: Jon Johnson, Editor
Copyright 2011 | All Rights Reserved

Jon Johnson is the Editor of The Daily at

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