Sunday, August 19, 2012

The Path for QE3 is Clear


- Nothing flashy but stocks continue the Thursday upside break with some big techs and small caps leading the way.
- Let's release from the SPRO for no effect other than political posturing. Moreover, demand is so low it would have no impact.
- Michigan Sentiment rises on current conditions, falls hard on expectations as inflation expectations jump.
- LEI rise on stock market gains.
- $500B unused highway funds released for jobs to fix our 'crumbling' roads. I travel a lot but have not seen them. Where are the 'crumbling' roads?
- Eating out less? You are apparently not alone.
- The path for QE3 is clear: Geithner requires Fannie to divest faster. But someone has to buy those MBS. Hmmm. The Fed?
- Stocks set to test the post-bear market highs. We have good positions so plan on going into the week with our eyes wide open as to how the sellers and buyers react.

It was nothing flashy, but stocks continued the Thursday break higher from that lateral consolidation. Of course that put them all the closer to their 2012 post-bear market highs. They did not challenge to break them on the day, but there were some good indications from leadership as NASDAQ and the small caps were in the lead to the upside.

When growth is leading, it is a positive for the market. Indeed, futures were somewhat flat to down premarket, but then they started to rally into the open. Stocks held up decently as the data was released. There was the Michigan Sentiment survey, which was a bit better than expected, but some of the internal numbers were not that good. The Leading Economic Indicators for July were better than expected, but it relies so heavily on the stock market, and no one believes in the rally, and no retail investors are in it. The reasons for its inclusion in the LEI are dubious right now, but the market enjoyed the news and continued to the upside. Indeed, it rallied into the afternoon after trading back and forth all morning. The market closed near session highs, putting in a very respectable move.

SP500 +0.19%
NASDAQ +0.46%
Dow +0.19%
SP600 +0.8%
SOX -0.76%

The SOX was down thanks to MRVL and its warning about the future. Its chips go into a lot of devices such as phones and tablets. It was not a big move to the upside for the market. It was not a big move at all, but it was a solid affirmation of sorts to the Thursday break higher. It is important that the indices did not immediately turn back over but instead continued their push to the upside.

Anything can happen over the weekend. There is so much geopolitical tension ongoing here as well as in the Middle East. It could be that Israel launches an attack this weekend. It seems strange, but it could happen. Of course oil was higher and many other commodities were higher on that kind of news. The indices are just below those prior highs but, as noted noticed on Thursday, they are showing very good technical action along with many stocks.

It was not a perfect day necessarily. There were some issues to overcome, but there was some help as well. Early in the day German Chancellor Merkel said they will do whatever it takes to save the euro. She also agreed to at least mull over reducing the requirements on Greece in terms of austerity.

Okay, we will do [hard swallow] whatever it takes to save the euro.
Alright, alright. We will also agree to ease up on the Greeks. Happy?

Reminds me of 'Blazing Saddles' where the townspeople were going to give land to certain groups but not the Irish. After the deal was turned down, the Irish were reluctantly included.

'Aw prairie s**t, everybody.'

It was enough to overcome some Fed pushback regarding further stimulus.

Plosser (Philly Fed President): 'Very dubious' about whether additional bond purchases would have a positive impact. "There are diminishing returns to these actions" he told Hilsenrath at the WSJ. "The evidence is not strong that somehow [bond purchases] are going to help the unemployment rate move faster to where we'd like it to be. I don't see that there is much benefit."

Plosser underscores the Fed's focus on employment over any other indication right now.

But . . . Geithner sets the stage for QE3

Still pis - - er, angry over FHFA head DeMarco telling him socialism was not the way to go in response to Geithner's proposal for mortgage principal reductions that would force responsible mortgage payers to pay for those perhaps less responsible, Treasury Secretary Geithner now requires Fannie and Freddie to pay not 10% but 100% of their income directly to the Treasury and to speed up the wind down of their portfolios to 15% a year versus 10%. This means the portfolios will be drawn down four years earlier.

What is the effect? Well, these GSA's are now fully nationalized given they have to turn over 100% of their incomes and totally answer to the Treasury.

Problem 1: Who or what will buy the excess investment portfolio as it comes up? Who indeed? Perhaps the . . . Fed? Geithner just mapped out the plan for QE3 whether the Fed likes it or not.

Problem 2: Fannie and Freddie had about $6T in debt. Does that mean this debt is now to be added onto the existing $15.9T in debt now on the books? It won't be but it is there nonetheless.

But Apple rescues the day.

AAPL continues its run, hits a new high ahead of product announcements.

AAPL has been on a run for almost a month now after a gap lower on earnings. Very nice, indeed. It tends to run ahead of the product announcements, and that is exactly what it has been doing and was continuing to do on Friday.

With AAPL being such a large market cap, that is why we saw the NASDAQ and the SP500 move higher. But it was not limited to AAPL; many stocks performed well on the day. ATHN made a good comeback, rising 2.75%. EBAY posted a nice gain as well, gapping up out of a month-long lateral consolidation, rising over 2%. CAT did not have a huge move, but it was a nice 1.5% gap to the upside to a new closing high on this break higher. BABY put in a good two-day run after reversing on Wednesday, rising 3.25%.

Looking at manufacturing equipment, FAST was up over 2%. Retail was not left out. PII reversed off of some Wednesday selling and put in a strong Thursday and Friday. It was up 2.4% on Friday. RL is another retailer showing strength. It broke above the 200 day EMA after something of a cup with handle base. Strong volume on that breakout. SSYS, another tech, had a nice lateral consolidation similar to the market after it ran to a new high. It had a strong 4.5% break to the upside on Friday.

It was not just AAPL doing the pulling, although it did do its share. A lot of other stocks contributed to the move, and they were not just drifting higher. Solid breaks to the upside, posting 2% to 5%+ gains on the session.


Some were resting and some were moving.

Dollar. 1.2321 versus 1.2364 euro. The dollar was resting. A modest gain after working laterally all week. It is still in a tightening something of a pennant pattern, holding near the 50 day EMA and trying to set up for a new break to the upside. It seems torn between the Fed potentially acting with more stimulus, the Fed potentially NOT acting with more stimulus, and mixed economic data. That data sometimes looks good in the headlines, but when you look at the guts of each report, it pretty much stinks. We are getting a flatline from the dollar right now.

Bonds. 1.81% versus 1.84% 10 year US Treasury. A modest gain in treasuries, bouncing off of the 200 day EMA after a week of selling. This selling has been ongoing for three weeks as it stair-stepped to the downside. This past week was a severe drop, plucking it right down on the 200 day EMA. But, as noted, it was a modest bounce, and it closed off of its high for the session. Not a lot of strength. Perhaps it got a little bit of energy from Treasury Secretary Giethner's actions with respect to Fannie Mae. But this is not a big move; it is more of a relief bounce off of the selling to the 200 day EMA.

Gold. 1619.40, +1.20. Gold rose modestly. Not a bad week overall. It sold early and then rebounded on Thursday. Still moving laterally, slowly rising in something of a cup base. We will see what happens. Commodities are showing a bit more of an inflation bent of late, and gold is no exception.

Oil. 96.01, +0.41. I will spend a little more time talking about oil. It rallied up close to the 200 day EMA. Will it be repulsed here? There are many factors affecting oil right now. One that I already talked about is the tensions between Israel and Iran and whether there will be some kind of attack this weekend or in the near term. The window is closing were Israel can actually do something.

There were other stories impacting oil on the day. There was the talk of the administration ready to use the Strategic Petroleum Oil Reserve to release oil and hopefully hold off rising oil prices. Why is that important? Consider that for every $10 rise in Brent, you get a $0.22 rise in US domestic gasoline prices. In July there was a $10 rise in Brent and, yes, gasoline prices rose $0.22 on average in the US. Now it is up another $10 since then, so we can expect another $0.22 rise in gasoline prices in what is possibly the worst time for the President. Everything seems to be piling up negative right now: the unemployment rate is rising, and now energy prices are moving back up when they thought they were getting under control.

Their release from the SPRO will not likely help. Remember that they did this last year. There was a short release. Brent fell $4, but then it bounced right back up. History shows that when we do this, it often goes down but then bounces back up even higher than it was before. That in itself makes it a dubious course to pursue. Also it is obvious pandering for votes. The Obama administration has been clear that it wants gasoline prices higher than they are now so it can push more of its "clean energy" programs. It wants it higher, but it will bow to what it thinks is public pressure every once in awhile and release a little from the SPRO to tamp down prices.

It is so hypocritical to do that since they want prices higher. Their policies have been geared to drive prices higher just like electricity prices. Yet they will pander when necessary. That is nothing new; most other administrations do the same things. It is just so obvious, and when things are already so negative, it makes you shake your head. I am sick of it. But whether we are all sick of it or not, it is what it is. And the market does what it will do.

Here is the kicker: We are seeing oil rise, yet demand is very weak. Deliveries for petroleum fell 2.7% in July year-over-year. That is the lowest level for any month since September 2008. The API reports that US oil demand was just over 18M barrels in July, and that was the weakest for any July since 1995. It fell 2.3% year-over-year. The deliveries for oil are down because obviously our demand is down. You can talk to any supplier and hear that there is plenty of oil out there. It is just trading at a higher price, but demand is way down. Is it because prices are so high? No. We were this high last year. The problem is just less economic activity right now. That is why we are getting such low demand and low need for oil.

Obviously it is the speculators driving it higher, correct? This is the same market that brought is lower a few months ago. We can see the downtrend from late April into early July. Now we have some more geopolitical tensions on top of everything else, so we have a build back to the upside in a rather bullish, something of a cup-with-handle pattern that looks like it could break out to the upside.


Internals. The internals were mixed.

Volume. NASDAQ -16%, 1.6B; NYSE +13%, 614M. Still very low trade, but it looks like NYSE indices got a bit of the expiration trade on Friday.

Breadth. NASDAQ +1.7:1; NYSE +1.6:1. Breadth was ho-hum.


SP500. SP500 did move higher to that post-bear market high at about 1423. It is not far away at all, basically five points away. It is right in the zone of "We better sell because a market top is coming," or that it has shown a good lateral consolidation, great technical action, a good pattern, and it is breaking higher on Thursday. It might just blow through this level. Well have to see how it plays out. Technically things still look solid. Good stocks are coming to the fore. SP500 is putting in higher highs and higher lows. Volume is low, but it has been low for many, many, many months. That has been a complaint for the past couple of years on the stock market, so take that for what it's worth.

NASDAQ. NASDAQ continued higher as well. It is below its peaks, but it is moving in on the May intraday high. The overall high on the move was 3134. It is not far away either, just about 60 points. It has room to move before it hits the top. As with SP500, it is looking strong. We will have to see how much strength it has when it gets there.

SP600. SP600 is looking very good. It was up +0.8%, moving up through the lower resistance on Thursday and continuing up to the February and April shoulders to the head and shoulders pattern that led to the May to June selloff. It is coming up to interim resistance. It is there, and now we see if it will fade a little bit back to the lower support in this range and then break higher or if it is just repelled or, frankly, if it just keeps moving higher.

It just so happens that the indices are moving well. The stocks are moving well, and they just so happen to be at the prior highs. If those highs were not there, we would all be saying, "What a great move. What strength it is showing. What great technical action." If those highs were down here or way up higher, we would be saying it was great technical action higher. Higher high, higher lows, testing, holding the gain, and breaking out. You see the point. That is why we just have to see how it plays out. I note that we have good leadership as stocks move higher.

SOX. SOX was down on the day thanks to MRVL, but it is still performing very well for the week. It broke through resistance a week and a half ago, testing and then bouncing to the upside.


I will not go into a lot of specifics, but I will note that the stocks we have been following all week from various sectors, after that Tuesday hiccup that saw stocks such as FFIV sell pretty aggressively on Tuesday, there was an immediate reversal. Not only that, but there was a breakout. So we had a shakeout, effectively, and then a reversal and a move higher. It happened in technology as we see in FFIV. It happened in retail in many circumstances. I am looking at RL's chart. It happened across the board in retail. We saw the same thing in energy with good continued moves to the upside on stocks that have turned the corner. We even got some industrials moving better. CAT broke to the upside. It is hard to complain when old CAT gets moving and looks solid even in the face of some weaker DE earnings.

Not every stock in every sector is performing, but we are seeing quality stocks in many sectors performing well, and that is what makes a market move higher. Stocks coming from bases to emerge as leaders. We have seen it with many stocks across the board in different sectors. We have been picking them up as well. That is a sign of health in the market. The indices broke a good lateral consolidation on the week. They were driven by stocks that have had money put their way. They were not necessarily the original market leaders on the rally, but they are now trying to place themselves in the ranks of leadership or at least help the move higher.

With that, the market still has a good foundation to move to the upside despite the overriding gloom like we saw all week on the financial stations. They had the "get out now" mentality based upon the indices being at those prior highs. That is not a bad reason. Last night I went through the list and said I could not argue with them at all. But it is about what the market does rather than what we think it will do. Thus we kept seeing this good technical action and this lateral consolidation as still a positive. And it made the break higher.

It will have to prove itself again next week when they challenge those old highs, but that is what you do when you move up or move down.



Michigan preliminary August rises but expectations fall and inflation expectations rise.

Michigan Sentiment, Preliminary August (9:55): 73.6 actual versus 72.2 expected, 72.3 prior

Usually not that important. In prosperous times consumers always say they are going to save but they don't. They feel good about the future and they spend.

But . . . sentiment is important when the economy and future are so uncertain. If people are down and don't think things will improve, they do not consume.

Current expectations: 87.8 versus 82.7 in July.
Tied to the jobs report and weekly claims: but they are less than reliable.

Expectations: lowest since 12/2011

LEI is up on the stock market. But how relevant is the stock market in terms of wealth with so few participating?

Leading Indicators, July (10:00): 0.4% actual versus 0.2% expected, -0.4% prior (revised from -0.3%)

Look at where the gains are: Initial claims, Building Permits, Stock prices, Interest rate spreads.

Look at where the losses or no growth sectors are: ISM new orders, Consumer expectations, goods orders, workweek, business investment.

Gains are in areas where the data is dubious or controlled by the government/Fed.

Thus as usual, the LEI is a report that is best ignored in favor of ECRI that has a perfect record and has called the recession we are likely in right now.

President to use $500M for infrastructure jobs on our 'crumbling' roads. Seen this before; it didn't work. But when you can buy votes from the uniformed . . . $473M is cheap.

Crumbling roads in the US? Not on most I travel on as well as our contacts in various industries . . .

President announced releasing $473M in unspent highway funds for infrastructure work and new jobs. As you recall, this is what the original 'stimulus' bill, a.k.a. spending bill, did, only on a grander scale. How much recovery did we get from that? None. Money shot down the hole on projects that were not, 'ha, ha' as the President joked, not as shove-ready as they thought.

Indeed, recent studies from several government agencies and independent agencies concluded the infrastructure spending from the 'stimulus' bill had absolutely ZERO impact on job creation.

Why is the President ready to spend again? Because this past week, DESPITE higher non-farm payroll gains and lower weekly jobless claims, 44 states reported HIGHER unemployment levels. Do you need any more evidence that the data the government produces is obviously inaccurate? Do you need any more evidence that the so-called infrastructure spending job creation doesn't work? Apparently those in charge do. Either that or they are in simple denial, blinded by their agendas versus results. Hell, they are not stupid. They likely KNOW it has no impact but want to pander for votes. Ah, now it all makes sense.

News headlines talked of using the funds to rebuild our 'crumbling' infrastructure. I hear that a lot. I travel a lot. I travel by road and air. Texas, Louisiana, Mississippi, Alabama, Georgia, Tennessee, Pennsylvania, Colorado, New Mexico, Utah California are a few states I have been in recently. I talk with a lot of business owners who travel and truckers as well.

I observe some issues with our transit system. Some states do not have roads up to par with all of the funding they receive. A couple are terrible. Some are bad. Most, however, have great roads.

When I travel I always see states working on their roads, using their funds and the federal tax dollars earmarked for their roads wisely. The businessmen and truckers I talk with say most roadways are fine.

Where then, are the roads crumbling? MORE IMPORTANTLY, WHERE DID THE MONEY GO IN THOSE STATES where the roads and bridges are not up to par? THAT is the question. Do you ever notice when driving how sometimes when you go from state to state and even COUNTY to COUNTY in a state that the road quality changes? Throwing more money at a bad SYSTEM is NOT the answer. If a state uses highway funds for other projects or for good old graft and fraud, more money only lines the pockets of those abusing the system.

The state of the roads in many states is a pretty good barometer of the efficiency and management ability of any state's government. If it cannot keep the roads up, one of its primary functions, then you know the other programs are terrible as well.

Feeding the fat man as Ronald Reagan used to say.

But you know what? That is how it works here. If a state cannot get it together and satisfy its citizens, the citizens can make changes with who is elected or they can leave for better states. THAT is the great equalizer, not a federal government that takes money from the well-run and prosperous states and gives it to poorly run, poorly managed states. Ronald Reagan called that 'feeding the fat man,' i.e. contributing to the bad habits and poor health of entities that don't have the willpower to do what is right.

Eating Out less and less.

In June and July the amount US citizens spent on eating out plunged dramatically. The July drop was so steep it started hitting levels from 2008 during the height of the economic meltdown.

Source: Boomberg

This is a hard evidence response to the weak sentiment expectations regarding the future. People spend less when the future is in doubt. Eating out is a key barometer of views about the future because it is so easy to cut back in this area. It is a clear physical manifestation of those views.



VIX. Volatility fell again. It bounced on Tuesday when there was something of a hiccup in the market, but it immediately turned back down and undercut the lows for the week. It also undercut the lows from March. Those are important because in April 2011 and March 2012, when volatility hit this level, the market sold off. Not immediately, but within a few weeks to a couple of months the market sold off. Everyone is watching this now and thinking that it could do the same thing here. It is breaking lower. It has been very low and hardly moved at all.

An interesting note is that on Monday when the market was lower, volatility was lower that day as well. That is unusual. I think that shows something of what is going on with volatility right now. In other words, it is not trading necessarily in parallel with the market. There are so few traders right now in late summer that the relationship is not exactly as it should be. It will probably change once we get back into September, people get back from their vacations, and everyone is ready to get back to business. I am just noting that bit of an aberration. Overall it is low. It is where it has been on the prior two occasions when the market did sell. It is worth noting as the indices themselves bump up against the post-bear market highs.

VIX: 13.45; -0.84
VXN: 13.79; -1.02
VXO: 13.42; -0.7

Put/Call Ratio (CBOE): 0.75; -0.09

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: 43.6% versus 43.6% versus 39.4%. Wow, talk about lack of care. Bulls, elevate from recent levels mind you, held steady. Makes sense given the lateral move below the prior highs that had so many pundits negative. Undercut 35%, the threshold for bullishness, in early June. You would expect it to rise and it has. Still not at a dangerous level, just working as it should. As noted, hit 34% in early June. It did its job and the market is on the rally. Hard drop to 34 from 39.3% as economic reality and a choppy stock market hit. Off the 55+ level hit in late February. That was the highest level since April and May of 2011, the peak of the post-bear market high. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 26.6% versus 25.5% versus 27.7%. Bounced back up to a level from four weeks back. Also makes sense given the lateral move that had many pundits calling for a market rollover. Never made it to the 35% that can be a bullish indication, but the bulls were weak enough back in June. Over 35% is the threshold to be really be a good upside indicator. For 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: +14.2 points (+0.46%) to close at 3076.59
Volume: 1.612B (-16.04%)

Up Volume: 824.93M (-485.07M)
Down Volume: 788.7M (+190.9M)

A/D and Hi/Lo: Advancers led 1.68 to 1
Previous Session: Advancers led 2.09 to 1

New Highs: 93 (+6)
New Lows: 28 (+6)


Stats: +2.65 points (+0.19%) to close at 1418.16
NYSE Volume: 614M (+12.87%)

A/D and Hi/Lo: Advancers led 1.63 to 1
Previous Session: Advancers led 2.59 to 1

New Highs: 188 (+31)
New Lows: 12 (+1)


Stats: +25.09 points (+0.19%) to close at 13275.2
Volume: 138M shares Friday versus 114M shares Thursday.


Earnings are winding down, and there will not be much economic data on the table. On Tuesday we have the FOMC minutes. It will be interesting to see who said what, but we all know who the dissenters and the proponents are for more Quantitative Easing or some form of stimulus.

Existing home sales are on Wednesday. We always watch home sales, of course. New home sales are on Thursday along with initial claims. Then on Friday we get the volatile durable goods orders. It will not be a heavy week in terms of the kind of economics that will impact the election. Home sales are important, but it is going to take a lot to get that moving. We have already shown earlier in the week that there are still issues with that huge shadow inventory -- around 13.5M units --hanging out there that could impact it. It would send things reeling if the economy does not improve, if there is a fiscal cliff issue and those people become stressed even further and have to default on their mortgages.

I have already covered a lot of this, but here we go. A lot of next week will focus on those old highs. No surprise. The indices are tickling them right now. They have shown great resolve and technical fortitude on the rise. Thursday was a very nice break to the upside, and it was continued on Friday. Not spectacular but it continued the move. The sellers did not immediately jump in.

It is a new week. It will not be September yet, so not everyone will be back, but that does not mean we can just ride this momentum higher. You have to pay attention to these highs. It is the facts of the market that you have to watch important levels. And, let's face it, recovery highs are important levels. It has taken awhile to get back. It was a lot of work to get up here, longer than it took to fall from April to June. That warrants care to be taken next week.

We did not buy much on Friday. We got a good move on Thursday, and we picked up some positions then. We already had many in the bank, so we are just letting them run. We have to be a little careful, though. There are a lot of people who think that the market will fall from this level. Sometimes there is a self-fulfilling prophecy that helps bring these predictions about. There are not that many people playing in the market right now, so a few groups can take control and send things down. It has not happened yet.

Good, solid technical action, and more solid action on Thursday and Friday. If other stocks that are supporting this move continue to have money put into them, those stocks that are "turning the corner" and rallying, then these indices can break on through and perhaps test from above the old highs or from new post-bear market highs. Just looking at the stocks, the indices, and those that are emerging as leaders, it certainly seems that the market wants to break these highs or at least run up to them. We will continue to look for plays that will make that play if it continues.

Early next week there will be some testing. We will have to see how it plays out. By testing I mean bumping up against these highs, most likely. It may want to come back and test to the downside, and that gives us entry points. Are we going to jump into a lot of new positions? Not necessarily. We will look at some, but we will also be adjusting the buy points to the downside for the plays we have where we have been following the move to the upside. If the markets want to reverse, this is a darn good place for it to do that. We could make some really good risk/reward plays to the downside if it does want to reverse.

We go into the early week not planning on buying a lot of new positions until we see how those old highs are handled. We have been riding a nice move to the upside. Now that we are bumping up against these old highs, it may not about the time to be the most aggressive. We will see how it plays out as we let our stocks continue to run. If they do run, great. If they pull back a little bit, hold, and bounce off of that, that is great. Then we can pick up some more. But we just want to see how it plays out. We will not just run into the room before looking around a bit. As one of my first bosses said, "You don't want to go into the room with a big light on your head that's flashing 'dumb ass.'" In other words, he is saying walk in, keep your eyes open, and keep your powder dry. Then when you see how things are going, you can react. That is what we need to do at these prior highs.

I will see you on Monday. Have a great weekend!

Support and resistance

NASDAQ: Closed at 3062.39

3076 is the late April 2012 high
3090 is the mid-March interim high
3134 is the March 2012 post-bear market peak
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

3042 from 5/2000 low
3026 from 10/2000 low
3024 is the gap point from early May
3000 is the February 2012 post-bear market high
2988 is the July 2012 high
2962 is the April 2012 low
2950 is the mid-April closing low
The 50 day EMA at 2943
2942 is the mid-June 2012 high
2910 is the March 2012 low
2900 is the March 2012 low
2888 is the May 2011 peak and PRIOR post-bear market high
2879 is the July 2011 peak
2866 is the July 2012 closing low
2862 is the 2007 peak
The 200 day SMA at 2856
2841 is the February 2011 peak
2816 is the early April 2011 peak.
2810 is the low in the shoulders
2754 is the October 2011 high
2706 to 2705 is the April 2011 low and the February 2011 and consolidation low (bottom of the trading range) 2723 to 2705 is the range of support at the bottom of the January to May trading range
2686 is the January 2011 closing low
2676 is the January 2010 low and the December 2011 peak
2645-2650ish from December 2010 consolidation
2643 is the September 2011 high
2612 is the late August 2011 peak
2603 is the March 2011 intraday low (post-Japan low)
2599 is the June 2011 low and NASDAQ

S&P 500: Closed at 1415.51

1422.38 is the Post-bear market high (March 2012)
1425 from May 2008 closing highs
1433 from August 2007 closing lows
1440 from November 2007 closing lows

1406 is the early May 2012 peak
1378 is the February 2012 peak
1375 is the early July 2012 peak
1371 is the May 2011 peak, the post-bear market high
The 50 day EMA at 1369
1363.46 is June 2012 high
1359 is the April 2012 low
1357 is the July 2011 peak
1344 is the February 2011 peak
1340 is the early April 2011 peak
1332 is the early March 2011 peak
The 200 day SMA at 1329
1325 is the July 2012 intraday low
1309 is the right shoulder low from June 2012
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
1258 is June 2011 intraday low
1255 is the late December 2010 consolidation range
1249 is the March 2011 low (post-Japan)
1235 is the mid-December 2010 consolidation low
1231 is the late August 2011 peak
1227 is the November 2010 peak
1220 is the April 2010 peak
1209 is the mid-August 2011 high

Dow: Closed at 13,250.11
13,297 is the April 2012, post bear market high
13,668 from 12-2007 peak
13,692 from 6-2007 peak
14,022 from 7-07 peak

13,058 from the May 2008 peak on that bounce in the selling
13,056 is the February 2012 high
12,971 is the early July 2012 high
The 50 day EMA at 12,904
12,754 is the July intraday peak
12,716 is the April 2012 closing low
The 200 day SMA at 12,643
12,391 is the February 2011 peak
12,369 is the left shoulder low from May 2012
12,284 is the October 2011 peak
12,258 is the December 2011 peak
12,110 from the March 2007 closing low
12,094 is the April 2011 low
The June low at 11,897 (closing)
11,734 from 11-98 peak
11,717 is the late August 2011 peak
The August low at 11,702
11,555 is the March low
11,452 is the November 2010 peak
11,178 from November 2010
10,978 is the bottom of the November 2010 consolidation
10,750 from September 2010
10,720 is the August closing low
10,705-710 from January 2010 peak
10,694-700 from August 2010 peak

Economic Calendar

August 14 - Tuesday
Retail Sales, July (8:30): 0.8% actual versus 0.2% expected, -0.7% prior (revised from -0.5%)
Retail Sales ex-auto, July (8:30): 0.8% actual versus 0.3% expected, -0.8% prior (revised from -0.4%)
PPI, July (8:30): 0.3% actual versus 0.2% expected, 0.1% prior
Core PPI, July (8:30): 0.4% actual versus 0.2% expected, 0.2% prior
Business Inventories, June (10:00): 0.1% actual versus 0.2% expected, 0.3% prior

August 15 - Wednesday
MBA Mortgage Index, 08/11 (7:00): -4.5% actual versus -1.8% prior
CPI, July (8:30): 0.0% actual versus 0.2% expected, 0.0% prior
Core CPI, July (8:30): 0.1% actual versus 0.2% expected, 0.2% prior
Empire Manufacturing, August (8:30): -5.9 actual versus 5.0 expected, 7.4 prior
Net Long-Term TIC Fl, June (9:00): $9.3B actual versus $55.9B prior (revised from $55.0B)
Industrial Production, July (9:15): 0.6% actual versus 0.6% expected, 0.1% prior (revised from 0.4%)
Capacity Utilization, July (9:15): 79.3% actual versus 79.3% expected, 78.9% prior
NAHB Housing Market , August (10:00): 37 actual versus 35 expected, 35 prior
Crude Inventories, 08/11 (10:30): -3.699M actual versus -3.729M prior

August 16 - Thursday
Initial Claims, 08/11 (8:30): 368K expected, 361K prior
Continuing Claims, 08/04 (8:30): 3300K expected, 3332K prior
Housing Starts, July (8:30): 763K expected, 760K prior
Building Permits, July (8:30): 770K expected, 755K prior
Philadelphia Fed, August (10:00): -5.0 expected, -12.9 prior

August 17 - Friday
Michigan Sentiment, Preliminary August (9:55): 73.6 actual versus 72.2 expected, 72.3 prior
Leading Indicators, July (10:00): 0.4% actual versus 0.2% expected, -0.4% prior (revised from -0.3%)

August 21 - Tuesday
FOMC Minutes, 7/31 (14:00)

August 22 - Wednesday
MBA Mortgage Index, 08/18 (7:00): -4.5% prior
Existing Home Sales, July (10:00): 4.55M expected, 4.37M prior
Crude Inventories, 08/18 (10:30): -3.699M prior

August 23 - Thursday
Initial Claims, 08/18 (8:30): 365K expected, 366K prior
Continuing Claims, 08/11 (8:30): 3298K expected, 3305K prior
FHFA Housing Price I, June (10:00): 0.8% prior
New Home Sales, July (10:00): 368K expected, 350K prior

August 24 - Friday
Durable Orders, July (8:30): 2.5% expected, 1.3% prior (revised from 1.6%)
Durable Orders -ex T, July (8:30): 0.5% expected, -1.4% prior (revised from -1.1%)

By: Jon Johnson, Editor
Copyright 2012 | All Rights Reserved

Jon Johnson is the Editor of The Daily at

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