Dire Predictions for the Government

SUMMARY:
- Economic worries set the tone as the technical pullback continues.
- Durable goods orders, new home sales strike a sour note to end the week
- Dollar stabilizes some to end the week but still remains very weak
- Dire predictions for the government and the economy as the US prints excessive money without the backstop of recessions past.
- Pullback likely to continue as indices are set for a June-like test.

Stocks never get on track as earnings, economic issues provide no reason to reverse the pullback.

The market was in no mood to rally on Friday. Thursday night, RIMM set the tone when its revenues missed and its guidance was below expectations. Friday morning, durable goods orders were much worse than expected and new home sales were not up to par either (just as we saw with existing home sales on Thursday). The confidence was up in Michigan, but that was not enough to give investors any confidence. Renewed economic worries pervaded the market on Thursday and Friday as the economic data, after a couple of months of improvement, all of a sudden took a step back. As it stepped back, so did investors. They continued the selling that started on Wednesday afternoon when the market reversed late.

Is this something that we can blame on any particular catalyst? We could blame the dollar; it's rebounding some from the slaughter it took the week before, but the dollar was not that strong on Friday and did not recoup much ground. There is also that renewed worry about the US economy. There is a concern that the economy is going to come back after the initial bust higher and double dip. This was more of a technical correction. The market had a strong run in July and then a resumption of that move in September. It has pretty much duplicated the length of time the market moved off of the lows in March through May. We are seeing what I consider to be a technical pullback after two very solid runs -- the most recent being in the first part of September which was supposed to be a bad month for stocks.

With those two factors playing in, that set the stage for when Mr. Warsh of the Fed wrote an op-ed that came out on Friday morning and said that, despite the FOMC saying on Wednesday that interest rates would remain low for a long time to come, that the Fed may have to quickly raise interest rates and remove some of the facilities in place to help foment the recovery. On one hand there are worries about the economy not being that strong, and on the other hand there are worries that the Fed feels like it has to take the stimulus back because of fears of massive inflation. With those competing factors, the investors decided to punt on Friday and continue the pullback that started on Wednesday afternoon with the reversal.

There was too much worry in the market for any buyers to come back in, so the market basically said, "We're out of here" and decided to go into the weekend with losses. There were modest losses. The market gapped lower and it sold some more, but then it managed to recover a little bit of the ground in the afternoon. It was not a significant recovery as the indices still closed lower.

SP600 - 0.34%, NASDAQ 100 - 0.9 1%, NASDAQ - 0.79%, SP500 - 0.6 1%. They were down but, unlike on Thursday when the small and mid-cap growth areas were hit the hardest, on Friday it was spread out to technology and to the financials in the SP500. That allowed some of the smaller areas to recover or show a relatively better day than on Thursday. The end result is that the market is making a pullback and the indices are still at near support. Trendlines still remain intact and the uptrend is in place. The question moving into next week is just how much of a pullback are we going to get? It may be something mild that comes back to basically where it is now, or we might see more of a June-like pullback where the indices lost roughly 9% as we consolidated that strong, initial run.


TECHNICAL

INTERNALS. The internals saw some mild distribution last week, particularly on NASDAQ. When the selling started on Wednesday, volume spiked up on NASDAQ. Volume was above average as it has been for the last three weeks, but it spiked up on Wednesday when the market reversed late. Even though it was lower on Thursday and Friday, it was still relatively strong compared to the upside sessions earlier in the rally. Even though it was modest in terms of not increasing in strength, it was still showing relative strong volume to the downside. You could call that distribution. SP500 was not nearly as prone to distribution last week; it had difficulty even making it to average as far as volume is concerned. All week long volume was below average. On Thursday it was average, but that was a day of selling. There was mild distribution, but it was modest relative to the upside in the early part of the rally in September.

CHARTS. This was more of a technical pullback than any other real catalyst impacting the market such as the possibility of a weaker economy. Stocks had rallied a long way starting in July. There were 10-11 weeks of rallying very similar to the rally from March to early June. There was a strong, long rally and now we are seeing basically a technical pullback. The question is how far will it pull back this time? Is it going to be just a test of near support, or is it going to be something deeper, similar to what we saw in June and early July? Right now, SP500 is at a support level which is near the October intraday high. That is not very serious support. That is not going to be something in and of itself that holds it up, but there is a double hump in August that has good support. That puts it around 1012 at the low end from early August, or later in the month from 1030. For all intents and purposes, SP500 is at the peaks from late August. It would be very easy for it to sell down to the early August levels around 1010.

NASDAQ is holding a similar pattern. It is holding the mid-September low that was the point where it bounced before it turned over and fell off of the table. Will it hold there? That is a good place for it, but there is more support down (as with SP500) at the early August level near 2015. If you take it down to the lows of that range, what you see is a range of support from roughly 2015 in early August to around 1950-1960. That is a very reachable area for NASDAQ on this turn down, and that is a significant area because that is part of the gap point in October of 2008 when NASDAQ gapped lower. What if there is a decline that is similar to those back in June and July? On both NASDAQ and SP500 there was a 9% decline from the June peak to the July low. Right now, the indices are down roughly 3.5%, about 1/3 of the way of that selling. If we go 9% on SP500, that puts it down to 982 and puts it at about the mid-August low.

If NASDAQ takes a 9% decline on this, roughly matching the June pullback, that will drop NASDAQ down to roughly 1972 which would be near the early September low. Again, an interesting point because this coincides very neatly with NASDAQ falling back to the gap points from October 2008. It is a very neat, logical place for it to pull back, and that puts it also just above the June peak. We will be watching it as it pulls back, both NASDAQ and SP500, to see what kind of Fibonacci retracements we get on that. I will be watching to see if we get a 38% or a 50-61% or if it goes all the way to 78%. We will see what kind of pullback we get, and that will give an indication of how much strength there is in the move and how much strength there is in the selling that has cropped up in the market.

In sum, this is a technical pullback brought about by none other than the success that the indices have had in this July-September run. You typically cannot have this kind of move without having a pullback. Even though all of the liquidity was still there in June and July, the market declined 9%. There has been another move of not the same percentage but of the same time period. We could very easily have a pullback over the same period of time, which was about six weeks. Maybe it is not 9%, but that is a pretty logical level when you examine the charts.

LEADERSHIP. Leadership was kicked around last week, but it was not trounced by any means. The financials were up but they pulled back. Biotechs continued to look solid even though they were knocked around a little bit. CELG bounced back up on Friday. The financials had a great first part of the month, and they are pulling back as well. There were big names that had good moves but, very similar to the large indices, they are not suffering much at all. Software is very strong and now it is also pulling back. It is not in bad shape and is one of the leadership groups right now. We will look for some pullbacks over this next week or two and see if we can get new buys there as well. Telecom has performed well, and we'll see if there will be some kind of pullback that gives us a buy. The theme is that the money is still plentiful out there, but we are probably going to have something of a pullback in the leaders despite that. Even plentiful money cannot keep the market moving up forever.

The irony of leadership and the theory that the economy may be starting to falter and double dip is that retail still remains quite solid. If there are fears of economic weakness, the retail stocks are not showing it (and, of course, retail plays right into the hands of the consumer). Retail stocks are going to rally ahead of consumer strength. I am a believer of what the market shows as a leading indicator, so when I see a lot of retail stocks that have enjoyed good runs and are still in good shape, I want to pay some attention to that. There is a whole group of stocks in retail that are in good shape. Some or pulling back while some are extending their gains. If you read the message of the market, it is saying that while there are concerns about whether or not the economy is going to continue to improve as we have seen, the retail stocks say that it is going to improve.


THE ECONOMY

Durable goods orders join the recent disappointments.

The theme toward the end of the week was whether or not the US was going to be able to sustain the somewhat modest recovery it has been enjoying over the past couple of months. The durable goods orders were down on Friday (-2.4% versus +0.4% expected; 4.8% shown in July). There is a serious issue with respect to orders of those goods that are supposed to last three years or more. That was a bit of salt in the wounds on top of the existing home sales that fell on Thursday.


New home sales fall but inventories are trending nicely lower.

After the durable goods orders were out, the new home sales came out and they were disappointing as well (429K, less than expectations; 426K in July). These were disappointing numbers. The inventory level fell (-7.3 months from 7.6 in July). There is movement again with respect to the inventories, and that is what has to recover to a level where there is a tight enough market where buyers will have to face a stiffer price competition. That is what sellers need - they want to have some equity built back into their house and enjoy some gains again and feel like the bottom is not falling out of one of the primary investments that most Americans have. If your house keeps falling in value, while you have a place to live, you have a concern as to whether your store of wealth will actually be a store of wealth when you need it. A lot of people have bigger homes when they get older, they want to retire, sell out, and be able to take some equity out of their house when they sell it. Right now they are worried that that may not be the case, and that is one of the things that is somewhat stymieing the consumer.

Then again, the consumer did quite well in the last round of retail sales. The consumer, as they said in Monty Python and the Holy Grail, ain't dead yet. Do not give up on them just yet, and maybe we can get more of a boost out of the consumer (and the businesses as well) as this little fledgling economic bounce continues. That was a positive. We did see some decent recovery.

In Michigan, the sentiment was solid (73.5 versus 70.5 expected; 65.7 in August). That was much stronger and indeed it was much better than expected, but it was not enough to get things moving in the stock market on Friday. There are more serious issues as far as investors are concerned, and again there was the overriding technical reason of the market needing somewhat of a pullback and correction.

The dollar did bounce a bit last week and showed some strength after getting hit so hard (closing 1.4675 Euros versus 1.4651 Thursday). The problem the dollar is having right now is the Yen because the dollar is becoming something of the carry trade currency. It is getting sold, and that is continuing to put pressure on it because it is the currency feature in the carry trade.


Some dire predictions. There always are, right?

I want to talk about some longer term predictions. There is an individual I admire named Marc Faber, and he has some pretty stark predictions about what is going to happen to the US economy in 5-6 years. Basically, he is calling for a collapse of the government in about 6 years. He is not talking about just a collapse of the economy, but a collapse of the government because of all of the debt that has been taken on. Trillions upon trillions have been added and, as he has noted, history has shown us that when you have economic collapses or economic bubbles break as a result of excessive credit creation, you cannot fix the problem by simply creating more liquidity and more credit. You can inflate your way higher and kick the can down the road, but eventually the road ends and there is a cliff at the end. Like Wile E. Coyote, you end up falling over the cliff and leaving a little puff of dust when you hit the bottom. Of course, when you have the world's largest economy, it will be a little bit more than just a puff of dust when you fall off and hit that bottom.

His concern is that we are trying to once again inflate our way out of it. He notes that Greenspan was the king of this - he started the ball rolling. He got the modern Fed in the position it is in now where its hand is forced to inflate and print money on the way to trying to stave off a systemic collapse. The interesting thing that Mr. Faber notes is that if your economy was improving, if this credit extension was really working, then our currency should be rising. I have said that before - a strong economy begets a rising currency, and that is just not happening right now. Our currency is getting pounded, and although there are other factors pushing it lower (such as it being the target of a renewed carry trade in the world), when you print trillions of dollars with nothing backing it, then you do have problems with your currency and it will decline. Mr. Faber says that the dollar will continue to plummet and gold should rise. It had broken $1K but now it is back under, but he predicts gold is going to $3K. The basic premise is that we had an economic shutdown last fall based upon loose credit, and the house of cards collapsed. Our response has been not to let the banks that made bad loans fall and not to let people lose their homes, but it has been to try to create inflation and give more credit out in an attempt to produce enough of a economic recovery to jump-start the great economic engine again here in the US so we could produce our way out of it. We have been lucky and able to do that in the past, but here is where my analysis comes in.

The reason we are not going to be able to do it (or not as easily able) this time is because there are other countries out there now - China, Brazil, India - that are becoming industrial powerhouses. They do not need to look to the US to buy their goods to get them out of economic troubles; they can look at home. These countries are becoming wealthy, and I always said that that was one of the serious problems that the US faced with such a large current account deficit and budgetary deficit. One day the economies that are funding our debt will wake up and realize they are rich and do not have to sell their stuff to the US but can sell it to their own people. Then they do not have to keep buying our currency. Our currency is already under pressure, and that would be the death knell that would send it down to nothing - or close to it. We will not have people wanting to produce goods to fund our economy so we can produce and consume our way out of it. We have the stimulus that the Obama administration passed, and I have been critical of it. I have said that it is the 1930's and 1970's type of stimulus, where it is into digging ditches and refilling them versus trying to invest in the US and produce an educated populace and put money into entrepreneurs hands to produce the new businesses that will lead to the new technologies like we saw in the 1980's and 1990's.

Even if we use the Reagan or Kennedy-style supply side economics that unleashed tremendous investment booms in the US and catapulted us into the technological lead in the world, could it stave off the kind of collapse that Mr. Faber is suggesting is going to happen? With the spending that we have thus far, and if we are going to try to pass the healthcare plans that are being kicked around, the costs are going to be staggering. Whether it is the Medicare multiplier, which is ten times what they anticipated it would be, or the Medicaid multiplier which was 100 times what it was anticipated to be, this is pretty much break-the-bank kind of spending. The irony of this is that this administration is telling us that we have to spend more money in order to save money. I do not know about you, but my wife used to come home from big sales that were 40-60% off saying "Look how much money I saved buying stuff that I would not have bought but for the fact that it was on sale." It appears that this is the kind of mentality that has taken over Washington. Somehow they think this is going to save us money, but has there ever been a program that the federal government has started that has saved us money? No, to the contrary, they always cost 10-100 times more than anticipated, and we are taking about break-the-bank kind of spending at those levels.

This debate has become not driven by logic but ideology. It is always very dangerous when we start forgetting what we know about the past and make the same mistakes again - this time on a colossal scale that we may not ever be able to recover from. What do we do? If this country is going to print such massive amounts of money that our currency becomes basically worthless, then buy some gold. Right now, stocks in the US are rallying, so participate in that. It is not a good place to necessarily be in interest bearing accounts because the Fed is keeping the rates at basically zero, and the Fed said it would be comfortable with a 6% inflation rate right now. The Fed will be happy with 6% inflation which means you would be getting 0% on your dollars and inflation would eat 6% annually into your money. On top of that, your dollars would be losing value because of the currency exchange risk. As we print more and more money and the other economies in the world that are industrializing become more and more confident in their ability to sustain themselves, then they buy less dollars and we go down in price further. Not only that, but everything we import becomes more and more expensive because anything priced in dollars has to inflate in value in order to make up the difference to the producer due to the falling dollar.

I heard a fairly smart economist the other day make a fool out of himself by saying that it does not really matter because if you buy everything in the US you will be okay. That is absolute nonsense. Most of our oil does not come from the United States, it comes from other countries and it is valued in dollars. Every time that we allow our dollar to fall, we are raising the prices of all of our energy costs. Energy is a main input cost in nearly everything that we produce, whether it is the actual energy used to power the machines or the petrochemicals that go into much of what we produce.

The problem that we have is that we are willingly debasing our currency by printing dollars that we do not have and we are ready to spend tens of trillions of dollars - at a minimum - that we do not have. That is why our currency is falling and, while it is not collapsing yet, it is on a steady decline. Maybe we can produce our way out of this. I do not have much faith in that just because of the kind of stimulus we have and the overhang of all the trillions of dollars that we are printing and spending. We are digging a hole that will be very difficult to get out of and have to think about what may happen down the road. It is one of those situations like last fall when one of my friends called me and said, "Jon you need to take all of your money out of everything and put your dollars in a safe deposit box because you may not be able to get any if nothing is done." My response to him was, "Well, it will not be worth anything if that happens, so why bother?" He thought about it a minute and agreed. If you have Armageddon, does it really matter? In the long run, not really. If we have that, then everyone is going to suffer. Realize that gold will go up in value, however, and hard things will go up in value because those are things you can hold and sustain. The question is where are you going to store them? If the system breaks down and there is chaos, you are not going to be able to do anything with them or be able to get anyone to give you them just because you hold a piece of paper saying you have a right to them.

That is something to think about. I always hate doom and gloom, but this is interesting. Mr. Faber is a very smart man. He called the crash, and he called this little rally we have had off of the bottom - he has made a number of very good calls in the past. He is quite prescient and it is interesting to listen to what he has to say.


THE MARKET

MARKET SENTIMENT

VIX: 25.61; +0.66
VXN: 25.77; -0.13
VXO: 24.85; +0.93

Put/Call Ratio (CBOE): 0.96; -0.03

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 doesn't have the cash to drive it higher.

Bulls: 47.9%. While the market moved higher the past two weeks bullish sentiment fell. It hit 50.6% three weeks back but some worry is creeping in. Success breeds doubters, eh? Still well over the 35% level that is the threshold for what is considered a bullish climate. It does not mean things are necessarily bearish; that takes a reading in the 60% range. Hit a high of 47.7% mid-June on the run from the March lows. Again, to be seriously bearish it needs to get up to the 60% to 65% level. Dramatic rise from 21.3% in November 2008, the bottom on this leg. This last leg down showed us the largest single week drop we have ever seen, falling from 33.7% to 25.3%. Hit 40.7% on the high during the rally off the July 2008 lows. 30.9% was the March low. In March the indicator did its job with the dive below 35% and the crossover with the bears. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator.

Bears: 24.4%. Bears continue to bounce higher on that same skepticism impacting the bullish figures, but the bounce is slowing (24.1% 2 weeks back). Hit a low of 21.3% on this leg. Rebounding some from the big drop 31.1% and 35.6%. For reference, cracking above the 35% threshold considered bullish. Hit a high on this run at 47.2%. 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.


NASDAQ

Stats: -16.69 points (-0.79%) to close at 2090.92
Volume: 2.282B (-10.24%)

Up Volume: 825.516M (+397.132M)
Down Volume: 1.543B (-634.168M)

A/D and Hi/Lo: Decliners led 1.34 to 1
Previous Session: Decliners led 3.09 to 1

New Highs: 37 (-12)
New Lows: 11 (+2)

NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg

NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg

SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg


SP500/NYSE

Stats: -6.4 points (-0.61%) to close at 1044.38
NYSE Volume: 1.195B (-11.43%)

Up Volume: 378.85M (+203.985M)
Down Volume: 795.856M (-367.717M)

A/D and Hi/Lo: Decliners led 1.27 to 1
Previous Session: Decliners led 3.19 to 1

New Highs: 175 (-7)
New Lows: 31 (0)

SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg

SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg


DJ30

Stats: -42.25 points (-0.44%) to close at 9665.19
Volume DJ30: 189M shares Friday versus 201M shares Thursday.

DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg


MONDAY

This week we will likely see a continuation of this technical pullback that I have been talking about. There has been a move higher in the market, and it is roughly equal in time from March to May. The question is how deep this pullback will be? 9% as in June, or is this the extent before a bounce? No one knows for sure, but the selling has not been very intense thus far, and there is still plenty of liquidity in the market although the Fed did inject some uncertainty about that at the end of the week. After Wednesday it said it would keep the money going, but on Friday, Mr. Warsh (who many look at as a surrogate speaker for Mr. Bernanke) said the Fed may have to turn the ship pretty quickly if things sour on the inflation front (and the currency as well). When you print this much money, that could happen relatively quickly. That could cause them to turn the ship, and that is what made investors somewhat nervous on Thursday and Friday. Add that it was just technically ready to pull back, and you have the making for a pullback ahead.

In anticipation we lightened up a lot of positions during the week. On Friday a lot of stocks were pulling back a little more but were fading into support, and you do not like to sell stocks at support. Let them bounce and see how they bounce. If they bounce with any strength, you let them run. If they bounce and fizzle out, you pull the cord and get out of them and then look for more downside plays and watch for other plays to develop to the upside.

As for the leaders, the money is still spreading out around the market to set back up whether it be in biotech, energy, software or telecom. There are stocks in sectors that are setting back up, so we watch for them. One thing about the choppy action in some sectors the past couple of week: there are a lot of ABCD patterns setting up. We have put those on the report and now we wait to see if they break upside or if the entire market is going to make the test. For now be patient and do not rush into a lot of positions. When the time is right, we will move in and make some money. Have a great weekend and I will see you on Monday.


Support and Resistance

NASDAQ: Closed at 2090.92
Resistance:
2155 is the March 2008 intraday low
2167 from the July 2008 intraday low
2169 is the March 2008 closing low (double bottom)
2099 is the mid-September 2008 closing low

Support:
The 18 day EMA at 2087
The March up trendline at 2075
2070 is the September 2008 intraday low
2060 is the August peak
2016 is the early August peak
The 50 day EMA at 2010
1984 from late September
1962 is the bottom of the August 2009 range.
1947 is the October gap down point
1897 is the October post gap intraday high.
1880 is the June peak
1862 is the July peak
1786 is the November intraday high
1780 is the November 2008 closing peak
1773 is the May intraday peak
1770 is the mid-October interim peak
The 200 day SM A at 1717


S&P 500: Closed at 1044.38
Resistance:
1106 is the September 2008 low
1133 from a September 2008 intraday low
1185 from late September 2008
1200 from the July 2008 low

Support:
The 18 day EMA at 1045
1044 is the October 2008 intraday high
The August peak at 1040
The early August intraday peak at 1018
The 50 day EMA at 1011
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low
956 is the June intraday peak
944 is the January 2009 high
935 is the January closing high
932 is the July peak
930 is the May peak
919 is the early December peak is bending
899 is the early October closing low
896 is the late November 2008 peak
The 200 day SMA at 896
888.70 is the April intraday high.


Dow: Closed at 9665.19
Resistance:
9855 is the early September peak in its lateral range
9918 is the September 2008 peak
10,365 is the late September low

Support:
9654 is the November 2008 high
The 18 day EMA at 9644
9625 is the October 2008 closing high
9620 is the August 2009 peak
9387 is the mid-October peak
The 50 day EMA at 9359
9116 is the August low
9088 is the January 2009 peak
8985 is the closing low in the mid-2003 consolidation
8934 is the December closing high
8878 is the June peak
8829 is the late November 2008 peak
8626 from December 2002
8588 is the May high
8581 is the July peak
8521 is an interim high in March 2003 after the March 2003 low
8451 is the early October closing low
The 200 day SMA at 8441
8419 is the late December closing low in that consolidation


Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

September 29 - Tuesday
Case-Shiller Housing, July (09:00): -14.20% expected, -15.44% prior
Consumer Confidence, September (09:00): 57.0 expected, 54.1 prior

September 30 - Wednesday
ADP Employment, September (08:15): -200K expected, -298K prior
GDP - Final, Q2 (08:30): -1.2% expected, -1.0% prior
Chicago PMI, September (09:45): 52.0 expected, 50.0 prior
Crude Inventories, 09/25 (10:30): 2.85M prior

October 01 - Thursday
Personal Income, August (08:30): 0.1% expected, 0.0% prior
Personal Spending, August (08:30): 1.1% expected, 0.2% prior
Initial Claims, 09/26 (08:30): 535K expected, 530K prior
Continuing Claims, 09/19 (08:30): 6178K expected, 6138K prior
Construction Spending, August (10:00): -0.2% expected, -0.2% prior
ISM Index, September (10:00): 54.0 expected, 52.9 prior
Pending Home Sales, August (10:00): 1.0% expected, 3.2% prior
Auto Sales, September (14:00)
Truck Sales, September (14:00)

October 02 - Friday
Average Workweek, September (08:30): 33.1 expected, 33.1 prior
Hourly Earnings, September (08:30): 0.2% expected, 0.3% prior
Nonfarm Payrolls, September (08:30): -180K expected, -216K prior
Unemployment Rate, September (08:30): 9.8% expected, 9.7% prior
Factory Orders, August (10:00): 0.5% expected, 1.3% prior

By: Jon Johnson, Editor
Copyright 2009 | All Rights Reserved

Jon Johnson is the Editor of The Daily at InvestmentHouse.com

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com

Economy Gets Back to Work

SUMMARY:
- Big volume but no volatility on expiration Friday.
- Dollar bounces modestly and the rest of the market rests.
- Good week of economic data as economy continues to get back to work. How much work is the question.
- Near term story: Liquidity versus long run and resistance.
- Plenty of strong stocks already pulling back and setting up: healthy market but still need patience.

Sleepy expiration as market sizes up the run and resistance.

Sometimes you see fireworks on expiration Friday, but that certainly was not the case Friday even though it was the quadruple type where options, futures, and just about everything expire. Stocks simply didn't do much, but even then they still drifted higher overall. Great volume as well but none of that volatility often associated with expiration. It was a quiet, listless, sluggish, boring day. Pick your adjective to describe it, and that was pretty much it. The market is up 9 out of 12 sessions so you can understand why there would be some sluggishness. The question is whether the sluggishness will continue and turn into a pullback or correction, or if the market will just pause to catch its breath and resume the move driven by all the money circling the world and looking for a place to roost. Frankly, a lot of it (if not most of it) is roosting in financial markets here and elsewhere.

The analysts were somewhat busy. Upgrades to PG, the homebuilders, SNDK and others were somewhat of a surprise for a Friday, but the analysts, as with many fund managers, are playing catch-up to the rally. Barclays, one of the big financial houses, raised its estimates on Q1 2010 GDP to 5%. That is above trend, and maybe they are banking on a traditional recovery - tough call. There can be good growth in individual quarters even when malaise sets in, but strong growth is pretty difficult to come by. I usually do not correlate growth and inflation, but the problem our Fed and government is creating is an attempt at heavy demand and little supply with a very liberal helping of money. Demand will eventually ramp up without, and if supply doesn't find its own way to keep up you have excess demand. With all that extra money pumped into the system (even though the Fed and Treasury deny it), the roots of very serious inflation grow. The CPI and the PPI didn't show any inflation this past week, but that is near term and in the rearview mirror. The problem is 2 to 3 years out. That is why you see gold building higher now as asset prices take account of events well ahead of time.

PALM announced earnings, losing less than anticipated but sporting lousy guidance for the current quarter even though guidance for the year was increased. PALM has a new product that is supposed to be the end- all PDA yet it cannot ramp current earnings. Curious at least. The Federal Housing Administration didn't help the morning action as it announced its cash reserves are falling below the required 2%. Of course it is strapped as it deals with delinquencies as it backs the mortgages that the federal government authorizes and stands behind. FHA is strained given the high number of delinquencies and foreclosures.

All of this was summed up, chewed up, opined and thought upon by the investors, and the market opened a bit higher. Very similar action to the rest of the week sans Thursday. Higher open, quick fade, then a recovery and steady build higher into the close. The gains were hardly substantial with a 0.3% gain being solid though SOX did hang a 1.6% gain on the board. Stocks tailed off at the close, taking a bit of luster off the final tally. A snoozer of a day, and a lot of what we did was snooze. We took some gain, but overall did little. That was pretty much the plan as noted Thursday. It is simply not time just yet as NASDAQ and SOX hit some resistance and we need to see how the other indices react. We will get a wider range of opportunities a bit further down the road


Other Markets

The dollar rebounded after getting slaughtered earlier in the week (1.4697 versus 1.4730 Thursday). Even with that modest improvement oil was lower ($71.75, -$0.72). Gold tarnished just a bit ($1,008.30, -$5.20). All commodities pulled back, and indeed the main leadership groups for the week, i.e. those that rallied as the dollar sold, paused at the end of the week as the dollar bounced in relief. Nothing abnormal about that. As any asset class gets thrashed, it tends to bounce back and to catch its breath. That is what we saw on Friday with the dollar, and the sectors that feed off of the dollar's movement moved inversely to it.

Bond yields bounced back after Thursday's bond rally knocked the 10 year down to 3.39% (closed at 3.47% Friday). That continues that somewhat strange dichotomy I noted earlier in the week and last week about bonds rallying as stocks rally. That is not the typical case, and it leaves you to surmise that something else is going on. Inflation, perhaps commercial real estate issues, or maybe something no one sees. Bonds tend to reflect problems before the cause shows itself. We will find out eventually - we always do.

TECHNICAL

INTERNALS.

Friday was a throwaway day with respect to internals. Huge quadruple expiration volume. Big spikes on NYSE and NASDAQ. NYSE showed its largest spike since late June. NASDAQ showed the same. Large volume Friday, but really volume was strong all week and indeed all during this last rally let. This has not been wallflower-type volume. Strong, above-average trade as buyers flock in and chase performance. That makes things interesting, especially given the time of year. You are going to see a bunch of fund managers forced to spend more with year-end approaching as they account for what they have done with client money. There is a lot of catch-up buying taking place, helping drive the market. That is why we are seeing the moves to the upside and the big volume, but as for Friday, it did not really mean a whole lot because this was the quintessential example of what expiration volume looks like. Of course, even with fund managers chasing performance you can still get pullbacks and corrections; nothing goes straight up.

CHARTS.

NASDAQ is at a resistance range from the mid-September closing low on up to the July closing level (2099-2100, on up to 2155-2169). It is a large, rather strong range of resistance. NASDAQ has thus far shown no inclination to turn tail and sell as it has rallied into the range and is now pausing. Often an index breaks into a range, tests the bottom of the range (here at 2100) and then moves further into the resistance range. Thus NASDAQ can still make headway even though it has hit the initial levels of resistance. That is not just an automatic brick wall that slams into and reverses. Sometimes that is true, but usually it rallies into the resistance and then starts to struggle as it tries to work through it.

SOX is hitting resistance as well, and this looks to be more of the brick wall type because it has hit the level and stalled, unable to crack into it. Why? This is serious stuff with the Q1 2008 trading range low, the July 2008 low, and then the September recovery attempt failed there: a long range of consolidation, a subsequent bottom over the level, and then when it was broken in the heavy bear market selling, it failed a rebound at that level. This is a significant resistance range that the semiconductors are dealing with.

SP500 that still has room to run to the upside. It can do some open-field running because it does not have any resistance up to 1106. I know I have talked about the before but it is worth repeating. 1106 up to 1150-1160, which was the mid-September closing level. That is a range of resistance as well that could start putting the brakes on SP500 when it starts moving toward that level. Will SP500 get there, however, before NASDAQ exerts any influence?

Thursday I discussed the rally in terms of the 200 day SMA. A significant move leaving the indices 20% or better above their 200 day MA. When they get to that level, they start to stumble, maybe start to fall. At a minimum they have more trouble moving forward. As I just said about resistance in general, however, this is not a brick wall either. They start to have problems, maybe shorter runs, more frequent pullbacks basically just not as strong as the prior runs. Makes sense, right?

There are two forces fighting at this juncture. Can the momentum generated by the liquidity continue to push stocks higher or will resistance and the size of the rally start to take its toll? You have the money chasing performance, but can it overcome the drag on the indices when they are 20% for SP500, 26% for NASDAQ, and 31% for the SOX above the 200 day EMA? As seen in May and June, liquidity cannot solve all problems all of the time. The market made its initial run off the lows. Big strong run, but it was tired and needed to take a breather. Of course when it did consolidate the market never gave up the gains, instead forming a consolidation range before breaking higher again.

Compare: you have the run from March into May, the May to early July consolidation, and then the July to September run. The initial run to the first peak was 39% for SP500. This last run 24%. A significant enough difference, but it has taken an extra 2 weeks to generate these gains than that initial move. That is normal: the initial run is usually the strongest. In any event that first rally consolidated for 6 to 7 weeks after that initial run. Now the indices put in more time on this move and they are substantially above their 200 day EMAs with NASDAQ and the SOX bumping into resistance. It makes a little bit of sense they might try to take another pause at some point in the near future. Strong liquidity keeps driving the market, but it just cannot defeat the force of gravity, so to speak, when the indices get so far ahead of the curve. Of course the question is always 'when?' It is prudent to watch a bit here. This could be a potential inflection point. I feel we still get more upside out of this before it corrects more substantially, but it won't be another 20%. You have to ask yourself how much money you are willing to put into play in addition to what is already on the table. With the nice setups out there the market could rally on for continue for a couple more weeks. I hate to leave money on the table, i.e. not making plays when they are there, but some caution when we move in is SOP as is looking for good risk/reward positions when we do.

LEADERSHIP.

Everything that moved up this past week as the dollar sold took a pause on Thursday and Friday. Industrials (TEX), steel (AKS, RS), etc., there was a pause. They are not getting tossed back on their cans necessarily, but they are taking a breather now. That is perfectly understandable after the nice runs gratis the dollar's slaughter. Whether it was industrials, commodities, or large cap tech, you are seeing kind of a stall here. Is it going to be the pause that refreshes and just continues on, or are they going to come back? As noted above, the answer is 'yes' and 'no.' In answering that question, let us look at some of the stocks that have moved up are already doing right now.

BRCM has a cool pullback, tight consolidation. Nice breaks higher on rising volume and a pullback on lower trade. BRCM looks pretty doggone good as long as the market has more upside strength overall. What if AKS broke out of this neat little triangle right here? You see it broke out of the prior triangle and will come back and test. If it comes down to 22 and holds that, then we have another great buy point. BHP in industrial metals broke out of an uptrending triangle and is coming back to test as well. Good volume on the upside. Low volume on the downside and thus not many sellers. Love to see that. The list goes on. TITN gapped up over some resistance and has come back to test it and backfill. It is in great shape. TIE is another industrial metal stock with a nice rally, a pullback for another day or two and you have a nice little cup with handle - or a flag pattern if you want to look at it more short term. Setups are not just limited to the metals and commodities. Semiconductors are setting up. A neat little breakout and test from ARMH and a similar pattern with FORM as it also broke out and is making an orderly test. CEDC (eastern Europe spirits distribution) is in a neat ascending triangle pattern as well.

You can see there are great pullbacks already in progress. That is the result of money coming to the market and rotating: it gives great entry points on stocks that pullback while others have rallied ahead. We keep seeing places to put our money. The lure of that is that you keep seeing those setups right until there is trouble. That market can start to struggle overall but you can still see these setups right up until it corrects. The market can go one bridge too far and suck in money right up to the end before it reverses. That is why you will often see a good break higher, but it is a late-stage break, and it reverses and sells off sharply. You know a rally gets long in the tooth and you keep asking yourself, how much more money you want to put in as the rally moves forward.

You can answer that by keeping position size relatively even, i.e. not loading and skewing your trading account or your larger portfolios with one or two overloaded positions. For example with AKS I can have three plays running but I treat them all separately. Some people say that is foolish because it is all the same stock, but if you treat them as separate plays and have different parameters on each one (and you should as you move in at different times) you have your risk defined and know how to react. You have to be able to divorce yourself from the emotion of the situation. Just because it has made you money in the past does not mean it will make you money in the future and vice versa. It is not the stock, it is what it is doing. It is what its chart is telling you along with its fundamentals and earnings. You combine all those and you get good entry points even if it is one stock. You keep a level head with respect to what you are doing and still never overly load the boat with one stock to where it accounts for 20% or more of your portfolio. That allows you to come in maybe later in a rally and still make some money. At worst, it allows you not to minimize any losses because you are moving in at good risk/reward points, right? If the play goes against you, you are out. If it continues higher, you make some great money.

Finally, not all is perfect in the market. Some key names are struggling. GLW is getting kind of toppy here and we have been talking about QCOM as it continues to struggle. Of course it has not broken down either; it has come to a support level here at 44, so even though some stocks that sagging and look kind of heavy, they are not necessarily crumbling.

After all there is a pretty decent technical picture in place. The indices are still in up trends and even though they are extended, nothing has been able to turn them back. They are at somewhat of an inflection point right now with NASDAQ and SOX at resistance, and it will show us what it has left in the take with respect to this rally. Serious resistance, the indices well above their 200 day EMAs, and a rally that has pretty much matched the length of the prior March to May run. With that in mind, a little caution and patience goes a long way as we wait for the plays to develop and come to us. We have positions on many great stocks, and if the market goes against us and starts heading back down, we can let the market take us out and will still have a lot of gain in the positions we have left and can look to play the other side.

THE ECONOMY

Solid week of data shows the business of getting back to business continues.

This past week saw the economy show improving data. Once more, there was bit by bit positive numbers coming out. The stock market started to rally in March because it anticipated improving economics. After the economy shut down to virtually no business given the financial system crash, no one could get any money to do anything. We were lucky the ATM measures still worked. Now that things are flowing again and the Fed has pumped trillions of dollars into the system along with the central banks from around the world, things are actually loosing up and moving. People have to live, and so that is necessarily going to throw off a certain amount of economic activity and therefore we are seeing the improvement. That is great; I have no problem with that. The concern is how strong it is going to be? We saw the Philly Fed show its second month of positive numbers. The New York PMI showed the same thing on Monday with another month of positive numbers. There is some real traction in the manufacturing sector. That was bolstered by our import/export data that shows we are importing a lot of not only consumer goods, but industrial goods and the capital goods that we use to conduct business.

That is a positive. These facts are dovetailing with each other and showing that there really is some improvement - it is not just one outlying number somewhere showing improvement as it was earlier in the year. Retail sales were up 1.1%. That is not as strong as the prior month, but still another month of gains. What did we see in the import data? There were a lot of consumer goods imported as well, even with a weak dollar. It makes you hurt almost to look at anything made overseas, but nonetheless, we were buying a lot of imports. There is pent up demand and we are spending money, so that is not bad at all. We continue to see sentiment improve; it is still at pathetic levels, but is moving in the right direction. You have to crawl before you walk and walk before you run, and it seems that we are getting to that point. Industrial production and capacity went up.

What I am getting at is that we are seeing a recovery. This is something that happens even in periods were it looks like you will have long-term malaise. The question is what is coming down the road? I talked earlier about the commercial real estate market and that is really a fear among many in the financial area - frankly, in the government as well. They are not talking about it because the last thing we need is to talk about this other pit that we are going the stumble across as we move down the road. The hope is that the Fed and Treasury will be able to liquefy the economy enough not the get into that trouble and to maybe create enough demand and it will snowball to where we actually get things going. Even if there is inflation, they do not care. I tell you right now - they do not care about inflation because inflation is something they feel they can kick down the road. Inflation is not something that is going to happen tomorrow or the next day or in the next six months. It will be 6 months to a year or two out, so they are not that worried about it. That is what concerns me. They are just trying to liquefy everything to get out of this mess now and will worry about the other troubles later. That is acceptable to some people, but if you look at history and how things work, it is avoidable. The problem is that we have loggerheads - we always do.

There is politics and then there is what needs to be done. There is the Constitution and then there is ideology. There are loggerheads oftentimes. While I love to see things done constitutionally where we free people up and give them back more of their money and let them make their decisions, that is not the situation we are in right now. The administration does not believe in that. It is a different ideology and we have to deal with it.


THE MARKET

MARKET SENTIMENT

VIX: 23.92; +0.27
VXN: 24.69; +0.43
VXO: 23.56; -0.21

Put/Call Ratio (CBOE): 0.85; +0.07

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 doesn't have the cash to drive it higher.

Bulls: 47.9%. While the market moved higher the past two weeks bullish sentiment fell. It hit 50.6% three weeks back but some worry is creeping in. Success breeds doubters, eh? Still well over the 35% level that is the threshold for what is considered a bullish climate. It does not mean things are necessarily bearish; that takes a reading in the 60% range. Hit a high of 47.7% mid-June on the run from the March lows. Again, to be seriously bearish it needs to get up to the 60% to 65% level. Dramatic rise from 21.3% in November 2008, the bottom on this leg. This last leg down showed us the largest single week drop we have ever seen, falling from 33.7% to 25.3%. Hit 40.7% on the high during the rally off the July 2008 lows. 30.9% was the March low. In March the indicator did its job with the dive below 35% and the crossover with the bears. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator.

Bears: 24.4%. Bears continue to bounce higher on that same skepticism impacting the bullish figures, but the bounce is slowing (24.1% 2 weeks back). Hit a low of 21.3% on this leg. Rebounding some from the big drop 31.1% and 35.6%. For reference, cracking above the 35% threshold considered bullish. Hit a high on this run at 47.2%. 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.


NASDAQ

Stats: +6.11 points (+0.29%) to close at 2132.86
Volume: 2.915B (+14.52%)

Up Volume: 1.826B (+905.657M)
Down Volume: 1.186B (-517.266M)

A/D and Hi/Lo: Advancers led 1.1 to 1
Previous Session: Decliners led 1.02 to 1

New Highs: 115 (-38)
New Lows: 5 (-3)

NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg

NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg

SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg


SP500/NYSE

Stats: +2.81 points (+0.26%) to close at 1068.3
NYSE Volume: 2.1B (+38.83%)

Up Volume: 1.117B (+547.488M)
Down Volume: 1.135B (+202.069M)

A/D and Hi/Lo: Advancers led 1.36 to 1
Previous Session: Decliners led 1.3 to 1

New Highs: 247 (-119)
New Lows: 39 (-50)

SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg

SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg


DJ30

Stats: +36.28 points (+0.37%) to close at 9820.2
Volume DJ30: 424M shares Friday versus 225M shares Thursday.

DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg


MONDAY

Do we worry, gnash our teeth and wring our hands about what will happen in the future? We can, and sometimes I do that. I have been known to get a little sackcloth and ashes on at times and then go out and howl at the moon as well, but it does not do me a lot of good. I want to make money. So I will do what I need to in order to do that. I look ahead at what is happening now, not what is going to happen a year or two or three from now because that is not going to make me money today, at least most of the time. In some cases it will, like the GLD, but not most of the time and thus it is a low percentage worry with respect to my trading accounts.

For now, the market is hitting up against resistance but there are a lot of stocks in great position to buy. Do we run out and buy them right now? No, this should not be a general grab bag of buying. Be a little patient and see what happens after expiration. Let us see what happens with NASDAQ and SOX up against this resistance. SP500 can run a few more days and start bumping up against 1106, and then maybe it stalls out as well. Then we get something of a correction. Remember the two runs - the one from March to May and the one from July to mid-September may not be identical twins but their look, trajectory, and ground covered are worth noting. Markets tend to do the same thing over and over again. Legs tend to be similar in length with the longest, strongest ones usually the first couple of legs. There is a case to be made that we see some sort of correction after we get another move upside by SP500.

With all of the money chasing performance into the end of the year, we could get a really nice rally after correction, pullback, consolidation whatever you want to call it. With September being something of a lamb this year it would almost be poetic if the market sold in October and then put in some kind of bottom for a new run. Everyone has thumbed their nose at the idea that September is a tough month. It has not been tough on anyone but the bears, so maybe we finally get a correction and come back. Is that a big worry? It will seem that way; always does. Combat it by using good stops- we have a lot of gain built in a lot of positions, we will let the market take us out of those if it does, using those stops. On our other positions entered recently, we have good risk/reward positions so we can exercise our stops and not get hurt. Over the next few weeks it is a matter of being patient and trying not to get too excited about the setups we see with pullbacks right now and pullbacks that will be forming.

Of course, if you get a great entry point, then you have to put your money to work. That is how you make money investing or trading, you have to put that money to work when an opportunity is there. Despite what you see on TV, despite what all of the pundits tell you, and despite what I tell you and what I think I know, the market does what the market does. When it shows you setups that you like to play, you play them. Then if it does not go your way, you shut it down. If it goes your way, you let it run as long as it will, e.g. AAPL, BIDU, AKS, RS, ESRX - you let them run and make big money for you. So, if we see the setups, we know there is money out there. We just do not know how long it will be able to trump the need to pullback.

Everything tells us we need to be careful moving ahead because we are entering a range that historically shows the market struggles a bit. Counterbalancing that is all of the money wanting to get into financial markets and chase performance and basically get put to work for the year end run given the banks are not lending and no one is borrowing. We have those two competing forces fighting near term and it could get bumpy. We will still just try and take what the market gives. If we see a set up, we will take it, but do not get too concentrated in one particular play, i.e. don't put too much of your account into one play. I might have three or four plays on one stock, but as noted above, I treat them as separate plays because I have different entry and exit points for each one. I have different parameters for them because they are separate plays to me. I am risking a certain amount of capital on each one. That does not mean if I get a gap down I don't get hurt, but if bad news hits the market most stocks will go down as well. That is a market risk. Still, that does not mean you overly concentrate and stack 30% of your portfolio into one play. We may have a lot of money in several plays on the same security, but not all money riding at once on one buy or sell point.

The key is finding great plays, great ENTRY points in those plays, and then managing your money. They are all important but they build one upon the other: managing a position depends upon good entry points. Managing a position, however, is difficult of you put all of your money into one play: it makes it hard to keep the emotion out of the play. If I know I can lose on a trade and it won't hurt me then I don't sweat just killing it if it does not go my way while I let the other plays that are going my direction continue to run. Do I like it when a play goes against me? Of course not. Do I let it ruin my trading mindset or prevent me from moving into other plays that fit my parameters? No way. If traded that way then the impact of a losing trade would be magnified: not just the loss itself but the ripple effect on my other trades that I manage or just not making a trade because of emotion. Not good. It is very empowering to have a system that allows you to now worry about any one trade.

Have a wonderful weekend. The weather is getting nicer, and everyone is enjoying football season and just being outside. Despite all of the troubles we have, it is a great place to live and a great time to be alive. Let us think about that a bit and enjoy some of the money we have made for ourselves and don't forget others that may need some help. Have a great weekend and I will see you on Monday to make some more money.


Support and Resistance

NASDAQ: Closed at 2132.86
Resistance:
2155 is the March 2008 intraday low
2167 from the July 2008 intraday low
2169 is the March 2008 closing low (double bottom)

Support:
2099 is the mid-September 2008 closing low
2070 is the September 2008 intraday low
The 18 day EMA at 2062
2060 is the August peak
The March up trendline at 2020
2016 is the early August peak
The 50 day EMA at 1985
1984 from late September
1962 is the bottom of the August 2009 range.
1947 is the October gap down point
1897 is the October post gap intraday high.
1880 is the June peak
1862 is the July peak
1786 is the November intraday high
1780 is the November 2008 closing peak
1773 is the May intraday peak
1770 is the mid-October interim peak
The 200 day SM A at 1701


S&P 500: Closed at 1068.30
Resistance:
1106 is the September 2008 low
1133 from a September 2008 intraday low
1185 from late September 2008
1200 from the July 2008 low

Support:
1044 is the October 2008 intraday high
The August peak at 1040
The 18 day EMA at 1037
The early August intraday peak at 1018
The November 2008 peak at 1006 closing 1007.53 intraday
The 50 day EMA at 1001
992 is the August 2009 consolidation low
956 is the June intraday peak
944 is the January 2009 high
935 is the January closing high
932 is the July peak
930 is the May peak
919 is the early December peak is bending
899 is the early October closing low
896 is the late November 2008 peak
The 200 day SMA at 892
888.70 is the April intraday high.


Dow: Closed at 9820.20
Resistance:
10,365 is the late September low

Support:
9654 is the November 2008 high
9625 is the October 2008 closing high
9620 is the August 2009 peak
The 18 day EMA at 9575
9387 is the mid-October peak
The 50 day EMA at 9274
9116 is the August low
9088 is the January 2009 peak
8985 is the closing low in the mid-2003 consolidation
8934 is the December closing high
8878 is the June peak
8829 is the late November 2008 peak
8626 from December 2002
8588 is the May high
8581 is the July peak
8521 is an interim high in March 2003 after the March 2003 low
8451 is the early October closing low
8419 is the late December closing low in that consolidation
The 200 day SMA at 8414


Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

September 29 - Tuesday
Case-Shiller Housing, July (09:00): -15.44% prior
Consumer Confidence, September (09:00): 54.1 prior

September 30 - Wednesday
ADP Employment, September (08:15): -298K prior
GDP - Final, Q2 (08:30): -1.2% expected, -1.0% prior
Chicago PMI, September (09:45): 50.0 prior
Crude Inventories, 09/25 (10:30)

October 01 - Thursday
Personal Income, August (08:30): 0.0% prior
Personal Spending, August (08:30): 0.2% prior
Initial Claims, 09/26 (08:30)
Continuing Claims, 09/19 (08:30)
Construction Spending, August (10:00): 0.3% expected, -0.2% prior
ISM Index, September (10:00): 52.9 prior
Pending Home Sales, August (10:00): 12.9% prior
Auto Sales, September (14:00)
Truck Sales, September (14:00)

October 02 - Friday
Average Workweek, September (08:30): 33.1 prior
Hourly Earnings, September (08:30): 0.3% prior
Nonfarm Payrolls, September (08:30): -216K prior
Unemployment Rate, September (08:30): 9.7% prior
Factory Orders, August (10:00): 1.3% prior

By: Jon Johnson, Editor
Copyright 2009 | All Rights Reserved

Jon Johnson is the Editor of The Daily at InvestmentHouse.com

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com

Companies Start Raising Revenue Guidance

SUMMARY:
- After 5 upside sessions the market takes the day off but holds its gains.
- Companies start raising revenue guidance versus just pruning costs.
- Michigan sentiment improves ahead of Notre Dame game.
- Wholesale inventories or lack thereof?
- Market starts the week a bit overbought.

Market takes a break on 9-11.

After 5 solid upside sessions stocks made a half-hearted attempt to log some more gains, but the buyers were not really into it, and by midmorning the market simply could not hold the upside. It slid to negative over lunch, and though it rebounded through the afternoon the indices logged their first losses in 6 sessions. Did it make a difference? Not really; SP500 is still at the 1144 level, but nothing changed the strong uptrends and the solid breaks higher on above average volume.

Of course there was the news, the usual and the pleasantly surprising. The usual: more economic data out of China and it was impressive. Why not, right? Communist government that can do what it wants to the data or influence the data by say giving away thousands of washing machines to citizens and logging them as sales. Sounds like some of our government contractors as well. Anyway, the Chinese reported a 12% annual gain in industrial production and a 15% again in retail sales. This is either an incredible growth story or an incredible chain jerking. Of course as China jerks the chain the rest of the world markets follow.


The real news is the best news.

The most intriguing news was the same we heard Thursday: companies increasing their guidance and doing so by virtue of revenues versus cost cutting. FDX, the shipper, was the biggest name Friday raising its guidance thanks to improving sales. STLD in the steel sector chimed in. This was on top of Thursday's group of similar stories from GIS, TXN, ASML and PG.

This is big news. The last earnings season saw a lot of earnings beats, but those improved results were driven by cost cutting those 2.6M lost jobs as noted Thursday. Investors were impressed by companies' ability to cut costs and improve the bottom line. Combine that with growing revenues via sales and investors should be even more favorably impressed.

The news is also good to hear as it corroborates the other data turning up. The regional ISM's moved positive and the national followed rather dramatically. Thursday the trade deficit numbers were much larger than expected, but the rise in capital goods and industrial goods helped increase exports and skew the overall number. Businesses buying equipment and a lot of it. That dovetails nicely with the rising ISM surveys. Love to see corroboration.

So the market received some very nice news again on Friday. It just couldn't do much with it after running higher for five consecutive sessions. That is fine. Everything has to take a rest. The nice thing is that the data is there and after the indices test this last move they can use that data and anticipation of better earnings to continue the uptrends after testing or pausing after the last run.


TECHNICAL

INTERNALS. After a week of very solid numbers you would expect some backsliding on a rest day. Sure enough breadth fell to -1.4:1 on NASDAQ and 1.3:1 on NYSE. Big deal. Volume faded as well but it was still above average on both NASDAQ and NYSE. Strong volume on the rally higher this past week. Not as strong as the selling volume to start September, but as noted before, the trade is no slouch. A series of above average sessions is offsetting the that first of the month trade.

CHARTS. All the indices took a moment Friday. NASDAQ and SOX blew through the August highs and though lower on Friday they did not lose any ground. SP600 managed to hold its break over that level as well. SP500 is holding its move also, but it does not have that much distance on the August peak so it gave up the October 2008 peak at 1044 but is holding its gains as well. What can you say? They made the breakouts and paused on Friday. The uptrends are still in place, the moves were on volume, and there is plenty of leadership.

LEADERSHIP. Ah yes, leadership. Last week saw money return to the market and it also spread out into some new areas such as healthcare. Chips jumped back to life . . . again. Tech was up but riding a wave that started some time back; kind of extended. Energy and metals broke higher out of some good patterns. Friday we started to see some pullbacks in chips and other areas but it is still really early to be jumping in on those for new plays. Suffice it to say there is plenty of leadership from plenty of different sectors.


THE ECONOMY

Sentiment improvement continues . . . once more.

Michigan sentiment improved to 70.2 from 65.7 in August, up from 65.7. Happy days for sure, right? Well not exactly.

First, 70.2 is not stellar. Even during the 2001 and 2002 recession Michigan sentiment was, at its low, where it is today. It came nowhere near the 48 level shown in this recession. Improving is good, but let's not get all sloppy over it.

Second, sentiment hit 70.8 back in June and then puked up the gains. Indeed the bounce from 65.7 to 70.2 this month is one of the best moves sentiment has made in quite some time. Football season has started and that always improves sentiment a bit. No kidding. At this point, given the bounce and fade in the summer, you want to see at least a couple of months of back to back improvement before you get all sentimental, so to speak.


Wholesale inventories continue their slide in July.

-1.4%, -2.1%, -1.2%, -1.3%, -1.8%. Five stellar months indeed. Wholesalers' shelves must be just about bare. No kidding. Inventories fell but it was not due to a lack of sales. Sales continued their increase, rising 0.5% for the month, the third month of gains after turning the corner in April. That pushed the inventory to sales ratio to 1.23 from 1.25, its lowest point since October 2008.

Greenspan told us last week that the weak inventory situation would help lead to increased economic activity as producers would have to ramp up production to restock goods. At some point that will occur, and it is true that the ISM indicates production activity is improving. That is how it starts. After that you need a handoff of the torch to the next level, i.e. some staying power. That is what it is all about; not blips, but steady improvement.

The environment looks ripe for a continued bump in economic activity. The question is how strong. We are worried the improvement will be short-lived and sporadic after the initial increase. People are getting back to business but that is far different from expanding business as you get in strong recoveries. The stimulus is wrong and the spending is much too massive. Been here before: Great Depression, 1970's. Both were long, lingering economic illnesses. Sure there were surges inside the malaise period, but the overall gains were subpar.

For now we are on a modest upswing and will enjoy the accompanying improvements near term.


THE MARKET

MARKET SENTIMENT

VIX: 24.15; +0.6
VXN: 25.29; +0.46
VXO: 23; +0.98

Put/Call Ratio (CBOE): 0.88; -0.03

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 doesn't have the cash to drive it higher.

Bulls: 50.6%. Bumping at highs for this rally off the March lows but off last week's peak that was the high for the rally. The move higher is slowing its pace, flattening out the past three weeks but is well over the 35% level that is the threshold for what is considered a bullish climate. It does not mean things are necessarily bearish; that takes a reading in the 60% range. Hit a high of 47.7% mid-June on the run from the March lows. Again, to be seriously bearish it needs to get up to the 60% to 65% level. Dramatic rise from 21.3% in November 2008, the bottom on this leg. This last leg down showed us the largest single week drop we have ever seen, falling from 33.7% to 25.3%. Hit 40.7% on the high during the rally off the July 2008 lows. 30.9% was the March low. In March the indicator did its job with the dive below 35% and the crossover with the bears. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator.

Bears: 24.1%. Bouncing as some skepticism creeps into the market as the rally falters some with a couple of sharp selloffs in the past three weeks. Hit a low of 21.3% three weeks back on the market rally. Rebounding some from the big drop 31.1% and 35.6%. For reference, cracking above the 35% threshold considered bullish. Hit a high on this run at 47.2%. 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.


NASDAQ

Stats: -3.12 points (-0.15%) to close at 2080.9
Volume: 2.247B (-5.41%)

Up Volume: 1.18B (-786.738M)
Down Volume: 1.133B (+671.151M)

A/D and Hi/Lo: Decliners led 1.44 to 1
Previous Session: Advancers led 2.05 to 1

New Highs: 102 (-14)
New Lows: 4 (-1)

NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg

Five sessions higher that saw NASDAQ hold a test of the October 2008 gap down point and surge to a new post-March peak. Volume was strong, rising well above average from Wednesday on, giving the move an extra kick in the pants and more meaning. This continues the uptrend off the March low and indeed NASDAQ tested that trendline at the start of September, using it as a launch pad. Some of the large cap techs are extended and NASDAQ could test back from here; after that kind of move a test of the former resistance is typical. After that, NASDAQ's next resistance is in the form of a pair of lows, one from March 2008 (2169 closing) and the other from July 2008 (2215 closing), as well as the September 2008 range starting at 2150.

NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg

SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg


SP500/NYSE

Stats: -1.41 points (-0.14%) to close at 1042.73
NYSE Volume: 1.389B (-12.12%)

Up Volume: 648.507M (-617.282M)
Down Volume: 709.871M (+412.336M)

A/D and Hi/Lo: Advancers led 1.28 to 1
Previous Session: Advancers led 3.2 to 1

New Highs: 245 (+13)
New Lows: 86 (+12)

SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg

Stronger trade as well on NYSE as SP500 surged past its August peaks at 1040 and on up to the mid-2008 intraday high, the highest point hit after the LEH related selling started. SP500 matched that level (1044) Thursday and faded back Friday, showing a candlestick doji. Maybe that means it is tired and will test, but this is often a continuation doji. Maybe a modest tap at the August peaks, but it could carry on after that.

SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg


DJ30

Stats: -22.07 points (-0.23%) to close at 9605.41
Volume DJ30: 196M shares Friday versus 234M shares Thursday. Falling back below average as DJ30 paused just over the August closing highs.

DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg


MONDAY

A full week of trade and volume was really picking up the pace to end last week as buyers flocked back in once more after an early week dip. As discussed this past week, there are two such sharp, quick declines where volume spiked and stocks sold. Another one raises a red flag, but at the same time rallies can have sharp, quick corrections and still continue the upside run. This rally is exhibit number one.

After that run to new highs, however, it is a bit overbought and thus subject to some selling. That is pretty normal and that would be somewhat welcome as it would bring some quality stocks back into buy range after they gapped away from us earlier this week. Indeed on Friday some areas were already posting modest pullbacks, e.g. scattered chips and techs. A couple more days of testing and we could have some nice 1-2-3 pullbacks or flag formations.

As noted Thursday, another aspect of this market is the rotation that is spreading the money around to more sectors. That is healthy as the market can grow and test at the same time it develops new buys as the money spreads out and seeks new sectors. Thus even with the market extended there are still stocks popping up in good patterns. We might have to look at 60 minute charts versus daily charts to get the best entry points, but that does not mean they are not there.

Therefore we will continue to look for new buys from here as well as waiting for nice pullbacks from those stocks that shot higher and led the latest upside move (as well as the moves before that). We anticipate the market may give us a test at some point this week as noted, and that will help set up some new buys.

Of course you have to watch for the one out of right field that catches you by surprise. We like how the rally showed renewed vigor with high volume on the late week gains. That does not mean it won't top and roll over. Long run from those early July lows for certain and a deeper test would not be surprising. Still, NASDAQ put in a 5 week lateral to modestly higher chop and broke out clean last week. Maybe it has had all the rest it needs.


Support and Resistance

NASDAQ: Closed at 2080.90
Resistance:
2099 is the mid-September 2008 closing low
2169 is the March 2008 double bottom low

Support:
2070 is the September 2008 intraday low
2060 is the August peak
2016 is the early August peak
The 18 day EMA at 2019
The March up trendline at 1995
1984 from late September
1962 is the bottom of the August 2009 range.
The 50 day EMA at 1956
1947 is the October gap down point
1897 is the October post gap intraday high.
1880 is the June peak
1862 is the July peak
1786 is the November intraday high
1780 is the November 2008 closing peak
1773 is the May intraday peak
1770 is the mid-October interim peak
The 200 day SM A at 1686
1673 is the prior April peak
1666 is the intraday January 2009 peak
1664 is the May 2008 low
1661 is the April 2009 prior peak
The January closing peak at 1653 (intraday)


S&P 500: Closed at 1042.73
Resistance:
1044 is the October 2008 intraday high
1106 is the September 2008 low
1133 from a September 2008 intraday low
1185 from late September 2008
1200 from the July 2008 low

Support:
The August peak at 1040
The early August intraday peak at 1018
The 18 day EMA at 1018
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low
The 50 day EMA at 987
956 is the June intraday peak
944 is the January 2009 high
935 is the January closing high
932 is the July peak
930 is the May peak
919 is the early December peak is bending
899 is the early October closing low
896 is the late November 2008 peak
888.70 is the April intraday high.
The 200 day SMA at 887
882 is the early May low
878 is the late January 2009 peak
The prior April peak at 876
866 is the second October 2008 low
857 is the December consolidation low


Dow: Closed at 9605.41
Resistance:
9620 is the August 2009 peak
9625 is the October 2008 closing high
9654 is the November 2008 high
10,365 is the late September low

Support:
9387 is the mid-October peak
The 50 day EMA at 9169
9116 is the August low
9088 is the January 2009 peak
8985 is the closing low in the mid-2003 consolidation
8934 is the December closing high
8878 is the June peak
8829 is the late November 2008 peak
8626 from December 2002
8588 is the May high
8581 is the July peak
8521 is an interim high in March 2003 after the March 2003 low
8451 is the early October closing low
8419 is the late December closing low in that consolidation
The 200 day SMA at 8383
8375 is the late January 2009 interim peak
8315 is the February 2009 peak
8307 is the April 2009 intraday high
8221 is the May 2008 low


Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

September 15 - Tuesday
Core PPI, August (08:30): 0.1% expected, -0.1% prior
PPI, August (08:30): 0.8% expected, -0.9% prior
Retail Sales, August (08:30): 1.9% expected, -0.1% prior
Retail Sales ex-auto, August (08:30): 0.4% expected, -0.6% prior
Empire Manufacturing, September (08:30): 15.00 expected, 12.08 prior
Business Inventories, July (10:00): -0.8% expected, -1.1% prior

September 16 - Wednesday
Core CPI, August (08:30): 0.1% expected, 0.1% prior
CPI, August (08:30): 0.3% expected, 0.0% prior
Net Long-term TIC Fl, July (09:00): -31.2B prior
Capacity Utilization, August (09:15): 69.1% expected, 68.5% prior
Industrial Production, August (09:15): 0.7% expected, 0.5% prior

September 17 - Thursday
Initial Claims, 09/12 (08:30): 555K expected, 550K prior
Continuing Claims, 09/05 (08:30): 6114K expected, 6088K prior
Philadelphia Fed, September (10:00): 8.0 expected, 4.2 prior

September 16 - Wednesday
Crude Inventories, 09/11 (10:30): -5.91M prior

September 17 - Thursday
Building Permits, August (08:30): 596K expected, 564K prior
Housing Starts, August (08:30): 580K expected, 581K prior

By: Jon Johnson, Editor
Copyright 2009 | All Rights Reserved

Jon Johnson is the Editor of The Daily at InvestmentHouse.com

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com

Indices Knocking on Door of Recovery

SUMMARY:
- Jobs are not great, but market continues the rebound nonetheless.
- Some short covering yes, but some strong moves also.
- Indices rebound, knocking on the door of recovery.
- Another round of early week selling. Coincidence or something brewing?
- Revisions, hours worked show recovery is just not strong enough yet to produce jobs.
- Market still in its overall uptrend but still having near term issues.

Market rallies in the face of jobs report, 3-day weekend.

Friday was about two things: jobs and a three-day Labor Day weekend. Jobs were important; every month people look to see if the economy is improving, and there has been some improvement over the past week with some regional manufacturing reports and the national manufacturing report. The ISM did not make 50, but there has been an improvement, and people always start looking for jobs to improve. We are just at the beginning of a recovery, thus jobs are not going to be there until the personal departments think it is safe to bring people on again. The other factors involved in the numbers are not there right now. We all have the long three-day weekend, and what often happens ahead of that is that the shorts have to worry about that "X factor" that might lead to the stock market rallying. They do not want to be in a lot of short positions, so they reduce their exposure, they cover, and that can cause stocks to rise. We may have gotten some of that on Friday.

The market stumbled earlier in the week and was able to make a comeback later, as we saw three weeks ago. It did not make it positive on the week, but there were good recoveries by the indices that put them at or right above the early August highs. That is a key point to note; indeed, SP500 moved over the November 2008 peak so there was some progress made at the end of the week after a pretty weak start.

On Friday, there was news out ahead of the jobs report in the US. China was up and was once again the early morning topic. We saw commodities and industrials and those related to growth around the world moving higher and, as with steel, they held up quite well during the entire session. Indeed, a lot of stocks were up by the end of the day, but it just took a while to get there. Canada was out with its jobs report, and it showed its first gain in 4 months. It would be nice if we could say the same, but unfortunately we have to turn the calendar back over a year to get there. We have a lot of catching up to do. Maybe we can look at it as a "glass half full" scenario while Europe, Canada and other countries are already pulling out of the recession. We are trying and are not there yet, but catching up can be fun, right?

Friday the futures were up on that news and the jobs report came out. Though it was better than expected, there were problems with the report such as the unemployment rate spiking up to 9.7% and investors kind of reading between the lines causing futures to fall back to flat ahead of the bell. Then as the market opened, stocks rallied. The futures showed what the morning would be like: up and down, back and forth. Midday stocks then caught a bid and took off. They went straight up at lunch, pushing everything positive, and then managed to trend higher throughout the afternoon. There were not great gains after that, but they trended higher and closed with very solid gains - 1.8% on NASDAQ, 1.3% on SP500, SOX closed up 2.68%, and the small caps up 1.2%. It was a strong day when the closing bell rang, so not a whole lot to complain about. Every time the market tends to look like it will sell off, the liquidity comes in and helps push things back up. Friday we had an extra impetus, and that was the long weekend. Often with a long weekend, the shorts want to lighten up their position and start to close, and when they close they have to buy back shares. What can happen is that that can snowball, and as stocks move up to resistance or pop resistance they start buying more because they are moving above resistance. It is a self-fulfilling prophesy. Today stocks surged midday and melted higher for the rest of the session to close at those nice gains.

Was it all short covering? The breadth was very strong. There was short covering, there is no doubt, but look at the mix of stocks that were moving up, which were at 4:1 on the NYSE, and these were not the heavily shorted stocks. These were great stocks in great patterns and stocks in great patterns are not heavily shorted. It is the ones that have done the nosedive that the shorts have been selling and pushing lower; those are the ones that rebound on a short squeeze. Everything was up, and some of those stocks were bouncing as well so there was some covering, but there was real buying going on. You cannot turn your back on good stocks in great patterns that are making solid moves, so we were out there buying stocks as well. We will see what happens next week when the market opens. Even though the indices were up, they did not necessarily make breakouts, and they did not necessarily reverse what happened early in the week when they moved sharply. There is that liquidity out there, and one thing that we have seen in the market is that liquidity is winning out so far.


TECHNICAL

INTERNALS.

On SP500, we see that the NYSE volume was below average, and that was the first time it was below average in six sessions. Even though we had a solid 1.3% point move, the volume was not really backing the move, and you can say the same thing with respect to the NASDAQ.

NASDAQ put in its third straight day of declining, below-average volume. Those coincide with the cessation of the selling on Tuesday and the rebound Wednesday to Friday. There is a lower and lower volume push to the upside after some high volume selling. What that often means is that you have fewer buyers on the upside then there were on the downside, and that makes any upside move suspect. Friday there was something else at play. We have a three-day weekend ahead of Labor Day, and a lot of the money managers and hedge fund managers were gone after the noon hour. You naturally would get lower volume, and on top of that it is a summertime volume. You are going to have trade decline, and that makes any read of volume somewhat suspect. It is hard to label this just a relief rally bounce and we cannot put faith in it. Take it with a grain of salt.

There is a mitigating factor when you look at breadth. Once again, both exchanges put in strong breadth sessions. The NYSE saw 4:1 breadth on top of a 3:1 session on Thursday. NASDAQ put in a 2.9:1 day, and that was on top of a 2:1 breadth day on Thursday. When there is short covering, you typically see much narrower breadth. The reason is that the shorts focus on a few key stocks and drive them lower, and that often takes the indices lower because they are big name stocks. Then when they cover up, they have to buy those back, so you have narrow breadth as the shorts cover the stocks that they have sold short. What we have here is very broad buying and a broad recovery. When you look at the quality of the patterns and the quality of these stocks that are in those patterns, you see they are not the fodder for the short sellers. These are high quality stocks that no one is selling. They are indeed under accumulation based upon their bases. It is hard to say that this was just a short covering rally that sent stocks higher when there were good stocks that moved up on good volume. From an internal perspective, you cannot call this a short covering rally, but you can say there was widespread buying in many quality stocks.


CHARTS.

On Thursday I was talking about whether or not the indices could clear some key levels, and there was the possibility that this selloff right here in August could turn into some kind of right shoulder to a short head-and-shoulders pattern. They are not out of the woods yet. SP500 did an important thing by breaking back over that November peak, and that was the first peak for SP500 after it sold off in the fall of 2009. That is a very important level because that represents the last area that buyers really stepped in and bought the market thinking it would bounce right back. They were disillusioned, so when the market came back up they would sell to get out, as they say, "even."

We are now back at that point, and on Friday SP500 was able to recapture it. There were those factors about volume that may mitigate the move somewhat, but overall it is hard to complain. That intraday high in early August did not quite make over 1,018, but that is all right. It closed at 1016.40, so it is pretty close, but it is still at a point where it could roll back over if the buyers do not continue to come back in. It is a key level. Friday it was good to see that liquidity driving things back up and maybe some short covering ahead of the weekend, but it was not the answer in and of itself, and it did not explode the market to a new high. The NASDAQ bounced off of its October 2008 gapdown point, so we can see right here by this top line that that is where it gapped down. It has broken through it at July, tested at mid-August, and came right back up after breaking it. This past week it came right back down and sat on that level and bounced off of it. There is no great shakes of volume as it bounced off, so it is also not out of the woods. It did surpass its early August high at 2,016 as it closed at almost 2,019 on the session.

It did break through that, which is important, but we always have to talk about support and resistance as ranges versus specific points. You can get too wrapped up in looking at one point and saying that if it breaks at that point then it is obviously going to go higher. That was not the case, was it? It did break that point but it came right back down, and there is nothing unusual about that. An index will come up and bump up against resistance point a couple of times and then it can break through after that. People think it is always double topping and perhaps it is, but you have to look at all of the factors involved: look at the price-volume action, whether there is accumulation ongoing, whether there is leadership and what kind of bases they have, and whether they are moving well. That will tell more of the picture than just one snapshot of one day in the stock market.


LEADERSHIP.

We see NASDAQ put in a credible day. It is hard to argue with a 1.8% move, especially when it came back off of a pretty nasty gut punch on Monday and Tuesday as we saw on a prior Monday and Tuesday to start in mid August where the market got sold off but bounced back again. I want to make a point about that. We have this selloff here with the gap down, but the market came right back (I am talking about NASDAQ, but also all of the indices). Then it had a breakout attempt and then another failure, another tough Monday and Tuesday. Does that mean anything in and of itself? You can flip a coin 100 times and if it comes out heads all 100 times, the odds are still 50/50 next time on whether it is heads or tails. In this case, does it mean anything if we have two Mondays that break down? This is not just a random selection as in a coin flip; the market is a compilation of all of the emotions of investors around the world. We see two gapdowns earlier in the week - we have recovery thanks to the liquidity, but this is something that we have not been experiencing, and when you see something like this you have to take note of that. It becomes a pattern. We are big into trends and big into support and resistance. If the trend comes where the market cannot make headway because every time it reaches a certain point, the sellers gap it down, then that is key. You need to pay attention to that, and that makes next week very interesting. It seems like I said that about this week as well, but what we have now is that the market did in fact sell off of high volume, it managed to rebound, but it was at low trade. We will have to see whether September starts living up to its billing again and starts taking the market lower when everyone comes back from vacation after Labor Day.

The SOX is very interesting to look at. It was struggling, but it made that gap higher just over a week ago that broke it out to a new post-March high. It immediately gave it up, but it immediately made a higher low and came back and broke out again. Suddenly, the semiconductors look much stronger than they did just a few weeks ago. Indeed, tech stocks look much stronger than they did just a few weeks ago and even earlier this week when they looked tired.

The NASDAQ 100 is the largest stocks on NASDAQ, and it is mostly dominated by techs. If you look they have put in once again a test of the 50 day EMA and bounced, albeit volume was not great. They did bounce however, and now they are right in this range of resistance. It is a key test because there is declining volume, high volume selloff here, somewhat high volume here on this selloff. Here, MACD matched prior highs in the July-August peak, but at the end of August when NASDAQ 100 matched and topped the prior August peak, MACD was lower. There is a loss of momentum here, and we will see if the large cap techs can turn it around and pick up the momentum and keep this late surge going at the end of the week.

We have to realize that the sellers are out there and are taking their shots at stocks and trying to sell them off. After all, it is September and the market has had a 15% run in July, and that is on top of the huge March-early June run which put the indices up 50%. After that kind of move, you can bet there is going to be some sellers out there. We see them and they are trying to sell some stocks.

We still see that in some of the big name tech stocks such as QCOM. QCOM double topped somewhat but recovered, moved up to a new post-March high but then had some of the same issues with a double top here. As it made this higher high MACD was lower in July than it was at the June peaks, and then as it came back up and matched that high in late July, MACD was lower. There are momentum issues here with QCOM. We are looking at QCOM to the downside and have picked up some positions. We may get egg in our face on this, but we have some serious resistance here on top of a double top, a break of the 50 day EMA, and a more substantial break than it has shown in the past and declining MACD. This is in a good risk/reward position for us to try a downside play and that is what we are doing.

Not all of the large cap techs enjoyed the kind of move that we saw on Friday. QCOM was up, but it did not put it in a great position. There were other stocks that did quite well in the tech sector. One that we bought into on Thursday was RIMM. It had formed a nice triangle and we picked it up on Thursday when it bounced off of the 50day EMA, and it put in another nice day that broke through this June-August down trendline. RIMM is showing a bullish pattern and is acting bullishly, and that is a positive for NASDAQ overall when the stocks in the index act as their patterns suggest they should act. You cannot talk about techs without talking about AAPL, and AAPL looked like it could have sold back to 160. There is a shelf of support there where it gapped up, tested that in mid-August, but then it found support at this higher shelf and bounced on Friday on rising volume. The buyers were back in AAPL on Friday. It is hard to discount that, and it is hard to discount some of these key techs moving higher, but it is not 100% across the board with the large cap techs.

Other areas moved up as well, and one of the interesting ones that we saw that has been in serious trouble of late (but is now recovering) are the Chinese stocks. BIDU came down again to the 50 day EMA and undercut it, but how many times do you see a stock undercut a key level onto reverse and continue higher? Look at the volume on the upside on Friday which was a weak-volume session in the market overall. That is a nice little double volume at the 50, and powering higher on good volume. We have a triangle pattern with SOHU. You can see the triangle, the higher lows and then the lower highs - there is not a lot of volume, but it is making higher lows and it gapped up through the 50 day EMA today. If we get a test back in this range to start next week and it holds, we are looking to be buyers at that point. The point is that Chinese stocks are suddenly coming back to life. NTES survived some ugly trade in mid-August, but it also held the 50 day EMA and a trendline that has been running up there, making something of its own double bottom at a key range of support. Look at the June peaks and then in July and August; it held key support.

The point is that some of the key areas that have been in trouble such as large cap techs and techs in general, semiconductors and Chinese stocks are all of a sudden back in good patterns and moving higher. Bullish stocks in bullish patterns acting bullishly - that is a positive for the market overall. I hate to imbue too much strength into this, but then again, you have to go with what the market is showing you. Again, we can look at some of the stocks that we talked about on Thursday such as the steel stocks, and as China does well they do well. We can see RS continued its break of its downtrend out of its triangle, and it is doing so on better volume. It is hard to complain with these kinds of moves. I also want to talk about energy. We have a service company, WFT with a real nice cup with handle. It held the 50 day EMA and is starting to bounce up on rising volume. In the offshore drillers there is a triangle. There is a break higher over a key level, and we will see if it can hold, but it is a very promising move. We have another oil service company, HAL; it is a company people love to hate, but it is kind of hard to hate the move. The pattern is a bit messy, but you can see there is a range of resistance and it is making a breakthrough and pulling some stronger volume as it does.

I am not going to end this without talking about gold. We had a great week in the yellow stuff. It broke over the June peak, and it is approaching the February peak and also way back at the July 2008 level. We are right in that range, and that makes it interesting. We have gold closing right at the summer high a year ago. The question is whether it going to turn tail and fall again at $98-100, or is it going to make the breakout? I think it is going to make the breakout this time, and we are going to take some gain. It is going to come back and test and hold the breakout and move higher. We will not have any problem with that.

We have talked about the indices and some leadership stocks. The key point is that while the indices are still not out of the woods buy any means, they could still - I hate to say it because I hate to talk about head-and-shoulders patterns - but they could still definitely form a little head and shoulders action. They showed positive action in the week led by individual key leaders that were showing positive action as well. When you have that, you cannot ignore these kinds of moves to the upside. Look at the SP600 and we see that it is nowhere near poking through its August high - that is something we are going to watch. If it stalls out, we can play another IWM to the downside next week if it is set up to do so and the market in general stalls out. You have to watch the small caps as well because when you see 4:1 breadth on the NYSE, you know the small caps are moving higher because most of the stocks are small stocks. If they run out of gas, then there could be trouble, so again, the market is not there yet. It put in a good recovery to end the week, and it has great stocks leading it, but it has not answered the question 100% whether or not it is going to make a new break higher. We will see when supposedly everyone gets back to work next week and the volume starts to pick up whether the sellers are going to come in and treat us to the downside September that, historically, it likes to show us.


THE ECONOMY

As for the close on Friday, gold managed to close basically flat at $996, down $1.60, but that was quite a recovery because it was down 5-6 points intraday and made an amazing rebound into the close. The GLD ETF that we are playing managed to turn in a positive session, so we can see that the gist was that gold has a lot of buyers. It sold off and it was a down day for gold, yet it managed to rally back.

Did dollar was a bit weaker, closing at 1.4304 Euros, down from 1.4254 on Thursday. Even with a weaker dollar, oil was down. It closed at $67.79, down $0.17. That tells us that oil once again rallied up to that $72-$74 range and found a resistance that bounced it down. There is no issue with that. Oil is trading in a range because it is trying to find out whether China is for real or not and whether the rest of the world recovery is for real. That is one of the reasons that gold is going up because it is not sure whether it is real. There are Chinese buying gold and there is a worry about inflation because the ECB said yesterday and Wednesday that it is not going to go out and get rid of its monetary stimulus. It says it just might be too soon to be doing that, so the gold buyers are concerned that if Jean-Claude Trichet, basically the inflation hawk of the world, decides that there is going to have to be more monetary stimulus for longer than anticipated, then people are worried about inflation. They are buying gold and there is real money behind this move. We anticipate a good showing.

Bonds rallied some and that pushed yield down. The 10 year closed at 3.44%, versus 3.34% the day before. A little bit of flux in the market, but not much. They held their patterns despite the equity market moves and despite what we heard with the rest of the economy.

Speaking of the rest of the economy, the big story on the day was the jobs report. 216K jobs were lost in August compared to the 276K lost in June. That was expected to pull down 230K, so it was a bit better than that, but the unemployment rate jumped up to 9.7% and that is the highest since June of 1983. That is when we were coming out of that really ugly recession to start the 1980's - we were coming out of it gangbusters, but look how unemployment still lagged. At that time, the economy was taking off with in a massive run higher, yet employment was still lagging. Are we foolish to look for a major turnaround in employment? Yes. The economy is simply not strong enough to support that, and that is the boogeyman out there. That is what is concerning many very smart economists. If we do not have the kind of economy that will roar ahead and start creating the 250-400K jobs a month that we need, and then we could be in this for a long time, just like in the 1970's. Gee, where have you heard that before?

The 1970's was the decade of malaise as for as the economy was concerned because we had the wrong policies in place that did not send the economy surging higher and did not create a lot of new jobs. We had long-term, chronically unemployed people, and when that happens you have moral down because they are not spending - because there is no money to spend. Then the rest of us have to pay unemployment costs for them in order to help them get through this time. It is a pipe dream if you do not think we all pay for the unemployment of others because we pay through it through what the companies charge us for their goods and services. We all have to underwrite that, and no one wants to do that. That is unproductive. We have to create jobs and the real worry is that we are going to have this same kind of problem.

One of the reasons that the unemployment rate went up to 9.7% was because when people see economic improvement, like the better ISM report, the housing market looking better, they get excited and start looking for a job. Then they get in and find out they cannot find a job so they are back in the job pool, they cannot get a job, and the unemployment rate spikes up. We have a 9.7% reading versus the 9.5% expected and 9.4% in July. That was a disappointment. Are we on the way to 10%? We could be. When you add in what is called the disgruntled workers - those are the people who came in, cannot find work, and gave up and left the pool - the rate is 16.8%. That is unbelievable. There are officially 26M Americans without work. If you add in the 16.8% then you are getting close to doubling that level. That is a frightening number of people out of work. This is happening all across the country, and that makes it very difficult to get out of these economic malaise situations unless you can have strong job creation. Unfortunately, we do not have any kind of John F. Kennedy program going on now that will really rev up the economy as we did in the early 1960's.

We set some records. We lost 63K in factory jobs, 136K in goods production, and 65K in construction. What do you expect? The economy is in a recession and this is a normal type of number for a normal type of recession. These are recession numbers, but they are not Great Depression numbers that we were throwing off in the fall of 2008. We are not there by any stretch of the imagination, and I applaud Vice President Biden for acknowledging that. That is about the only thing I would applaud him for, but he acknowledged that. You have to dig a bit deeper. Average hourly wages rose 0.3% as expected, and matched the prior 0.3% in July. That was also up 2.6% year-over-year. That is a positive because at least they are getting a bit more pay, but it is not that much of a raise, so will not have that much of an impact now because fewer people are working. They would have to really raise the wages of those that are left working in order to make a significant impact and take care of all of those who are not working and offset the difference. Also you have to figure that most of this increase in average hourly work that we are seeing is because of the mandatory hike in the minimum wage. These are illusory gains. These are not people who are getting well-deserved wages, this is something the government is cramming down small business's throats and saying they have to pay them. It is not because the economy is any more productive, it is not because people are buying more goods, and it is not because the companies have extra money to pay their workers. It is because it is mandated by the government. That is inflationary, and there are going to be jobs lost when we need to have jobs gained. That is what always happens when the minimum wage is raised. There is my little soapbox action, but I try to back everything up. These are the facts and what history shows.

The key element of any jobs report is the average hours worked per week. What we see is, after a gain in July, it was flat at 33.1 in August. That was expected, but it is bad when your expectations are for no growth. As I said before, we have to get more jobs created and one of the things that create jobs is when the economy started going and companies need more help. They work their workers as much as they can until there is about to be a mutiny, and then they bring more people on. Whenever that happens, we see the average hours works per week rise (and we see it rise more than 33.1 hours). We are not even close to the 40 hour weeks with a massively reduced work force. We have fewer hours worked with less people employed, and that shows there is not the drive to go out and hire new workers because there are no jobs to be filled. The people who are there are not pushed to the max like they would be if the economy was surging back up and they had orders to fill and more manufacturing to do; they would have to have more people to do it all. That is a key element that shows what we already knew: We are not there in the jobs picture yet, and it is kind of a pipe dream to think that we would be. I have said "pipe dream" a lot lately, but it has been a surreal time, has it not? We are seeing things happen on the federal level that we have never seen before, so it is kind of like a pipe dream, but you want to wake up some day have it all be over. Unfortunately, it is reality.


THE MARKET

MARKET SENTIMENT

VIX: 25.26; -1.84
VXN: 25.85; -2.25
VXO: 24.24; -1.9

Put/Call Ratio (CBOE): 0.89; -0.03

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 doesn't have the cash to drive it higher.

Bulls: 50.6%. Bumping at highs for this rally off the March lows but off last week's peak that was the high for the rally. The move higher is slowing its pace, flattening out the past three weeks but is well over the 35% level that is the threshold for what is considered a bullish climate. It does not mean things are necessarily bearish; that takes a reading in the 60% range. Hit a high of 47.7% mid-June on the run from the March lows. Again, to be seriously bearish it needs to get up to the 60% to 65% level. Dramatic rise from 21.3% in November 2008, the bottom on this leg. This last leg down showed us the largest single week drop we have ever seen, falling from 33.7% to 25.3%. Hit 40.7% on the high during the rally off the July 2008 lows. 30.9% was the March low. In March the indicator did its job with the dive below 35% and the crossover with the bears. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator.

Bears: 24.1%. Bouncing as some skepticism creeps into the market as the rally falters some with a couple of sharp selloffs in the past three weeks. Hit a low of 21.3% three weeks back on the market rally. Rebounding some from the big drop 31.1% and 35.6%. For reference, cracking above the 35% threshold considered bullish. Hit a high on this run at 47.2%. 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.


NASDAQ

Stats: +35.58 points (+1.79%) to close at 2018.78
Volume: 1.677B (-6.23%). Friday was light as you would expect, but all the rebound days to end the week were on weaker and weaker volume. Not a lot of buyers overall on NASDAQ, but there are some solid leaders that are moving well. The question is whether they ignite overall buying when everyone gets back to work after Labor Day.

Up Volume: 1.461B (+110.377M)
Down Volume: 239.425M (-289.19M)

A/D and Hi/Lo: Advancers led 2.9 to 1
Previous Session: Advancers led 2.07 to 1

New Highs: 33 (+16)
New Lows: 9 (+2)

NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg

NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg

SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg


SP500/NYSE

Stats: +13.16 points (+1.31%) to close at 1016.4
NYSE Volume: 1.155B (-9.72%)

Up Volume: 999.354M (-59.943M)
Down Volume: 136.769M (-68.927M)

A/D and Hi/Lo: Advancers led 4.12 to 1
Previous Session: Advancers led 3.01 to 1

New Highs: 112 (+12)
New Lows: 28 (-11)

SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg

SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg


DJ30

Stats: +96.66 points (+1.03%) to close at 9441.27
Volume DJ30: 152M shares Friday versus 168M shares Thursday. Declining volume each day of the rebound.

DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg


TUESDAY

The market is closed on Monday because of Labor Day, so we have this three-day weekend. There has not been a lot of change has there? The market gaps down early in the week and then it comes up. We were playing some of those gaps down - a potential for a gap down - we bought some DIA SPY and also bought some QCOM to go along with some of our other positions, but the downside plays have bounced back on us. Some of them are still in great shape, but the SPY and the SMH bounced back up. We can still play them to the downside if this thing rolls over again, but the market did not finish the week with a trend, did it? It sort of did - it finished the trend with the overall uptrend, but it has not hammered out the near term trend. We have had two down, sharply lower Monday and Tuesday early-week selloffs in the last three weeks. That is sharp downside. The sellers are moving in and trying to break something, but they cannot hold it through the end of the week. Maybe this was a short-covering rally ahead of a three-day weekend. We will see if the market turns over and starts to sell again on Tuesday when (in theory) everyone gets back to work and you have the full volume up. Then whatever trends are in place can be accentuated or it can be reversed when the new money comes in. We have come in after Labor Days and been just slaughtered. This is not the same situation fortunately, so we will have to see. It may not be a totally heavy, sharp selloff. If we do get more of a pullback, I still think it will be one that holds near the June peaks. That is a very solid support level and there is a lot of liquidity out there. There is no reason for the market to turn over other than it has run a long way. Look at history, though; markets can run a long way, take a short rest, and then run an awful long way further.

We will continue doing what we have been doing. We have hedge a bit to the downside with a few downside plays. I think we are going to make some money on some of these - quite a few of them, as a matter of fact. I still think we will get another jerk lower because the sellers are going to take another shot because we are in September when they get back from the holiday. We will continue to look at some downside plays and positions, and we are warranted to move into some of these positions. As I said, you cannot deny the strong upside that we are seeing in quality stocks. We were buying quality such as HAL and RIMM - there are quality stocks moving higher from good positions and you cannot deny those moves, especially when there is all the liquidity out there that we have been promised will remain by Ben Bernanke and Mr. Trichet. We are going to watch for gold the breakout over 100, and that would put the GLD over 100, then we will see what kind of test we will get on gold. If it holds, we will move in. That may take a week or so, so we have time to get that in shape. We are going to continue to look for those solid patterns and good buy points in those patterns. That has the key right now. The market is showing a bit of toppy action and is a bit tired, but it is in that overall uptrend. What we need to do is get good entry points so we will be in good shape depending on which way the market goes. We can cut off whichever every side goes against us relatively quickly, and then move the other way in more depth. We just need the market to make a decision and make a break. We are still getting some good moves, but we sure want to bank some gain. We have some great positions that are accumulating gain, but we need the market to make a break one way and hold it for a bit so we can make some gain, and then it can go the other way if it wants to.

Enjoy your Labor Day and be thankful for what you have. Be thankful for everyone who works so hard to make this country go, and that is what we will keep doing. We will make it go again, we just have to be patriots and take care of our country. We will be great. Have a wonderful weekend.



Support and Resistance

NASDAQ: Closed at 2018.78
Resistance:
2070 is the September 2008 intraday low
2099 is the mid-September 2008 closing low
2169 is the March 2008 double bottom low

Support:
2016 is the early August peak
1984 from late September
1962 is the bottom of the August 2009 range.
1947 is the October gap down point
The 50 day EMA at 1937
1897 is the October post gap intraday high.
1880 is the June peak
1862 is the July peak
1786 is the November intraday high
1780 is the November 2008 closing peak
1773 is the May intraday peak
1770 is the mid-October interim peak
1673 is the prior April peak
The 200 day SM A at 1672
1666 is the intraday January 2009 peak
1664 is the May 2008 low
1661 is the April 2009 prior peak
The January closing peak at 1653 (intraday)


S&P 500: Closed at 1016.40
Resistance:
The early August intraday peak at 1018
1044 is the October 2008 intraday high
1106 is the September 2008 low
1133 from a September 2008 intraday low
1185 from late September 2008
1200 from the July 2008 low

Support:
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low
The 50 day EMA at 979
956 is the June intraday peak
944 is the January 2009 high
935 is the January closing high
932 is the July peak
930 is the May peak
919 is the early December peak is bending
899 is the early October closing low
896 is the late November 2008 peak
888.70 is the April intraday high.
882 is the early May low
The 200 day SMA at 882
878 is the late January 2009 peak
The prior April peak at 876
866 is the second October 2008 low
857 is the December consolidation low


Dow: Closed at 9441.27
Resistance:
9620 is the August 2009 peak
9625 is the October 2008 closing high
10,365 is the late September low

Support:
9387 is the mid-October peak
9116 is the August low
9088 is the January 2009 peak
The 50 day EMA at 9099
8985 is the closing low in the mid-2003 consolidation
8934 is the December closing high
8878 is the June peak
8829 is the late November 2008 peak
8626 from December 2002
8588 is the May high
8581 is the July peak
8521 is an interim high in March 2003 after the March 2003 low
8451 is the early October closing low
8419 is the late December closing low in that consolidation
8375 is the late January 2009 interim peak
The 200 day SMA at 8352
8315 is the February 2009 peak
8307 is the April 2009 intraday high
8221 is the May 2008 low


Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

September 04 - Friday
Average Workweek, August (08:30): 33.1 actual versus 33.1 expected, 33.1 prior (no revisions)
Hourly Earnings, August (08:30): 0.3% actual versus 0.1% expected, 0.2% prior (revised from 0.3%)
Nonfarm Payrolls, August (08:30): -216K actual versus -230K expected, -276K prior (revised from -247K)
Unemployment Rate, August (08:30): 9.7% actual versus 9.5% expected, 9.4% prior (no revisions)

September 08 - Tuesday
Consumer Credit, July (14:00): -4.0B expected, -10.3B prior

September 09 - Wednesday
Crude Inventories, 09/04 (10:35): -372K prior

September 10 - Thursday
Initial Jobless Claims, 09/05 (08:30): 560K expected, 570K prior
Continuing Claims, 09/29 (08:30): 6200K expected, 6234K prior
Trade Balance, July (08:30): -27.4B expected, -27.0B prior

September 11 - Friday
Export Prices ex-ag., August (08:30): 0.2% prior
Import Prices ex-oil, August (08:30): -0.2% prior
Michigan Sentiment-Prel, September (09:55): 67.8 expected, 65.7 prior
Wholesale Inventories, July (10:00): -1.0% expected, -1.7% prior
Treasury Budget, August (2:00): -162.0B expected, -111.9B prior

By: Jon Johnson, Editor
Copyright 2009 | All Rights Reserved

Jon Johnson is the Editor of The Daily at InvestmentHouse.com

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