Social Security Already in the Red

SUMMARY:
- Dollar is lower Friday, but stocks don't benefit.
- Another intraday reversal Friday leaves stocks flat, but no further damage done.
- EU has a plan: punt to the IMF.
- Social Security already in the red.
- Weaker bond auctions just a sign of things to come and our debt to rise.
- More healthcare surprises.
- Taxes to inevitably rise.
- This week will tell the ramifications of the Thursday intraday reversal.
- Jobs report on Friday, but the market will be closed.

Stocks reverse early gains again, but no further damage.

Compared to Thursday, Friday was a piker. The point swings were much less, volume was lower, and the market started higher on the day. The dollar was even lower because the EU has a plan. More accurately, it has a play borrowed by football: It is going to punt to the IMF. The plan states that the IMF is to be on standby, ready to lend Greece money if needed. The other countries in the EU will focus on shoring up the Euro because they do not want it to collapse. How they will do that is not clear, but at least they have a plan. As weak as that plan may appear, it did seem to work on Friday as the dollar was lower and stocks started higher in the morning. As on Thursday, however, the rally faded into the afternoon. That was not because the dollar rallied it did not. In the premarket alert, I suspected that there might have been an afternoon decline simply because of the action on Thursday and the immediate response to the upside with the gaps higher on Friday. Despite a decent GDP number it was lower but still solid and a better Michigan Sentiment indication, the market, could not support the gains into the afternoon. It slid down, and by the afternoon had turned the indices negative. There was a bounce in the back half of the afternoon, and that closed the indices basically flat but mostly mixed. The large cap NYSE indices were up, but the growth areas were slightly lower. The end result was another rally that ultimately failed just as it did on Thursday, although not nearly as spectacularly.

OTHER MARKETS

Dollar. The dollar had a spectacular week with huge gains on Wednesday and another surge Thursday that clearly broke it out of its consolidation and took it to a new rally high. Perhaps it had too much success during the week because it did sell back against the Euro and other currencies ahead of the weekend. It probably had something to do with the great European plan that was put in place, but the dollar was a bit overbought in the near term (1.3413 Euro versus 1.382 Thursday). This was a week that saw the dollar trade solidly below the key 1.35 Euro level. It was trying to hold 1.34-1.35 and was smashed, but the other currencies did recover some to end the week (again, just likely due to the dollar's success). Nothing indicates this with change anytime soon. The EU put in a punting play, but that is not really a plan. It is just ready to move in case Greece cannot get its own house in order. There are still the other PIIGS to worry about, including the UK. This is definitely not the end of the dollar's strength against the Euro. This is a giveback on Friday ahead of the weekend after a strong week.

http://investmenthouse.com/ihmedia/dxy0.jpeg


Oil. Oil struggled a bit. It closed slightly lower ($80.12, -0.41). It is still holding in the top half of its range just as it has done on each of the last dips over the past three to four weeks. A good consolidation in November and in late February is propping it up. It is finding support despite a big build in inventories and despite issues in Europe. Oil is holding its gains, and thus gasoline holding up as well. It is keeping a high average per gallon in the US closing in on $3.00 and it is not even the end of March. Oil still looks like it could break out. Even though it is stalling at the top of its range, it is not breaking lower and smashing through this key level. It could hold the 50 day EMA or above 78 next week and try a breakout. It could be next week or the week after, but it looks like it will make a try unless very bad news comes out with respect to growth overseas.

http://investmenthouse.com/ihmedia/xoil.jpeg


Gold. Gold had an up day after a down week. It finished strong, moving back over the 1100 level that so many are watching ($1,108.80, +14.70). This made a new low for March, but that still kept it inside its overall base that started in early December. There is still a reverse head and shoulder trying to form, and it can still do that. The left shoulder dropped all the way to 1075, so it could still make that level and hold the pattern. It is not in position yet to make the buy. We will be watching it, but gold is still working through its base. It has reasons to rally ultimately, given the 0% interest rate policy with the US Fed and many other central banks. In fact, they are still printing a lot of money in order to pay for programs and bailouts. The US is going to be printing even more money. We have more programs that will require more money and will be in deficit despite claims to the contrary even as the healthcare bill was passed. Right after that, they will have to pass the so-called "doctor fix" for Medicare. That will immediately use any savings as elusory as they are and go into deficit to pay the doctors enough that they will continue to accept Medicare.

http://investmenthouse.com/ihmedia/xgld.jpeg


Bonds. Bonds did recover some on the session with the 10 year closing down (3.85% versus 3.88% Thursday). There was a big move during the week as bonds rallied, with the 10 year moving up from the 3.869% level close to 3.9%. There was a big move on Wednesday, and you can tie this into many things. The healthcare bill was passed. There will have to be more money printed. There was a bad 7 year auction on Thursday that had to offer a higher yield in order for investors to take the paper. That is symptomatic of the problems with a huge debt and deficit that is only going to get larger. Bonds are selling and interest rates are rising because of the amount of money required to be printed. That is inflationary, so interest rates will rise. Also, there is improvement in the US, and rates tend to rise when there is improvement in the economy. The Fed will also have to raise interest rates at some point. There is a triumvirate of issues pushing yields higher and driving bonds lower as a result. I do not expect that to change any time soon unless there is a major problem overseas to impact the price of oil and bonds, making US bonds look more attractive as a safe haven. Right now, it does not look like anything along those lines will appear, especially given that the EU now has a plan. With that, everything is coming up roses, no doubt.

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TECHNICAL PICTURE

INTERNALS

Breadth. Breadth was basically flat on the NASDAQ as it closed lower by just a fraction of a percentage point. Breadth was flat on the NYSE as well with a slight gain of advancers over decliners. The session was basically flat and held no surprises and no big moves. Breadth never had major swings.

Volume. Volume was down. It fell to 2.2B on NASDAQ, and that took it back below average after a strong Thursday reversal that saw volume shoot above average on that exchange. NYSE volume fell as well, dropping to 1B shares, or 11%. After it traded up to average on the Thursday intraday reversal, it once again fell back below average where it has resided for most of the last three weeks. Not too much excitement with the internals on Friday, but again, most of that excitement was on Thursday with higher volume and a big reversal that saw good breadth turn into negative breadth as stocks sold off on higher volume.


CHARTS

SP500. The big move for SP500 was on Thursday with that new high on the rally followed by a reversal to negative on rising volume. There is a little more dramatic picture on NASDAQ, but it was very quiet on Friday, even though it did trade in a range and close in the middle. It tapped the 10 day EMA on the low and volume tapered off below average. There were no fireworks on Friday, and if the SP500 can hold above the January peak at 1151, all will be forgiven and it can continue to move higher. The tread is still in place and is not in any danger. Thursday was a reversal day, where it was higher and lower than a prior session (indeed the prior two sessions), and the ramifications of that would not show up on Friday. The ramifications will show up early next week, and Monday and Tuesday (particularly Tuesday) are days to watch after this kind of reversal. Again, the volatility day-to-day has been exaggerated. The market goes down and bounces right back up. It goes down the next day and then reverses intraday. Volume goes up and down. This is the kind of choppy action you see when a bottom or a top is trying to be put in. There was the same effect back in January when the market topped near term. Then when it bottomed in February, there was a sharp selloff, reversals, and a sell back down immediately followed by a bounce higher that sold off the high. Very choppy action and big volume as it was doing it that is characteristic of a turn in the market. It may not turn. It may hold support at 1151 with just a modest pullback. If that is the case, again, everything is forgiven and it can continue to move higher. It can sell back to 1150-1125 or even the top of the November and December range and not be in serious danger. It has had a great run off the February low with a pause, and it has had almost a month of straight runs to the upside. It is due for a rest or test, and it is going through the initial stages of that now.

NASDAQ. NASDAQ shows a similar picture the big rise on Thursday and then the reversal to negative on a spike oaf above-average volume. Friday it tested the 10 day EMA on the low, just as the SP500 did, and bounced off of that for a very modest loss. It is showing the same day-to-day chop. Big volume and low volume. It could easily come back and test 2350-2355, or go down to the January peak. It is very strong, plenty of momentum still. The uptrend is in place, so I am not looking for a major rollover or selloff, but it is showing indications that it wants to consolidate more and take a breather. In this instance, you should let it. The need to be patient still applies heading into next week.

SP600. SP600 is more of the same: Choppy after a great run. Up one, down one, reversing one. It is showing that it also wants to take a breather. It has support around 353; that is a key level it broke through. I would not be surprised if the selling takes it to that point to test. That would be absolutely normal after such a great move and strong leadership by the small caps.

SOX. The semiconductors posted a new closing high on Tuesday, and then immediately gave it back on Wednesday and Thursday. It finished lower on Friday, but it did hold the 10 day EMA on the close. It looks like a fairly orderly pullback. Big break, test, and holding over that mid-March peak. It does not look bad here at all. I cannot say you should run away from this, but it is not excellent. You could make the case for a double top with MACD making a lower peak even as the index broke to a new closing high. You have to watch for that because there are indications of trouble. Overall, however, it has been a laggard on the move up, and it is being dragged higher by the other indices that are much stronger and testing from a position of strength. We need to let the volatility work its way out and see what happens on Monday and Tuesday. That will tell more of the tale as to the significance and impact of the Thursday high-volume reversal after the indices struck gold and hit new rally highs.


LEADERSHIP

Financial. JPM has thrown a pair of tombstone doji on the last two sessions just as it broke to a new rally high off the February low, crossing over the January peak. That did not put it at a new high on this rally that is still over in October. The financials had a great run. They are a little winded and are showing indications that, along with the indices, they may want to test somewhat. No danger here from the look of it, but I will keep an eye on them to see if we can get a decent setup from these stocks. GS is one I am looking at already. It tried to make the move on Thursday, but reversed and Friday and tapped the 18 day EMA on the low, selling further. To me, this sets the play up a bit better. It, too, is having trouble with the January high, which is actually an interim recovery high. But, MACD is still in very good shape. Momentum has built for the stock, and I am looking for it to hold in the area of the 18 day EMA or the support at 170. It is pretty well delineated there. If there is a move down to 170 and get any kind of bounce, we will be all over that. We are looking at the play right now, but we need to see how far it will come back and keep adjusting our buy point until it can show us the move higher. WFC is also showing a pair of doji at the prior high. It did clear the January peak, but now it is up at the October. MACD is solid. It had a great run, and it just needs to take a breather.

Retail. Retail had another great week. There is more good news coming out and more upgrades during the week. Good news keeps flowing with respect to the retailers. ANN showed a good consolidation during the week and then broke higher again on Friday on rising average volume. Strength building upon strength. JWN is showing no signs of slowing. It continues to move higher after breaking to a new rally high early in the month. At the other end of the spectrum with respect to target clientele, WMT is performing well also. It broke higher and is putting in a nice flag test. It could make a break to the upside further. The thing is, how much upside can you get? Maybe it will run up to the prior high, and that would be a decent play. WMT just kind of plods along; it is not a great trading stock.

Healthcare. With the healthcare bill passing, this is a bifurcated sector. Some of the medical device stocks had a delayed effect to the healthcare bill. They will have a 3.8% tax placed on every device produced. HOLX had one of the delayed reactions. It sold ahead of it, bounced a bit when the news came out, but then it rolled over toward the end of the week. ZOLL is a defibrillator manufacturer. It sees serious trouble for itself with the healthcare costs for its company as well as the tax on each of its devices. It was rolling over on higher volume on Friday. HUM is in the Medicare Advantage and is being boxed around, but it sold on light volume to end the week. There was not an effort to dump the stock. Others are benefitting, such as hospitals. LPNT had a great rally ahead of the bill passage, and then it broke higher earlier in the week. It is testing in a nice flag. There are winners and losers based upon this bill.

Industrial. DE is setting up nicely. It broke higher, very nice test in progress, and it showed a doji on Friday. CAT says it will take $100M in charges related to the healthcare bill. Indeed, DE will take around $100M in charges with respect to healthcare costs. BUCY broke higher on Tuesday with a nice fade back to test. That is an interesting stock, too. DE, BUCY, and GS all look interesting. Maybe some of the hospitals will be able to give us some buys or trades higher off of the flags they are forming.

Technology. AAPL had an up session after selling off on Thursday, reversing from a new high. It actually hit a new closing high on Friday. It had its price target raised to $300 by one of the firms covering it; AAPL still seems to be attracting more money its way.


THE ECONOMY

TO VIEW THE ECONOMY VIDEO CLICK THE FOLLOWING LINK:

http://investmenthouse1.com/ihmedia/Economy.wmv


Healthcare passed just in time . . . to see Social Security go into the red.


Weak bond auctions becoming commonplace.

1) Worsening credit position.
2) Credit rating could be cut from AAA
3) Cost of servicing debt rising for US, pushing the price tag of our individual debt higher and higher.


More Surprises in healthcare.

Not Armageddon, at least not this week.

3.8% tax and other taxes not indexed to inflation: another AMT.


Taxes, taxes as far as the eye can see.

In 10 years, perhaps earlier, tax rates will have to explode higher.


THE MARKET

MARKET SENTIMENT

The VIX is undercutting the lows from January, and that is an indication that the market is somewhat overbought in the near term. That showed up in the action last week with the day-to-day volatility, although it did not show up in the VIX itself. This is that day-to-day volatility where the market chops back and forth in a big range, but there are not the surges in volatility overall. This could mean an interim pullback, but it is not suggesting a major top of any kind in place.

VIX: 17.77; -0.63
VXN: 18.67; -0.15
VXO: 16.91; -0.73

Put/Call Ratio (CBOE): 0.92; +0.05

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: 48.9%. Up from 46.1%, continuing the steady rise since a low of 35.6% in February, the lowest it has been since July 2009. Over the 35% threshold level below which suggests bullishness. After peaking at 53 on this move the bulls lost some nerve, falling to a new low post- July 2009. Once again bulls peaked out near the 50% level. Bulls have bumped at 50ish since late August 2009, falling to 45ish and then rebounding. 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.

Bears: 20.5%. After bouncing up and down, heading lower steadily, down from 21.3% last week, down sharply falling from 27.8%. Over 35% is considered bullish for the market, so still a ways off even though bulls are falling to a bullish level. Continuing the rise from 16%ish on the lows this leg where it held for several weeks. Peaked near 28% in November, falling short of the 35.6% hit in July 2009. 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: -2.28 points (-0.1%) to close at 2395.13
Volume: 2.204B (-12.66%)

Up Volume: 1.111B (+150.074M)
Down Volume: 1.112B (-453.139M)

A/D and Hi/Lo: Decliners led 1.04 to 1
Previous Session: Decliners led 1.65 to 1

New Highs: 78 (-132)
New Lows: 16 (+5)

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: +0.86 points (+0.07%) to close at 1166.59
NYSE Volume: 1.03B (-10.86%)

Up Volume: 599.59M (+117.313M)
Down Volume: 406.768M (-238.995M)

A/D and Hi/Lo: Advancers led 1.1 to 1
Previous Session: Decliners led 1.44 to 1

New Highs: 221 (-322)
New Lows: 25 (-44)

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

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


DJ30

Stats: +9.15 points (+0.08%) to close at 10850.36
Volume DJ30: 175M shares Friday versus 200M shares Thursday.

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


MONDAY
Personal income and spending will come out on Monday, and Tuesday will be the Case-Shiller Home Index. That will be important. It is the week of the jobs report, so there is the ADP Employment Report. We also have regional factory news for factory orders and the Chicago PMI. There will also be the weekly jobless claims always important and the ISM index. Manufacturing has been one of the strong points in the recovery. On Friday, there are the non-farm payrolls. It is all a warm up for that. There are expectations that range up to 300K jobs being added for the month. How did they get to those? 100K added because of the census. 100K coming back in because of the weather in other words, the weather got better, so people are being rehired. Then another 100K for good measure, perhaps because of the manufacturing improvement. The official expectations are for 190K, but up to 300K is possible. It will be interesting to see. 200K of those, of course, could be related to the government or just a rebound from no one working in the prior months because of bad weather.

Friday, the payroll report comes out, but the market will not be open for Good Friday. There will be a three-day weekend for the stock market, and that always has some play with respect to stocks as traders in some of the big funds want to get squared away before a long weekend. With news of all the programs that are still being pushed, anything could happen. Of course, you cannot forget that the EU has a plan. As long as they have that plan out there, things should be okay, right? Because nothing can go wrong with this great plan. After all, the IMF is involved and it is such a stalwart of support and calm. Earnings will also affect things next week. They are just two weeks away. We could see some warnings or some positive guidance. Most of what we have seen thus far has been positive guidance, and the market has moved up nicely into the preliminaries of earnings season. It would be very appropriate and helpful to get some sort of consolidation moving into earnings. Otherwise, we are setting ourselves up for a weaker market. There may be good news early that pops it up, but then the market is already high. It would really take something to drive it higher. That leaves it more subject to upset if things are not as great or investors get their fill of good news. The big thing we are looking at, is how the Thursday intraday reversal on high volume plays out this coming week. There are several factors involved. There was the reversal that was the culmination of all the volatility of the prior two weeks. There was a break higher and an attempted test that looked successful because the market broke higher on Monday and Tuesday, but then the volatility came back in. As soon as the market hit a new closing high, it sold off the next session. It rallied sharply to a new high the next day on Thursday, and then it gave it all back and reversed negative on rising volume. There was a lot of day-to-day volatility and big surges intraday.

How will this play out? As noted on Thursday, you have to look and see to the next week; Mondays and Tuesdays are often days where you see the result of a sharp reversal or turn the prior week. We will be looking at those days to see how the market reacts. It may be that nothing transpires during those two days. It may take more of the week to ascertain what is going to happen (and it may be nothing). It may be that as the markets did on Friday they just brush it off, consolidate a bit more, continue the uptrend and start back to the upside. We will see what happens. Since we do not know what the outcome of that Thursday reversal will be, it is time to be patient. If the pullback is going to happen, let it take place. It will not hurt because it will give better buy points on stocks we are looking at. Some great stocks will be pulling back. We protect our positions to the upside, of course, as we have been doing all week. If they get in a bit of trouble near support, we can take some gain off the table. There is no point in taking great risks here because there was a great run to the upside. We have banked a lot of money on a lot of these positions already, and we do not want to see them get turned over on us. If there is a pullback, we will be able to buy back in and make new trades to the upside and make more money off of them. If we get good plays to the downside, we might want to take advantage of those as well. The market has punished the downside plays, but that does not mean it will be the case all the time. When you see setups occurring off highly volatile action, you often get good downside plays you can take advantage of. Look what happened in January. There was a highly volatile action again, and there was the selloff. It was not the end of the rally, but it was a pretty severe selloff. We do not have to get a selloff nearly this steep. There could be one down to the 1151 area and still make great money on downside plays. You could play the SPYders themselves if you wanted down to that level, and pick up some scratch along the way. There are several ways to play this from an index point of view, as well as some of the weak sectors we have seen that have not been able to take out their January peaks or prior peaks and have been struggling. They might pull back and continue to base, and that pullback can give us several points of gain. When you are playing with put options, that gives you plenty of bang for the buck to put into the bank.

Again, we do not have to get fancy. We just have to see the volatility and realize there is a potential change in the market. We need to be patient, we need to be cautious with our upside positions that could be thrown back at us. The market has rallied upside, and this type of volatility would typically presage some downside. Always take advantage of what the market is giving you. If it gives us downside play, we will go that way. We picked up a little PBR late in the session as it rebounded off the lows. We are anticipating more of a selloff off of this head and shoulders pattern. Maybe we get it, and maybe we do not, but it was well worth the risk/reward for it. We will look for other plays that give good risk/reward. If it works, we get a great reward. If it does not work, we do not risk much. At the same time, we look for those upside plays on those great stocks, watching them set up to give us new plays to the upside. We can turn what many would see as a disadvantage into our own advantage, and as always take what the market gives. Have an excellent weekend.


Support and Resistance

NASDAQ: Closed at 2395.13
Resistance:
2412-2415 represents a series of peaks and lows in 2007, 2008
2453 is the August 2008 peak

Support:
2382-2395 from 2008
The 10 day EMA at 2385
2324-2370 is a range of resistance from early 2008
2320 to 2326.28 is the January high
2319 from the September 2008 peak
2292 is a low from January 2008
The 50 day EMA at 2296
2273 to 2282 marks bottom of January 2010 lateral peak
2275 - 2278 from the February 2008 and April 2008 lows
2245 from July 2008 through 2260 from late 2005.
2210 (from September 2008) to 2212 (the July 2009 closing low)
2205 is the November 2009 peak
2191 is the October 2009 peak
2177 is a low from March 2008
2169 is the March 2008 closing low (double bottom)
2168 is the September 2009, intraday peak
2167 from the July 2008 intraday low
2155 is the March 2008 intraday low
2143 is the October 2009 range low
The 200 day SMA at 2113


S&P 500: Closed at 1166.59
Resistance:
1170 is the prior March 2010 high
1185 from late September 2008
1200 from the July 2008 low

Support:
The 10 day EMA at 1162
1156 is the Sept 2008 low
1151 is the January 2010 peak
1133 from a September 2008 intraday low
Bottom of the January 2010 consolidation 1131 to 1136
The 50 day EMA at 1129
1119 is the early December intraday high
1114 is the November 2009 peak is breaking
1106 is the September 2008 low
1101 is the October 2009 high
1084 to 1080 (September 2009 peak)
1078 is the October range low
1070 is the late September 2009 peak
The 200 day SMA at 1056
1044 is the October 2008 intraday high
The August peak at 1040
The early October 2009 closing low at 1025
The early August intraday peak at 1018
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low


Dow: Closed at 10,850.36
Resistance:
10,963 is the July 2008 low

Support:
10,730 is the January 2010 peak
10,609 from the Mid-September 2008 interim low
The 50 day EMA at 10,505
10,496 is the November 2009 high
10,365 is the late September 2008 low
10,285 is the late December consolidation peak
10,120 is the October 2009 peak
9829 is the September 2008 closing high
9918 is the September 2008 peak
9855 is the early September peak in its lateral range
9835 is the late September 2009 peak
The 200 day SMA at 9831
9654 is the November 2008 high
9625 is the October 2008 closing high
9620 is the August 2009 peak
9430 is the early October low
9387 is the mid-October peak


Economic Calendar

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

March 26 - Friday
GDP - Third Estimate, Q4 (08:30): 5.6% actual versus 5.9% expected, 5.9% prior
GDP Deflator - Third, Q4 (08:30): 0.5% actual versus 0.4% expected, 0.4% prior
Michigan Sentiment -, March (09:55): 73.6 actual versus 73.0 expected, 72.5 prior

March 29 - Monday
Personal Income, February (08:30): 0.1% expected, 0.1% prior
Personal Spending, February (08:30): 0.3% expected, 0.5% prior
PCE Prices - Core, February (08:30): 0.1% expected, 0.0% prior

March 30 - Tuesday
Case-Shiller 20-city, January (09:00): -0.6% expected, -3.1% prior
Consumer Confidence, March (10:00): 50.0 expected, 46.0 prior

March 31 - Wednesday
ADP Employment Chang, March (08:15): 40K expected, -20K prior
Chicago PMI, March (09:45): 61.0 expected, 62.6 prior
Factory Orders, February (10:00): 0.5% expected, 1.7% prior
Crude Inventories, 03/27 (10:30): 7.25M prior

April 01 - Thursday
Continuing Claims, 03/20 (08:30): 4600K expected, 4648K prior
Initial Claims, 03/27 (08:30): 440K expected, 442K prior
Construction Spending, February (10:00): -1.0% expected, -0.6% prior
ISM Index, March (10:00): 57.0 expected, 56.5 prior
Auto Sales, March (14:00): 3.7M prior
Truck Sales, March (14:00): 4.2M prior

April 02 - Friday
Nonfarm Payrolls, March (08:30): 190K expected, -36K prior
Unemployment Rate, March (08:30): 9.7% expected, 9.7% prior
Average Workweek, March (08:30): 33.9 expected, 33.8 prior
Hourly Earnings, March (08:30): 0.2% expected, 0.1% prior

By: Jon Johnson, Editor
Copyright 2010 | 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

Rumors of Fed Discount Rate Hike

SUMMARY:
- Mostly profit taking to end the week but 'over there' sectors feel selling pressure heat.
- India raises investor concerns with a surprise rate hike, fueling rumors of a Fed discount rate hike.
- Dollar surges out of its consolidation, helping push oil back from its peaks
- Watching for the breakout test and how strong stocks remain.

After a long advance stocks take a breather on expiration.

Some sellers hit the market on Thursday, but it was limited to energy and commodities. There was a stronger dollar, and it pressured those areas. Selling was more widespread on Friday, but the brunt of it was again borne by the energy sector and commodities. The OIH chart shows two sharp downside sessions on Thursday and Friday, and the rest of the market showed minor profit taking. The SP500 was down 0.5% and managed to bounce off its lows on the session. The strong rise in the DXY0 triggered this. There was a strong bounce Thursday, a strong bounce Friday, and it broke out of the consolidation just as it did in mid-January after the month-long consolidation.

The dollar was turning higher due to industrial worries in Europe about Greece. The bailout that seemed so sure just a few weeks back was rattled this week when Germany preferred the IMF option. Greece gave the rest of the EU a timetable as to when it needed to get something done, or else it would turn to the IMF. With that uncertainty, the dollar rallied and oil was pushed lower. It did not help that India gave a surprise hike in its interest rates during the session. That started a rumor that the Fed would raise the discount rate once again between the last meeting on Tuesday and the next meeting the coming month. If you combine those catalysts with the fact that the market is sitting on top of a three-week run, then you have some selling coming. Most of it was profit taking, but there was high-volume selling in those sectors tied to the dollar and overseas trade. It was not just energy and commodities that were hit; those indices that had rallied the most recently were the target of the most selling. NASDAQ dropped 0.7%, and the SP600 dropped almost an entire percentage point, but neither was in trouble at all. They are still holding their uptrends and were due for a test. This was just a one-day pullback, and they still have room to test quite a bit more before consolidating this last run of three weeks this month. When you combine February on top of it, you are looking at a very solid six-week move to the upside.

Stocks started down and tried to bounce early, but they never came close to the flat line, and then tumbled through mid morning. It was flat line the rest of the session, and then about 15 minutes into the last hour, the bottom fell out and they hit new session lows. That triggered a round of late buying that pushed stocks back up. They recovered all of the last hour loss, but that still kept the indices well below the flat line and sporting losses they had not felt all week long. It seems like the market makers and the NYSE specialists that were bemoaning the lack of volatility finally got a bit of it. it did occur in the last hour of trade and did not do much to help create more money through their volume of trades, however. The real action was the other markets. They drove a lot of what happening the stock market during the week and the selling that occurred before the weekend.


OTHER MARKETS

Dollar. The dollar started the breakout of its four-week consolidation. It looked dicey during the week, moved up, held its support at the 50 day EMA and another price support, and then it bounced on Thursday and Friday. There was good, strong volume, and it pushed it back below 1.36 Euros (1.3537 Euros versus 1.3609 Thursday). The dollar flirted with the 1.38 level earlier in the week as it sold off sharply, but it held the range and has now moved below that 1.36-1.38 range that has held it in check. With this break higher, it looks as if it is ready to move more to the upside and will continue to drive below 1.36 Euros and higher against the basket of currencies.

http://investmenthouse.com/ihmedia/dxy0.jpeg


Oil. Oil had a second day of falling back. It came up and tapped the top of its range the past two weeks, fell back, and rallied back this week. It hit it again and looked very strong only to peel back as the dollar broke out of the upside. This puts oil in jeopardy of being able to make the break. There is a short double top in conjunction with the prior twin peaks. It will be difficult for oil to turn and make the break higher because the dollar is rallying and there is concern over what is happening in Europe. There is also worry that, since India raised rates, what happens if China raises rates? What kind of oil demand will we have moving through into the summer? It looked like things were shaping up quite well, but if the central banks of the world start to raise rates, the worry is that they be overdue their task (as is always the case they either ease too much or tighten too much) and that will have a negative impact on everything related to growth. That would be energy and commodities, so we watched oil, metal, and other commodities going down. Industrials have been struggling as well, unable to make new highs on this rally. They are still below their January highs. None of this news does well for any of those stocks tied to the "over there" trade associated with the emerging industrial nations.

http://investmenthouse.com/ihmedia/xoil.jpeg


Gold. Gold had the hammer taken to it as well. It is still in its base and setting up. There is the inverse head and shoulders pattern, but when it looked to be approaching the breakout point, it was knocked back down on Friday. It is trading back ward the support at 1100 ($1,107.60, -19.90). It was kicked hard, but it is still in the pattern. If there will be inflation, you would expect gold to rise, and it is setting up to do just that. The news on Friday kicked it in the teeth because India raised rates to squelch its potential inflation, and China may do the same. Gold suffered a setback in that respect.

http://investmenthouse.com/ihmedia/xgld.jpeg


Bonds. Bonds sold off after rallying earlier in the week after the FOMC meeting. That caused the 10 year to rally, and it reached down to 3.64% in the week, but the yield has rebounded as bonds sold back. Indeed, the 10 year closed at 3.7% on Friday, back where it started from earlier in the week. That keeps bonds in their range. The Fed said it will keep rates down forever, but then India raised rates. That created the rumor on Friday that the Fed would raise the discount rate again, as it did between the last two meetings. With that in mind, bonds sold back. Investors were just playing a guessing game with what the Fed will do. Bonds are definitely stuck in a range right now.

http://investmenthouse.com/ihmedia/tip.jpeg


TECHNICAL

INTERNALS

Breadth. Breadth was flat on NASDAQ with decliners ahead -1.6:1, and decliners stepped out a bit on the NYSE to lead -2.5:1. This is because the small caps and mid-caps were taking most of the beating on the session; whenever they do, there are more of them around, and that means the breadth will expand.

Volume. Volume shot higher to 2.8B on NASDAQ, up 40%. It was up 1.9B shares on the NYSE, up 113%. There were two factors working today, with the first being expiration. It had been quiet all week with respect to expiration and, when that happens, it generally saves up the ammunition for a Friday fireworks display. In addition, there was some SP balancing going on at the end of the day, and that pumped the volume up even further. There was tremendous volume on the session, but you cannot take a lot from it. It obscures what was actually going on. You can look at some of the individual areas that were under pressure, such as the energy sectors. It was under pressure Thursday as well, but even some of that was tied to expiration since oil was starting to fall back from its rally. Those stocks became less favored and were rolled over into the next expiration period.


CHARTS

SP500. The SP500 matched the prior high on its break over the January peak and then tested back on the session. It did bounce off the intraday low and recovered, but still closed down 0.5. The big move during the week was the break over the January peak and the close that held that, and it even extended that on Wednesday. The rest of the market was extended even before SP500 made this break, so it could easily come back to test 1151. Indeed, it went all the way down to 1155 on the low Friday, and that is going to be the key test for SP500. There are some bears calling this a double top, and perhaps they are right. The answer comes with this test of this break. Will it become support after it acted as resistance, or will it just give way and sell off into a deeper correction? Right now, everything indicates it can go higher. There is no heavy selling in the market only a few sectors are suffering selling. The indication is that it could continue to move higher after that test.

NASDAQ. The NASDAQ showed the same action. It had broken out above the January peak before this week. It even came back and tested a bit to start things out and then rallied. It tapped at the 10 day EMA on Friday and recovered some off the low. There was big volume, but it is attributable to expiration. It is still well above the prior peaks from January and the closing high for January at 2320. NASDAQ closed at 2374, so there are roughly 50 points before NASDAQ makes the test of that level. It does not have to test all the way back. SP500 can make the test all the way back, and NASDAQ and the SP600 can fill part of that rally and then be ready to make the move higher. They can use SP500, since it is the laggard, and make it test all the way back. It does not have that far to go anyway, so let it do it and then move higher. There is still plenty of strength; obviously the trend is in great shape. The test is the key, same with SP500. How it holds that test and what the leading stocks do as it tests will tell you the quality of the move and what to expect as it starts back up.

SP600. SP600 suffered almost a 1% loss on the day, but even so, its pattern looks very similar to NASDAQ. It sold off, but it tapped the 10 day EMA on the low and recovered. It is still in a great uptrend, and it is still well above its January peak at 344. It closed at 349 on the session, so it has plenty of room to test. One would think 350ish in the 18 day EMA range would be where it would come back to test. There are other old resistance areas that it could come back and hold without having to collapse all the way down to the January peak. It was a stellar run by the small caps.

SOX. Semiconductors, once again tried to come back and make it to their January peak, but they have not made it yet. They are trending higher. They are in the process of selling back again, but are still holding the trendline. That looks solid, but they have lagged this entire time and are not a leadership group. I cannot extrapolate and say they look solid for a breakout over this area; indeed, they got close to it and have turned tail.

In sum, all of the major indices are above their January peak, and now they are suffering a bit of profit taking. Some are hit harder than others as seen with SP600 because some of their sectors are tied to the oil trade. Nonetheless, these are strong trends that are in shape for now. I am looking for an SP500 test of its January peak at 1151 that it broke above last week. That will be the key test as to whether it holds. SP500 could break back down into the range of the January peaks. Remember, support sometimes acts as a point that bounces things, and other times it acts as a range. This is where the buyers and sellers fought things out. It could come back into this range even to the bottom of the range and still break back to the upside. In conjunction with SP500, watch how NASDAQ comes back and tests. If SP500 falls back into the lower half of this range, does NASDAQ come back and hold its top of its range? If it does, it can bounce and continue to lead higher. If not, then we have to reevaluate at that point. For now, the trends are strong, the buying has been strong, and there is plenty of liquidity in the market. That has been enough to push stocks to the upside.


LEADERSHIP

Healthcare. Given the vote this weekend, healthcare is on everyone's lips no matter where you turn. The healthcare plans may have their last hoorah. AET gapped higher and was surging, and we were able to take some gain on that. HUM has something to do with Medicaid Part A, and it is not doing as well because that is something that is impacted more by the healthcare bill. Nonetheless, it is performing rather well. RMD is taking off to the upside with a nice 45-degree run. Healthcare is doing fine, and we will see what happens next week.

Retail. Retail had another decent session. PNRA continued to move higher, and we were able to take gain there. BBBY had a good week, but has pulled back a little after gapping higher. BBY announced good earnings and gapped to the upside. It has already been trending higher into those numbers. ANN had a nice run and is coming back a little. These are a bit tired, and they have had a great run. They need to pull back, and that is what they were doing on Friday as part of that overall profit taking.

Energy. Energy was one of the areas that have been kicked in the teeth. HAL is back for a second day on rising volume. It has not broken down its pattern, but it was in trouble. SLB was the same story; it was selling on higher volume, but it did manage to hold up and bounce back on the 50 day EMA. Not all stocks were able to do that. APA broke out below its 50 day EMA after making a lower high. It is a dangerous-looking pattern. SUN is doing okay. It has something of a double bottom with handle pattern, so it is in decent shape and still setting up for a new move higher. A lot of the smaller stocks were really hammered this week.

Financial. Financials had a good week and helped the SP500 make it up through the January peak. GS was up modestly on Friday, but it still trending higher in a nice run. WFC is stalling out a bit at the end of the week, but again, there was a nice break higher that helped push SP500 through the January peak. FITB had a nice rally, and there was a small pullback to test the ruin higher. Financials are holding up. They are not in great buy shape because they have rallied off no patterns and rallied straight up. We will see whether they present a decent buy next week after a bit more of a pullback.

Industrial. Industrials did not make new highs. DE had a double top at the prior peak, and it has been unable to punch through. That does not mean it will not, but it is a difficult pattern. A lot of these stocks have been lagging, unable to make the break through the prior highs. CAT is in the same type of situation. It is trying to move higher, but it is running into serious resistance from October, November, and early December. CAT noted on Friday that it sent a letter to Nancy Pelosi saying that the bill would cost them 100M to implement based on what the bill requires for it employees. That will fall on deaf ears because we are not talking about impact we are taking about agenda at this point. This thing will get passed, and we will have to deal with it. It is likely one of those things we will deal with down the road. It will be a 1970's-like malaise situation versus an immediate impact. But I digress.

The industrial patterns are unable to break the January peak. CMI did break, but it has double topped and is struggling. It looks like it wants to turn over and give back some gains. It may come back and test down to 56 and the 50 day EMA, and we will see what happens after that. That is an example of those stocks that have not been able to break through their prior peaks; something is holding them back. A lot of that is tied to the "over there" trade and worries with Europe, and now new issues with foreign central banks raising their interest rates.

Metals. Metals have not been able to make new highs. They are turning back well below the prior highs. FCX turned back on higher volume. BHP has been unable to break through its peaks and is forming something of a double top below that prior peak. We entered X on Friday, and it sold off nicely for us after we entered but then bounced back off the lows. It still has a very bearish pattern and plenty of room to fall before it gets to the next support. It is another of the stocks that was unable to break through the prior peak. There is a cadre of these in the industrial areas that are related to the "over there" trades that are lagging the rest of the market. Maybe they have had their growth spurt. Maybe they were the leaders earlier and are now taking a back seat to the rotation of the next group of growth leaders. We will see. These are very important stocks as we saw in the run up through 2007 to 2008. They have not yet recovered from that sell off. They are up off their lows, but have not broken out and moved to leadership positions.


THE MARKET

MARKET SENTIMENT

The VIX remains low. It gapped lower on Wednesday and is now below the January low. Looking back, it is still hitting ranges it hit in 2008 before the meltdown. If you really look back, you can see its above levels hit in 2004, 2005, 2006 and early 2007. The market was rallying the entire time, so low volatility does not necessarily mean low stock prices or that a selloff is imminent. In the long term, when volatility starts to rise as the market rises, there is trouble. The economy topped in 2007, and the market started to struggle after that. Stocks continued to rise, however, and volatility rose as well. In the present, shorter term this low volatility combined with the market run has you looking for a short term pullback. Right now there is no issue with respect to volatility other than near-term complacency that can lead to a pullback (but not a major correction).

VIX: 16.97; +0.35
VXN: 17.87; +0.63
VXO: 16.51; +0.33

Put/Call Ratio (CBOE): 0.97; +0.2

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: 46.1%. Still on the rise, climbing form 44.9% last week. On the rise since hitting 35.6% on the low in February, the lowest it has been since July 2009. Over the 35% threshold level below which suggests bullishness. After peaking at 53 on this move the bulls lost some nerve, falling to a new low post- July 2009. Once again bulls peaked out near the 50% level. Bulls have bumped at 50ish since late August 2009, falling to 45ish and then rebounding. 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.

Bears: 21.3%. Bears are indecisive, trading in a range in the low 20's. Down from 23.6% last week, and that was up from 22.7%. Again, bears have been more skeptical on this move though they are down sharply falling from 27.8%. Over 35% is considered bullish for the market, so still a ways off even though bulls are falling to a bullish level. Continuing the rise from 16%ish on the lows this leg where it held for several weeks. Peaked near 28% in November, falling short of the 35.6% hit in July 2009. 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: -16.87 points (-0.71%) to close at 2374.41
Volume: 2.828B (+39.18%)

Up Volume: 550.333M (-425.039M)
Down Volume: 2.331B (+1.253B)

A/D and Hi/Lo: Decliners led 1.59 to 1
Previous Session: Decliners led 1.3 to 1

New Highs: 172 (0)
New Lows: 19 (+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: -5.92 points (-0.51%) to close at 1159.9
NYSE Volume: 1.975B (+113.64%)

Up Volume: 480.674M (+159.72M)
Down Volume: 1.474B (+887.652M)

A/D and Hi/Lo: Decliners led 2.47 to 1
Previous Session: Decliners led 1.47 to 1

New Highs: 327 (-105)
New Lows: 22 (-1)

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

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


DJ30

Stats: -37.19 points (-0.35%) to close at 10741.98
Volume DJ30: 434M shares Friday versus 153M shares Thursday.

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


MONDAY

The economic calendar is once again filled with various details about the health of the US economy. None of these are particularly huge or noteworthy with respect to the market, although durable orders are significant and the weekly rendition of jobless claims will be closely watched. On Friday, there will be the third look at the Q4 GDP. There are no changes expected and nothing to indicate there has been a significant change. Inventory jockeying and some import and exports may make it blip one way or the other, but there is nothing significant to change what was previously recorded. That mainly dealt with huge inventory moves that inflated the GDP. The next reads will be interesting after the initial moves in inventory have been made.

The key for the market is how the indices test. I am confident there will be a test and, after the Friday selling, one would anticipate further downside. SP500 started to move toward its January peak, and we will see how far it makes it to that level. Maybe this was just an expiration blip and the market will take off to the upside once more. It has the horsepower to do that, and there are stocks in position that could run higher. Not all stocks have rallied straight for six weeks and are sitting at the apex of long moves. Nonetheless, the path would seem to be more downside first. That will take off some of the fluff from six weeks of upside moves and thus set the move better to the upside. I am not sure how many buyers want to come in at this particular level. The one thing we do know is that in every pullback thus far whether two, three, or four days has been met with buyers. Until something changes that, whether it be from market behavior or something exterior to the market, we will continue to look for opportunity to the upside. This weekend I will be looking for opportunity for stocks that are presently in position to move higher. Then, if there is a pullback, we will be watching the leaders come back and test support levels and look for opportunities to move into them.

There are still downside plays available. As we went through the leadership areas, I pointed out stocks that could be in a position to sell back further whether or not the market tests. Indeed, if the market tests more, they will drop harder because they are simply in position. They have not put together big runs to the upside, and they will fade back to support. They have developed somewhat bearish patterns, and there is money being taken out of them. Stocks such as APA, or BHP are possible downside plays that we can look to make and profit from as well. We are not going to turn our back on those, particularly since the market has been up substantially over the past six weeks and has started to suffer profit on Thursday and Friday.

This is not a great secret of a game plan, but given the strength of the market and that there is still good leadership and money rotating through it, we can use that to our advantage to continue to play the upside. We cannot ignore that there is more selling appearing, however. It is not just profit taking; there is serious selling going on in some of the energy areas. It may bleed over into some of the weaker areas such as industrials and metals (and perhaps other commodities that were unable to take out their January highs.) They are laggards, and that marks them as being weaker. If the oil prices continue downward, that would likely mean that the dollar continues its breakout and resumes its uptrend, and those will come under pressure. That has been the initial move whenever the dollar recovers from selling. Those eventually came back around and rose even as the dollar rose during this last rally, but the initial response is negative for those stocks. That makes them targets on this rally. Although they recovered from the lag, they are not dealing from a position of strength. They have broken above and are now coming back to test it. We will watch them for potential downside plays at the same time we look for new upside plays to develop during a pullback.

Have an excellent weekend. Support whatever side of the healthcare bill you believe in, and get out there to let them know what you think. We have to take the process back from the people in Washington who do not seem to understand that we have a constitution to follow. Whichever way we vote, we have to follow the constitution; without it, we do not have anything. It is the law of the land, and following it is what has made us great. As long as we are true to that document, it will show us the right path and we will remain great regardless of what side is in power and what we are doing. Support your side and urge our congressmen to abide by the constitution. That way, we cannot go wrong.


Support and Resistance

NASDAQ: Closed at 2374.41
Resistance:
2382-2395 from 2008
2412-2415 represents a series of peaks and lows in 2007, 2008
2453 is the August 2008 peak

Support:
2324-2370 is a range of resistance from early 2008
The 10 day EMA at 2360
2320 to 2326.28 is the January high
2319 from the September 2008 peak
2292 is a low from January 2008
2273 to 2282 marks bottom of January 2010 lateral peak
2275 - 2278 from the February 2008 and April 2008 lows
The 50 day EMA at 2273
2245 from July 2008 through 2260 from late 2005.
2210 (from September 2008) to 2212 (the July 2009 closing low)
2205 is the November 2009 peak
2191 is the October 2009 peak
2177 is a low from March 2008
2169 is the March 2008 closing low (double bottom)
2168 is the September 2009, intraday peak
2167 from the July 2008 intraday low
2155 is the March 2008 intraday low
2143 is the October 2009 range low
2099 is the mid-September 2008 closing low
The 200 day SMA at 2099


S&P 500: Closed at 1159.90
Resistance:
1185 from late September 2008
1200 from the July 2008 low

Support:
1156 is the Sept 2008 low
1151 is the January 2010 peak
The 10 day EMA at 1151
1133 from a September 2008 intraday low
Bottom of the January 2010 consolidation 1131 to 1136
1119 is the early December intraday high
The 50 day EMA at 1120
1114 is the November 2009 peak is breaking
1106 is the September 2008 low
1101 is the October 2009 high
1084 to 1080 (September 2009 peak)
1078 is the October range low
1070 is the late September 2009 peak
The 200 day SMA at 1051
1044 is the October 2008 intraday high
The August peak at 1040
The early October 2009 closing low at 1025
The early August intraday peak at 1018
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low


Dow: Closed at 10,741.89
Resistance:
10,963 is the July 2008 low

Support:
10,730 is the January 2010 peak
10,609 from the Mid-September 2008 interim low
10,496 is the November 2009 high
The 50 day EMA at 10,430
10,365 is the late September 2008 low
10,285 is the late December consolidation peak
10,120 is the October 2009 peak
9829 is the September 2008 closing high
9918 is the September 2008 peak
9855 is the early September peak in its lateral range
9835 is the late September 2009 peak
The 200 day SMA at 9779
9654 is the November 2008 high
9625 is the October 2008 closing high
9620 is the August 2009 peak
9430 is the early October low
9387 is the mid-October peak


Economic Calendar

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

March 23 - Tuesday
Existing Home Sales, February (10:00): 5.00M expected, 5.05M prior
FHFA Home Price Index, January (10:00): -0.9% expected, -1.6% prior

March 24 - Wednesday
Durable Orders, February (08:30): 0.5% expected, 2.6% prior
Durable Orders ex Au, February (08:30): 0.5% expected, -1.0% prior
New Home Sales, February (10:00): 315K expected, 309K prior
Crude Inventories, 03/20 (10:30): 1.01M prior

March 25 - Thursday
Continuing Claims, 03/13 (08:30): 4560K expected, 4579K prior
Initial Claims, 03/20 (08:30): 450K expected, 457K prior

March 26 - Friday
GDP - Third Estimate, Q4 (08:30): 5.9% expected, 5.9 prior
GDP Deflator - Third, Q4 (08:30): 0.4% expected, 0.4% prior
Michigan Sentiment -, March (09:55): 73.0 expected, 72.5 prior

By: Jon Johnson, Editor
Copyright 2010 | 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

SP500 Stalls at January High

SUMMARY:
- Daily theme eases Friday, but it is a difference without distinction
- A little pre-weekend profit taking as SP500 stalls at the January high.
- Dollar, bond trade gets a bit wilder on Friday.
- Retail sales surprise upside while Michigan sentiment sags.
- Market in position to test early in the week, but thus far the buyers keep the upside pressure on.

Investors reap the reward of the rally, bank some gain ahead of the weekend.

It has been another good week of gains that we were able to take to the bank. On Friday, the market did not quite hold the same theme that was prevalent for the week, i.e., starting softer, then moving up and melting higher into the close and producing nice gains for the entire week. On Friday, instead, there was a higher start and you always have to worry about that after having a good move up followed by softness. There was very narrow range trading for most of the day that moved the indices in and out of positive territory as they bounced up and down over the flat line. At the end of the day, there was a modest drift higher into the close, but that only made up for the dip that started mid-afternoon. The indices closed flat. They were mixed depending on which exchange you look at, but there was no relative movement on the session overall. There is a reason for that, and it was something we anticipated: after a good move higher the market wants to lock in gains before a weekend. On the initial burst to the upside, there was profit taking. We were in there as well, taking gains off of the table as the market opened higher. There was good news in the agricultural sector as well as the retail sector; we were able to bank gain on those stocks as the market started higher in general. It was unable to hold the move, however, and it faded into the close. That does not mean the bigger theme was not present on Friday the market is still getting a bid.

Despite being weak on Friday, the sellers were not present. They did show up last week on Tuesday and Wednesday and tried to push a market back, but that was quickly tamped out and the market showed intraday resilience as well. It was generally able to come back and produce gains on the session. That does not mean there will not be a pullback by any means. Looking at the SP500 chart, there has been a strong run. In the past month, the market has moved well with one small consolidation at the end of February. With SP500 at its January peak, along with NASDAQ, SP600, and SP400 well over their January peaks and having broken out through those ranges, you would expect a pullback and test of this strong move higher. The market's move up does not necessarily mean it will continue to move up without a test. Nothing goes up in a straight line, just like nothing typically goes down in a straight line.

The market had every opportunity to sell at the January high. Indeed, that is something we were anticipating given the strength of the correction from January into February. As it approached, it looked like it might be trying to sell. There was the lateral move as it started to stall in early March, but then it gapped higher and ran through the January peak. It overcame bad news throughout this rally. When it looked like it could roll back over and make good on the deeper correction, it did not. It broke through and ran to new rally highs. Instead of dealing from a position of weakness, now NASDAQ, SP600, and the SP400 are dealing from a position of strength. These will be coming back to test the prior high they have already broken versus having bumped up into it and failed. Yes, while SP500 is still below the January peak although it did break through it intraday on Friday the SP500 is not a leading index; it is following the others. I am not worried that the SP500 has not made the break yet. If the other indices show a reasonable test where they come back and tap at or near the breakout point at the January high and move back up, they are likely to drag the SP back up with it. It is not fun having to drag around your brothers, but it can be done. It has been done to this point. With the strength that is shown in the market with the continuing bid (and indeed on NASDAQ with the upside volume that has appeared over the past month), the strong spiked on the upside sessions shows that buyers are there. Thus far, they have been willing to push the market higher and drag the SP500 along with it. Nothing happened Friday that changes the underlying theme, though it did not necessarily follow the same day-to-day script that it had during the week.


OTHER MARKETS

Dollar. Looking at the DXY0 chart, it has been consolidating laterally after a nice move higher from January into mid-February, but then things got dicey on Friday. It sold off hard and broke to a new closing and intraday low on the session. It is still in pullback mode. It is not a dangerous break it is still rising above the 50 day EMA which is where it held in January with the first test of the trend break. It is not in any serious trouble right now, but the violence of the selling on Friday was somewhat surprising, particularly since there were stories that the UK would be the next Greece. One would think that would have bucked the dollar up against the pound as well as the Euro, but it did not (1.3758 Euro versus 1.3675 Thursday). The dollar had broken below the 1.36 level on the Euro, and it traded there quite a bit last week and early this week. It then slipped back above 1.36 and did not seem that nefarious, but at the end of the week it jumped higher almost toward the 1.38 top of the range. It fell against other currencies as well. Did weaker sentiment numbers cause this? It is hard to say. Sentiment is so vaporous, and it often does not translate into what consumers actually do. It is hard to say that it was the reason the dollar sold, particularly when retail sales for February came out better than expected. This is something we will have to watch because the dollar is correcting after a good run. That is normal, and it is still in a normal range, so it is not out of hand. It is concerning to see such a significant drop in one session, but it can happen and still recover, no problem. I want to see if it slows down or if the pressure stays on next week.

http://investmenthouse.com/ihmedia/dxy0.jpeg


Oil. Oil had another struggle at the top of its range. It tried to break higher as it did on Wednesday, but it reversed even with a weaker dollar. Oil was unable to make any headway and closing down ($81.24, -0.87). It is at the top of the range, and we are looking to see whether it will fall down. This is not definitive, but it is definitely struggling with the closes off the peak. If it closed up, and then reversed sharply, that would be a clear reversal signal. It is not there yet, but we still have our DUG position ready in the event that oil breaks lower and we can play that drop in the range. This was despite not only the weaker dollar but the EIA raising its forecast for anticipated oil demand for 2010. With the trade balance on Thursday, oil imports were down to 1991 levels (actual number of barrels imported). There is a question as to whether the demand will increase. It is factoring in an economic increase the United States a continuing recovery. While the data suggests that there is a slow recovery continuing, the debate is over how strong it will be.

http://investmenthouse.com/ihmedia/xoil.jpeg


Gold. Gold had a bit of a weaker day as well ($1,102.22, -6.00). Depending on which market you look at, it has a different close because some close at different times, but the close was 1100. It held near 1100 on the week, and that is considered a support level by many analysts. It is still in a pullback mode and still above support at the 1100 level, so it is not in any real danger. If there was concern about the US economy and other economies, then there would have been some strength in gold. It did not show up on Friday, and the reason the dollar sold might be the correction it has been in up to now.

http://investmenthouse.com/ihmedia/xgld.jpeg


Bonds. Bonds had another interesting day. All of the markets were trading very strangely. Early in the morning, bonds were selling and the yields were rising up to 3.76%, above a 3.73% close on Thursday. As the session progressed, however, bonds reversed. They rallied back and the yield fell below 3.7% intraday. By the close, however, they sold just a bit and closed at 3.70%. Bonds still held gains on the session, and a move into bonds would suggest worry about the economy. Even though the Fed says it will eventually start raisings rates, there was back and forth all day. Was it the fact that Janet Yellen may be put forth as the Vice Chair on the Federal Reserve (and she is considered a dove by many)? There were many undercurrents today, so it was hard to figure out what was going on. It was not the end of the month, it was not expiration, and yet there was a lot of movement in the other markets. We will have to see how it plays out, but bonds were stronger. Pushing yields lower, they held at the bottom of this range. I am a big believer in the bond market foretelling the future. If bonds continue to strengthen, despite the Fed's jawboning that they will have to raise rates, then there is something they are concerned about. We will just have to see what it is. There was talk back and forth on Capitol Hill about the healthcare bill. It will look like things are going well, and then there is a move back with people still peeling away from voting for the bill. It is an ebb and flow, and maybe some of the market gyration is related to that. Looking at some of the individual stocks and the healthcare plans, they bounce higher one day to sell off the next day. This will be a huge bill, regardless of what side of the fence you are on. It is so expensive and will affect so much of the American economy. In any event, we saw a lot of back and forth in many different markets on Friday and, while that may just be end-of-the-week juggling and position shuffling, there was no reason in the market for them to be so volatile.

http://investmenthouse.com/ihmedia/tip.jpeg


TECHNICAL

INTERNALS

Breadth. The internals were blas . Decliners led 1.2:1 on NASDAQ while advancers led 1.3:1 on NYSE. The small caps and mid caps are still helping quite a bit.

Volume. Volume fell considerably, down to less than 2B on NASDAQ and pushing it well below average. It rose slightly on the NYSE. You can take these as good or bad. You could say it had higher volume on a mixed or churn day on the SP500, but volume was still below average. It is bumping up against the prior high and struggling a bit. There were some sellers her, but it was hardly something to be worried about. In short, volume has been better overall. Even on the NYSE, volume was up earlier in the week as the market moved higher. NASDAQ volume was much stronger on the up days during the rally the past week. Price/volume action has improved.


CHARTS

SP500. SP500 did break over the January peak intraday, but was unable to hold the move. It was showing something of a hangman doji, but that is nothing to get worried about at this point. Again, SP500 is not the leading index it is following. It has had a great run. It would be normal for it to pullback and test to 1125 where this late-December bump is at the interim high without coming all the way back to the November-December consolidation level. A normal pullback would put it anywhere between the 10 day EMA and down to 1125 near the 18 day EMA. It may make a run from there. It may double top there are many scenarios that could play out but, on top of those, you overlay the action of the growth indices.

NASDAQ. NASDAQ is considered a growth index, even though it is heavily weighted by some of the behemoths such as MSFT that do not grow that fast. Nonetheless, it had an impressive gap, a breakout, and a rally straight up. It gapped higher on Friday but could not hold the move. It was a bit negative as well, but volume dried up, and there were no real sellers. Some profit taking and a pullback to test this peak would be perfectly normal and healthy. It would give all these stocks a chance to rest, come back to around the 10 day EMA, and then make the next break higher. It sounds too pat and very easy. We will have to see what happens a political storm may hit that changes things (healthcare passing, et cetera.) For now, it has plenty of upside volume, breadth, and plenty of leadership.

SP600. SP600 has a very strong pattern. It is very similar to NASDAQ and even stronger because it was one of the early leaders. It has recovered leadership status, and that is good for the overall market as well as the economy. It is an indicator of economic success (increase or decline). SP600 showed a hammer doji on Friday, but that is no big deal; it has a very strong pattern. Coming back to test would be normal, but the question is how far it will go. If it has to come all the way back down to 345, then that is a significant drop since it closed at roughly 359. As a leader of the market, I would expect it to hold around the 10 day EMA. If it holds there, that would be a tremendously strong move (and something that happened in late February). It tapped it on the low, closing above the 10 day EMA and taking off once more.

SOX. The SOX continues to struggle somewhat. It is still below its January peak and below some interim peaks in December and mid-January. It is struggling but slowing some life. Last week it started to come to life and, with a strong move on Wednesday, could not quite finish it off to end the week. There are some improving patterns in the semiconductors, however. We will see if it is able to make the break and follow the others higher because it is a growth area that I want to see do that.


LEADERSHIP

Financial. The financials were what pushed the SP500 up on the week. GS was the strongest of the group, and it gapped to a doji at prior resistance on Friday. It was an evening star doji, and it could be in for a pullback. If it pulls back, then SP500 will pull back, but it has support at 175, so it may hold there. This is the little pullback in the market we are looking for and that is ripe for. JPM was up as well. It was not nearly as dramatic or spectacular, but just a steady move higher. It did show it had same doji pattern seen on other charts on Friday. WFC led up, but it gapped higher and closed lower on Friday. The regional banks were all the talk. EWBC broke to a new high on Wednesday. It faded at the end of the week, but they have been one of the backbones helping the NYSE indices move higher. They are already testing, so you can take from that that the SP500 and the small caps may test as well.

Technology. Techs had the big names leading the way on the week. AAPL was up on a tremendous run; it gapped higher last week and continued on this week. It gapped higher and actually held the gain on Friday. It is a bit extended, but is in a nice run what can you say? It is a leader. GOOG was down. It gapped higher and rolled over with a modest loss. It has been a great two weeks for GOOG. It is still in good shape and could come back. It has serious support at 575. If it comes back and tests that, it is off to the races and up toward 600 once more.

Energy. Energy was coming back around early in the week, and we put some plays on. UPL bounced off of a support level, and there are a lot of these. They bounce off a support level and rally. It was a little slower at the end of the week, but a good start to the rollback up in the range. HK is similar. It bounced off its support level as well with volume picking up as it rallies. Indeed, it rallied on Friday as it continued and posted a solid price gain.

Medical. Medical stocks were up. Biotech was a big one, and medical appliance was big. HOLX had a good day on Thursday. It was off a bit on Friday, but not bad at all. RMD had a good week (it was a great month altogether). Biotech had a really good week. CELG is moving laterally, but there is a lot of takeover speculation in biotechs. It was pushing a lot of these stocks higher. AWC was not huge on this one, but it had a good week and approached a prior high. Medical, drugs, and biotechs had a good week.

Retail. Retail was strong again. ANN is showing great strength. ARO had more good numbers and gapped higher once more. PNRA is still moving up. BBBY has been lagging, but finally made a breakout on Friday. It had some downgrades before this, but it swallowed and digested them and then broke over this consolidation range from late February and March on good volume. It might prove an interesting play.

Metals. Metals have been lagging. They have downside ABCD patterns, but are trying to recover. STLD gapped higher on Friday, but it stalled at resistance. AKS is pulling back, and maybe it will set a flag and can bounce. FCX is trying to make the break higher and get on track with the rest of the growth industries, but it is struggling. NEM has formed something of a flag or pennant pattern, and maybe it can make the break higher. It may be some precursor to what gold will try to do. Notice how it broke the downtrend, rallied more than gold did, and is now coming back to test as gold did over the past two weeks. If it starts to break higher, we can anticipate gold will break higher as well.

Industrials. Industrials are similar to metals they are just holding on. CMI has been going well, but has stalled out its move for us. JOYG is still moving up but is stalling out below the old high. DE looked like it was in trouble. It stalled out below the old high on low volume, and it is starting to struggle with high-volume selling. The industrials those tied to what they used to call the "old economy" stocks are struggling while the other growth sectors lead. Overall, there is still plenty of solid leadership, and as we saw with some parts of energy this past week, there are stocks that will try to make a run up and become leaders as they bounce off of key sport. Rotation from one sector to another is part of a healthy market. One sector will be hot, such as the metal stocks and the industrials were. They may be tapering off a bit now but, as they did, we can see money flowing into retail and technology or moving back into financials, for that matter, as well as the healthcare stocks. That is a healthy rotation of money in the market. Even though I reported last week that a lot of mutual funds are at almost record lows on their cash levels, there is a lot of money on the sidelines in money market funds that could move their way. If people start selling out of bond funds, then that will bring more money to bear on the stock market. That does not mean it will go up in a straight line and go up forever, but it is an indication that there could be money brought to play if this market keeps moving higher.


THE MARKET

MARKET SENTIMENT

VIX: 17.58; -0.48
VXN: 19.14; +0.05
VXO: 17.7; +0.19

Put/Call Ratio (CBOE): 0.86; -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: 44.9%. Continues higher and understandably so as the market continues higher, up from 42.1% and 41.1% prior. Rising from 35.6% and over the 35% threshold level below which suggests bullishness. After peaking at 53 on this move the bulls lost some nerve, falling to a new low post- July 2009. Once again bulls peaked out near the 50% level. Bulls have bumped at 50ish since late August 2009, falling to 45ish and then rebounding. 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.

Bears: 23.6%. Bears are not as convinced as bulls, rising even as the market rises, up from 22.7%. Bears have been more skeptical on this move though they are down sharply falling from 27.8%. Over 35% is considered bullish for the market, so still a ways off even though bulls are falling to a bullish level. Continuing the rise from 16%ish on the lows this leg where it held for several weeks. Peaked near 28% in November, falling short of the 35.6% hit in July 2009. 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: -0.8 points (-0.03%) to close at 2367.66
Volume: 1.998B (-4.02%)

Up Volume: 894.106M (-406.956M)
Down Volume: 1.118B (+284.56M)

A/D and Hi/Lo: Decliners led 1.21 to 1
Previous Session: Advancers led 1.33 to 1

New Highs: 217 (+22)
New Lows: 7 (-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: -0.25 points (-0.02%) to close at 1149.99
NYSE Volume: 1.049B (+7.48%)

Up Volume: 448.418M (-235.46M)
Down Volume: 588.882M (+320.42M)

A/D and Hi/Lo: Advancers led 1.31 to 1
Previous Session: Advancers led 1.52 to 1

New Highs: 592 (+214)
New Lows: 56 (+17)

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

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


DJ30

Stats: +12.85 points (+0.12%) to close at 10624.69
Volume DJ30: 166M shares Friday versus 150M shares Thursday.

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


There is a lot of data coming out on the table, including an FOMC rate decision meeting on Tuesday. The Fed will say they will leave rates where they are, but there is always more intrigue as to what the Fed's actually going to say about hiking rates in the future. Treasury Secretary Giethner said on Friday that the last thing the Fed wants to do is follow the lead of other countries such as Japan. As soon as they saw any sign of recovery, they raised interest rates and then squelched off any hope of a strong recovery. The Fed will keep rates low, but it is all about perceptions and the jawboning the Fed does with respect to raising rates in the future. .

There are a lot of reports coming out. There are manufacturing reports, and there will be the important import prices. There is always the housing starts, and then wrapping it up with some inflation numbers and the initial claims. We will have a full schedule of data, but the question is whether it will change the theme very much. Overall, it is a good place for the pullback I have been talking about. The markets have rallied. Friday there was a microcosm of that with a little profit taking ahead of the weekend. With SP500 still at resistance, maybe this is where there will be a pullback. It may be a good spot to test a bit without breaking higher. If it does break higher, that is fine because it will be dealing from a position of strength as well. As long as it does not break to the upside and end up in a nasty reversal. That is one of the things you have to worry about when you get to these levels. There can be a break and a close over that level, and then a big, sharp selloff. It would show is sellers are back on.

You never know exactly what the market will do, yet everyone is very confident about what is happening. Today, there was one person on a financial station saying that the market was setting up for another leg higher even after this run. After a rally of a week straight up, how is it setting up for another leg higher? It may be setting up for another leg higher after it sets up for a test. In any event, it shows you there is a lot of bullish sentiment out there. Whenever the market goes up, there are bulls everywhere. Then the market sells back few days, then there are bears everywhere. Right now, we have to focus on the theme of the market, and that is there is a bid to the market; it has not left. The sellers tested the water on Tuesday and Wednesday, and then they left the pool. Maybe they will show up next week, and we will have to watch. Again, this is a good point for the SP500 to make a test back down to 1125. That gives NASDAQ and the other growth indices a chance to come back and test their breakouts as well. They are primed for a breakout, but should we panic over that? No. We have been taking profits on the way up because stocks have been hitting our initial targets. You run to the certain levels of the 127% Fibonacci extension or other support and resistance levels, you stick by your plan, and you take gains to the bank. There already inevitable pullbacks and we would like to be as with the indices dealing from a position of strength when we do that. Take some profits and then let them run, and you will be surprised at how far these moves can last. Frankly, I did not think this move would last to see NASDAQ and the small cap indices break through the January peak. But they did, and then they kept running after that. We would buy when it was time to buy, and take gain when your target was met according to our plan for that particular play.

We will be dealing from strength. When they come back to test, we can let our stocks make good tests at good support. At the same time, we can look for new positions on our plays, as well as new positions on other stocks that may have gotten away from us. We can use this pullback as a opportunity as well. We will not forget about the downside; there are stocks that are struggling and in trouble. Some of the metals, industrials, and those type of stocks have rallied but have not rallied that well or cleared out to new highs. They could be subject to a pullback, and they might be able to give us some plays. Just because a stock is not going into a major correction does not mean you cannot make money off of it. You can profit to the downside, like when a stock becomes extended. Or, if it is a weak stock that has rallied back to a resistance level, you can play it back down as it falls back and tries to base further. We can take advantage of those moves. You have to be more nimble to do so, but it does not mean you cannot bank 40-50% gain on a put option on those moves. You often only need a three-point move or so to make that kind of money on those stocks, and I would hate to turn that down.

We will be looking for those, and maybe some stocks that are extended, weak, and ready to pull back. We will also look for stocks that have already been pulled back or have been basing during this period and are ready to break higher. Many stocks are extended right now, so the upside is kind of picked over, but we will still find some. Then as the market pulls back (if it does to start to week), we can see what stocks end up in good position for us to buy into after they hold a test. Of course that is all predicated upon the lack of any change in the status quo that knocks the bid out of the market. There are so many political and global issues out there, that we will have to see what the weekend brings. However, based upon what we saw last week, investors were more than ready to buy. Every time they had the opportunity, the bid was there under the market. Have a great weekend.


Support and Resistance

NASDAQ: Closed at 2367.66
Resistance:
2324-2370 is a range of resistance from early 2008
2382-2395 from 2008
2412-2415 represents a series of peaks and lows in 2007, 2008
2453 is the August 2008 peak

Support:
2320 to 2326.28 is the January high
2319 from the September 2008 peak
The 10 day EMA at 2325
2292 is a low from January 2008
2273 to 2282 marks bottom of January 2010 lateral peak
2275 C 2278 from the February 2008 and April 2008 lows
The 50 day EMA at 2249
2245 from July 2008 through 2260 from late 2005.
2210 (from September 2008) to 2212 (the July 2009 closing low)
2205 is the November 2009 peak
2191 is the October 2009 peak
2177 is a low from March 2008
2169 is the March 2008 closing low (double bottom)
2168 is the September 2009, intraday peak
2167 from the July 2008 intraday low
2155 is the March 2008 intraday low
2143 is the October 2009 range low
2099 is the mid-September 2008 closing low
The 200 day SMA at 2085
2070 is the September 2008 intraday low
2060 is the August peak
2048 is the early October 2009 closing low
2015 from an early August 2008 peak


S&P 500: Closed at 1149.99
Resistance:
1151 is the January 2010 peak
1156 is the Sept 2008 low
1185 from late September 2008
1200 from the July 2008 low

Support:
1133 from a September 2008 intraday low
Bottom of the January 2010 consolidation 1131 to 1136
The 10 day EMA at 1135
1119 is the early December intraday high
1114 is the November 2009 peak is breaking
The 50 day EMA at 1111
1106 is the September 2008 low
1101 is the October 2009 high
1084 to 1080 (September 2009 peak)
1078 is the October range low
1070 is the late September 2009 peak
The 200 day SMA at 1045
1044 is the October 2008 intraday high
The August peak at 1040
The early October 2009 closing low at 1025
The early August intraday peak at 1018
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low


Dow: Closed at 10,624.69
Resistance:
10,730 is the January 2010 peak
10,963 is the July 2008 low

Support:
10,609 from the Mid-September 2008 interim low
10,496 is the November 2009 high
The 50 day EMA at 10,366
10,365 is the late September 2008 low
10,285 is the late December consolidation peak
10,120 is the October 2009 peak
9829 is the September 2008 closing high
9918 is the September 2008 peak
9855 is the early September peak in its lateral range
9835 is the late September 2009 peak
The 200 day SMA at 9726
9654 is the November 2008 high
9625 is the October 2008 closing high
9620 is the August 2009 peak
9430 is the early October low
9387 is the mid-October peak


Economic Calendar

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

March 12 - Friday
Retail Sales, February (08:30): 0.3% actual versus -0.2% expected, 0.1% prior (revised from 0.5%)
Retail Sales ex-auto, February (08:30): 0.8% actual versus 0.1% expected, 0.5% prior (revised from 0.6%)
Michigan Sentiment, March (09:55): 72.5 actual versus 74.0 expected, 73.6 prior
Business Inventories, January (10:00): 0.0% actual versus 0.1% expected, -0.2% prior

March 15 - Monday
Empire Manufacturing, March (08:30): 21.45 expected, 24.91 prior
Net Long-Term TIC Fl, December (09:00): $50.0B expected, $63.3B prior
Capacity Utilization, February (09:15): 72.6% expected, 72.6% prior
Industrial Production, February (09:15): 0.0% expected, 0.9% prior

March 16 - Tuesday
Building Permits, February (08:30): 602K expected, 622K prior
Housing Starts, February (08:30): 570K expected, 591K prior
Import Prices ex-oil, February (08:30): 0.4% prior
Export Prices ex-ag., February (08:30): 0.7% prior
FOMC Rate Decision, March 16 (14:15): 0.25% expected, 0.25% prior

March 17 - Wednesday
Core PPI, February (08:30): 0.1% expected, 0.3% prior
PPI, February (08:30): -0.2% expected, 1.4% prior
Crude Inventories, 03/13 (10:30): 1.43M prior

March 18 - Thursday
Core CPI, February (08:30): 0.1% expected, -0.1% prior
CPI, February (08:30): 0.1% expected, 0.2% prior
Initial Claims, 03/13 (08:30): 450K expected, 462K prior
Continuing Claims, 03/6 (08:30): 4500K expected, 4558K prior
Current Account Balance, Q4 (08:30): -$120.0B expected, -$108.0B prior
Leading Indicators, February (10:00): 0.1% expected, 0.3% prior
Philadelphia Fed, March (10:00): 18.0 expected, 17.6 prior

By: Jon Johnson, Editor
Copyright 2010 | All Rights Reserved

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

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