Bounce Monday or Black Monday?

SUMMARY:
- Not a Thursday-like rout, but another significant loss down to the next support level.
- Growth leading to the downside after leading the move upside. That is expected, but it is also something to watch closely.
- Jobs report is solid.
- Bounce Monday or Black Monday? Indices at logical support, in position to bounce: now it depends upon the ECB and if there is a 'phase 2' in the bailout plan.
- Have to watch the February low for the indices and the bond market for the longer term impact WHILE we play what the market is telling us.

Stocks sell, but after Thursday Friday seemed like nothing.

It was a week for the record books and one to tell the grandkids about. Trading glitches hit on Thursday on top of concerns about what is happening in Greece and the EU in general. On Friday the futures were up a bit as the jobs report was better than expected with 390K jobs versus 187K. The prior two months were written higher as well. The unemployment rate bumped up to 9.9% as more people came into the jobs market looking for work. More people who came into the workforce got jobs than did not, so that is a positive. The average workweek also ticked up another tenth of an hour for the third month in a row. There are positives, and the market was trying to put on the best face it could with the early move higher by the futures. Once the market opened, however, it could not overcome the continuing worries about Greece, the EU, and the US system.

If there was an electronic problem yesterday that cascaded upon itself, then that put in a bit of concern with trading. It was not just the fact that that bids were lower coming in; recall there were weird upside spikes as well on AAPL, BID, and other stocks. It was not just the downside seeking the lowest bid by electronic trades. The software was turned on its head, and that created concern about the market and whether the reads could be trusted on Friday. As it turned out, everything worked just fine. The markets just lost ground on the day. It was not a total rout, although there were quite a few downside reads that were beyond anything seen of late. NASDAQ lost 54 points, down 2.3%. The Dow -1.3%, SP500 -12.5%, SOX -1.6, SP600 -2.8, and the NASDAQ 100 -2.34. The losses were concentrated in the growth areas, and they were not minuscule losses. Thus it is not a good read with respect to the US economy. Remember, the growth sectors led the market to the upside with the small cap SP600 doing most of the heavy lifting. Now they are giving it back harder than the others. While that is expected given they are more volatile and since it is a growth area, I want to watch that. If growth turns down sharply and breaks through its support levels, that does not signal good things for the US economy down the road (even though things look good right now based on the reports coming in).

The technical key on Friday was that SP500, NASDAQ, and the SOX all hit the 200 day EMA on the low and they held for the second day in a row. You can even throw the NASDAQ 100 in. It performed similarly with the test of the 200 day EMA intraday and then the bounce off that level. That is a point you would expect it to bounce. That is a logical support level given that many of them have broken that January peak. The next logical level is the 200 day EMA that happens to be coincident with the late-2009 lateral consolidation range. The SP500 is poised to bounce and try to test that January peak or better, but there has been a terribly sharp selloff. It broke through important levels such as the January peak. It is holding at an important level at the 200 day EMA, so it is in position for a relief bounce up to the January peak at 1150. Since it closed at 1110, that is a substantial relief bounce. Whether we get it will depend on what the ECB does this weekend. If it announces that it will follow quantitative measures as was done in the US in 2008 (i.e. buying mortgages and other securities to keep rates low and create a market to support banks and its financial system) then we will definitely get a rebound. That is what the market is looking for. If we do not get it, then we could have a further test down toward the February lows even lower than that. Things could get messy. When there is a selling cascade to end a week with a low close on a Friday, there is often a lower close on Monday and/or Tuesday before there is a reversal and rebound. There is talk of a Black Monday or a Black Tuesday, but we will have to see. I am not convinced that will be the case. Frankly, if the indices come to the February low, that is not any Black Monday or Black Tuesday. It is not that bad; it is really a standard correction after such a strong move upside.

The bottom line is that the market is not finished with this correction. It may get a relief bounce on Monday or Tuesday if the ECB does something to prove it is truly interested in stopping the Greece problem. If not, we still probably have more correcting to go because it was a strong move to the upside that has not corrected much along the way. The key point now is no longer the January peak. I am now looking at the February low because there is a serious issue if the market makes a lower low here. It could hold this level, bounce, and come back to 1150 and roll over again. Then there would be the familiar head and shoulders pattern. Over such a broad time period as that would be, and given the strong move up, that would likely lead to more downside. With a head and shoulders pattern, however, they set up so many times and then pay no mind to it. Again, this has been a long run higher. The ball game is a bit different this time, but near term the market is set for a bounce if it gets the right news. If not, there will be more selling. Either way, we are likely to continue this correction and downside move that will eventually turn into a lateral move if everything holds, i.e., the ECB does what some consider to be the right thing it may not be and goes into quantitative easing.

Looking at an intraday chart, the action was not as wickedly severe as it was on Thursday. The market started off higher, quickly sold off, and it hit session lows mid-morning. It recovered into lunch and then did not have the strength to move higher. It never made it back to the morning high. When that happened, it had lost its juice for the day, but it did not break down. That was a positive. Again, it held above the 200 day EMA after the bounce off it earlier in the day. The late bump higher in the last hour tried to help, but it did not change anything. We still have a market that was beaten down hard but has held at the next logical support level. It is poised to move up or down depending on what news comes out over the weekend or on Monday morning.


OTHER MARKETS.

Dollar. The dollar surged during the week against the Euro and most other currencies, but it lost a bit of ground on Friday (1.2732 Euros versus 1.2615 Thursday). It is worth noting that the dollar-to-euro ratio was near 1.5 just a month ago. You do not see moves like this in the course of a month. You do not see them in the course of a year or even two years. These are incredible moves of course brought about by very palpable fears in the EU. There is nothing wrong the dollar chart other than it is over baked in the near term and rising much too high. When there are such surges, there tend to be moves back down. I do not think it will cause any trouble for the dollar because there is nothing in the picture now to change its reason for moving higher. If the ECB says it will engage in some type of quantitative easing over the weekend, that could change the situation and push the dollar back down in a test of this move. That would not be anything unusual. A test after such a strong breakout is normal, and it would happen with the dollar as well. Markets tend to react the same way whether they are stocks or currencies or what have you. The interesting thing about whether the ECB would engage in quantitative easing goes directly to its mandate. It does not try to balance inflation with maximum growth; its only mandate is to fight inflation. That is why Mr. Trichet is somewhat reluctant to engage in quantitative easing even though the threat really is deflation. I say that even as producer prices in the UK showed there could be inflation picking up. Mr. Trichet is in a difficult situation right now, and I would not want his job.

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Oil. Oil was weak yet again, and it broke below the 200 day EMA that many technicians were looking to hold oil up ($75.35, -1.76). Oil has dumped lower this past week on worries of less global demand due to problems in Europe and comments about the economic bubble in China. One prominent Chinese investor said he thought real estate was going to be a bubble near term, and it would be "raining dirt" in China. I am not exactly sure what that means, but I think the gist of it is that there is a bubble, and it is not going to end well. Half of the office space in Beijing is empty, prices are still rising, and speculation is running rampant in the areas outside of Beijing. You can see there is a bubble, and we are going to see serious issues with all of the markets once it collapses. The US will be the strongest economy at that point, and we are pretty fragile as it is with our recovery. Can we withstand it? We will have to see. Interesting times, indeed so goes the Chinese curse. One of the Chinese curses now is that it has had such a strong economy and has a lot of bubbles. We could have trouble when they start popping.

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Bonds. Bonds actually sold back somewhat on Friday in the US. They spiked for about a month straight. After it broke down in early April it broke right back. The bond market in the US was telling us about the troubles in Europe. At the time it made no sense with the US economy improving and the Fed saying it would have to raise rates and otherwise end its quantitative easing. Bonds should have been selling, but they reversed and rallied sharply. Once again, the bond market was the accurate leader for the rest of us. On Friday the US 10 year closed at 3.42%. That yield was higher than 3.39% on Thursday, and that means t bonds sold. Bonds went from 3.8% into 3.3% in the blink of an eye all because of these issues in Europe. Just as with the other markets, if the ECB comes out with a plan for quantitative easing over the weekend, we could see an interim relief test as the market comes back and has to test this straight upshot when bonds reversed and broke their downtrend line.

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Gold. Gold did not do a lot on Friday according to the chart I am looking at, but the actual finish showed it moving up ($1,209, +12.00) It depends on what market you look at. If you look at the late close on Thursday, that would put gold up only $2.00. You can get confused by what market and what close you look at. The main point is that gold is holding above 1,200. It is bumping up against the prior high, and it may try to retrace ground, regroup, and then move higher. I see no reason gold would not continue to move higher unless the ECB does something near term that brings worries under control. Overall, gold still has upside pressure. It may test and correct near term like the dollar because they both had such strong runs over the past two weeks. Overall, the chart has set out a good base, it is breaking higher, and it looks positive for the upside.

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TECHNICAL PICTURE

INTERNALS

Breadth. The internals were impressive all week. Breadth on NASDAQ was -3.5:1. Of course it was 6.8:1 to the downside on Thursday. On the NASDAQ, downside was -2.3:1 versus -10:1 on Thursday. 10:1 is what you would call excessive.

Volume. Volume fell to 4B shares on NASDAQ. Still massively high trade. Volume was flat on the NYSE at 2.1B shares. No wallflower there either. There is still heavy selling of stocks, and the market is under distribution. At some point it gets to a level where, even though they are selling on high volume, the high volume starts to be your friend. If it comes down to an important level and there is high volume and it is holding, that shows the buyers are stepping in and supporting a stock or index at that level.


CHARTS

SP500. SP500 undercut the 200 day EMA on Thursday but rebounded. It sold further on Thursday, but it held the 200 day EMA and rebounded, but look how strong the volume remained on the NYSE. There is something keeping the index here, and it is basically a "look and see" out to next week. We will see whether the ECB takes actions that investors consider beneficial. If they do not, then this support might evaporate at this level. But we see this on individual stocks, so there are buyers here at support who are propping it up at the 200 day EMA.

NASDAQ. NASDAQ is in the same technical situation as the SP500. There is the reach down toward the 200 day EMA and the recovery. Still above the February low, but now it is below the January peak as well. It is in position to bounce up and test the 2325 level that is the January peak. After that it might come back down and test the February low. As noted with the SP500, that will be the key move. If it makes a lower low after this pretty sharp selloff in January and February, you have the makings of a potentially much larger drop.

SOX. SOX also held the 200 day EMA and bounced. Its January peak becomes key as it make it is bounce. Same situation, same technical pattern. Its growth is showing a similar problem though as the more staid and stodgy SP500.

SP600. SP600 is another growth area, and it lost 2.8%. It did not have the same snap back, but is not in the same problems that the other three indices find themselves in, i.e. down at the 200 day EMA. SP600 is still well above that level; indeed, it is holding above the January peak. That puts it in a whole different technical ballgame. In other words, it is in a much stronger position. It tapped that level on Thursday and recovered. This is still a key point for the small caps as they test next week. They are in a perfect position to bounce as well. They are not down at the 200 day EMA, but they are at the January peak. Perfect position to bounce back up and test this range anywhere from mid March up to maybe the early April consolidation levels.


LEADERSHIP

Metals. Thursday FCX reached lower and bounced, and I did not know how much to discount this move lower. On Friday it moved lower again and undercut the January and February lows, but it rebounded to hold this level again. That shows that the Thursday move was not just in the weeds that shows the buyers are stepping in. After it sold off in its range, it is holding the same support level and is ready to bounce as well. BHP is the same story. It sold off hard, and it undercut the previous low in February in its range (and even the one way back in November and December of 2009). Then it rebounded and held that level on the close on Friday. It is in position to make a run back up and its range as well. This goes on for others. We have some downside plays we made money off of. X has come down to the 200 day EMA just as the indices have. It is a very similar pattern, and it is holding and bouncing off that level. We have taken some gain. If it continues higher, we will close it, but it gives you a chance to play a move up to the 67.5 range. If you look at the XME, one of the ETFs, it is a similar story. It has come down to a support level. You can see the old peaks and areas that it has tried to hold in the past, and it is bouncing off of that level as well as the rising 200 day EMA. We made good money on this. If it starts to break higher, we have to close that one and maybe play to the upside. There are four potential metals plays that are basic rolling-in-the-range type of plays that you can play for a bounce if the market gives a bounce to the upside.

Technology. Technology has been a leader of late, and now it is under pressure. AAPL rebounded nicely on Thursday, but Friday it was down because NOK is suing AAPL for patent infringement with respect to the iPhone and iPad. AAPL has been beating the pants off of NOK, and I wonder if NOK will even survive. It is trying to make a survival move in suing a competitor. That is when you know they are in trouble, when they start lashing out with lawsuits. If you look at NOK's chart, it is different from AAPL. Its earnings faded when it announced, and it gapped sharply lower in a breakaway gap. In fact, it looks like something that rhymes with "gap," but it is holding above an old low back in March of 2009. Of course that was the selloff low. It has done absolutely nothing during that period a nowhere stock going nowhere in a hurry. AKAM is holding up nicely and filling the gap. It looks like it might be ready to move if the market is ready to move. Then you have a stock like SNDK. It sold down more but it held the 50 day EMA and still looks like it wants to move up. GLW is showing the same kind of pattern the metals are. We made money to the downside on this one. If it holds and starts to bounce, we close it out on the downside, take the rest of the gain, and then play it for a move to the upside. That is a pattern we will see a lot of after such a rapid decline.

Energy. Energy is getting clobbered. The big multinationals such as CVX were holding up while many of the smaller or independents were selling off. Now even the larger multinationals are cracking and breaking down at this point.

Retail. Retail has been a leader, but it is under pressure right now. BBBY broke below its 50 day EMA on Thursday. It could not recover it that day or on Friday. It is at support so it could make a bounce, but it does not have the kind of trading range were it sold off and is ready to bounce. It has not set up that kind of pattern yet. You could argue it is an ABCD, but it would be a thin argument. PNRA broke its uptrend. It was trending higher, and then it smacked right through it over a week ago. The trend is broken, and it will come up and kiss that trend. It will make the bounce up, and the nimble traders can trade this move back up to the trendline. You want to play it if it breaks down from there. There are two possible plays in opposite directions. When it gets up to this trendline or resistance level, that is where it will probably have trouble. ANN reported good earnings the other day and gapped higher, but it could not make a definitive new high. MACD was unable to make a new high as price did, and it rolled down immediately after reporting earnings. The tank is empty, and the question is whether it will hold just above the 50 day EMA. It is still in its uptrend, but it is in a fight to keep the uptrend alive.

Financial. GS did not have a great week, although it finished up on Friday. It is below a key resistance level, and it gapped down below that level unable to recover it on the rebound. It does not look good. JPM is one that has been a foil to GS, but it has sold off as well. It made us money to the downside, and I still think it could come lower toward the February low and make a lot more money for us down at 37 or so. It closed at almost 41. That would put more bling in the account if there is a downside move to start Monday. WFC is struggling. It had a double top and broke lower, coming back to kiss the 50 day EMA that it broke on Thursday. It may be coming down, but there is not a lot of room. There is a lot of support at the 28.5 level, and we would not want to short WFC right here. Even the regional banks were not doing well. They were some of the strong ones as the market moved up. EWBC broke its short term trend as well as the 50 day EMA. Looks to be heading lower to test down to the consolidation range in late 2009.

Leadership is down across the board, but there are plays out there to the upside if the market gets the news it wants. It is poised to make a bounce, and if they can bounce, there are many stocks (metals, techs) that are ready to make a bounce higher. We can play them to the upside and make money near term.


THE ECONOMY

Please view the Economy video at the following link:

TO VIEW THE ECONOMY CLICK THE FOLLOWING LINK:

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


THE MARKET

MARKET SENTIMENT

The VIX was up 8 points on Friday, and that is another 25% move. It basically took out the high hit on all of the Thursday worry. Even though the market was not totally slaughtered with respect to losses although they were not small the VIX still shot higher. Looking at a weekly chart, it definitely has broken its downtrend. It has surpassed the late 2009 and the January-February 2010 spikes. Those were just road bumps in the overall rally off the late 2008 and early 2009 lows. This is a significant trend break, so there is obviously something more serious ongoing now. The correction has already taken out the February peak on VIX, but the SP500 has not taken out the February lows. That tells us there is likely more selling to come to at least test these levels. That will be the next key, and that is why I was focusing on it earlier. Without a doubt, volatility is spiking, and that is what one would expect. Options prices have gotten very expensive. Looking at the volatility, it has even taken out the interim highs in 2008. The next peak is in early 2009 this is where the market bottomed and started back up. Again, this is not your ordinary selloff. This is something more severe and somewhat expected after the type of run we saw in the stock market.

VIX: 40.95; +8.15
VXN: 41.52; +10.27
VXO: 38.94; +7.82

Put/Call Ratio (CBOE): 1.22; +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: 56.0% up from 54.0%. Highest on this move and it coincided with problems elsewhere. Still below the 60% to 65% considered bearish, but again, with the other factors it was high enough. Many more bulls than in February, but they are not running away with the market and thus the market continues to rally. Not that this is a 'Green Zone' of safety; it is a level that can still spark a selloff as seen early this year. This move started at a low of 35.6% in February, the lowest it has been since July 2009. Over the 35% threshold level below suggesting 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: 18.7%. Rising from 18.0% as the bears were worried more even as bulls turned more bullish. A pretty sharp decline in bears, well off the 27.8% level on the high of this leg in February and heading toward the 15% level that is bearish for the market. Over 35% is considered bullish for the market; definitely at the lower end of the scale. Heading back toward the 16%ish on the lows of the 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: -54 points (-2.33%) to close at 2265.64
Volume: 4.054B (-9.05%)

Up Volume: 371.699M (+101.473M)
Down Volume: 3.728B (-456.29M)

A/D and Hi/Lo: Decliners led 3.45 to 1
Previous Session: Decliners led 6.83 to 1

New Highs: 19 (-44)
New Lows: 85 (-92)

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: -17.27 points (-1.53%) to close at 1110.88
NYSE Volume: 2.146B (+0.11%)

Up Volume: 358.629M (+250.291M)
Down Volume: 2.047B (-421.429M)

A/D and Hi/Lo: Decliners led 2.33 to 1
Previous Session: Decliners led 10.1 to 1

New Highs: 78 (-74)
New Lows: 98 (-346)

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

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


DJ30

Stats: -139.89 points (-1.33%) to close at 10380.43
Volume DJ30: 428M shares Friday versus 495M shares Thursday.

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


MONDAY

Next week starts anew, but we have the same old problems confronting us: What happens in Greece and the EU juxtaposed against the US economic strength. There are not too many reports out next week that will make a lot of difference to the market. There will be the usual initial claims, but that is on Thursday. On Friday there are some sentiment claims as well as retail sales. That will be something to take into consideration and there will be a market impact, but that is later in the week. Again, what will push the market is what the ECB does (if anything) over the weekend or on Monday. Stocks are poised to make a move higher. SOX, SP500, SP600, and NASDAQ are all sitting above a logical support level and are in position to bounce after a sharp selloff. It is just whether they get the trigger to make the move to the upside. If they do, we will definitely have stocks we can play on the bounce. We can let other stocks that we have upside recover (we have a few left) and use that as an exit point. That is the risk we took on Friday closing stocks that did not recover a support level. If there is more selling on Monday, then the bottom would drop out on them. We run the risk that they could bounce up on Monday, but I was willing to take that risk given the alternative.

After we get a bounce higher and it could last a couple of days then we may get a turn back down when the indices reach the key levels I was talking about. That would be up at the January peak on NASDAQ, the SP500, and even the SOX. Once it hits those levels, it may turn back down and sell. If it starts to stall, we will put some downside plays on the report again to take advantage of them after they have bounced back up just as the indices have to test a resistance level and fall. You could play the SP500 or the NASDAQ to the downside at that point with a variety of plays and tools: The SQQQ, the QID, QQQQ, or short the NASDAQ 100. There are many things you could do, and many different things to do with the other indices as well. Not the mention individual stocks that would be ready to roll over that have bounced back up to resistance. If we get the move higher, that is great and we can use it as I have outlined. If we do not get that and the market moves lower... then it moves lower. It is not in a position to short further right now because it has sold down to a support level. If it breaks that level and makes a quick run down to the February lows, that is where the next key is. That is where it gets interesting once more to see if there is a bounce and recovery. That would be the telltale point for the market. If the indices break below that level, that would spell a lot of trouble to the downside. But we have to be careful not to get sucked into the old idea that once they break a level that they are necessarily heading lower. How many times do you see a stock breech another level but then recover it and move back upside? That is what we look for in reversal plays like in BHP. Look how it broke through support on Thursday, broke through it again on Friday, but it has recovered it. If it continues upside, it has a high probably for a move to the upside. Just because SP500 or NASDAQ would break below the February low, it is not a guarantee it will continue downside. Indeed, we should watch and be patient. We let that move play out and they will typically come up and test. They will either test and fail, or they will recover and move higher. Given the downside to this point, you would anticipate that if they got down to the February low and broke it, that they would recover because this is a massive drop. It takes something very serious to continue that kind of drop. That would mean the investors would have turned against the US economy's recovery and anticipate that the recovery would fail and turn back down later in the summer.

If you recall, back in the spring when there were signs of recovery, I said that it looked like we would have a recovery. There was no doubt we were having a recovery off of the prior lows, but our worry would be at the end of the summer (and now I have to say even into the early part of fall since the recovery has been strong). We have to be worried if the market breaks down below the February lows and recovers near term but then gives it back up. That would be very important as an indication to what the US economy would do down the road and that would be following Europe. That is not a good prognosis, but we are not there yet. Remember, there is still plenty of momentum in the US economy right now. We saw it with the numbers all week long, including the just jobs report on Friday. There is momentum to keep things going for a couple of quarters, but the market will lead the economy. If it is going to turn down, the market will lead, and the bond market as well. We need to keep an eye on the bond market and what it does. I have been watching the TIP chart, and it broke its trend. Now we will see what it does after it tests. Bonds and stocks lead, and bonds are typically right. Stocks eventually come around and are right, but bonds are the ones to take our first lead from.

The market still has a lot of work to do, and it is still in trouble right now. It is still in a normal correction however, and we do not want to jump to conclusions. We made a lot of gain on the upside. We helped ourselves a lot by taking a lot of it off the table before and during the earnings season. With new positions we took partials, and if they have not panned out (some of them have not on the selling) then we do not get hurt too badly and get rid of them. We have made a lot of downside gain as well. I think we will make more downside gain after a possible interim bounce that we look to make some upside gain on. We are still in a correction and have to play accordingly. At this point, it has not shown that it will be anything worse than just a correction, so we just watch the signposts for the market. We take what the market gives, and if it looks ugly, we take to the downside again. We just play the market and do not worry as much about what happens. Yes, it is worrisome out there, but we make money in the market to help insulate us from what happens down the road. I hope you have been buying gold. I cautioned you to put some of your money in hard assets, and gold has worked out well. Take some of your profit and put it there, but not right now. Let it come back. It has hit 1,200 and will probably test. After it tests, we will probably be buying more options on the GLD. That would be a good time to buy more of the hard stuff as well.

These are interesting times, but we have made a lot of money. We will continue to make good money if we keep our heads on and are smart. We are all smart, and you are ahead of the game by being here. You are going to make money just as you have been making money, and that is how you stay ahead of these trying times. Indeed, we will have trying times to come, I am afraid. Again, keep your head, do what the market tells you to do, and you will come out ahead. Have a great weekend.


Support and Resistance

NASDAQ: Closed at 2265.64
Resistance:

2275 - 2278 from the February 2008 and April 2008 lows
2273 to 2282 marks bottom of January 2010 lateral peak
2292 is a low from January 2008
2319 from the September 2008 peak
2320 to 2326.28 is the January 2010 high
2324-2370 is a range of resistance from early 2008
2382-2395 from 2008
The 50 day EMA at 2401
2412-2415 represents a series of peaks and lows in 2007, 2008
2453 is the August 2008 peak
2535 is the April 2010 peak
2546 from July 2007, February 2007, November 2007: a level touched many times as a high and low.
2725-2730 from the July 2007 and May 2009 peaks

Support:
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
The 200 day SMA at 2205
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
2100 is the February 2010 low


S&P 500: Closed at 1110.88
Resistance:
1114 is the November 2009 peak
1119 is the early December intraday high
Bottom of the January 2010 consolidation 1131 to 1136
1133 from a September 2008 intraday low
1151 is the January 2010 peak
1156 is the Sept 2008 low
The 50 day EMA at 1167
1170 is the prior March 2010 high
1181 is the April selloff low
1185 from late September 2008
1200 from the July 2008 low
1214 is the first April peak, 1220 is the second high.
1240 is the key July 2008 interim low.
1293 from a March 2008 low
1298 is the November 2008 rebound high that made a lower high. Also part of the Q1 2008 double bottom.

Support:
1106 is the September 2008 low
1101 is the October 2009 high
The 200 day SMA at 1096
1084 to 1080 (September 2009 peak)
1078 is the October range low
1070 is the late September 2009 peak
1044 is the October 2008 intraday high AND the February 2010 low


Dow: Closed at 10,380.43
Resistance:
10,609 from the Mid-September 2008 interim low
10,730 is the January 2010 peak
The 50 day EMA at 10,826
10,963 is the July 2008 low
11,100 from the 7-08 low
11,734 from 11-98 peak

Support:
10,496 is the November 2009 high
10,365 is the late September 2008 low
10,285 is the late December consolidation peak
The 200 day SMA at 10,192
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 AND the February 2010 low


Economic Calendar

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

May 03 - Monday
Personal Income, March (08:30): 0.3% actual versus 0.3% expected, 0.1% prior (revised from 0.0%)
Personal Spending, March (08:30): 0.6% actual versus 0.6% expected, 0.5% prior (revised from 0.3%)
PCE Prices - Core, March (08:30): 0.1% actual versus 0.1% expected, 0.0% prior
Construction Spendin, March (10:00): 0.2% actual versus -0.3% expected, -2.1% prior (revised from -1.3%)
ISM Index, April (10:00): 60.4 actual versus 60.0 expected, 59.6 prior
Auto Sales, April (14:00): 4.2M expected, 4.3M prior
Truck Sales, April (14:00): 4.6M expected, 4.8M prior

May 04 - Tuesday
Factory Orders, March (10:00): 1.3% actual versus -0.2% expected, 1.3% prior (revised from 0.6%)
Pending Home Sales, March (10:00): 5.3% actual versus 5.0% expected,

May 05 - Wednesday
ADP Employment Change, April (08:15): 32K actual versus 30K expected, 19K prior (revised from -23K)
ISM Services, April (10:00): 55.4 actual versus 56.1 expected, 55.4 prior (no revisions)
Crude Inventories, 05/01 (10:30): +2.75M actual versus 1.96M prior

May 06 - Thursday
Continuing Claims, 04/24 (08:30): 4594K actual versus 4600K expected, 4653K prior (revised from 4645K)
Initial Claims, 05/01 (08:30): 444K actual versus 440K expected, 451K prior (revised from 448K)
Productivity-Prel, Q1 (08:30): 3.6% actual versus 2.4% expected, 6.3% prior (revised from 6.9%)
Unit Labor Costs, Q1 (08:30): -1.6% actual versus -0.5% expected, -5.6% prior (revised from -5.9%)

May 07 - Friday
Unemployment Rate, April (08:30): 9.9% actual versus 9.7% expected, 9.7% prior
Nonfarm Payrolls, April (08:30): 290K actual versus 187K expected, 230K prior (revised from 162K)
Average Workweek, April (08:30): 34.1 actual versus 34.0 expected, 34.0 prior
Hourly Earnings, April (08:30): 0.0% actual versus 0.1% expected, -0.1% prior
Consumer Credit, March (15:00): $2.0B actual versus -$3.9B expected, -$6.2B prior (revised from -$11.5B)

May 11 - Tuesday
Wholesale Inventories, March (10:00): 0.5% expected, 0.6% prior

May 12 - Wednesday
Trade Balance, March (08:30): -$40.0B expected, -$39.7B prior
Crude Inventories, 05/08 (10:30): 2.75M prior
Treasury Budget, April (14:00): -$20.0B expected, -$20.9B prior

May 13 - Thursday
Initial Claims, 05/08 (08:30): 440K expected, 444K prior
Continuing Claims, 05/08 (08:30): 4590K expected, 4594K prior
Export Prices ex-ag., April (08:30): 0.6% prior
Import Prices ex-oil, April (08:30): 0.2% prior

May 14 - Friday
Retail Sales, April (08:30): 0.2% expected, 1.9% prior
Retail Sales ex-auto, April (08:30): 0.5% expected, 0.9% prior
Capacity Utilization, April (09:15): 73.8% expected, 73.2% prior
Industrial Production, April (09:15): 0.6% expected, 0.1% prior
Michigan Sentiment, May (09:55): 73.5 expected, 72.2 prior
Business Inventories, March (10:00): 0.4% expected, 0.5% 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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