Sunday, August 15, 2010

Retail Sales Decent, But Not Impressive

- Molasses slow session and low volume cap a week of downside.
- With earnings over, market looked at the economic data it ignored during the rally, and it didn't like what it saw.
- A down week but bigger picture key indices such as SP500 are simply testing back in their bases/trading ranges.
- Retail sales decent, but not impressive.
- CPI posts first gain in four months.
- EU GDP jumps and market, fearing ECB inflation fighting, sells back yet again.
- Back in the base once more, and the pullback provides opportunity.

Market gets a dose of reality after a heady earnings run.

I styled it the Captain Ron market where stocks seemed to find a way to rally during earnings season despite what was occurring outside the current earnings environment.

Once earnings ended, however, investors were forced to take a harder look at the economic data. The US news is simply not positive, leaving many to wonder if this is a slow patch or a renewed slow down in the economy.

With those questions investors pulled the plug on more buying, preferring to take profits instead. As with the question about the economy as a slow patch or slow down, investors are left wondering if last week's action was merely a profit taking pullback or a more nefarious selloff.

For now, however, the indices, particularly the SP500, are still in their bases, simply fading back from the January/June resistance that they were just not quite ready to break through. SP500 looks as if it wants to try and hold, and if it does, then the basing remains in place and we continue to play the same way, i.e. playing a trading range using stocks that are ready to move with the range.








VIX: 26.24; +0.51
VXN: 28.07; +0.44
VXO: 26.68; +0.95

Put/Call Ratio (CBOE): 1; 0

Bulls versus Bears:

Back to more bulls than bears, the 'normal' state of affairs for the market. This after a crossover and then a tie. A rare crossover a month back and it was, as s typical, a bullish scenario.

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

Bulls: 41.7% versus 38.9%. Still on the rise from that 35.6% hit three weeks back when the bulls and bears crossed over. Now they are heading in opposite directions, of course just as the market rolled over. The high on the last leg was 56.0% after starting at 35.6% on the low in February, the lowest it has been since July 2009 . . . until this last leg. 35% is the threshold level suggesting bullishness. 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: 27.5%. The bears are suddenly on the endangered species list, falling from 33.3% last week and 35.6% just a few weeks before. Hit 18.7% on the low. Hit a high of 27.8% level on the prior leg in February. For reference, cracking above the 35% threshold considered bullish. Hit a high on the prior run at 47.2%. For more reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.


Stats: -16.79 points (-0.77%) to close at 2173.48
Volume: 1.576B (-27.03%)

Up Volume: 420.03M (-317.649M)
Down Volume: 1.108B (-317.032M)

A/D and Hi/Lo: Decliners led 2.26 to 1
Previous Session: Decliners led 1.48 to 1

New Highs: 17 (0)
New Lows: 119 (-35)





Stats: -4.36 points (-0.4%) to close at 1079.25
NYSE Volume: 870.055M (-13.54%)

Up Volume: 353.264M (-24.777M)
Down Volume: 505.881M (-110.287M)

A/D and Hi/Lo: Decliners led 1.16 to 1
Previous Session: Decliners led 1.39 to 1

New Highs: 236 (+45)
New Lows: 93 (-19)




Stats: -16.8 points (-0.16%) to close at 10303.15
Volume DJ30: 151M shares Friday versus 221M shares Thursday.


Support and Resistance

NASDAQ: Closed at 2173.48

2177 is a low from March 2008
2184 is the June gap bottom side.
2185 to 2195 represent support points for years: December 2004 peak, July to October 2005 consolidation, January, March and July 2008 lows, and October 2009 peak.
2205 is the November 2009 peak 2210 (from September 2008) to 2212 (the July 2009 closing low)
2221 is the gap down upside point from June.
2245 from July 2008 through 2260 from late 2005.
The 50 day EMA at 2250
The 200 day SMA at 2268
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
2341 is the June 2010 peak
2324-2370 is a range of resistance from early 2008
2382-2395 from 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
2140 from the May and June 2010 lows
2100 is the February 2010 low
2061 is the July 2010 low
2024 from November 2009
2020 to 2005 from the Q4 2009 peaks

S&P 500: Closed at 1079.25
1084 to 1080 (September 2009 peak)
The 50 day EMA at 1100
1101 is the October 2009 high and the recent May and June 2010 interim peaks
1106 is the September 2008 low
1114 is the November 2009 peak
The 200 day SMA at 1116
1119 is the early December intraday high
1131 is the June 2010 peak
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
1170 is the prior March 2010 high
1174 is the May 2010 high
1181 is the April selloff low
1185 from late September 2008


1078 is the October range low
1070 is the late September 2009 peak as well as several other peaks and valleys even in 2010
1065 is the May flash crash intraday low.
1044 is the October 2008 intraday high AND the February 2010 low
1040 is the May and June 2010 low
1020 is the bottom of the late summer 2009 consolidation
946 from June 2009

Dow: Closed at 10,303.15
10,365 is the late September 2008 low
The 50 day EMA at 10,386
The 200 day SMA at 10,440
10,496 is the November 2009 high
10,594 is the June 2010 peak
10,609 from the Mid-September 2008 interim low
10,730 is the January 2010 peak
10,920 is the recent May high
10,963 is the July 2008 low
11,100 from the 7-08 low
11,205 is the April closing high
11,734 from 11-98 peak

10,285 is the late December consolidation peak
10,260 from the May and June 2010 interim peaks
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
9774 is the May 2010 intraday low
9325 is a late 2008 interim peak
9034 from early 2009 peaks

Economic Calendar

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

August 10 - Tuesday
Productivity-Prel, Q2 (08:30): -0.9% actual versus 0.1% expected, 3.9% prior (revised from 2.8%)
Unit Labor Costs, Q2 (08:30): 0.2% actual versus 1.4% expected, -3.7% prior (revised from -1.3%)
Wholesale Inventories, June (10:00): 0.1% actual versus 0.4% expected, 0.5% prior
FOMC Rate Decision, August 10 (14:15): 0.25% actual versus 0.25% expected, 0.25% prior

August 11 - Wednesday
Trade Balance, June (08:30): -$49.9B actual versus -$42.2B expected, -$42.0B prior (revised from -$42.3B)
Crude Inventories, 08/07 (10:30): -2.99M actual versus -2.78M prior
Treasury Budget, July (14:00): -$165.0B actual versus -$169.0B expected, -$180.7B prior

August 12 - Thursday
Initial Claims, 08/07 (08:30): 484K actual versus 465K expected, 482K prior (revised from 479K)
Continuing Claims, 07/31 (08:30): 4452K actual versus 4600K expected, 4570K prior (revised from 4452K)
Export Prices ex-ag., July (08:30): -0.2% actual versus -0.8% prior (revised from -0.2%)
Import Prices ex-oil, July (08:30): -0.3% actual versus -0.5% prior (revised from -0.6%)

August 13 - Friday
CPI, July (08:30): 0.3% actual versus 0.2% expected, -0.1% prior
Core CPI, July (08:30): 0.1% actual versus 0.1% expected, 0.2% prior
Retail Sales, July (08:30): 0.4% actual versus 0.5% expected, -0.3% prior (revised from -0.5%)
Retail Sales ex-auto, July (08:30compq): 0.2% actual versus 0.2% expected, -0.1% prior
Michigan Sentiment, August (09:55): 69.6 actual versus 70.0 expected, 67.80 prior
Business Inventories, June (10:00): 0.3% actual versus 0.2% expected, 0.2% prior (revised from 0.1%)

August 16 - Monday
NY Fed - Empire Manufacturing, August (08:30): 7.5 expected, 5.08 prior
Net Long-Term TIC Fl, May (09:00): $35.4B prior
NAHB Housing Market, August (10:00): 14 expected, 14 prior

August 17 - Tuesday
Housing Starts, July (08:30): 555K expected, 549K prior
Building Permits, July (08:30): 573K expected, 586K prior
PPI, July (08:30): 0.2% expected, -0.5% prior
Core PPI, July (08:30): 0.1% expected, 0.1% prior
Industrial Production, July (09:15): 0.6% expected, 0.1% prior
Capacity Utilization, July (09:15): 74.5% expected, 74.1% prior

August 18 - Wednesday
Crude Inventories, 08/14 (10:30): -2.99M prior

August 19 - Thursday
Initial Claims, 08/14 (08:30): 475K expected, 484K prior
Continuing Claims, 08/07 (08:30): 4500K expected, 4452K prior
Leading Indicators, July (10:00): 0.2% expected, -0.2% prior
Philadelphia Fed, August (10:00): 7.5 expected, 5.10 prior

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

Jon Johnson is the Editor of The Daily at

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