Market Surges for Fifth Straight Session

SUMMARY:

- Market surges for fifth straight session, providing the fireworks for the Fourth of July
- Modest gains early until ISM supercharges the session, and sellers dared not enter the fray.
- Investors realize that few earnings warnings mean a solid earnings season, and they spend the week playing catch-up.
- SP500 rallies to test the February peak, SOX testing its range.
- Bonds sell and gold fades, both expected if the economy strengthens, but why is the dollar still selling if times are getting better?
- ISM posts a solid rebound on the headline, but key components are still very disconcerting. China's PMI declined again.
- Michigan Sentiment declines more than expected.
- Cyclical stocks making the best moves.
- More
- Building gains ahead of earnings that are, as of this week, expected to rise again.
- Indices at a key point: test the rally and continue or fail at this resistance?

MARKET SUMMARY

Another strong session pushes SP500 to the February peak.

Much of the country is under a fireworks ban given the drought conditions. The market decided it would provide the fireworks for the Fourth of July celebration, rallying for five straight sessions to the upside. It was an even week of huge gains, with each session gaining over 1% or close to it. A double bottom off the 200 day EMA and above the March peak on the SP500 helped create the move, and it was fed by economic data all week. It was technically set make the move, and the data kept helping it along.

Early in the week Japanese production surged at the highest rate since 1953. Of course, it was at such a slow rate that it was bound to jump back. It could have posted almost any amount of gain and beat its highs over the past 40-50 years. There was some good data. The Chicago PMI came in better than expected. The ISM numbers on Friday came in much better than expected at 55.3 versus 51.1 expected. Very good news for the manufacturing sector that had been starting to contract in some regions of the country. It is a chicken or the egg scenario. The national number tends to lag the regionals rather than lead them. As I will discuss soon, some of the internals of that number were not very good. The market still took it as a positive, so you have to go with what the market says.

We also had the end of QE II along with the end of Q2. That no doubt played a role in the bounce as there was window dressing done after a big selloff. Earnings are also just around the corner and there have been very few warnings. That means we will have good earnings, and all of a sudden investors woke up. They realized that even though the economic numbers were not so good, the earnings are going to be good due to the lack of warnings. They started building some gains back in the stocks ahead of the actual numbers.

You could say that investors were somewhat playing catch-up with the realization that there were basically no earnings warnings and they better get into the stocks while prices are cheap before they surged to the upside. Are they going to be considered cheap now that we have had five days of rallying that pushed the SP500 right up to its February peak? As you recall, that was our high side on the estimates of how far this rally would run. I did not anticipate that there would be the catalyst of better economic data that would push it. Certainly if the data had not been this solid, the oversold bounce probably would have run out of gas somewhere around the early-March peak. But it got some extra juice and it made the run up to that February peak.

The SOX did not run to its February peak, but it rallied back up to a key level at the bottom support range of its former trading range. That puts it in an important area just as SP500 is at an important area (at a much higher level). Remember that the SOX led the move to the downside with an ugly three-week drop. It did not start to rally back with the rest of the market. It was not looking as strong. It was moving, but its moves were very modest. Not until Thursday and Friday did it get some power behind that rally, at least in terms of price gains. Thus it is now at a critical (but much lower) level than the SP500. What does this mean? Lagging to the upside and it was leading to the downside. In an inverse way it is leading again or it could be. If it fails here and turns over, it could be trouble for the rest of the market. Thus, even though the SOX is lower and does not seem to be leading this bounce, it is kind of leading the bounce in terms of not participating. Again, if it rolls over it could really be an anchor chain for the rest of the market.

Looking at the intraday action on Friday, the market was really going nowhere early. Futures were flat to lower, and then they started to move a bit higher but really were not making any new headway. That was something I kind of anticipated. Stocks had rallied well for four days, and a little weakness on Friday ahead of a three-day weekend was not too surprising. I thought there might be a little more upside we would use to sell with some afternoon selling. After all, stocks would have been up for five straight days. Ahead of a three-day weekend, you would think that some of the short-term players would start taking some profits. It never really happed. It looked like it would happen until that ISM report a half hour into the session that supercharged the upside.

You can see the blast higher on SP500 as that news came out. It went from 1322 up to almost 1330 in a five-minute bar. A tremendous surge and it did not stop. It kept moving higher the rest of the session. Sellers never wanted to get in front of the upside juggernaut. That was surprising given a three-day weekend and a five-day rally. One of the concerns is that volume was tepid. But, of course, it was ahead of a three-day weekend and it is summer. Volume will be tepid in that case. It was tepid all the way up the entire week. I cannot get too upset about the volume. Remember, this is just a relief rally, right? At least that is what we are calling it until it can prove otherwise. This is where it will prove otherwise or not.

That makes this a very important upcoming week. Will the market test (after five days you would expect it to), regroup, and then make a run at that February peak and late-May peak. Or is this the top? Does it roll over here and fall having built in earnings data and having built in a bit better economic data although still in a downtrend of bad news? That will be the important test ahead this week. We will be ready for it. We were ready for the upside even though I did not really believe in it. It has done better than I expected, but it is still within our expectations. We were able to profit nicely, taking a lot of nice gain ahead of the Fourth of July weekend on this rally. Even though I really do not think it will continue to a new breakout, we certainly utilized it to make some great money.

Outstanding 1%+ gains on the day. NASDAQ, +1.5%; SP500, +1.4%; Dow, +1.3%; SP600, +1.6%; SOX, +2.1%; NASDAQ 100, +1.5%. Interesting that NASDAQ 100 had been lagging the overall NASDAQ, meaning the large cap techs were lagging on the way up. They kind of picked up their pace on Friday. It will be interesting to see if they can continue this or if they start to slide back.


OTHER MARKETS

Dollar: 1.4527 versus 1.4511 Euro. Down slightly, but it was up premarket on the economic data. It was a down week for the dollar all around. As the stock market rallied the dollar declined. That goes back to the older pattern that we saw of a declining dollar leading to gains in the stock market. Note how, when the dollar started to rally in May, the stock market itself started to struggle. Almost to the day when the dollar bounced and rallied, the stock market started to fade. This past week when the dollar started to fade, the stock market rallied sharply. The dollar is still in this range that it has set up over the past two months. We will see if it can bounce off of the support it is at right now and what effect that has on the market overall.

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Bonds: 3.20% versus 3.17% 10 year US Treasury. Bonds sold off sharply last week. It was not long ago that the 10 year was trading well below 3%. Strong rally from April into May, then a consolidation, and then the rollover to end May. The dollar sold and bonds sold. Bonds should sell if the economy will improve. That makes sense. It also has the end of QE II as of Thursday, so the Fed will not buy as many bonds. That makes some sense as well. Bonds are struggling right now, and they are at a potential support level the initial high on the rebound, or the reversal of that long downtrend. That is where they are holding right now. That makes this a very important test for the bond market.

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Gold: $1,483.30, -19.50. Gold is breaking down. It tried to rally back. It put in a bear flag and it is breaking lower. Less than two months ago, gold was trading at $1,550. It has been a big turn.

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Oil: $94.79, -0.63. Oil struggled on Friday. On the week, it managed to bounce, and it bounced above where it was on the announcement of the release of 60M barrels from various strategic oil reserves including 30M from the US Oil Reserve. We had a bounce back up which would suggest that there may be some strength in the economies, even though we saw China and a lower PMI announcement on Friday.

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Let's review what these other markets are showing. We have bonds selling and gold fading. That is something that you would expect if the economy is strengthening. Regardless of what a lot of Phillips Curve economists think (such as Ben Bernanke), as an economy improves the inflation pressures actually decline as long as supply is allowed to meet demand. You would expect bonds to fall because there is more demand for money and the fear declines that there is going to be trouble ahead. The price of money rises and interest rates rise as bonds fall. That makes a lot of sense.

Why do we have this continuing problem with our dollar? It is falling as the economic news was supposedly getting better and better on the week. It surely puts into question whether things are really getting economically better or if this is just a little blip in a continuing problem for the US economy. There is something fundamentally wrong with our system when the central bank ends a plan buying $600B worth of bonds and our dollar falls. It is a problem when the dollar falls while the interest rates surge higher on the week. This is very disconcerting. For me, it shows that this bounce we are seeing because of the supposedly recovering economy is rather illusory. Some of the economic numbers were better, but there is a question of whether the ISM is still lagging the regionals. We will find all of that out.

The point to take home is that this month does not change the trend we have seen. And it is worrisome that when your currency is still falling as you have a supposed economic recovery. We can put all of our faith into the bond market and say it looks like it has broken down for now and that should be a positive. The bond market is a very solid economic indicator. I remain concerned, and I will discuss some of those concerns shortly.


TECHNICAL SUMMARY

INTERNALS.

Volume. Volume was quite weak. It fell to 1.67B, down 10% on NASDAQ. It fell to 764M, down 11% on the NYSE.

Breadth. Breadth was decent. 2.8:1 advancers over decliners on NASDAQ. A strong 4.1:1 on the NYSE. Those small and mid-caps were performing quite well.

Not necessarily suggesting a relief bounce in terms of breadth, but the volume definitely was lighter all week and not that impressive. It is summertime, however, so you have to take any weak volume with a grain of salt. Again, if we are expecting this rally to be just something of a relief rally, that should not dampen our enthusiasm. It does tell you that it is time to be careful at this resistance with the weak volume.


CHARTS

SP500. SP500 is just below that February peak at 1344. The index closed at 1340, so it has just over four points to get to that level. Of course there is that May peak as well. It hit 1345 just before the index turned over and sold off in June. We are at a critical juncture. If the market will roll, this is where you would expect it to do so. It could do something else. It could come back and test, coming back to the early-March peak or some variation thereof and then try to make a breakout.

There are two possibilities. There is a roll over, a test and a breakout. I guess it could also move laterally for quite some time, but I do not think that is a possibility. Everything is at extremes right now. We had an extreme five-day rally. VIX is right back down to the support level. I do not think we have a lot of middle-of-the-road just yet. There is also a potential shoulder top at the February peak. Makes that very important to watch.

NASDAQ. A lot good moves here as well. It broke through its early-April peak as well as the lower early-March peak. It has moved into the gap range from February. A very important move coming. The top of the February move is 2840, and NASDAQ is at 2816 right now a mere 24 points off. In any event, very solid move but lower volume. It still looks like a relief bounce. Looks like it could be making that right shoulder to a head and shoulders pattern.

SP600. Small caps broke above some of their resistance. There is a triumvirate of tops from early April into early June, and it is trying to match those right now. Strong move by the small caps. We will see if they can break higher. Watch MACD. It made a low, and look where it is already even though it has not picked up at that early May peak. Interesting. The small caps are showing a lot of strength. They are economic harbingers, etc, etc. They definitely deserve watching.

SOX. The SOX deserves watching as well. It has rallied back up to the upper part of the former support in its trading range. Support and resistance is often a range. On Friday it clearly broke through the lower part and cleared the 50 day EMA. It closed at the upper range of the support marked by the April and May lows. Very important move as well for the semiconductors because they led on the way down and they are lagging on the way up.

We will have to watch. SP500 is at a key point. NASDAQ is at a key point. The SOX is also at a key point. We will see which way they break, and I will talk about what the possibilities are again shortly.


LEADERSHIP

Financial. The financials did get off the dime and started higher. JPM rallied, WFC rallied, and even GS rallied. These are still way down in their patterns, but they did provide support for the SP500. They could help it break that February peak if they can continue their recovery moves in their downtrends. That means they have to break their downtrends; that is something they have not done yet. They will have to do it again in order to help SP500 make that breakout.

Retail. There were some strong stocks in retail again. AMZN rallied to a new high for the rally, putting more money in our pockets. DECK moved up. It has had a good two-week run. I did not get it, I am sorry to say. PCLN is making a nice recovery. Those long-term positions we have just had a tremendous surge back up. It is one I wish I would have caught again to the upside. I tried to play it but did not catch it because it jumped away from us. NFLX continues to move higher. It made a little pullback and bounced again on Friday. Not a pillar of strength, but it is making us money, so I am not going to complain about that.

Energy. Energy enjoyed a good week as well. Not such a big day on Friday, but they have put in a huge run thus far. HAL scored a nice rally for the week. CVX continued higher with a 1.2% gain on Friday. APC rallied on Friday as well, adding to its gains. The cyclical sector of energy came back nicely, and you could even say retail is a cyclical area that came back nicely, riding the apparent wave of consumerism.

Industrial. CAT surged higher again, adding 2% on Friday to a great week and making us more money. I missed JOYG, and it had a big ending to the week. It surged 2% on Friday. Even MMM made a nice 2% move on Friday, really getting some steam. Industrials are also a cyclical sector performing quite well. That would suggest improving economics or maybe that the overseas trade is back on.

Technology. Even technology, which is also considered a cyclical sector, posted good gains. AAPL burst up over 2.25%. Looked like it was ready to roll over at the 50 day EMA, but it was not happening (at least not yet). GOOG posted an almost 3% gain, clearing its 50 day EMA, but it has serious resistance. I was considering removing that from the plays but I think it is worth keeping and looking at the resistance it is coming up to. It could be a very massive rollover if the market does break lower. NTGR looks like it might be in a position for a new buy after breaking to a high on the week. Could be. It could put some more money in our pockets. Some of these are coming back from sharp selloffs. Others in the tech sector are holding up quite nicely.

Healthcare. CERN has made a nice recovery. Our positions are building us some gains. HS was moving laterally all week, but it has had a great move. It started back to the upside, and we will see what happens. Healthcare was taking a pause as the other cyclical sectors rallied on the week.

Metals. Metals had a good week. FCX bounced off of the bottom of its support level. Strong move. I do not know how much it has in the tank, but it looks good for now. AKS posted another gain on Friday. It is a good week, but it is still locked in its trading range. You could play the range, I suppose, but we are looking for leadership in the market.

Summary. There are some stocks in excellent shape and moving higher like NTGR, AMZN, and CERN. But a lot of the other stocks have had the snot kicked out of them, and they are just rebounding along with the rest of the indices like industrials and energy (rather mixed).

Technology is mostly beaten down and just trying to rebound. Metals are definitely beaten down and trying to bounce. A lot of what I see is still the rebound from beaten-down areas. I do not want to get too excited, although it is a lot of fun seeing these kinds of gains on a week. We do have to throttle back on the excitement and look where the indices are. Lower volume and a rally back up to where I expected on the upside. That would still put them in a head and shoulders pattern. They would easily break out, but we have to be cognizant that leadership is still rather thin. That can cause problems for any try at breaking out.


THE MARKET

VIX. Volatility fell like a stone as the market rallied like a rocket on this relief bounce. Volatility is holding exactly where it held in December, January, February, April, May, and June. Look as the doji it is showing. That suggests there could be a selloff. They have been playing together in lockstep with just one aberration. They have been bouncing back and forth together. The breakout was interesting because the stocks broke out to the downside, and then they have reversed. There was a breakout and reversal, and now there is a hold as support and maybe a rebound here. Very important to watch. Could be indicating that the relief rally is over. It is just an indication; volatility is not set in stone. Obviously not, because we had a breakout from this range back in June. Nonetheless, it bears watching given that the indices are at important levels in the market overall.

VIX: 15.87; -0.65
VXN: 17.37; -0.49
VXO: 15.22; -0.06

Put/Call Ratio (CBOE): 0.87; -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 does not have the cash to drive it higher.

Bulls: 39.8% versus 37.6%. Reversing the trend lower as the indices held prior support and started to rally. Down from 45.2% over the past month, but trying to turn back up after holding just over 35%, below which is considered bullish. Well below the 5 year high at 62.0. Fading back from the level considered bearish, i.e. where so many are in the market and believe it is going up that the ammunition to send it higher runs low. The crossover level at 29% bulls from July 2010 is long gone. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 26.9% versus 28.0%. After jumping from 26.0% the prior week, bears fell sharply. Big upside burst three weeks back from 22.6%. Passed the 23.1% hit to start April and putting the moves on 28.3% from September 2010, just as the market pulled out of that base. The 35% level is considered bullish for the market overall. 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.


NASDAQ

Stats: +42.51 points (+1.53%) to close at 2816.03
Volume: 1.669B (-10.08%)

Up Volume: 26.26M (-1.414B)
Down Volume: 4.26M (-303.13M)

A/D and Hi/Lo: Advancers led 2.8 to 1
Previous Session: Advancers led 2.35 to 1

New Highs: 156 (+50)
New Lows: 26 (-13)

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: +19.03 points (+1.44%) to close at 1339.67
NYSE Volume: 764M (-11.06%)

Up Volume: 3.04B (+290M)
Down Volume: 239.81M (-780.19M)

A/D and Hi/Lo: Advancers led 4.13 to 1
Previous Session: Advancers led 2.76 to 1

New Highs: 233 (+70)
New Lows: 91 (-5)

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

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


DJ30

Stats: +168.43 points (+1.36%) to close at 12582.77
Volume DJ30: 142M shares Friday versus 180M shares Thursday.

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


TUESDAY

Enjoy yourself on July Fourth. The week starts back up on Tuesday with factory orders. Wednesday we have services. Thursday brings the initial jobless claims, which are always important. Then there is the warm up for the jobs report, the ADP employment change. On Friday we have the nonfarm payrolls. They are expected to rise, but just not that great of a move. I think they will have the data. The government may want to kick it back. It typically does not like to do that on the jobs report because it is such a big report. As of now, it looks like it is a go for Friday. The market will be playing up to that. There may be some profit-taking ahead of that result. After all, the market has been up sharply.

What happens before then? We have July. Is it going to be a situation where we have the rally into the end of the quarter and then a reversal? It certainly did not do it on July 1st. Then again, there was some good news that catalyzed the move to the upside and managed to keep stocks in positive territory and definitely in rally mode. Next week I think there should be some more heavy lifting done. This weak, thin trade ahead of the overall weekend really did not tell much of the story in my opinion. It was easy for the buyers to keep things moving to the upside. It may be a light week again next week with the holiday weekend, but we may still get a better indication of what will happen.

What could happen? We could get the old rollover I have been talking about. After all, there is that potential head and shoulders pattern. It is at the February peak, and that would mark the high of the relief rally if it is going to roll over. There could be some kind of reversal signal where it breaks through and then closes down with a doji. That would be very instructive and interesting indeed. It could happen on the NASDAQ as well since it also has the potential for that pattern as it rallies up towards its February peak. Not as much on the small caps. They have broken through a potential shoulder area, and we will see if they reverse. It did not look like there was any reversal in their system on Friday.

This is definitely a crossroads. Will the indices break through, or are they just going to test and then make the break? Or is it the rollover time? I have been planning on a rollover. We have been playing that game plan, and we took a lot of gain off of the table on the way up. Remember, I did not really think this move was going to happen. I thought it would be truncated, but I played it anyway. The market said it was time to play, and we did; we got in as much as we could. We had to miss some plays. You could not buy into all the plays that were moving higher because they did not all give good entry points. Some of them we missed, but a lot of them just jumped away. Nonetheless, we bought in through this area and made great money to the upside.

Now we will just watch. If it wants to test with a modest test that will not take us out of our positions we are using smart stop points it will break back to the upside. As it does so, we will have an opportunity to buy new upside plays. We will get a test and some stocks that are not too extended right now could take the torch and lead the next rally to the upside. That would be fantastic for those that want to play upside.

It could turn over if we get a false breakout where it surges up and shows a doji and reverses something like it did in late April. Maybe it does that on Tuesday or Wednesday, and then we can make money to the downside. We moved the buy points on a lot of our downside plays to take advantage of that. If we can get them to reverse and the selling starts, I will not shy away from playing the downside. After all, that is something I thought could happen. The rise in the Chicago PMI and in the ISM, while they may ostensibly look to change the flow of bad economic data, you can see by the internals that was not necessarily the case. There is still a lot of weakness inside the ISM. I could see it come right back down next month if the other indices do not pick up the pace and support it. We could have a rollover.

What will we do? We will do what the market says to do, and we will make money just as we did on this rally. I did not really have any conviction in this rally (no one did, mind you) until late Thursday and on Friday. Now all of a sudden there is a lot of excitement, but we have problems here. We have the VIX falling sharply lower, and we have that run up to resistance on light volume. There are problems with it. I will be watching to see what it does. We will take advantage either way, and that is the point.

It is still in a well-defined trading range. Does it have reason to breakout? Maybe earnings will provide that reason. Stocks rallied sharply for five days, kind of on the realization that earnings were suddenly going to be better than they had thought. But let's face it, without the warnings all of a sudden the light did come on for us, too, this week. We might just see some earnings surprises. The market seemed to pick up on that, and that is what it was doing.

The question is whether the earnings will be enough to augment this move and justify more buying. If they do, it will break out and there will be a move higher. We will catch it on the test of the breakout. If it continues higher, we will pick up stocks there. We will either have a test that then breaks out maybe when earnings start coming out. You take a few days of a test, then good earnings come out and, boom, you get a breakout. Great. We can play that to the upside. We could also get a rollover. Earnings may not come in that well, or maybe the sellers just show up as they did in June and slaughter the market. We will just play that to the downside.

We have already taken a lot of gain to the upside. We can get rid of the upside that is not holding on and play some downside again, or we have the breakout. Maybe it just continues to breakout and then we play the test. If we get a breakout we can play that test. If we get a test first and then the breakout, we can play the rally off of the test. We will just see what the market is going to do. It is at an inflection point again. We made money on the last move. Whatever move it wants to make next, we will make money on that as well. We will just stick to our plan.

I have been out seeing this great country, talking to business people and talking to workers and employees. I still feel good about things, but they need to be able to do what they do best. That is to invent, come up with better ideas, and then hire the people to help them. With all the uncertainty and the problems with Obamacare, they do not want to hire anybody. They are still not getting any money, and that is a big problem. We are People want to do what they have always done in the US, but they are being stymied by the federal government. Hopefully our leaders will get the message and do the right things. Then this can be a July Fourth we look back on as a time when the country corrected course, did the right thing, and I got back on track to being the best nation in the world.

Have a great Fourth!



Support and Resistance

NASDAQ: Closed at 2816.03

Resistance:
2816 is the early April peak. Key.
2825 is the 2007 closing peak.
2841 is the February 2011 peak
2862 is the 2007 peak
2888 is the May 2011 peak
2956 from November 2000
3026 from October 2000 low
3042 is the May 2000 low

Support:
2796 is the February gap down point
2762 is the February low
2759 is the May low
The 50 day EMA at 2734
2723 to 2705 is the range of support at the bottom of the January to May trading range
2706 to 2705 is the April 2011 low and the February 2011 and consolidation low (bottom of the trading range)
2686 is the January 2011 closing low
2676 is the January 2010 low
The 200 day SMA at 2664
2645-2650ish from December 2010 consolidation
2603 is the March 2011 intraday low (post-Japan low)
2580 is the November 2010 closing high
2569 is the November gap up point through the April 2010 peak


S&P 500: Closed at 1339.67
Resistance:
1340 is the early April 2011 peak
1344 is the February 2011 peak is being challenged again
1364 is the March 2007 low
1370 is the August 2007 low
1371 is the recent May 2011 peak

Support:
1332 is the early March peak
1325-27 is the March 2008 closing low and the May 2006 peak.
1318.51 is the May low
1313 from the August 2008 interim peak
The 50 day EMA at 1306
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1275 is the January 2010 low, early January 2011 peak
The 200 day SMA at 1268
1255 is the late December 2010 consolidation range
1249 is the March 2011 low (post-Japan)
1235 is the mid-December 2010 consolidation low
1227 is the November 2010 peak
1220 is the April 2010 peak


Dow: Closed at 12,582.77
Resistance:
12,605 is the mid-May 2011 high
12,876 is the May high
13,058 from the May 2008 peak on that bounce in the selling

Support:
12,391 is the February 2011 peak
12,283 is the March 2011 peak
The 50 day EMA at 12,251
12,110 from the March 2007 closing low
12,094 is the April 2011 low
11,893 from March 2008 closing low
11,867 from the August 2009 high and peak on that bounce in the selling.
The 200 day SMA at 11,821
11,734 from 11-98 peak
11,555 is the March low
11,452 is the November 2010 peak


Economic Calendar

June 27 - Monday
Personal Income, May (08:30): 0.3% actual versus 0.4% expected, 0.3% prior (revised from 0.4%)
Personal Spending, May (08:30): 0.0% actual versus 0.1% expected, 0.3% prior (revised from 0.4%)
PCE Prices - Core, May (08:30): 0.3% actual versus 0.2% expected, 0.2% prior

June 28 - Tuesday
Case-Shiller 20-city, April (09:00): -3.96% actual, -3.9% expected, -3.77% prior (revised from -3.61%)
20 City: +0.7%. First increase in 8 months. Seasonally adjusted: -0.1%. Still smallest loss since 7-10
Consumer Confidence, June (10:00): 58.5 actual, versus 60.8 expected, 61.7 prior (revised from 60.8)

June 29 - Wednesday
Pending home sales, May (10:00): 8.2% actual versus 2.0% expected, -11.3% prior (revised from -11.6%)
Crude oil inventories (10:30): -4.375M, -1.71M prior

June 30 - Thursday
Initial Jobless Claims (8:30): 428K actual versus 420K expected, 429K prior
Chicago PMI (9:45): 61.1 Actual versus 54.0 expected, 56.6 prior

July 1 - Friday
Michigan Sentiment Final, June (9:55): 71.5 actual versus 71.8 expected, 71.8 first June read, 74.3 May final
ISM Index, June (10:00): 55.3 actual versus 51.1 expected, 53.5 prior
Construction Spending, May (10:00): -0.6% actual versus 0.0% expected, -0.6% prior (revised from 0.4%)


July 05 - Tuesday
Factory Orders, May (10:00): 1.0% expected, -1.2% prior

July 06 - Wednesday
MBA Mortgage Index, 07/02 (07:00): -2.7% prior
Challenger Job Cuts, June (07:30): -4.3% prior
ISM Services, June (10:00): 54.0 expected, 54.6 prior

July 07 - Thursday
ADP Employment Change, June (08:15): 60K expected, 38K prior
Initial jobless claims (8:30): 425K expected, 428K prior
Crude oil inventories (11:00): -4.375M prior

July 08 - Friday
Non-Farm Payrolls, June (8:30): 80K expected, 54K prior
Private Payrolls, June (8:30): 110K expected, 83K prior
Unemployment Rate, June (8:30): 9.1% expected, 9.1% prior
Average workweek: 34.4 expected, 34.4 prior (up from 34.3 the prior month)
Hourly earnings: 0.2% expected, 0.3% prior
Wholesale Inventories, May (10:00): 0.9% expected, 0.8% prior
Consumer Credit, May (3:00): $3.5B expected, $6.5B prior

By: Jon Johnson, Editor
Copyright 2011 | All Rights Reserved

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

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