Bernanke Passes on Further Stimulus

SUMMARY:

- Bernanke passes on further stimulus, again punting back to Congress and the Executive, and the market can handle it.
- GDP weak, a bit lower than expected.
- Michigan Sentiment up for August but still very low.
- ECB, Fed initiate a new swap line.
- Stocks reverse off of post-Bernanke low, post solid gains, keep the relief bounce alive.


MARKET SUMMARY

What a week: Buffett, Bernanke, economic data, and endless coverage of the east coast storm.

What a week. We had Buffett buying $5B worth of BAC preferred shares on a whim in the bathtub. At least he would have us believe that, although there is more to it without question. There was also an earthquake centered in Virginia near the nation's capital. Now there is nonstop coverage of a hurricane heading toward the East Coast. It is nonstop because it is heading toward New York, and most of the stations are centered in New York. More power to them, I guess. I just wonder what someone upstairs is trying to tell the people in DC given the earthquake and now a major storm moving toward the capital. I would like to think they are saying, "Get it together. Change your ways and let the great American entrepreneurs be free to do what they do best." Okay, maybe that is not exactly what they are saying, but I would hope it is close enough.

In addition to Buffett, there was Bernanke on Friday. That was the focus of the week after the Buffett surprise. On Friday Bernanke did not surprise us. I did not expect economic stimulus to be announced, and he did not do it. As a matter of fact, he reiterated his FOMC statement from August 8th. He said they are ready if something bad develops, but they are not wild about doing anything right now. He punted the ball to the Congress and the administration on August 8th by saying he would keep interest rates at 0% into 2013.

Now he punted again. He told the administration and Congress that they had better get busy with creating long-term solutions to our economy, including better tax policies and rates and getting the regulatory policies in line to promote long-term growth. Even Princeton-educated Bernanke is saying we have problems with the tax rates and problems with the regulations coming out of Washington by the book full each week. That is not how we became great, and it certainly will not get us back to greatness. We have to make some change.

Some will take offense to this, but I thought it was humorous. Today I heard the President talking to the people in the path of the storm. He said if they are told to leave, then they should leave. I had to open my mouth and say that should apply to the people in DC as well President and Congress. Some laughed and some hissed. Some continued to sleep. That was nothing new.

Bernanke did have some rather asinine comments about the debt debate, saying we need to work through these problems without having the kind of debate we had with the debt ceiling. As I said before, that misses the point. We are a country born through debate. We protect speech in our Constitution. It is in our founding document, so we are supposed to talk things out. We are supposed to have heated debate. If you believe in something, you should stand up and passionately represent that belief. You should not do the politically correct thing and knuckle under because the President says that debate is bad for the country. I do not know where that came from. The Founding Fathers of this country were at each other in debate; it is our history for sure. We fought a war to get away from a king who did not want you to say anything bad about him. If you did, you may have ended up missing or dead. Our main enemy for years was the Soviet Union, and dissenters there would disappear in the night never to be seen again.

We have to have debate. We have to be able to say when something is wrong, "The emperor has no clothes," etc. That is our history, but I digress. I just want to draw it all together because I hear so much nonsense every day from supposedly learned scholars and leaders. They say the stupidest things and think they are being smart. They forget that the means are as important as the ends in the United States of America.

When the futures were trading in the morning, things were a bit worrisome since they were lower. Not crashingly low, but lower. There was a problem perceived ahead of Mr. Bernanke's speech in that the ECB and the Fed had opened up a $500B swap line. When that was announced, European markets that had traded stronger promptly reversed and sold off. It was "Oh my gosh, something is up and we do not know what" kind of trade. That dragged U.S. futures down with it, but we did recover.

GDP was worse than expected, but not unbearable. It came in at 1% versus 1.1% expected. The original read was 1.3%. It did not fall below 1%, which was a relief. As Rick Santelli said on CNBC this morning, it is a sad state of affairs when everyone breathes a sigh of relief when it is not below 1%. 1% is atrocious for the USA. Frankly, 1% is probably not where it will stay since the economy has steadily worsened since January. We could still see it falling further.

Michigan Sentiment came in a bit light but better than July. 55.7 when 55.8 expected. Everyone said "whew," since it was not worse on that one either. But that misses the point as well. This is terrible Sentiment. This is bottom of the barrel. We are in a recession, everyone is depressed and worried about their job, their next paycheck, and worried if their kids will go to college. It is not even like Trading Places where Dan Aykroyd tells Eddie Murphy how it is in the pits. One minute you are in great shape, and then in the next they repossess your Bentley and your kids can't go to college. Lately it has just been the latter. In addition to the Bentleys, however, they are repossessing Volkswagens, Chevy trucks, and GMC Suburbans. Things are not good and the sentiment reflects that.

To hear some of the talking heads in New York and on the financial stations, things are fine because a lot of monstrous companies have huge amounts of money sitting in the bank. Things must be great because their profits are great. But some smart people who are supply-side economists forget that big business is not the business of the United States. Small business is the backbone of this country, and that is where jobs come from. We miss the point If we take comfort in a bunch of giant corporations that got huge subsidies and payments out of the so-called stimulus package passed in Obama's first year. We are in serious trouble. If we do not do something quickly, we could lose the golden goose and the driver of our economy for an indefinite period.

But, holy cow, we have the September speech coming. That certainly will solve all our problems. There is talk of 4% nationwide refinancing for everybody's houses. Supposedly that will put money in their pockets. There will be shovel-ready projects focused on jobs, but those are the busy-work jobs. You dig a ditch and then you fill the ditch. John Maynard Keynes says that is stimulus, but it is not. As soon as you take away the stimulus, there is no more activity. Lest you forget, the money that paid that that guy digging the ditch comes from taxing someone who actually had a productive endeavor. They are taking money from a productive area that people obviously want because it is making money, and they are putting it in an area that does absolutely nothing. Once the stimulus is gone, the work and money created, if any, is gone as well. That was a lot of talk about policy, but let's look back to the market.

It was not a bad session. Stocks did trade sharply lower after Bernanke's announcement (or lack of announcement). But they reversed nicely and posted up solid gains across the board. Looking at an intraday chart, you can see the dip, the reversal, and then back up into lunch. They kind of sold off in the back half of the afternoon but rebounded into the close.

SP500, +1.5%; NASDAQ, +2.5%; Dow, +1.2%; SP600, +2.3%; SOX, +2.8%.

It seems the market was heartened by the fact that the Fed felt things were not bad enough to jump in with stimulus right now. The market thought maybe Ben Bernanke knows what is going on. Why that would be the case I have no idea, but they took it and ran with it. I do not have a problem with that. We picked up some positions early such as CMG. It did very well. Nice break off of the neat test of the trendline. We picked up SMTC as well, and it posted a nice move. A little double bottom. We got a little FCX. Copper may be coming back from the dead.

It was worth picking up some upside positions as the market reversed, and we will see what happens next week. The indices look pretty decent overall. They closed off well, so there is what I call the Relief Rally Part II in gear for a continued attempt to the upside. Thursday was shaky. Early Friday was not great, but it got it out of its system. Now we could get that additional rally. I do not think it will turn things over. Maybe the Fed does come out with QE3 that actually takes the market and breaks it out of this range over the April peaks. Maybe. But that is all rank speculation right now. I am looking for the pragmatic and the obvious, and that is a move to the November high as step one.


OTHER MARKETS

The other markets reacted, of course, to Ben Bernanke's lack of stimulus as well.

Dollar: 1.4488 versus 1.4386 Euro. Ugly day. Not great, but looking at the chart, the dollar is just in the range it has been for the past six weeks. It is going nowhere despite worries that Europe is going into a depression, not just a recession. That is strange. Is someone intervening? No one is saying anything about it, but it is strange that the dollar is having no headway as Europe sinks, supposedly, closer to depression. Everything I hear is that things are very bad in Europe. That makes the dollar's movement very strange indeed.

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Bonds: 2.19% versus 2.23% 10 year U.S. Treasury. Bonds rallied. No stimulus. You would think bonds would sell because there would be no buying, but that was not the case. A little worry here because bonds should not be moving up if everyone feels so comfortable with the economy and has such confidence in Ben Bernanke.

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Gold: $1,797.30, +34.10. Gold traders jumped right back in, all over the yellow stuff. A pretty big move. There was a big reversal. Three days down, big reversal Thursday, and a bounce higher on Friday. Gold is showing no signs of abating its move. That would suggest fear is still there. That is interesting since Ben Bernanke said no stimulus from us "No mas," as Roberto Duran said many years ago, quite famously. Gold still is running higher as if there was inflation and fear. That means there is probably inflation and fear ahead.

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Oil: $85.37, +0.07. Oil was flat on the day. It was down over two clicks intraday ahead of Bernanke on worries of what he would do. When he said he did not feel it was necessary to initiate any stimulus, oil recovered.

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


The other markets were mixed in their reaction. They were not exactly what you would expect, and that shows that a lot of investors do not know what to expect. You have a strange situation now with all kinds of intervention from governments and quasi-governmental agencies namely the Fed. That totally confuses markets. That is why the dollar is muddling sideways. It does not know who will come in, how they will come in, and what they will do. Gold is running higher simply because people do not know what is going on, but they do not have a good feeling about it. U.S. bonds keep rising as well. Why? Because people do not know what will happen here either, and they are taking in some safe haven with U.S. Treasuries. That seems strange as can be, but that is the mix we are getting. Oh, this just in: Hurricane Irene is still a hurricane.


TECHNICAL SUMMARY

INTERNALS.

The internals were kind of lackluster, but not that bad.

Volume. Volume was up on NASDAQ, 1.8B shares, up 3%. It was down 6% on the NYSE to 1.04B. It is Friday. It is a Ben Bernanke day, it is a hurricane day, and it is a post-Buffett "Feeling good about America because of a back-room deal (but we will not tell anyone that)" kind of week.

Breadth. After being down -4:1, breadth jumped back to 3.6:1 to the upside on NASDAQ. It jumped to 4.3:1 advancers over decliners on the NYSE after a -2.8:1 decline on Thursday. Very solid breadth as the market reversed. You have to like that.


CHARTS

SP500. Looking at the picture of the SP500, you can see the reach lower and the reversal. This is good action. We have the double bottom. We are having a test, and note how the buyers jumped right back in. The sellers lost, the buyers won, closing out the session positive with a 1.5% gain. We are still looking for that move up to the November peak. Originally we were looking for March and even June lows as a possibility. It may still hit there, but we are not going to get that far ahead given the amount of trouble we have had just getting past this point.

We are still looking for a break upside. It did itself a world of good after looking pretty shaky on Thursday. The reach lower and reversal really looks solid. Of course we have to watch out for Monday. We had a lot of strange events this week ending with the Bernanke speech on Friday, and we are having the hurricane as well. There could still be interesting action in the coming week, but it did itself a world of good. We are looking for a bounce higher, maybe to the 50 day EMA as it is pretty close to that November peak. It is also right at this December little test back to the 10 day EMA.

Looking for that move. After that we are not looking for any kind of breakout. Not even a move past 1260 on the SP500. We are looking for a rollover. That is, unless the Fed comes in with some kind of stimulus. Or the Obama administration actually comes up with some real stimulus. I do not know about that. Even if it does, Congress will never pass it. But I digress.

NASDAQ. NASDAQ posted an excellent day, trying to take the lead back with a 2.5% gain. It is at a rebound high now, just edging out the Thursday peak before the market reversed that session. This puts it right at the bottom of the November 2010 consolidation. Things get interesting here. We are also coming into the gap point, filling more of it. I think it will fill it, and then we will get up close to this August peak. That puts it still a bit below that November peak. It has room to move. As with SP500, it did itself a world of good on Friday.

SP600. Nice action for the SP600 as well. Reached lower, reversed, closed positive. No new high on the rally on this leg of it thus far. But it is a good, credible move with a 2.3% gain. It, too, has placed itself in position to bounce higher and continue the relief move come Monday.

SOX. SOX posted a very solid 2.8% gain. It gapped lower, reached down as well and has rebounded. Still not at the high on this leg, but it is cutting into that gap point and has room to run. Several semiconductors actually look like they are worth buying for trades to the upside. I am not saying they are a good investment for the long term, but they have sold off. They look like they are sold out and are ready to move higher, e.g., SMTC. It has a neat double bottom and some good volume to the upside after a higher low on MACD as the stock price made a lower low. We have a little upside momentum that we will take advantage of.


LEADERSHIP

Technology. AAPL posted a great day. We had Steve Jobs stepping down as CEO, and AAPL took a bit of a hit on Thursday. On Friday it came right back. Very nice pattern. I like what I am seeing. I hope Steve Jobs has a recovery.

Software is performing just fine. We have a position in CERN, and it is blazing to the upside yet again. Looking quite good, very strong. We are seeing semiconductors trying to pull off these moves as well. I already talked about SMTC with its good move. KLIC looks like it wants to make a break to the upside as well, doing itself some good work on Friday. Coming back from that Thursday turn.

A lot of these stocks suffered engulfing patterns on Thursday. Some of the indices did as well, but they redeemed themselves somewhat on Friday. Goes to show you how the day-to-day volatility is very high. Buyers and sellers are still fighting it out. As long as they can maintain this lateral move with the double bottom, they have a good chance of making the break higher and continuing the relief bounce.

Financial. JPM gapped lower. It recovered some ground, but not impressive. WFC is not impressive. BAC also not impressive even with $5B of Warren Buffett's money. Of course, if it did not need the money, it would not have made this deal. It was not a good deal for BAC as it gave those warrants out. There are people saying that the company is strong because it did this deal. No. I am not buying that.

Industrial. CAT reversed again. It is still not there. It has better volume. It is trying to make the move higher. JOYG is a very similar position, trying to make that break higher. UTX looks good. It looks just like SP500. Cannot complain about that.

Energy. BTU is continuing its move to the upside. I kind of like that. Not a huge run but not bad. HAL is not bad. It has its own engulfing pattern. It gapped lower and reversed upside. Closed positive, completely swallowing the Thursday price action. That is a positive.

Retail. TIF announced it was actually having good results, and it raised its outlook and gapped above the 200 day EMA. YUM has been very volatile the last three sessions, but it has had a good move off its lows. Possibility of a trade to the upside. Not bad action at all. There are retailers out there that are showing a little life. BWLD is very volatile but trying to hold the trendline and move higher. CMG held a nice test of its lower trendline in the channel and a good solid break upside on rising volume.


THE MARKET

SENTIMENT INDICATORS

VIX. The VIX spiked higher on Friday and then reversed. It is heading very high. If this was a stock, it is narrowing into something of a triangle or a pennant after this nice surge to the upside. It suggests a break to the upside is coming and some more selling. Before that happens, it looks to me like we will get an additional relief bounce. After that it may roll over and then it may get truly ugly. That is what volatility is suggesting to me. We will keep an eye on this. It is suggesting a further break higher. If that is the case, stocks will be heading the other direction.

VIX: 35.59; -4.17
VXN: 34.49; -4.94
VXO: 35.87; -3.87

Put/Call Ratio (CBOE): 1.18; -0.11


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.

Not pricing in a lot of fear, the one indicator that is not showing the high levels that would suggest a turn.

Bulls: 40.9% versus 46.2%. Finally a significant drop after stubbornly holding the line (47.2% three weeks back). Moving toward that late June low near 38% Fibonacci Retracement. Hit 49.5% a month back. Highs from April and December (60% readings spanning December through early May 2011). The 5 year high is 62.0. 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: 33.3% versus 23.7%. Honey, that is a spike higher. After two weeks at 23.7% bears broke loose and are roaming the markets. This is more indication of the negative sentiment that helps drive markets higher. Almost to the 35% considered bullish. 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: +60.22 points (+2.49%) to close at 2479.85
Volume: 1.839B (+3.08%)

Up Volume: 1.66B (+1.479B)
Down Volume: 193.65M (-1.436B)

A/D and Hi/Lo: Advancers led 3.57 to 1
Previous Session: Decliners led 4.07 to 1

New Highs: 10 (0)
New Lows: 107 (+42)

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: +17.53 points (+1.51%) to close at 1176.8
NYSE Volume: 1.044B (-6.2%)

Up Volume: 3.83B (+2.23B)
Down Volume: 400.19M (-3.17B)

A/D and Hi/Lo: Advancers led 4.29 to 1
Previous Session: Decliners led 2.84 to 1

New Highs: 34 (+1)
New Lows: 119 (+50)

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

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


DJ30

Stats: +134.72 points (+1.21%) to close at 11284.54
Volume DJ30: 244M shares Friday versus 255M shares Thursday.

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


MONDAY

If we thought this past week was busy, next week will be even more so. It will start off with the aftermath of the hurricane on Monday. Both the NASDAQ and the NYSE say they will be open regardless. Good for them. It looks like the hurricane is slowing down in its intensity. It is quick-moving and the intensity is dropping off, and that is exactly the scenario you want. You do not want the storm to have time to develop further as a slow-moving storm will. It is dragging in some dry air, and that is helping weaken it. The path is not good, but the prognosis is improving dramatically because of these factors that are weakening the storm. Believe me, having sweated these out before, it is wonderful news to hear that it is sucking in dry air, moving fast, and losing power.

We have a lot of economic data starting with Personal Income and Spending on Monday. Then there are Pending Home Sales. Consumer Confidence comes in on Tuesday. There is also Case/Shiller. ADP employment comes in on Friday. There is the very important Chicago PMI. It is expected to drop precipitously but remain in expansion levels. Factory orders are on Wednesday as well. Thursday there is Initial Claims and Productivity. The ISM index is expected to contract. That is important. We also have Construction Spending. Friday brings Nonfarm Payrolls, and it is expected to fall. Unemployment is expected to hold. It is all a guess right now. We will keep watching the important average workweek. It has not been rising.

That is a lot of economic data to swallow. That is good; the market needs a continuing catalyst. Maybe it will get it. There is also the new month on Thursday. We may see some painting of the tape heading into that. That could be good for the stock market and the relief rally. Then we could get some new money put into the system on Thursday which would also be, of course, good for the stock market relief rally. I still say it is a relief rally at this point. We are looking for a continued move up on Part II of the bounce, trying to get up to that November peak first. We will continue to look for plays in that direction. We picked up some downside plays last week, and we picked up some upside plays as well. We are balanced.

By no means is this a done deal. The last time the market bounced, it stalled below the 20 day EMA. It tapped at it on Thursday and fell back. It will get another shot on Friday. It had has a big dose of strength at least buyers in the wings because the indices reached down on Friday and then reversed positive to post very nice gains. We will look at more upside in line with this. Some stocks are improving after lying dormant or looking relatively crappy for quite some time.

We may not get long-term investments out of them, but we can get trades out of them as discussed with stocks such as YUM. This is a break through key resistance, a test of that break, and a move back up. We will be looking for those kinds of plays to take advantage of a further relief rally to the upside.

Again, I am not expecting these individual stocks to break out of resistance or the indices to break out of their trading range/resistance areas. No. We are looking to make money to the upside either to the November peak or to the March and June lows. If we get anything beyond that, we will be happy because we will let positions run. We always do. But I do not expect it. There is nothing at this point to suggest it will happen.

There is no new stimulus from the Fed. In fact, the Fed punted over to Congress and the administration. But that very well could be part of the game plan. The Obama administration could have the Fed saying they will not do anything and it is up to the President and Congress. Then Obama comes out with his stimulus package that is a bunch of repackaged Keynesian ideas with maybe one supply-side idea from Art Laffer on top of it. You know he will point to Warren Buffett saying that we should cut one little area of taxes, but we should raise taxes on everyone making 250K dollars or more. That is not going to fly with anyone. I still think it is a plan for reelection versus a plan for saving the economy.

Call me cynical. Call me un-American. Whatever. Some people might call me worse than that because I am talking about the President, but this is the way these guys think. Most of them are all about getting reelected. You have to factor that into anything. I do not take anything at face value when it comes out of DC, that is for sure.

In any event, whatever they decide, it is probably all part of a plan. That plan is also to help gin up the stock market. If they will try that, we will play that move as long as the technical show us that. After it gets up on this bounce, I am not so sure it will be able to maintain it unless the Fed starts forking over the money in terms of liquidity. No policies that Obama puts forth (whether they could pass or not) are not the kind that will turn the economy enough to warrant substantial and sustained gains in the market without Fed liquidity. That is just the way it is. Again, call me cynical, but I know how these guys think. I have seen it before; I study history as everyone should.

We will play this upside, and then we will let it ride as far as it will. If we are pleasantly surprised, so be it. I am happy with that. I hope everything does work out, but I am not expecting it to.

Have a great weekend! I will see you on Monday after the hurricane.


Support and Resistance

NASDAQ: Closed at 2479.85

Resistance:
The 20 day EMA at 2507
2512 is last week's gap down point
2532 is the early August gap down point
2540 is the early November 2010 lower gap point
2555 is the mid-August 2011 peak
2569 is the November gap up point through the April 2010 peak
2580 is the November 2010 closing high
2599 is the June 2011 low
2603 is the March 2011 intraday low (post-Japan low)
The 50 day EMA at 2611
2645-2650ish from December 2010 consolidation
2676 is the January 2010 low
2686 is the January 2011 closing low
The 200 day SMA at 2704
2706 to 2705 is the April 2011 low and the February 2011 and consolidation low (bottom of the trading range) 2723 to 2705 is the range of support at the bottom of the January to May trading range
2759 is the May low
2762 is the February low
2796 is the February gap down point
2816 is the early April peak.
2825 is the 2007 closing peak.
2841 is the February 2011 peak
2862 is the 2007 peak
2879 is the July 2011 peak
2888 is the May 2011 peak


Support:
2469 is the November 2010 low
2331 from October 2010 low and the August 2011 low
2305 from the August 2010 peak (summertime base)
2139 is the May and June 2010 low
2123 is the August 2010 gap down point
2100 from the August 2010 lows


S&P 500: Closed at 1176.80
Resistance:
1178-1180 is the October 2010/November 2010 consolidation low
The 20 day EMA at 1190
1196 is the November 2010 consolidation peak
1209 is the mid-August 2011 high
1220 is the April 2010 peak
1227 is the November 2010 peak
1234 is the August 2011 low
1235 is the mid-December 2010 consolidation low
The 50 day EMA at 1238
1249 is the March 2011 low (post-Japan)
1255 is the late December 2010 consolidation range
1275 is the January 2010 low, early January 2011 peak
The 200 day SMA at 1284
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1313 from the August 2008 interim peak
1318.51 is the May low
1325-27 is the March 2008 closing low and the May 2006 peak.
1332 is the early March peak
1340 is the early April 2011 peak
1344 is the February 2011 peak is being challenged again
1357 is the July 2011 peak
1364 is the March 2007 low
1370 is the August 2007 low
1371 is the recent May 2011 peak

Support:
1131 - 1127 from August 2010 base peak.
1119 is the early August closing low
1109 is the mid-September gap up point
1101 is the August 2011 low
1099 from the mid-July interim peak
1040 from the August 2010 lows and May/June 2010 lows
1011 is the summer 2010 low


Dow: Closed at 11,284.54
Resistance:
The 20 day EMA at 11,375
11,452 is the November 2010 peak
11,555 is the March low
The August low at 11,700
11,734 from 11-98 peak
The 50 day EMA at 11,758
11,867 from the August 2009 high and peak on that bounce in the selling.
11,893 from March 2008 closing low
The June low at 11,897 (closing)
The 200 day SMA at 11,987
12,094 is the April 2011 low
12,110 from the March 2007 closing low
12,283 is the March 2011 peak
12,391 is the February 2011 peak
12,876 is the May high
12,754 is the July intraday peak
13,058 from the May 2008 peak on that bounce in the selling

Support:
11,178 from November 2010
10,978 is the bottom of the November 2010 consolidation
10,750 from September 2010
10,720 is the August closing low
10,705-710 from January 2010 peak
10,694-700 from August 2010 peak
9938 is the August 2010 low


Economic Calendar

August 23 - Tuesday
New Home Sales, July (10:00): -0.7%. 298K actual versus 310K expected, 300K prior (revised from 312K)
Inventories: 6.6 months versus 6.3 months prior (Existing home sale inventory 9+ months)
Richmond Fed, August (10:00): -10.0, lowest since 6/09

August 24 - Wednesday
MBA Mortgage Index, 08/20 (7:00): -2.4% actual versus +4.1% prior
Durable Orders, July (8:30): 4.0% actual versus 1.9% expected, -1.3% prior (revised from -1.9%)
Durable Orders -ex T, July (8:30): 0.7% actual versus -0.5% expected, 0.6% prior (revised from 0.4%)
FHFA Housing Price I, June (10:00): 0.9% actual versus 0.4% prior
Crude Inventories, 08/20 (10:30): -2.213M actual versus 4.233M prior

August 25 - Thursday
Initial Claims, 08/20 (8:30): 417K actual versus 400K expected, 412K prior (revised from 408K)
Continuing Claims, 08/13 (8:30): 3641K actual versus 3700K expected, 3721K prior (revised from 3702K)

August 26 - Friday
GDP - Second Estimate, Q2 (8:30): 1.0% actual versus 1.1% expected, 1.3% prior
GDP Deflator - 2nd estimate, Q2 (8:30): 2.4% actual versus 2.3% expected, 2.3% prior
Michigan Sentiment - Final, August (9:55): 55.7 actual versus 55.8 expected, 54.9 prior

August 29 - Monday
Personal Income, July (8:30): 0.4% expected, 0.1% prior
Personal Spending, July (8:30): 0.5% expected, -0.2% prior
PCE Prices - Core, July (8:30): 0.2% expected, 0.1% prior
Pending Home Sales, June (10:00): -1.4% expected, 2.4% prior

August 30 - Tuesday
Case-Shiller 20-city, June (9:00): -4.7% expected, -4.51% prior
Consumer Confidence, August (10:00): 52.0 expected, 59.5 prior

August 31 - Wednesday
MBA Mortgage Index, 08/27 (7:00): -2.4% prior
Challenger Job Cuts, August (7:30): 59.4% prior
ADP Employment Chang, August (8:15): 100K expected, 114K prior
Chicago PMI, August (9:45): 52.5 expected, 58.8 prior
Factory Orders, July (10:00): 1.8% expected, -0.8% prior
Crude Inventories, 08/27 (10:30): -2.213M prior

September 1 - Thursday
Initial Claims, 08/27 (8:30): 408K expected, 417K prior
Continuing Claims, 08/20 (8:30): 3660K expected, 3641K prior
Productivity-Rev., Q2 (8:30): -0.5% expected, -0.3% prior
Unit Labor Costs - R, Q2 (8:30): 2.4% expected, 2.2% prior
ISM Index, August (10:00): 48.5 expected, 50.9 prior
Construction Spending, July (10:00): 0.1% expected, 0.2% prior
Auto Sales, September (15:00): 3.93M prior
Truck Sales, September (15:00): 5.56M prior

September 2 - Friday
Nonfarm Payrolls, August (8:30): 75K expected, 117K prior
Nonfarm Private Payrolls, August (8:30): 111K expected, 154K prior
Unemployment Rate, August (8:30): 9.1% expected, 9.1% prior
Hourly Earnings, August (8:30): 0.2% expected, 0.4% prior
Average Workweek, August (8:30): 34.3 expected, 34.3 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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