Individual Stocks are Upside Key for Now

SUMMARY:

- Stocks start stronger, give up the gains for a mixed close as the slow slog continues.
- Slow overall, but some solid moves from solid leaders.
- Michigan Sentiment Final jumps again.
- New home sales fall in January, but opposite of Existing Home Sales, they do so because of an upward revision in December numbers.
- Geithner says 'no quick fix' for gasoline problem. No there is not, but we would already be 'fixed' if we had taken action back when they last said there was no quick fix . . .
- President pushes algae fuel as he takes credit for higher oil production that had its beginnings before he was even running for President and when he has only 3% of offshore zones closed to drilling.
- Excess money helping fuel higher fuel prices.
- Indices end the week basically unchanged, i.e. still rising but making virtually no overall progress. Individual stocks are the upside key for now as we watch for rollover signs.

Indices try to make a meaningful move but suffer the afternoon dips.

Friday was heralded as the day that the Dow crossed 13K, and surely it did. It moved up to a whopping 13,014. It could not hold it again, however, and faded back below the magical 13K on the close. SP500 was said to have made a new closing high since 2008. Yea verily, it did, but it also did not break above its May intraday high. When you are talking about old highs, you have to talk about where it made it intraday. If you are playing a stock or index, then that makes a difference in a technical sense. Am I splitting hairs? Yes, I am.

There was virtually no change in the market as the indices closed mixed, but they did give up an early gain. We had a bit of that high-to-low action versus the low-to-high action that has been the hallmark of this rally. The low-to-high action is a positive because it shows buyers stepping in whenever there is a dip. We saw that this morning. Stocks open and sold back. There was that first-hour dip, and buyers came in and rallied stocks to session highs and pushed the SP500 to that new closing high. It was really looking good, almost breaking through the prior peak marking that bear market high. It could not quite do it, and it faded at that high. The buyers did not stay around until the close on Friday. It was hardly catastrophic. As noted, the indices are still very solid in their ranges, bumping up against or in some instances actually moving through the prior bear market highs.

We have the same action of a slow, steady move to the upside even though it was not shared by all of the indices on Friday.

SP500, +0.17%; NASDAQ, +0.23%; Dow, -0.1%; SP600, -0.4%; SOX, -0.2%

As I said, it was a mixed market. It was spread between the growth and the more stoic and staid large cap NYSE stocks and indices as well. It was a definite mixed bag on the day, and it was quite frustrating and boring. The indices are continuing this climb to nowhere. We have heard about the Bridge to Nowhere in Alaska. This is definitely not a move to nowhere, but it seems like it is going nowhere fast. There was an up day followed by a down day. Or a good, solid break to the upside followed by several days lateral. It is hard for the market to put together two (and dare we ask for three?) strong upside sessions back-to-back. I would even settle for every other day. Instead we get the slow slog to the upside.

That does not mean there were not good moves on the day. Some of the plays we were looking at broke nicely to the upside. FOSL is one of those apparel retailers doing quite well. It had a solid 2.5% break to the upside. VFC, another apparel maker, bounced nicely off of the 10 day EMA on rising volume. A very nice pullback to test its breakout, and it started to resume the move. They are out there. They are making upside moves, but it is more of a stock-by-stock basis. They are definitely moving, but the bigger moves are coming on individual names versus the overall market. That says something in itself; perhaps the market is tired. I have been saying that for a while.

Has it slowed the market? Yes. But it has not stopped the market. The move is definitely slower, but it is still moving higher and it has not put in that rounded-look looking top you get before selloffs. KLAC has a very classic-looking rounded top. The stock continued to work higher through late 2011, but as it did, MACD was putting in lower highs even as the stock put in higher price highs. Then there is a round off top spanning early January until basically this week. It broke below the 50 day EMA, and it tried to test on Wednesday and Thursday. Then Friday it broke lower once more. We have the move up on waning momentum, and then the rounding out at the top. Now perhaps we will have the rollover.

That puts this market in what they like to call on the financial stations "a stock-picker's market." That is where you have to get the right names. If you are a fundamental investor, that makes life very difficult for you. That is where technical analysis comes in. Frankly, we are always picking stocks. Every day we go through a big list of possible plays where we might put our money, and we decide whether it is worth it. Of those that are, we decide which have the best risk/reward, the best pattern, and are ready to go. Those are the ones that make it on the report. It is not something new for us, but it is something they like to talk about because it makes things a little more mysterious and supposedly difficult for the average investor. Anyone can do this, however. You do not have to be all that smart; you just have to understand how the market works and understand that it does not work the way you were taught that things should work. But that is a whole other story. While I teach some of it here, I have to teach classes to really get into that.


OTHER MARKETS

The other markets pretty much kept the trends they were following for the week as well.

Dollar. 1.3456 versus 1.3367 euro. It was a tough week for the dollar, and the closed lower again. It was a multi-month low versus the dollar (or a high versus the dollar, whichever way you want to look at it). It broke the dollar below its recent range in the index. The dollar stopped rising against the yen, and that has fueled this quick drop on Thursday and Friday in the DXY0. Of course it is down sharply against the euro as well.

The dollar should be getting stronger, in theory, if the U.S. economy is supposed to be stronger in the future. There is that offsetting problem of the eurozone. Money is moving back to the continent after spending time in the U.S. That is one of the reasons why the dollar is losing ground versus the euro. They are selling dollars in favor of buying euros.


Bonds. 1.98% versus 1.99% 10 year U.S. Treasury. Bonds were up overall on the day, although the 10 year posted a very modest gain. Bonds are holding in their range. They have a little triangle set up, and they bounced this week. We will see if they can make a breakout. That would be counterintuitive to a stronger economy in the U.S. and a stronger recovery in Europe. Bonds would be stronger if there was worry about the economic future here, in Europe, or both. The fact that they are rallying would suggest some kind of problem down the road. It is important to note that they have not broken out and they are at the bottom of their range. While they may be rebounding this week, we have to the see if it is just a relief move or something more significant. Right now it does not suggest that it is anything terribly serious. If this pattern forms up a bit better and bonds start to make the breakout, that suggests something is out there that we have to worry about yet again.


Gold. 1,776.30, -9.90. Gold was off on the session. It took a breather after a very solid move up on the week. This week saw it resume the breakout from the channel formed from the fall off 2011 into early 2012. There was the breakout, the test, and then a great move to the upside this week. There was a little giveback on Friday. That is perfectly normal after a good week to the upside


Oil. 109.76, +1.93. Oil continues higher, painfully so. Quite the breakout on the week. Indeed, it was an impressive three-week move for oil. We were looking for a test but it was not showing up at the end of the week. Why not? There is stress from Iran and its issues with Israel, as well as other problems in the Middle East that keep tensions higher with respect to oil. Also there is the possibility of sanctions against Iran by the eurozone coming later. Iran is making it clear that it does not view that as a friendly act. No kidding.

There is also the dollar and its decline. As we used to see and talk about a lot in the past, oil tends to rise as the dollar weakens because it is nominated in dollars. It takes more dollars to buy every barrel of oil when the dollar value declines. You do not hear much about this right now as to why oil is high, but that is a very good reason why the moves are accelerating to the upside. The dollar is accelerating its decline against other currencies. It takes more dollars to have the same value for a barrel of oil. This despite the fact that there is a lot of oil in the U.S. right now.
The President is taking credit for making the increased oil production possible. I will talk about that more later, but it is absolutely crazy. That is like a newly-elected mayor cutting the ribbon on a completed 20-story building that a company built and saying, "Thanks to the policies I have implemented, we were able to build this." A lot of it was built well before the mayor ever showed up. That is exactly what happened with the additional energy production we have now.


TECHNICAL SUMMARY

Internally it was rather boring on Friday.

Volume. NASDAQ -7.2%, 1.6B; NYSE -17%, 581M. Volume fell fairly sharply.


Breadth. NASDAQ, -1.2:1; NYSE +1.2:1


THE CHARTS

SP500. The SP500 is bumping right at that old post bear market high from 2011. It could not take it out. It fell back, but it put in that closing high that got everyone excited. Again, that does not mean much because it did not take out those old highs. It is still bumping, still working on it, and still not there.


DJ30. Same story with the Dow. It moved to a nominal new high, but then it faded back and was unable to close out the deal. Up on the week, yes, but still struggling to extend this break above those July 2011 highs.


NASDAQ. NASDAQ was up as well. It continues to try putting a little distance between it and those prior highs, but it is not making much headway. A nice 1-2-3 pullback during the week, a nice break to the upside on Thursday, but it could not consummate it on Friday. Very similar to last week.


SP600. The small caps were down a bit, struggling right below the prior peak. Moving now in a four-week lateral range, trying to get out of there. Not looking bad or rolling over, but we do see MACD falling lower, as with the other indices. It is making a lower high as the indices bump and try to put in that higher high. A bit of loss of momentum.


SOX. Last night I talked about the SOX and its nice pullback to the 20 day EMA. It tried to put in the bounce on Friday. It could not consummate it and fell back. Not a catastrophic rollover; it is still sitting above the 20 day EMA. It can still make the move, and we will see if it does. The semiconductors could provide a big boost for this market. If they get back on track and make more of these solid 3-4 session upside moves, that would really goose the other indices to the upside.


LEADERSHIP

Semiconductors/Technology. I want to discuss those that I said were key and that we needed to watch. BRCM is attempting to hold at the 20 day EMA, make a higher low, and then try to push through the October 2011 peak. Very important test for BRCM because it is one of those AAPL-related semiconductors. Speaking of AAPL, it was up again. It posted a 1%+ gain on the day. It is right below this prior reversal-day peak. This will be an important test for AAPL. It has come right back up to that peak. The question is will it consolidate, make a higher low and break higher? Will it move right on through or will it reverse? Lower volume. MACD is still trying to make a move. It is nothing definitive yet. It is maybe just a bit low. We will see. This is a very important test for AAPL.

KLAC has put in that rounded top. It looks to be heading lower. That is the problem with chip equipment. NVLS has a rounded top. It is trying to hold the 50 day EMA, and it may do it. We will see. There is some trouble in semiconductors, but there are also good tidings there as well. Stocks such as BRCM are holding the line.

Retail. Retail remains solid. VFC had a nice break to the upside. It gave us the entry we were looking for. RL is trying to set up again for the new break to the upside. FOSL broke to a new rally high after that surge. It has given us the entry we were looking for as well.

Medical/Healthcare. ISRG looks to be making a new break to the upside. HNSN is another stock that we have played in the past. It looks like it could try to make a break to the upside. It has some serious resistance, but I just want to point out stocks that look to be coming around.

Manufacturing. HOLI had a nice break to the upside on Thursday and Friday. IR had a very nice flag pattern back to the 10 day EMA. We still have great stocks in great position to move higher, and they are moving higher. It is hard to bet against this kind of market.

What makes this kind of market run? Liquidity, baby. It has been the pump all along. Liquidity has fueled this recovery since basically day one. The turn at the bottom was from massive liquidity pumped into the system. For the initial rally, QE1 is what turned it. None of those other programs worked; QE1 brought stocks off of the bottom. Then we had the 2010 test. They did not know if there would be a QE2, and then it was announced in August. An inverted head and shoulders. The announcement was the catalyst, and shortly thereafter the market took off on another run up through early 2011. We knew that QE2 was ending in June, and the market started to falter ahead of that. It topped. It put in a head and shoulders. There was no QE3 announced, and the market sold off. Europe started to burn. With no QE3 the U.S. fell. The U.S. was in trouble, and then they announced twist. Twist rescued the market off of the lows. It was not enough to send it higher, however, because we still had the European problems. Then the Fed, the ECB, and four other world central banks got together and created dollar facilities for European banks. Thus we have had the move from mid-December to the present based on that liquidity.

We are back at the highs. We have had great runs and we are still having great runs thanks to the continued liquidity. As long as we have these good leaders moving, we can play them to the upside. Liquidity really drives the market.


THE ECONOMY


Treasury Secretary Geithner says 'no quick fixes' to gasoline price issue. If we started at some point in the last 30, 20, or even 10 years we would not, again, be having this discussion.


There's gold (black gold?) in them thar' swamps! President takes credit for increased oil production, makes more claims about 'green' energy.


ECRI still calling for a mid-year recession.

Recession call made September 2011, forecasting a recession by mid-2012. You won't know you are in one until about 6 months later.

Definitive data show no recovery, indeed things are getting worse:
-Annualized GDP peaked in Q3 2010. By Q2 2011 it fell to 1.5%. The last read was 1.6%. Since the peak it has flat-lined at 1.5%.
-Personal Income is down.
-Overall sales are down (recall the inventory surge in Q4 2011 GDP number?)
-Industrial Production is at a 22 month low.

This pushed the Coincident Index to a 21 month low (see chart). In the last 50 years this has equaled a recession.

Why is sentiment up? Central Banks have printed trillions in currency. As I discussed last week, that is why we have had the economic lift we have had. Not stimulus, not real growth, just extra money.

Money Velocity: Trillions of dollars out there but velocity is at a record low in the US and near record lows in China and Europe. The money is not getting used but going into the financial markets just as it did in, for example, 1999 when the Fed pumped all that Y2K money into the economy and it was put in the stock market.

Personal disposable income: Negative for the past five months!!


TO VIEW THE ECONOMY OVERVIEW CLICK THE FOLLOWING LINK:

Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.html



THE MARKET

SENTIMENT INDICATORS

Sentiment is starting to play in the market. The VIX was up slightly, but it closed very low at 17.3. There was a decline in bulls and a rise in bears. This is markedly different from the spike we saw in bulls and the decline in bears over the last two weeks. Bulls came in at 51.1% while the bears rose to 26.6%. The 51.4 is up from 54.8 the prior week. The bears were at 25.8. Not a huge spike, but even as the market moves higher we are getting some issues with respect to how well the market is behaving. So much so that the slow move, even though it is to the upside, is getting a lot of people nervous. Bears are rising and bulls are falling from pretty steep levels, and that could suggest an interim top. Perhaps not a top of the rally, but an interim top.

The put/call ratio bumped up to 1.09. That is only on the CBOE, not the combination of all the put/call exchanges that, for instance, Investor's Business Daily uses. On IBD, the put/call ratio looks like it was around 0.84, but we do not have the latest numbers on that yet. We will have to see when it comes out over the weekend, but it will most likely be up. That shows that people are nervous. Does this mean that a bunch of speculators are out buying puts? No, although we have been buying some as the positions present themselves. We bought more positions today on KLAC to the downside, but that is different versus the big money managers buying puts for protection for a decline. They are anticipating a pullback, and it seems like everyone is anticipating it. What happens when everyone anticipates something? It tends to do the opposite, at least for a while. Thus the uptrend continues for now.

VIX: 17.31; +0.51
VXN: 18.27; -0.14
VXO: 15.44; +0.16

Put/Call Ratio (CBOE): 1.09; +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.

Bulls: 51.1% versus 54.8%. After a quick and big spike higher bulls are right back down near that 50% level where it held for several weeks. Hit the highest level since April and May of 2011, the peak of the post-bear market high. Now the indices are back at that level and so are the bulls. All the more reason to watch this action at the prior highs. 35% is the threshold measuring bullish versus bearish action. Six weeks the bulls were below bears. A powerful sentiment signal but now dissipating. 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: 26.6% versus 25.8%. Back up a bit but still lower than the 28.7% three weeks back. As with bulls, a quick and big break upside, but now right back down. After spending weeks at 30%ish, bulls are faltering big time. Not at a bearish level but they are growing more confident even as the market hits the prior highs and is not blasting on through. 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: +6.77 points (+0.23%) to close at 2963.75
Volume: 1.602B (-7.18%)

Up Volume: 937.03M (-322.97M)
Down Volume: 679.7M (+187.71M)

A/D and Hi/Lo: Decliners led 1.21 to 1
Previous Session: Advancers led 2.44 to 1

New Highs: 110 (+12)
New Lows: 8 (-15)


SP500/NYSE

Stats: +2.28 points (+0.17%) to close at 1365.74
NYSE Volume: 581M (-16.76%)

Up Volume: 1.77B (-880M)
Down Volume: 1.61B (+520M)

A/D and Hi/Lo: Advancers led 1.21 to 1
Previous Session: Advancers led 2.6 to 1

New Highs: 162 (+30)
New Lows: 3 (-1)


DJ30

Stats: -1.74 points (-0.01%) to close at 12982.95
Volume DJ30: 89.4M shares Friday versus 120M shares Thursday.


MONDAY

Next week there is a lot of economic data. Monday brings Pending Home Sales. Tuesday is Durable Orders, Case/Shiller, and Consumer Confidence. Wednesday there is the second estimate of GDP and Chicago PMI. Very important. Thursday is Initial Claims, Person Income and Spending, and the ISM Index for February. All will be important, particularly in light of the ECRI reiteration of the call for a mid-2012 recession. That is just the situation we have.

Where do go from here? The indices are basically up at the old highs, unable to push further but not falling. As I said earlier, this is what they call "a stock picker's market," and we have seen some really great stocks moving to the upside. The indices are not rolling over at least not yet. Since they are not showing signs of that rounded top rollover, we are not going to bet against them overall right now. We are not that comfortable with a lot of new positions, but they keep showing themselves so we will keep taking them. We will let our positions run as long as they will. If any get in trouble, we will take some off of the table as we have been doing. We are not letting them get out of hand on us.

What does that mean for the coming week? A lot of data. We still have to keep that eye on the exit just in case things turn. Typically you get a rollover. Typically, as noted on Thursday, it takes awhile for this to work through the system. But the initial moves can be sharp as we saw in February. You get the climb and then, boom, a sharp selloff. But then you almost always get that recovery. If it does not make it, you are done and it will sell off. But this was a classic ABCD pattern. You have the strong move, the pull back, the bounce to a lower high. Then there is the sell off to a lower low, and then you have a rally right back up to the prior peak. That is what ABCD does and what you are looking for. That was the top. It tried again. Not bad, but that was false. It did not have the MACD with it. It was already in some trouble and it rolled over. We were worried at the time, and it proved to be correct.

We have not had the selloff yet. It may come up next week. You do not know. At some point there will be a punctuated selloff. Do we get out now and just wait for it? You can, but you might miss some action. You always get to that last point where you say, "Should I stay or should I go?" That is the question. But we are investors/traders and we have to take advantage of what the market gives. If we see moves like VFC, we want to take advantage of those because they can make us money even if the market is getting ready to top. We just have to be careful. It behooves us to watch the exit, watch our positions, and be pretty ruthless with taking stops as we have been. We are protecting our gain. We are not letting any of it go, and we are still making money to the upside. We will continue to do that. But we are fully cognizant of the fact that the indices, while they are breaking through the old highs, are not showing great strength. We watch for topping, we watch for any sharp pullbacks, but we can wait for a bounce to exit. That is typical these situations. You get a pullback and a bounce, a pullback and at bounce.

Even though we get selling, let us keep our heads. Protect your positions, but to not totally panic if we cannot get out of everything. Just wait for your time, and you typically get a better exit point. Then we will get better setups to the downside as well. Those stocks that broke down will rebound and fail, and we can get more downside entry points and make money to the downside as the upside folds up shop.

I hope that makes sense to you. Have a great weekend, and I will see you on another busy Monday. It is another week where we watch and see if this is the one where the move runs out of juice.




Support and Resistance

NASDAQ: Closed at 2963.75

Resistance:
3026 from 10/2000 low
3042 from 5/2000 low


Support:
The 10 day EMA at 2937
The 20 day EMA at 2900
2888 is the May 2011 peak and post-bear market high
2879 is the July 2011 peak
2862 is the 2007 peak
2841 is the February 2011 peak
2825 is the 2007 closing peak.
2816 is the early April 2011 peak.
The 50 day EMA at 2804
2754 is the October 2011 high
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
2686 is the January 2011 closing low
2676 is the January 2010 low and the December 2011 peak
The 200 day SMA at 2668
2645-2650ish from December 2010 consolidation
2643 is the September 2011 high
2612 is the late August 2011 peak
2603 is the March 2011 intraday low (post-Japan low)
2599 is the June 2011 low and NASDAQ
2593 is the November intraday high
2580 is the November 2010 closing high
2572 is the November 2-11 gap down point
2555 is the mid-August 2011 peak
2546 is the early September 2011 gap down point
2535 is the November island reversal gap point
2532 is the early August gap down point
2469 is the November 2010 low
2441 is the November 2011 low
2331 from October 2010 low and the August 2011 intraday low
2305 from the August 2010 peak (summertime base)
2139 is the May and June 2010 low


S&P 500: Closed at 1365.74
Resistance:
1370 is the August 2007 low
1371 is the May 2011 peak, the post-bear market high

Support:
1364 is the March 2007 low
1357 is the July 2011 peak
1344 is the February 2011 peak
The 20 day EMA at 1344
1340 is the early April 2011 peak
1332 is the early March 2011 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 1311
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
1258 is June 2011 intraday low
The 200 day SMA at 1258
1255 is the late December 2010 consolidation range
1249 is the March 2011 low (post-Japan)
1235 is the mid-December 2010 consolidation low
1231 is the late August 2011 peak
1227 is the November 2010 peak
1220 is the April 2010 peak
1209 is the mid-August 2011 high
1196 is the November 2010 consolidation peak
1178-1180 is the October 2010/November 2010 consolidation low
1158 is the November 2011 low
1131 - 1127 from August 2010 base peak.
1119 is the early August closing low
1109 is the mid-September 2010 gap up point
1101 is the August 2011 low
1075 is the October 2011 intraday low
1099 from the mid-July interim peak


Dow: Closed at 12,982.95
Resistance:
13,058 from the May 2008 peak on that bounce in the selling

Support:
12,876 is the May high
The 20 day EMA at 12,836
12,754 is the July intraday peak
The 50 day EMA at 12,576
12,391 is the February 2011 peak
12,284 is the October 2011 peak
12,258 is the December 2011 peak
12,110 from the March 2007 closing low
12,094 is the April 2011 low
The 200 day SMA at 11,999
The June low at 11,897 (closing)
11,893 from March 2008 closing low
11,867 from the August 2009 high and peak on that bounce in the selling.
11,734 from 11-98 peak
11,717 is the late August 2011 peak
The August low at 11,702
11,555 is the March low
11,452 is the November 2010 peak
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

February 22 - Wednesday
MBA Mortgage Index, 02/18 (7:00): -4.5% actual versus -1.0% prior
Existing Home Sales, January (10:00): 4.57M actual versus 4.63M expected, 4.38M prior (revised from 4.61M)
Up 4.3% in January. Down 5% in December, revised lower. 5% - 4.3%= net negative.
Inventories: 2.31M unites. Lowest March 2005.

February 23 - Thursday
Initial Claims, 02/18 (8:30): 351K actual versus 355K expected, 351K prior (revised from 348K)
Continuing Claims, 02/11 (8:30): 3392K actual versus 3450K expected, 3444K prior (revised from 3426K)
FHFA Housing Price I, December (10:00): 0.7% actual versus 0.7% prior (revised from 1.0%)
Crude Inventories, 02/18 (11:00): 1.633M actual versus -0.171M prior

February 24 - Friday
Michigan Sentiment - Final, February (9:55): 75.3 actual versus 73.0 expected, 72.5 prior
New Home Sales, January (10:00): 321K actual versus 315K expected, 324K prior (revised from 307K). -0.9%. 5% revision upside in December.


March 1 - Thursday
Construction Spending, January (10:00): 1.0% expected, 1.5% prior
Auto Sales, February (14:00): 5.00M prior
Truck Sales, February (14:00): 5.73M prior

February 27 - Monday
Pending Home Sales, January (10:00): 1.0% expected, -3.5% prior

February 28 - Tuesday
Durable Orders, January (8:30): -1.4% expected, 3.0% prior
Durable Orders -ex Transports, January (8:30): 0.2% expected, 2.2% prior
Case-Shiller 20-city, December (9:00): -3.6% expected, -3.7% prior
Consumer Confidence, February (10:00): 62.5 expected, 61.1 prior

February 29 - Wednesday
MBA Mortgage Index, 02/25 (7:00): -4.5% prior
MBA Mortgage Purchases Index, 02/25 (7:00): -4.5% prior
GDP - Second Estimate, Q4 (8:30): 2.8% expected, 2.8% prior
GDP Deflator - Second, Q4 (8:30): 0.4% expected, 0.4% prior
Chicago PMI, February (9:45): 60.0 expected, 60.2 prior
Crude Inventories, 02/25 (10:30): 1.633M prior

March 1 - Thursday
Initial Claims, 02/25 (8:30): 355K expected, 351K prior
Continuing Claims, 02/18 (8:30): 3425K expected, 3392K prior
Personal Income, January (8:30): 0.4% expected, 0.5% prior
Personal Spending, January (8:30): 0.3% expected, 0.0% prior
PCE Prices - Core, January (8:30): 0.2% expected, 0.2% prior
ISM Index, February (10:00): 54.5 expected, 54.1 prior

By: Jon Johnson, Editor
Copyright 2012 | All Rights Reserved

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

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com

Stocks Overcome Minor Selling Attempts

SUMMARY:

- Stocks overcome minor selling attempts on the week, post gains along with some new post-bear market highs.
- Still feels as if you have the tiger by the tail, but thus far the tiger has not tried to swat us.
- Gallup puts Unemployment at 19.2% as CBO tells us long-term unemployed still at 40%, where they were in 2009.
- Philly Fed forecasting 30K jobs created in February. Why won't people hire?
- CPI 'lighter' trumpet the headlines, but the core is hot and getting hotter: beware gasoline prices.
- Sticking with what is working but the ranks of quality new plays are growing thinner.

Stocks hit some bumps but continue higher.

Hello fellow investors and traders. Let's face it, we all have to be traders to a certain extent right now, like it or not. Although we do still have investments. What about PCLN? You remember this company we bought way back in 2010 at $188, and today it was trading at $582. It was breaking out, as a matter of fact.

SOX overcame some minor selling on the session and on the week to post relatively nice gains. After all, stocks were trading laterally the prior week, and this week, even though they had issues getting away from that lateral range, they overcame them and rallied Thursday and Friday. We have had a few bumps along the way. Last Friday the stock market sold. It looked a bit shaky. Monday it bounced right back, but we had those sell on close orders. Wednesday the market sold back down, but it held the 10 day EMA again. Thursday it was back up, but there were those sell on close orders once again. Some former big buyers were now pretty big sellers, dumping shares. Friday did not seem to cause much of a problem, however.

Stocks were starting to the upside. They sold off and gave it all back early in the day, but then a slow, steady melt higher once more as another dip (this one intraday) was used as a buying opportunity. Looking at the SP500 chart, there were dips last Friday, then on Wednesday, but buyers stepped in and used the dips as an entry point as they have all along in this rally. There was no grand breakout move. Just more upside. That is not too bad given where the indices are. SP500 is still trying to get through its May peak. Other indices made it. NASDAQ continued to move higher above its prior post-bear market high. The Dow finally made more of a substantial move on Friday, clearing this two-week range where it played footsie with the old post-bear market high. Now looks like it might try to motor a bit. There was a good volume spike, but it was expiration Friday, so we cannot put too much into that.

All in all, it is hard to complain about the action on the week, particularly given that there were some hiccups. There was some actual selling showing up, but the market overcame it. The bids are still there. I was worried a few weeks back and spoke of the bids running out. They keep bumping up against the same resistance as the indices were bumping up against those prior highs, and there is the inability to break through. Sometimes that wears out the bids, so to speak. It exhausts the buyers and the sellers just wait them out. Once the buyers do not have anything left, the sellers can swoop in and knock stock prices backward. They took their shots last week, but they just were not able to knock them back. On Friday stocks managed to post gains and put in some decent moves on the indices.

SP500, +0.23%; NASDAQ, -0.27%; Dow, +0.35%; SP600, -0.03%; SOX, -0.88%; NASDAQ 100, -0.31%.

The SOX was up over 2% on Thursday and posted another solid gain on Wednesday as well. It was doing just fine. Why would the NASDAQ 100 be down? Big cap techs. AAPL was flat on the day. Some big names were unable to rally, and AAPL had that reversal on Wednesday. It looked like things were okay on Thursday. It held the 10 day EMA on a gap lower and reversed off of that, but it takes time for this kind of pattern to work through the system. I suppose it is good that they did not break down further, but it is not out of the woods yet given that Wednesday reversal.

All in all, not a bad week for stocks. Although there are still issues that I talked about last weekend that are still in play. That would be the double bout of selling attempts over the past week. They were not successful but, again, on the bounces at the end of the day there were sell on close orders and some big volume. That means there is some big money dumping shares the day after a selloff on a rebound. They are closing out their positions anyway. They were not buying into the dip as many were. They were selling at the peak of the dip. If they had been buying on the dip, obviously it would have been a bigger move. They were waiting, and they sold when the market went to close. Just so happens that, thus far, the market still found enough bids to overcome those sellers.

I talked about AAPL with its Wednesday reversal day. It held up, and that is good, but the jury is still out. Looking across the market, there are fewer stocks out there with those nice rounded bottoms that we can catch. We caught many of these in Q4 for the run higher to end 2011 and begin 2012. Those provided great gains for us to the upside. Now there are not that many. As noted last night, it is the missing demographic in the continued attempts for the market to move higher.

At the same time, there are more downside setups showing up. Some are in key areas such as the transports. KSU is a stock that we have been looking to play to the downside. We are seeing more topping patterns develop. Not more topping patterns than upside -- not at all. Just that more of them are developing. We are still looking at it for this weekend, but at this juncture I do not see a plethora of rounded tops that would be the antithesis of these rounded bottoms.

I talked a lot in October and November about the rounded bottoms that were setting up. I was excited about it. We felt that meant we were going to get the market rally. That was the whole point behind our thesis that we would get the run up to the prior highs in the SP500 and the other indices. That is exactly what happened. We rode these stocks to the upside. Others were already on the way as well; it was not all the rounded bottoms, but they provided a big foundation for the market to rally. We are watching for rounded tops. Not as many are setting up now, but some of those patterns look like they may be setting up a pennant. Those can give you a bit of a curve ball sometimes. Not that FTK is negative. We were looking at it as an upside play, but you can see what happened. MACD came up and hit a new high. It is just rolling over. It is not able to do anything with it. No major breakdown. It could just be a shakeout. We are watching it. You have to start watching patterns like this. There are some even bigger than this, stretching out over two or three months. Those are more of a worry than FTK. We see rounded tops forming, just not nearly as many as the rounded bottoms. If we saw multiple rounded tops in key stocks as well, that would be the indication that we would get a pullback, and a pretty good one at that. We are just not seeing that right now.

The overall economic data is solid. Retail Sales were not as great as expected, but if you ex out the autos, they were solid. And there were great revisions. The manufacturing numbers were good with Empire Manufacturing and the Philly Fed. Industrial Production and Capacity where not bad. Capacity was quite solid, thank you. Initial claims continued to improve. Housing Starts were higher than expected with a 1.5% rise. You can see what I am talking about. Where he getting better data, and that is on top of other data that was solid as well.

The U.S. data is looking good and, by golly, Europe seems to have it under control. I am not saying it is for certain, but it is giving the appearance of control whether it is in charge or not. Looking at the LIBOR rates, the dollar LIBOR went down to a new low on this selloff at 0.49. For the second day in a row, Friday, it continues to show less stress between the banks. The bond markets are improving. Portugal, Italy, and Spain yields are dropping significantly. If you are going to trust any market, typically it is the bond market. Of course there has been a lot of monkeying around with bonds given the government interventions, but they are showing that things are improving. LIBOR and the bond markets give pretty good insight that things are getting a bit better on the continent.

So is everything all candy and nuts now and we are all going to be happy at Christmas because of this? Everyone seems to think so. There is a lot of bullish sentiment out there. We had Barron's with its Dow 15K headline. We had the almost unending run higher in AAPL. And it is not just AAPL. CMG is running higher as well, day after day to the upside. COH is moving higher day after day. Well known, well loved, and moving higher. TJX is clicking them off with these slow moves right up the 10 day EMA. Just working its way higher.

A lot of people think we have hit nirvana when it comes to stocks with their steady moves and not giving any back. That is when you have to be a little worried. There is never nirvana in the market, although it seems like it sometimes. Everyone was partying too hard for too long back in 1999 and early 2000. They had a really bad headache afterwards... for years. The point is that we are getting pretty ebullient about stocks -- although the retail investor is not really in the market. Nonetheless, there is getting to be a lot of whipped-up sentiment, and people are coming around. It is ironic that AAPL made that great move and almost to the day that Barron's put out the Dow 15K article, AAPL surged and then reversed on high volume. Maybe that was just outstanding timing or maybe it is a little bit of foreshadowing.

Last week I said we had the tiger by the tail, and I think we still do. He may have seen us and tried to shake us off a little over the past week with those two downside days, but they were immediately followed by buying. Maybe he is planning something. Maybe he knows we are back there now and is scheming. We had those sell on close orders for two days. Big sells. We had AAPL reversing. We had a lot of great feelings in the market that everything is fine, and we have a lot of feeling in the economy that everything is fine. I have chronicled over the week that the economy is actually a piece of crud, although it is improving. Maybe it does not smell as bad and looks a little better, but crud is crud.

You can see what I am getting at. You have to be careful. Everyone is getting somewhat complacent. The tiger knows we are there. We will keep hanging onto that tail and following him along, but if he turns around and starts swinging at us, we will get out of the way pretty quickly. We are already moving into some downside plays, and we got knocked back on one of those this week had to close it. But we had some other good entries that I think could make us some money. If things keep hiccupping along, there will be some early fallout stocks that could make us money to the downside. That is the way it always is. There are always early leaders to the upside that everyone on follows, and there are always early leaders to the downside that most everyone follows that way.

The tiger is still running, and we are running with it. We are trying to figure out what tree are we going to jump off on. We were all laughing about it in the office today. If a stock looks at us sideways, we all said we would get out of them. We may be hyper paranoid right now, but we are seeing stocks do some pretty strange things on the day. HMSY sold off sharply. It rebounded, but it never really regained its trend. It closed below the 20 day EMA. It has been holding that for months on end. I like JAZZ a lot, but it sold off hard. It came back. We were just about to leave it because it was above the 2012 trend, but then it faltered. Got away from it.

We have some stocks that performed very well and have been market leaders. They are now coming under fire. The tiger is taking a swat here and there. It is just a matter of time before the tiger comes back to take a swipe at us. How do I know that? Because of history. I do not know precisely when it will happen; no one does. A lot of people think they do. What is more likely is the pullback similar to the one in Q4 of 2010. It was after that inverted head and shoulders bottom over the summer of that year, the rally back up to the prior highs, and JUST ABOVE the prior highs. Does that not sound familiar? And then the fade to test. But Quantitative Easing was still in place, so the rally continued.

We have not had our real test yet. We moved laterally, but that was not really a test. I still think we could come back and sell. We are starting to see more action that would line up with that idea and pull us to the downside. But it has not happened yet, so we are running with the tiger. We are still going into stocks. We saw buys we wanted like PCLN today. Long base, broke out, and tested it. That was a beautiful setup. I do not care if the market is at a zenith; PCLN looks like it wants to go up to $1000 again. I am not saying that is your target -- because I am not that stupid -- but I also bought some stock back at $188 and now it is trading at $582. You can still invest is some of these. I am not buying stock right here, although maybe it is a good play to do so. Maybe LEAPS could be a good thing to buy on PCLN if we are planning on it going potentially to $1000. That is something to consider. WFM is in its mid range, and it broke to the upside. It did a nice job of it, too. It still has room and could make us money. We are not looking for it to go up to $500. We are looking for it to trade up to the top of the range near 90. That is a start. That makes us some good money and puts the kids into college a bit better.

We have the tiger, but we still have some great stocks that are running along and will run interference for us. Maybe they are showing that the tiger does not really care about us right now. He just wants to head down the road. Since we are not holding him back, maybe he will let us ride along.


OTHER MARKETS

Dollar. 1.3158 versus 1.3132 euro. The dollar had a rough day, but it had a good week overall. It closed sharply lower against the euro. The yen is stinking so badly this week that the DXYO did not tank. Indeed, it gained on the week. The euro was up sharply on the week and the yen was down sharply on the week versus the dollar. That left the DXY0 up but off its highs on the week.


Bonds. 2.01% versus 2.00% 10 year U.S. Treasury. Bonds were flat on the day. Back down at the bottom of the range, but still holding the range. Bonds are not giving up. They are not totally convinced that everything is fine in Europe. If it was, then money would be fleeing back to the continent and our bonds would go down in price and up in yield. They are up in yield, but they have not broken through the bottom of the range.


Gold. 1,725.70, -2.80. Gold was flat on the week. Flat is not bad. Gold is holding the test of the breakout of the channel. Not bad action at all. It still think gold is going higher from here. Why? The EU is adopting all the U.S. strategies on how to liquefy your way out of problems. Ultimately that leads to some pretty hellish inflation, and that is what will put gold to the upside. The thing holding gold back this week was the lack of fear. It was the fear being taken out of the equation in Europe. Inflation will take charge again. We saw it in the U.S. CPI numbers. When that happens, gold will head back to the upside.


Oil. 103.27, +0.73. Oil looks unstoppable. It is right at the top of its range. International pressures are adding to it as well as simple stupidity in the U.S. Gasoline hit a new high at 3.53 per gallon. That was up from last week, and it is up 92% since President Obama took office. Oil will create problems for the economy, no doubt.


The other markets were acting like you would expect them to act. That is not necessarily good for us when looking at the price of oil and how gold is setting up, looking at inflation over the long run. But the market has not stopped. It has overcome the little bit of adversity that has been thrown its way, so we keep running with the tiger. We have him by the tail. He could turn around and maul us at any time, but we will run with him for as long as he will let us.


TECHNICAL SUMMARY

Volume. NASDAQ, +1.5%; NYSE, +11%. It was expiration, so you would expect a little higher volume. That is what we got, and it still was not very high volume at that.


Breadth. NASDAQ +1:1; NYSE +1.4:1


THE CHARTS

SP500. The notables: On Friday a break lower and rebound. Wednesday a break lower. Thursday a rebound. Now a new rally high. Still not over the prior post-bear market highs, but moving in that direction up toward 1375. It will be the moment of truth. It may stop these moves or it may not, but it looks like the SP500 will be the last of the majors to make it to that level.


DJ30. DJ30 finally broke out of its highs a bit decisively. Looks like it could put some moves on it if it wants to. Lateral consolidation for two weeks, breaking higher. Could be off to the races like PCLN. We will see.


NASDAQ. NASDAQ pulled back on the day. AAPL and the big boys were not helping out, but it extended its lead over its prior 2011 post-bear market highs. NASDAQ continues to be the leadership index.


SP600. The small caps made a decent comeback on Thursday. Friday they were matching the prior bear market highs, but still below the nominal new high hit in early February. This is the lick-log point for the small caps. Will they be able to break through and extend the move like NASDAQ and perhaps the Dow? Or will they be stuck here spinning their wheels?


SOX. The SOX had a very good week. It was up nicely Tuesday, Wednesday, and Thursday. Gapped higher and sold back on Friday. Technology had a bit of trouble. Growth had trouble on Friday, but this did not turn the tide on this move. A nice breakout over the November and December peak, and there is a good rally to the upside underway. It even cleared that July 2010 high. Still a lot of resistance ahead, no doubt. One of the major points of resistance is at 450-455. About the best the SOX could do was 439. It still has room to run. If the rest of the indices wants to move, SOX can help push in from below


LEADERSHIP

It was not a bad week for leadership. I will go through several different stocks that performed fairly well.

STX gapped higher on earnings. It has moved laterally nicely. Looks like it wants to make the break to the upside. Of course there is the PCLN juggernaut. It came to life in mid-January and it is looking super to the upside. Not bad at all. TXN is a key chip stock. It is still struggling to get over those prior peaks, but it has put in something of an ascending triangle. Maybe it can make the move. TEX has really been interesting. It continues to move to the upside. TJX is continuing to move higher up the 10 day EMA and 20 day EMA. These stocks are showing continued buying. Another building-related company is TREX. It has had a bit of trouble at the end of the week, but it came right back.

As long as these stocks keep performing as they are, we have that tiger by the tail. We will let him keep running. We do not see the breaks. We do not see the rounded tops yet. We do not see those clear flags that tell us to get out. We are not seeing that at all, but we are being careful. If we see a stock that looks like it will get in trouble, we take it out and shoot it before it shoots us or drags us down. We do not want to be like one of those guys caught on a line in "Deadliest Catch." They are out catching crabs, and when a guy goes overboard he is frozen like a popsicle and dead in two minutes. That is what happens when a stock starts dive on you and you do not cut the cord rapidly enough. It does not necessarily kill you (although it can), but it bleeds our gains away. Just do not do it. If the market keeps going up, we will other opportunities. We still have many great plays to continue higher for us.

We still have leaders that are running. We just do not have a lot of those in the rounded-bottom genre. There are a few out there. We will continue to put them on the report, but they are not showing up as fast as they used to. That is just a factor of how far the market has run right now. We have that tiger by the tail. We are letting him run, and we still have leaders running. They are making us money, and we will not say no to that.


THE ECONOMY

Gallup pegs the accurate unemployment rate.

Philly Fed and jobs: the connection.

CPI core is showing inflation.


TO VIEW THE ECONOMY OVERVIEW CLICK THE FOLLOWING LINK:

Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.html



THE MARKET

SENTIMENT INDICATORS

VIX: 17.78; -1.44
VXN: 19.76; -1.13
VXO: 16.33; -0.8

Put/Call Ratio (CBOE): 0.75; -0.13


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: 52.1% versus 48.9%. After a dip from 50.0% bulls are picking up steam. At the highest level since April and May of 2011, the peak of the post-bear market high. Now the indices are back at that level and so are the bulls. All the more reason to watch this action at the prior highs. 35% is the threshold measuring bullish versus bearish action. Six weeks the bulls were below bears. A powerful sentiment signal but now dissipating. 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: 28.7% versus 29.8%. Still around the 30% level but starting to back off, matching the same level as three weeks back. A bit less fearful as the indices probe the prior highs. Not at a bearish level but they are growing more confident even as the market hits the prior highs and is not blasting on through. 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: -8.07 points (-0.27%) to close at 2951.78
Volume: 1.933B (+1.52%)

Up Volume: 836.27M (-783.73M)
Down Volume: 1.08B (+779.13M)

A/D and Hi/Lo: Advancers led 1.02 to 1
Previous Session: Advancers led 3.23 to 1

New Highs: 126 (+11)
New Lows: 12 (-1)


SP500/NYSE

Stats: +3.19 points (+0.23%) to close at 1361.23
NYSE Volume: 831M (+11.24%)

Up Volume: 1.99B (-1.46B)
Down Volume: 1.66B (+1.107B)

A/D and Hi/Lo: Advancers led 1.4 to 1
Previous Session: Advancers led 3.01 to 1

New Highs: 174 (+39)
New Lows: 2 (-5)


DJ30

Stats: +46.02 points (+0.36%) to close at 12950.1
Volume DJ30: 234M shares Friday versus 134M shares Thursday.


TUESDAY

There is a three-day weekend, so we will be starting things off on Tuesday. That could be interesting because Monday brings the interminable votes with respect to the Greece bailout. They have a few votes a week. Maybe they voted on the week before, but that was not binding so they have to vote again. And this other one was not really the right vote. You get the idea. We have that on Monday. They are planning to put the serious news out on Tuesday when the U.S. markets are open so they can react to that. That is what we hear. There will be something happening. In Europe there always is, right? No big deal there. The issues are if something happens in Iran or someplace similar. But no one can control that anyway.

It is a three-day weekend. What do you do? No one was selling, that is for sure. There was no real desire to sell. It was expiration, so that colors the tape a bit. It is hard to complain about the way things closed. Tuesday is a whole new story, and we will see what happens. The data does not come out until Wednesday. Existing Home Sales come out a half hour into trade. They are important. Then we have the usual Initial Claims on Thursday. On Friday we have the Michigan Sentiment final for February and New Home sales. Some important reports, although backing off.

What do we do at this point in the market? We continue doing what we have been doing all along in this rally. Of course we cannot do it to the same degree we were because we do not those nice, rounded bottom plays coming off of the double bottoms or the rounded bottoms or the cup with handles, or whatever they were forming down there. We had inverted head and shoulders, triangles. We saw a bit of everything. The common denominator was that they were putting in some form of a bottoming pattern, and they have broken higher and run for two to three months on top of that. We will stick with that because it has not changed.

We do not see dramatic changes in leadership, although we do see some that are having problems. The problem is the ranks of the upside quality plays are growing thinner. We are trying to stick to well-known names in great position if we can. There are other stocks in great position that have great patterns but are not as well known. That is not bad, but if the market starts to buck those are stocks that are jettisoned first. People do not really know them, so they just hang on to the household name stocks like AAPL. You do not want to get too heavy into lesser-known stocks just as you think the market might be moving toward some kind of top before a pullback.

That leaves you in a dilemma. You want to stick with quality, but you have to have quality names that give you the right kind of risk/reward. You do not want to put a dollar at risk for a dollar risk of loss. That is a losing proposition over the long run. You want to get those odds in you are favor. You want to have three points to make to the upside without having to break any resistance to one point to the downside to your support. There should be a support level there, and your stop loss can be right underneath that as a little firewall. As they said in Gettysburg, "This is damn good ground." That is good ground, and you want that big support (or resistance if you are playing downside) between your stock and where your stop is. That gives your play a chance to run even if it wants to test. It will hold at that support and bounce again.

You want to find those plays, but they are harder to find. They hate me here in the office because I keep saying "That will not work. That is not good enough. No. That will not be a play with enough quality." It is driving the guys crazy, but that is where you get the big bucks. That is why we keep finding those and it is what we will focus on. We will stick with what we are doing. We will hang onto that tiger's tail, letting our positions run, but we will be ruthless in protecting them as we have been.

We have a list of stocks that are on the bubble. Positions that are not maybe working as well as we wanted them to given the market rise. The patterns are not exactly what we want to see, but they are still working on it. But if they get in trouble then, boom, they are gone. The list is shorter because we have closed a lot of those positions. We have been fortunate that we can still close them with gains. We are not losing any money and actually putting more money in the bank as we do close them. We will continue to look that way, but we have to be flexible. We will be looking more downside as well. Keep your eyes open for rounded tops, head and shoulders setting up. Things that go bump in the night where you have highs and highs, but lower MACDs and the higher high. Just as we had higher MACD at the lower lows on the bottom. That is the circle of life. It goes up; it goes down. It is the symmetry of it all that is so compelling. We will have problems when we start seeing more tops like this, bottoms like this, or stocks that are still continuing to put those little pyramids one on top of another as they hold their trendline. We are not there yet, but we will probably see more of those as time goes on in this rally.

We will just take what the market gives along the way, adjusting accordingly. We will naturally move from a bullish, upside bent to a more bearish downside position as the market morphs into the pullback stage. I want to reiterate, as I did on Thursday, that I am not talking about a major selloff. I am talking about a pullback to test the October highs or the 50 day EMA, similar to what the market did in Q4 of 2010. It came back to test after matching (or just besting) the original rally high off of the bear market low.

I will see you on Tuesday. Have a great weekend!


Support and Resistance

NASDAQ: Closed at 2951.78

Resistance:
3026 from 10/2000 low
3042 from 5/2000 low


Support:
The 10 day EMA at 2919
2888 is the May 2011 peak and post-bear market high
2879 is the July 2011 peak
The 20 day EMA at 2875
2862 is the 2007 peak
2841 is the February 2011 peak
2825 is the 2007 closing peak.
2816 is the early April 2011 peak.
The 50 day EMA at 2778
2754 is the October 2011 high
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
2686 is the January 2011 closing low
2676 is the January 2010 low and the December 2011 peak
The 200 day SMA at 2665
2645-2650ish from December 2010 consolidation
2643 is the September 2011 high
2612 is the late August 2011 peak
2603 is the March 2011 intraday low (post-Japan low)
2599 is the June 2011 low and NASDAQ
2593 is the November intraday high
2580 is the November 2010 closing high
2572 is the November 2-11 gap down point
2555 is the mid-August 2011 peak
2546 is the early September 2011 gap down point
2535 is the November island reversal gap point
2532 is the early August gap down point
2469 is the November 2010 low
2441 is the November 2011 low
2331 from October 2010 low and the August 2011 intraday low
2305 from the August 2010 peak (summertime base)
2139 is the May and June 2010 low


S&P 500: Closed at 1361.23
Resistance:
1364 is the March 2007 low
1370 is the August 2007 low
1371 is the recent May 2011 peak

Support:
1357 is the July 2011 peak
1344 is the February 2011 peak
1340 is the early April 2011 peak
The 20 day EMA at 1335
1332 is the early March 2011 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 1302
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
1258 is June 2011 intraday low
The 200 day SMA at 1257
1255 is the late December 2010 consolidation range
1249 is the March 2011 low (post-Japan)
1235 is the mid-December 2010 consolidation low
1231 is the late August 2011 peak
1227 is the November 2010 peak
1220 is the April 2010 peak
1209 is the mid-August 2011 high
1196 is the November 2010 consolidation peak
1178-1180 is the October 2010/November 2010 consolidation low
1158 is the November 2011 low
1131 - 1127 from August 2010 base peak.
1119 is the early August closing low
1109 is the mid-September 2010 gap up point
1101 is the August 2011 low
1075 is the October 2011 intraday low
1099 from the mid-July interim peak


Dow: Closed at 12,949.87
Resistance:
13,058 from the May 2008 peak on that bounce in the selling

Support:
12,876 is the May high
The 20 day EMA at 12,771
12,754 is the July intraday peak
The 50 day EMA at 12,508
12,391 is the February 2011 peak
12,284 is the October 2011 peak
12,258 is the December 2011 peak
12,110 from the March 2007 closing low
12,094 is the April 2011 low
The 200 day SMA at 11,993
The June low at 11,897 (closing)
11,893 from March 2008 closing low
11,867 from the August 2009 high and peak on that bounce in the selling.
11,734 from 11-98 peak
11,717 is the late August 2011 peak
The August low at 11,702
11,555 is the March low
11,452 is the November 2010 peak
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

February 14 - Tuesday
Retail Sales, January (8:30): 0.4% actual versus 0.8% expected, 0.0% prior (revised from 0.1%)
Retail Sales ex-auto, January (8:30): 0.7% actual versus 0.5% expected, -0.5% prior (revised from -0.2%). Largest rise since 2/11.
Export Prices ex-ag., January (8:30): 0.0% actual versus -0.2% prior
Import Prices ex-oil, January (8:30): 0.1% actual versus 0.2% prior, +7.1% yr/yr
Business Inventories, December (10:00): 0.4% actual versus 0.5% expected, 0.3% prior

February 15 - Wednesday
MBA Mortgage Index, 02/11 (7:00): -1.0% actual versus 7.5% prior
Empire Manufacturing, February (8:30): 19.5 actual versus 14.0 expected, 13.5 prior
Net Long-Term TIC Fl, December (9:00): $17.9B actual versus $61.3B prior (revised from $59.8B)
Industrial Production, January (9:15): 0.0% actual versus 0.6% expected, 1.0% prior (revised from 0.4%)
Capacity Utilization, January (9:15): 78.5% actual versus 78.6% expected, 78.6% prior (revised from 78.1%)
NAHB Housing Market Index, February (10:00): 29 actual versus 26 expected, 25 prior
Crude Inventories, 02/11 (10:30): -0.171M actual versus 0.304M prior
FOMC Minutes, 1/25 (14:00)

February 16 - Thursday
Initial Claims, 02/11 (8:30): 348K actual versus 365K expected, 361K prior (revised from 358K)
Continuing Claims, 02/04 (8:30): 3426K actual versus 3505K expected, 3526K prior (revised from 3515K)
Housing Starts, January (8:30): 699K actual versus 671K expected, 689K prior (revised from 657K)
Building Permits, January (8:30): 676K actual versus 675K expected, 671K prior (revised from 679K)
PPI, January (8:30): 0.1% actual versus 0.3% expected, -0.1% prior
Core PPI, January (8:30): 0.4% actual versus 0.2% expected, 0.3% prior
Philadelphia Fed, February (10:00): 10.2 actual versus 10.0 expected, 7.3 prior

February 17 - Friday
CPI, January (8:30): 0.2% actual versus 0.3% expected, 0.0% prior
Core CPI, January (8:30): 0.2% actual versus 0.1% expected, 0.1% prior
Leading Indicators, January (10:00): 0.4% actual versus 0.5% expected, 0.5% prior (revised from 0.4%)


February 22 - Wednesday
MBA Mortgage Index, 02/18 (7:00): -1.0% prior
Existing Home Sales, January (10:00): 4.63M expected, 4.61M prior

February 23 - Thursday
Initial Claims, 02/18 (8:30): 355K expected, 348K prior
Continuing Claims, 02/11 (8:30): 3450K expected, 3426K prior
FHFA Housing Price Index, December (10:00): 1.0% prior
Crude Inventories, 02/18 (11:00): -0.171M prior

February 24 - Friday
Michigan Sentiment - Final, February (9:55): 73.0 expected, 72.5 prior
New Home Sales, January (10:00): 315K expected, 307K prior

By: Jon Johnson, Editor
Copyright 2012 | All Rights Reserved

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

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com

Indices Struggle with Prior High

A modest pullback as the indices struggle with the prior highs.

A Greek bondholder deal is not a Greek austerity deal. Investors were concerned because there were riots in the streets, and the head of one of the three political parties said he would not vote for the current austerity package because it was designed to humiliate the Greeks. They did not want to be under the boot of the Germans. That sums up the feeling on the continent about those haves and the have-nots. Those who have already gone through their austerity and have relative prosperity versus those who just wanted to do their own thing.

I am reminded of the cartoon about the grasshopper and the ant. The ant worked so hard during the days of summer to put away food while the grasshopper sat back, strummed his guitar, and sang a song about how working could wait. Come winter, the ant had a nice, warm home full of food, and the grasshopper was starving to debt. You know the story. I do not think the Greeks would appreciate that analogy, but it is somewhat similar to how things are going. They have to bite the bullet and, as I said the other night, we will have to do the same at some point. They do not want to do it, and that is understandable. As I mentioned last night, we did end up seeing pictures with the haze of not only tear gas but of burning autos dimming the natural beauty of Greece. It is a shame for such a beautiful place.

That news roughed up the futures, and they were starting to the downside. They tried to recover a bit into the open and could not make much of a move. They were heading in the right direction until things started. They did recover, and then it was back and forth the entire day, never gaining any kind of traction. It looked like things were turning up at the opening bell, but the Michigan Sentiment numbers brought the market right back down. They were not horrible, but they did miss expectations. It did not do much from there, although it did manage something of a late rally that cut the losses. But that is all it did.

SP500, -0.69%; NASDAQ, -0.8%; Dow, -0.69%; SP600, -1.42%; SOX, -2%; NASDAQ 100, -0.65%.

AAPL was not able to keep the NASDAQ 100 going, although AAPL was up pretty decently early in the session before things lost their mojo. Then it fell into that backsliding mode.


OTHER MARKETS

When there is worry about Europe and Greece, we start having improvement.

Dollar. 1.3171 versus 1.3290 euro. The dollar managed to bounce, but it was down on the week. Money continued to flow back to Europe from the U.S. on the sign that things were a bit better. That is, of course, taking Friday out of the equation. There is just something about people rioting in the streets, tear gas, and fires that quell the feeling that everything is just fine.


Bonds. 1.96% versus 2.04% 10 year U.S. Treasury. Bonds rebounded with a bounce back up toward the 50 day EMA. Back in the range but at the bottom of the range nonetheless. Money is being moved back out for the same reason it is moving out of the dollar. They are better on the day, but overall they are still trending down as money flows back to Europe.


Gold. 1,725.30, -15.90. Gold was up and down, but it still finished lower. It did rebound after hours and improve itself. It still looks like it will try to make a bounce. It held the 20 day EMA on the low, and it bounced nicely off that level.


Oil. 98.68, -1.23. Even though we imported incredible amounts of oil at an all-time high in 2011, it was down on the day. It also tested lower, but it rebounded and bounced up higher in its range this week.

Oil is still range bound, as are bonds, the dollar, and gold. They are all trading in a range, and they are all trading as you would expect as the news comes out day to day. But none of them are breaking out or breaking down. That tells us that things are not necessarily decided in Europe. Our stock market has rallied in anticipation of maybe a resolution, but then bonds have sold back, raising yields. But there have been no major breakthroughs that would suggest anything serious has changed. We head into another week with the markets banging up against those old highs yet again. And bonds, the dollar, gold, and oil are all roughly moving around in their ranges as well. It is as if they are all waiting for the definitive moment to take place or something new to come out.

With the markets where they are now, on Friday we saw that they can be rattled a bit. No doubt the market is a bit overbought and subject to upset when the news does not go its way. Greece did the market no favors, one that has its indices trying to break through the prior highs. There were some nominal breaks over the past week, but nothing that was able to extend and rally to the upside. The selling was pretty innocuous. It was not heavy across the board. Volume was lower. It was not anything that will scare investors too much ...yet. That is the way it always starts, however. It is something little. It reminds me of the Kurt Russell movie 'Big Trouble in Little China.' They were questioning Egg Shen and he says, "It was just a little thing. But that is how it always happens." We had just a little move on Friday, but that does not mean there will not be more selling. Sometimes the selling comes in quietly like a thief in the night. Other times it is like shock and awe when it starts. We have had a good run to the upside. Buyers still want to buy in, and we may just have a nice backslide. That remains to be seen, and this coming week will answer more of those questions.

Maybe it is a bit down the road, but a test would not hurt at all. As you know, we were taking positions seriously. If they showed signs of trouble, we were getting out of them. We want to keep the gain we have. One of the problems with the market is it has a lot of potential inflation because of all of the money printing. You want to make as much money as you can to keep ahead of inflation. You want to buy some commodities and buy some gold, and that is what we have been doing. You kind of take care of things from both ends. As Ronald Reagan said, one of the most patriotic things you can do is be a person for free enterprise, start your own business, make as much money as you can, and then give as little of it as you can to the government. When you are in an inflationary environment, that is all the more important. You have to hang onto all those extra bucks because they will be worth less. Not worthless, but worth less.


TECHNICAL SUMMARY

The internals were not that impressive.

Volume. NASDAQ -18%, 1.75B; NYSE -1.7%, 697M. Volume was down, and it was already quite low even before that drop. Volume overall has fallen considerably, so overall volume will not shock you if it is lower or higher.

Breadth. NASDAQ -2.9:1; NYSE -3.1. Decliners led thanks to the small caps suffering. Pretty obviously slanted toward the downside, but nothing grotesquely out of the norm or compared to what we have seen over the past year.


THE CHARTS

There was no big action. Friday was rather innocuous. It is a small start that may lead to something, but it was not showing it on Friday.

SP500. SP500 is back below the February peak, but it is holding the 10 day EMA. It is still in the steady rise. Looking at this, you might say this is no issue. If you ignore all of the tops, you may think that is no big deal at all. But that is not the case. We know they are there, but thus far the market has not broken. You just have to be concerned in the event that things get worse. What looks to be nothing can (as easily as not) develop into something, particularly when you are at prior highs.


DJ30. The Dow shows this. It broke through, but it just could not make it stick. The fell to the 10 day EMA as well, and now it is trading around in a range. It is still trying to hold, but it could easily come back and test the 50 day EMA that is marked roughly with the late-October peak. We have a place that is perfectly logical for the market to pull back and then turn back to the upside. That is much more logical than continuing on as it is without a pullback. Then again, the market does not always act according to our logic.


NASDAQ. The NASDAQ is very similar. It is holding its breakout, sitting with a doji on the 10 day EMA. A little island reversal. On Wednesday to Thursday there is a gap, and on Thursday to Friday a gap to the downside. Maybe that will lead to more selling, but it is nothing heavy duty. The bigger ones were back a week ago with that gap to the upside. If it gaps down from there, we have a pullback to the 50 day EMA. It is also roughly coincident with the late-October peak.


SP600. The small caps are a bit more interesting. The SP600 does not show a lot. Up and down, sliding just below the 10 day EMA. But if you look at the ETF that is traded, it gapped in something of an island reversal that one of the subscribers pointed out today. It gapped upside last week, it gapped downside on Friday. Could be a selloff. But how deep? You just look for a pullback down to that October high. At this point there is nothing to suggest otherwise.


SOX. The SOX was beaten up a bit. The chips took it on the chin. They have been one of the leaders, and they were roughed up somewhat. The question is whether they are going to lead to the downside. Some patterns got suddenly quite rocky. Not terrible, but not as comfortable as they were. It was like going over a big pothole in the road. The question is whether it smoothes back out or if we have more potholes that degrade and take it down to these October and early-November highs.

The markets are bumping up against those highs. There were some nominal breaks that everyone was excited about, but they are not able to push through. There is no follow-through, and that is something I always talk about. That is the key to anything whether it is a breakout of a stock or a selloff off a stock that breaks below support but then comes back and does not sell off. No follow through. The buyers cannot push the indices up through that resistance and make it stick or put mileage between it and those key points. If there is no follow-through, then the other side (whether you are upside or downside) tends to come back in. They push back and have some backsliding. That leaves us the possibly that we could have a bit of trouble, but that is what we have been looking for.


LEADERSHIP

Semiconductors. The chips are struggling a bit. Nothing major, but a bit of a struggle. ALTR is coming back toward the 200 day EMA. TXN is gapping downside, having a hard time getting through that early-January high. MRVL is one we have been watching and playing. It has been struggling. There is a little bit of hitch in the get-along, but that is okay. We are just being careful. We can get better setups out of these with a pullback. Why ride through something that is not looking that great in hopes that it gets better? Instead we can just let it come back and give us a test that sets it up a lot better. That is the theme I have been hounding you about for the past week. If you have a little trouble, do not mess around; just take it off the table and then maybe we will come back and later get a better buy on it.

Technology. It was a great week for AAPL. It was up 0.25 on Friday. It was showing a doji, but that was after a really nice run. We took some excellent gain off the table on the move. GOOG has had a good move to the upside. There are some interesting features. It has filled part of gap, and now it is up at a resistance point. If we draw another resistance line, it is bumping up against this range of resistance. We could see a downside move that would aid the market in testing. Is that not putting a positive spin on it?

Miscellaneous. Even though there are some trouble areas and potential problems, most every other area looks great from what we can tell. How do you tell? You look at the charts. I want to go through a group of stocks that we have that look good. TEX is performing very well. ARAY was off on the day, but it has had a great run. It was not showing that it is wearing out. TREX did not have a spectacular move, but it was down with a doji to the 10 day EMA. Plenty of positives with stocks still showing good action, good moves, and holding the market to the upside. That does not mean that these will continue to do so. Things start off quietly sometimes and then get worse. That is why we do not want to let positions get out of hand and start to hurt us.



THE ECONOMY

TO VIEW THE ECONOMIC SUMMARY VIDEO CLICK THE FOLLOWING LINK:

Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.html

Michigan Sentiment lower but in keeping with the recovering trend.


A wider trade gap is a good thing.




THE MARKET

SENTIMENT INDICATORS

VIX. Volatility did bounce. It rose significantly on the day. It was up +11.5%, but it tapped the 50 day EMA and backed off. That means the market is having a rough patch and reacting as you would think when it sold. It is still very low, but volatility can remain low for long periods of time. This will be the key move where it bumped that 50 day EMA because there are other peaks along the way from back in the summer and in late 2010. That will be a level up around 22 that tries to keep it in check.

VIX: 20.79; +2.16
VXN: 20.94; +2.04
VXO: 18.76; +1.86

Put/Call Ratio (CBOE): 1.1; +0.23


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: 52.1% versus 48.9%. After a dip from 50.0% bulls are picking up steam. At the highest level since April and May of 2011, the peak of the post-bear market high. Now the indices are back at that level and so are the bulls. All the more reason to watch this action at the prior highs. 35% is the threshold measuring bullish versus bearish action. Six weeks the bulls were below bears. A powerful sentiment signal but now dissipating. 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: 28.7% versus 29.8%. Still around the 30% level but starting to back off, matching the same level as three weeks back. A bit less fearful as the indices probe the prior highs. Not at a bearish level but they are growing more confident even as the market hits the prior highs and is not blasting on through. 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: -23.35 points (-0.8%) to close at 2903.88
Volume: 1.759B (-17.57%)

Up Volume: 405.95M (-654.05M)
Down Volume: 1.37B (+418.54M)

A/D and Hi/Lo: Decliners led 2.87 to 1
Previous Session: Decliners led 1.23 to 1

New Highs: 43 (-67)
New Lows: 14 (+4)


SP500/NYSE

Stats: -9.31 points (-0.69%) to close at 1342.64
NYSE Volume: 697M (-1.69%)

Up Volume: 819.86M (-1.45B)
Down Volume: 3B (+1.25B)

A/D and Hi/Lo: Decliners led 3.08 to 1
Previous Session: Advancers led 1.01 to 1

New Highs: 88 (-106)
New Lows: 11 (+4)


DJ30

Stats: -89.23 points (-0.69%) to close at 12801.23
Volume DJ30: 123M shares Friday versus 157M shares Thursday.


MONDAY

We are going into next week a bit cautiously, but we are looking for a test. Maybe it will hold and continue higher, but we are looking for a test that we can make plays off of. Plenty of data comes out next week. Tuesday we have Retail Sales back out. We have Business Inventories, and it will be important to see if they are rising. Empire Manufacturing is on Wednesday. On Thursday we have the Initial Claims, Philly Fed, Housing Starts, Building Permits, and the PPI. Friday we have the Leading Economic Indicators. Plenty to move the market, not to mention Greece and what will happen there over the weekend.

Considering all of that, we have to figure out what we want to do for the coming week. Frankly, I would love one more push to the upside and to take more gain off of the table. But you cannot count on that. The Friday action was not bad, but it may not get better. If we get a push downside, we need to be ready to continue what we are doing. Take gain off of the table, close positions, and do not let them hurt us. We have made a lot of great money, and we do not want to lose any of it. You will lose a little bit because, as you ride up, obviously you have positions that are not padded with a nice gain on them. You have to be quick. If you see they are in trouble, you take them off. If it gaps lower, then so be it. That is the way it goes.

It does not look like it will do that, but we are not going to sit around and wait for things to get down to the 50 day EMA without doing anything. We can buy back in at that point. I have a concern that this might be more than just a pullback. So many are positive that this is a great market to buy and that all we need is a little test and everything will be fine. But tests usually get to the point of discomfort. They want to scare you out as you see your profits evaporating. If you are back in the market down from October of 2011 and it comes right down here, then you will not feel much discomfort. But not everyone gets in right at the bottom, and you buy along the way. We do not want to get uncomfortable with positions. That is why we were taking them off of the table without much hesitation on Friday. We have been ruthless on them all week long, taking gains as well as taking trailing stop losses.

Just keep cool. There are still a lot of good patterns out there. We will look at some to the upside and some to the downside. There are some great patterns both ways, and we will get opportunity out of those. We have some that are still down at the bottom and ready to move up. If the market wants to go higher, if it gets some good news over the week, we could do that. We could get another week or two of run to the upside.

The market will go further than you think it should. Even now I think it should pull back. This is something that I have been thinking about all along. Remember, if it got to this target, I did not think it would go higher. But it could. That is just my thought; it is not the market's final word. I can kind of hear it walking up behind me and saying it might fall here. I am just listening and I am ready. I have a little adrenaline going (or maybe that is just coffee).

The point is we have to be ready. We need to know what we have, which is a good chunk of positions that are still in good shape. We have already banked a bunch of gain on them. If we get in any trouble, we want to take those off, too, and just wait for good opportunity. There are some of them that we can let ride. They are in great shape and we will not sell them out, like some old positions in AAPL. We might sell some calls on that, but we are not going to dump those shares because we have a little pullback in the market.

Again, my thesis is that this is just a pullback in the market and not a major decline. I may be proved wrong. If we get a pullback to the 50 day EMA or the late-October peak and it holds and we see a bunch of patterns setting up, we will be ready to buy again. We may be ready to buy on the way down if some early leaders find their purchase before the rest of the market and start move up. That is fine. We will just take them on a stock-by-stock basis. Overall I feel there could be a pullback, but we cannot be sure until the market lets us know. We have just been positioning ourselves to be ready for it, and we will continue to do so.

I will see you on Monday. We have a big week ahead, and we will preserve some money and make some money.

Have a great weekend!




Support and Resistance

NASDAQ: Closed at 2903.88

Resistance:
3026 from 10/2000 low
3042 from 5/2000 low


Support:
2888 is the May 2011 peak and post-bear market high
The 10 day EMA at 2881
2879 is the July 2011 peak
2862 is the 2007 peak
2841 is the February 2011 peak
2825 is the 2007 closing peak.
2816 is the early April 2011 peak.
2754 is the October 2011 high
The 50 day EMA at 2743
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
2686 is the January 2011 closing low
2676 is the January 2010 low and the December 2011 peak
The 200 day SMA at 2663
2645-2650ish from December 2010 consolidation
2643 is the September 2011 high
2612 is the late August 2011 peak
2603 is the March 2011 intraday low (post-Japan low)
2599 is the June 2011 low and NASDAQ
2593 is the November intraday high
2580 is the November 2010 closing high
2572 is the November 2-11 gap down point
2555 is the mid-August 2011 peak
2546 is the early September 2011 gap down point
2535 is the November island reversal gap point
2532 is the early August gap down point
2469 is the November 2010 low
2441 is the November 2011 low
2331 from October 2010 low and the August 2011 intraday low
2305 from the August 2010 peak (summertime base)
2139 is the May and June 2010 low


S&P 500: Closed at 1342.64
Resistance:
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:
1344 is the February 2011 peak
1340 is the early April 2011 peak
1332 is the early March 2011 peak
1325-27 is the March 2008 closing low and the May 2006 peak.
The 20 day EMA at 1323
1318.51 is the May low
1313 from the August 2008 interim peak
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
The 50 day EMA at 1290
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
1258 is June 2011 intraday low
The 200 day SMA at 1258
1255 is the late December 2010 consolidation range
1249 is the March 2011 low (post-Japan)
1235 is the mid-December 2010 consolidation low
1231 is the late August 2011 peak
1227 is the November 2010 peak
1220 is the April 2010 peak
1209 is the mid-August 2011 high
1196 is the November 2010 consolidation peak
1178-1180 is the October 2010/November 2010 consolidation low
1158 is the November 2011 low
1131 - 1127 from August 2010 base peak.
1119 is the early August closing low
1109 is the mid-September 2010 gap up point
1101 is the August 2011 low
1075 is the October 2011 intraday low
1099 from the mid-July interim peak


Dow: Closed at 12,801.23
Resistance:
12,876 is the May high
13,058 from the May 2008 peak on that bounce in the selling

Support:
12,754 is the July intraday peak
The 20 day EMA at 12,700
The 50 day EMA at 12,426
12,391 is the February 2011 peak
12,284 is the October 2011 peak
12,258 is the December 2011 peak
12,110 from the March 2007 closing low
12,094 is the April 2011 low
The 200 day SMA at 11,991
The June low at 11,897 (closing)
11,893 from March 2008 closing low
11,867 from the August 2009 high and peak on that bounce in the selling.
11,734 from 11-98 peak
11,717 is the late August 2011 peak
The August low at 11,702
11,555 is the March low
11,452 is the November 2010 peak
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

February 7 - Tuesday
Consumer Credit, December (15:00): $19.3B actual versus $8.5B expected, $20.4B prior

February 8 - Wednesday
MBA Mortgage Index, 02/04 (7:00): +7.5% actual versus -2.9% prior
Crude Inventories, 02/04 (10:30): 0.304M actual versus 4.175M prior

February 9 - Thursday
Initial Claims, 02/04 (8:30): 370K expected, 367K prior
Continuing Claims, 01/28 (8:30): 3475K expected, 3437K prior
Wholesale Inventories, December (10:00): 0.4% expected, 0.1% prior

February 10 - Friday
Trade Balance, December (8:30): -$48.8B actual versus -$48.2B expected, -$47.1B prior (revised from -$47.8B)
Michigan Sentiment, February Preliminary (9:55): 72.5 actual versus 74.0 expected, 75.0 prior
Treasury Budget, January (2:00): -$27.4B actual versus -$40.0B expected, -$49.8B prior



February 14 - Tuesday
Retail Sales, January (8:30): 0.8% expected, 0.1% prior
Retail Sales ex-auto, January (8:30): 0.5% expected, -0.2% prior
Export Prices ex-ag., January (8:30): -0.2% prior
Import Prices ex-oil, January (8:30): 0.1% prior
Business Inventories, December (10:00): 0.5% expected, 0.3% prior

February 15 - Wednesday
MBA Mortgage Index, 02/11 (7:00): 7.5% prior
Empire Manufacturing, February (8:30): 14.0 expected, 13.5 prior
Net Long-Term TIC Flow, December (9:00): $59.8B prior
Industrial Production, January (9:15): 0.6% expected, 0.4% prior
Capacity Utilization, January (9:15): 78.6% expected, 78.1% prior
NAHB Housing Market , February (10:00): 26 expected, 25 prior
Crude Inventories, 02/11 (10:30): 0.304M prior
FOMC Minutes, 1/25 (14:00)

February 16 - Thursday
Initial Claims, 02/11 (8:30): 365K expected, 358K prior
Continuing Claims, 02/04 (8:30): 3505K expected, 3515K prior
Housing Starts, January (8:30): 670K expected, 657K prior
Building Permits, January (8:30): 675K expected, 679K prior
PPI, January (8:30): 0.3% expected, -0.1% prior
Core PPI, January (8:30): 0.1% expected, 0.3% prior
Philadelphia Fed, February (10:00): 10.0 expected, 7.3 prior

February 17 - Friday
CPI, January (8:30): 0.3% expected, 0.0% prior
Core CPI, January (8:30): 0.2% expected, 0.1% prior
Leading Indicators, January (10:00): 0.5% expected, 0.4% prior

By: Jon Johnson, Editor
Copyright 2012 | All Rights Reserved

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

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