Monday, February 06, 2012

Jobs Provide Additional Strength to the Rall


- Jobs beat expectations, provide additional strength to the rally.
- As DJ30 knocks on the door, NASDAQ, SP600 kick the son of a (expletive) in and break to post-bear market highs.
- There are no doubt more jobs, but just how many and what quality? A look into the manipulation of the internal numbers providing the results.
- January ISM shows strong employment gains in the midst of a banking layoff binge.
- Factory orders quietly slip in December, matching the decline in other data, but no one cares as all eyes are on the lagging jobs data.
- Iran preparing a 6,000 mile range 'Great Satan' missile. No, we don't need a missile defense system in the 'modern' era of terrorist warfare.
- More upside or time for a test? At least the indices are dealing more from a position of strength.

Jobs send the indices on a further run with no signs of any selling into the news.

I am starting with the NASDAQ as my initial chart, and you probably know why. Unlike SP500 that was bumping up against the February highs, and unlike the DJ30 that was trying to get through its prior bear-market high but failed, NASDAQ and the SP600 borrowed an old expression from Bum Phillips, the coach of the former Houston Oilers. After a tough loss to arch rival Pittsburgh in an AFC Championship game, Coach Phillips made the famous statement, "Last year we knocked on the door, this year we beat on the door, and next year we're gonna kick the son off a [blank] in." While the Dow was knocking on the door over the past two weeks, NASDAQ and the SP600 took control of the market. They took leadership in the market and they kicked the son of a [blank] in.

Of course it was the jobs report that fueled the action. The market had already risen substantially, and when jobs and unemployment both came in better than expected, stocks gapped to the upside and ran higher. There was no sign of selling on the day. Stocks started higher, quickly ran to the upside, and then slowly bled higher into lunch. After that it was more of a holding position for the back half of the day. All afternoon stocks traded in a narrow range, but they never gave up ground. There was no inclination to sell. Even after the run this point and breaking through resistance, the sellers were not to be found. We did do some selling. There were some stocks that did not participate. There were some stocks that have earnings coming up, and we used the nice pop in the market and the increase in volatility to take some gain in options.

Overall it was just some position maintenance. We let our stocks run because they are running well. We did not want to get in front of the move, particularly when there no one really wanted to sell. Perhaps it is all about the jobs and the belief that the economy has turned the corner and is going to improve. Jobs are lagging, however, and we have seen slowdowns in the economic data across the board over the past month-and-a-half to two months. We even saw more of that on Friday with the Factory Orders, but that was just ignored. There is no reason to worry about downers when you have jobs going. But jobs lag and the other data leads. It is softening. It has not turned over, but we have to keep an eye on it in the future.

On Friday that was not the question. It was nirvana. Jobs were up, things were looking good, and we would probably have another "recovery summer" as Tim Giethner put it on the day when he addressed some issues with respect to the economy and the dollar. Without a doubt, the markets liked the news and closed up.

SP500, +1.5%; NASDAQ +1.6%; Dow, +1.25%; SP600, +2.1%; SOX, +1.8%

Very solid gains pushing the indices to the highs, beyond the highs, and leaving them in a position of strength if there is going to be a test. Yes, the indices look overbought a bit, but as we have often seen, they can be overbought for a long period of time before they ever decide to come back. If the market will go up, we will go up with it. That is why we were not getting in front of the move. We were letting a lot of our positions run and build up some great profits. If we need to take them next week, we will. But right now we were not going to get out, break off this run, and be the sacrificial lamb so others could make money.

We took positions when times may not have been so clear-cut and wonderful. Stocks were saying "buy us" at this interim bottom when they were forming their rounded bottoms. They looked like they were going to break up while the market was still trying to come back to the downside. Well, you buy when stocks say "buy me," regardless of what your guts are saying. They are probably saying "Do not even look; I am getting sick." If you have to, keep the Pepto-Bismol buy your desk and buy when your head tells you to move in. Then you can enjoy these kinds of runs these runs that even extended beyond what our thesis was.

Remember, we were expecting a run up toward these highs, no doubt. We were not expecting them to take them out. That does not mean they will hold the gains. It does not mean they will not reverse and sell off. But we will not step in front of it. If we think we are smarter and start picking tops and bottoms, that is when we end up missing out on the moves.


The other markets were not quite as strong as we thought they might be in some circumstances, and they were as you would expect them to be on stronger economic data in other circumstances.

Dollar. 1.3151 versus 1.3144 euro. The dollar was down on the day versus the euro, and it was basically flat against the other currencies even with our strong numbers. It did reach 1.3066 euro early in the day. That was a big gain on the dollar, but it could not hold it. Why not? There may be some issues with these numbers. I alluded to some of them earlier when talking about the jobs numbers lagging with respect to the other economic indicators. But there is also something in the internals of the numbers.

I will go into this in more detail in the economic section, but there are real problems with these numbers, even though they look good, most everyone was willing to accept them, and the trend is improving. There are actual jobs out there and bodies being put to work. People are getting jobs, but it is the number of jobs and the percentage of people working that have serious problems with them. Not to mention what kind of jobs they are getting temporary, permanent, high paying, low paying. There are some real problems. While the jobs are the jobs, it looks like there could be some down-right manipulation of the numbers going into the equation to determine what percentage of people are employed or unemployed. It looks like the dollar might have figured some of that out during the session.

Bonds. 1.93% versus 1.83% 10 year U.S. Treasury. Bonds sold. Bounced up to the top of the range, and then it closed down close to the bottom of the range with a gap. But notice how it held the range with a doji. It has been trading in this tight, up-and-down range for the past three months, and it is still holding it even after the barn-burner jobs report.

Gold. 1,740.20, -19.10. It was down a lot harder intraday. It is almost surreal when listening to Mr. Bernanke talking on Wednesday about how things were still problematic for the economy. Of course, the week before, the Fed said it would keep interest rates low until the end of 2014, and gold broke to the upside. Then gold sold off, of course, as it should when strong economic numbers came out. But it rebounded. It still looks strong. Still looks like it wants to go to the upside. Maybe gold understands that there are other things afoot. There is the Fed that is very easy and wants to keep pumping money into the equation, but maybe things are not as strong as they appear on the surface. There is an old saying, "All that glitters is not gold." And all that appears in the jobs numbers are not jobs. I will elaborate on that a bit later.

Oil. 97.79, +1.43. Oil bounced. Of course you would expect it to on some better economic data. It sold down to 96 or near the bottom of the range and it bounced. That is exactly what you would expect. We have tensions with Iran. Now it supposedly has a missile that can go 6K miles or thereabouts. It is dubbed the "Great Satan" because it can deliver a payload to the United States. I wish we had continued working on that missile defense shield. I guess some very smart people decided we did not need it because warfare was going to be different now in the age of terrorism. Maybe and maybe not. It will be different, but it will also be the same in some ways. If someone can develop an intercontinental ballistic missile and carry a warhead to the United States, there we go again. They wield a lot of power and we have that mutual ensured destruction thing again. Nice. Of course we assume the other side wants to live and does not want to bring about the end of the world. Well, times have changed indeed. That is modern of warfare, and it is even worse than it was before. Even more reason to want a nuclear missile shield. But I digress. I have just been readying the stories and they are not that pleasant.




Issue 1: Unbelievable Numbers and Assumptions.

1.2M workers dropped from the workforce from December to January!

Lower worker pool and you get more APPARENT employment
100 workers in work force. 80 are working.
80/100 = 80% employment or 20% unemployment

Reduce workers in work force to 90. 80 still working.
80/90 = 88.9% employment or 11.1% unemployment rate.

Long-term Workforce participation = 65.8%
Government figure for January: dropped to 63.7% on the ASSUMPTION that 1.8M people left. SHRINKING THE WORK POOL as in the example above.

Why leave? Government says they are retirees.

Really? The 55+ age group participation in the workforce is SPIKING as more and more older citizens are forced to work later in life because their retirements are gone.

The population expanded to 242.2M. If you apply the long term participation rate that is in line with the statistics versus the government's artificially lower level and account for those the government says are no longer in the work force through its 'adjustment,' you get unemployment at 11.5%! That is a 'true' number versus the artificial and very POLITICALLY TIMELY adjustment to the downside that shrinks the unemployment rate.

The Administration was ready, and as soon as there were more 'bodies' going to work per the non-farm payrolls report it 'adjusted' the worker pool, using the non-farm payrolls showing job creation as cover for the change. It argues there are more jobs. Yes there are, but NOWHERE NEAR THE NUMBER NEEDED TO COME UP WITH AN 8.3% UNEMPLOYMENT RATE.

ISSUE 2: What kind of jobs are being created?
Part-Timer Economy.

January reports 699K temporary workers, a record increase putting part-timers at 27.739M, the third highest ever.

Only 10% of the jobs increase was due to full-time jobs!

Low Paying Jobs.

Moving from higher paying jobs to lower paying jobs. Bankers laid off by the thousands even as the employment rate moves higher.

CRT Capital said today that 113K of the non-farm payrolls jobs were low pay jobs. Typically couriers and messengers decrease in January after the holidays but they were still strong. When those jobs go, the numbers go down.

Remember in the Bush administration and that economic recovery the carping about the 'quality' of jobs created? Where is the worry about this now? Are we so starved for jobs this time around that we are taking anything, taking the 'new normal' idea Bernanke espoused Thursday regarding the unemployment rate with respect to the types of jobs we will have in the US?

Is our view of the problems with the jobless report overly picky or just BS?

Some commentators said Friday that US data is now no more reliable than China and its manipulation of its releases.

Bernanke as late as Thursday did not see this coming.
The CBO did not see it coming, predicting unemployment back over 9% by year end.

Indeed the trend is belying historical trends: Unemployment rate goes up BEFORE jobs because the perception the economy is better. People re-enter and look for jobs that are not there yet, spiking unemployment rate.

This time the rate is dropping AS there is meager jobs creation. After several months of economic improvement have people really given up and not come back to the jobs market? In other words is this time different? It certainly seems what is different is the government's 'adjustments' to the input data.

We would the THRILLED to see unemployment really fall as jobs really recover. The problem is the unemployment number is hogwash, and EVEN IF it is correct, it is no byproduct of the Administration's actions. It took three years to get to this point and indeed it is the government ending its stimulus programs and Congress blocking more of them that is allowing the economy to get back on track somewhat.

The problems are still here because the policies are still there. Gasoline is spiking again and will be over $4/gallon this summer at this rate; there is no change in Administration policy on this and indeed its actions are further stymieing improvement (e.g. Canadian pipeline). Food costs are still spiking and nothing suggests that is backing off despite the Fed's belief there is no inflation. 40,000 new regulations as of January 1 continue to undermine and browbeat small businesses, making profitability ever more elusive. And let us not forget the Defense Authorization Act that, for the first time, allows the government to use our military as a police force and allows the warrantless and secret removal and detention without representation of ANY US citizen deemed, in the opinion of the President or authorized party, a terrorist threat.

In conclusion, the recovery is simply not that great. Q4 GDP was atrocious with most of the gains due to inventories piling up. Even taken at face value it is a paltry level, one-third of what it should be in similar recoveries at this period. The jobs rate is up as the non-farm levels show, but it is still pathetic and we are swapping high pay jobs for low pay jobs as we push IPO's offshore and discourage investment in the US. We are conditioning the youth to a 'new normal' of European mediocrity and stand the very real risk of losing our economic dominance and condemning our progeny to generations of decreased standard of living.


Volume. NASDAQ +12%, 2.12B; NYSE, 13%, 827M. Buyers are moving in and showing more strength as the market has shown more strength to the upside over the past month or more.

Breadth. NASDAQ +4:1; NYSE +3.7:1. Advancers were solid. Growth stocks leading the way yet again.


I have already talked about kicking in doors. Who is doing the kicking and who is just knocking?

SP500. SP500 is still is not above its February peak. It is trying and it is close. It is there, but it just has not made the move. That would also be at the late-July interim peak as well as the late-May interim peak. There is resistance at 1345 that SP500 has not moved through. Not to mention getting up to 1385 where the May peak resides. There is still plenty of upside for SP500 to play catch up if it wants to do that. That would give NASDAQ and the other indices that broke out the chance to move higher before they come back to test. That is not a bad scenario. As I said earlier, that is dealing from strength versus looking up from the bottom side of the resistance.

DJ30. DJ30 gained a nice 1.25%. That pushed it right up to a new post bear-market high. Indeed, it closed at a new post-bear market high, but it just did not take out that prior peak at 12876. It came close, closing at 12862. Just a few short points away, but it was not able to kick the door in. It is still knocking and has to prove it can make the move.

NASDAQ. NASDAQ is a thing of beauty. It has been very strong over the past week, straight to the upside. Hard to maintain that kind of ballistic move without a test. But, as I said, it can be testing from a position of strength now. Coming back after breaking through is always better than moving up to it and fading. I did not expect it to do this on this move; just a little hitch in the get-along on the way up. It is what it is. You play what the market gives and do not try to be smarter than the market and outguess it. That just causes you to either miss out on big runs or get ripped apart betting against the market move. That is why we take gains at the logical points but we always leave stuff on the table to continue higher. We are making even more money right now as NASDAQ helps lead the way to the upside.

SP600. Speaking of leadership to the upside, you have to talk about the small caps. They, too, put in that new high, closing at about 463. That puts it over 460, and that breaks it to that new post-bear market high with a big leap up in the back half of the week. Ones again they are more from a position of strength. Also, small caps are just good harbingers of economic action down the road. If they are breaking to new highs, that is a positive for the U.S. economy down the road as well.

SOX. Semiconductors have been leaders of late, no doubt. Even if the chart is not breaking to any new highs, it is breaking to higher highs. It cleared that July peak and is now taking on the next step at the late-May peak. It will be a series of trying to take out after another. Stepping up and shooting them down. That is how it works when you are digging yourself out of a hole. It is doing it with a bit of flair with strong moves from component stocks. The neat thing is that some have been leading all the way to the upside and others are just now getting in gear. Now they are helping the index to the upside as money seeks different levels of semiconductors to look for those big percentage gains.

Remember, the mutual funds are out early in the year playing catch up, and they are also playing the January effect game (even though it is now February). They see a bit of recovery and they see that they are behind. They are trying to look for big gains. They play the stocks that have been beaten down. That is why we saw all of those rounded bottoms that ultimately started to break to the upside. Some of them started sooner than others. AKAM made the break to the upside. Some of them have been coming around later to the party. SWKS formed this rounded double bottom and broke to the upside, finally making the move. Broke through the trend and has continued to run. It has happened at different stages, but that is the strength of the market. You kept getting different waves of leaders emerging as money moves around, looking for the percentage gains in these big moves off of the lows.


There were some issues with stocks. It is easier to point out stocks that are having problems or did not follow than those that were up because, as we saw from the breadth, most stocks rallied.

Metals. AKS was down on the day. I was wondering mid-session why this stock was not participating. The other steel stocks were not surging, but they seemed to be performing. This was an aberration that I noticed.

Industrial Equipment. Some stocks in industrial equipment were not. HOLI is not necessarily in a bad situation, but it was not doing anything on the day. It continued to sell off, not benefiting from the good news in the market overall.

Retail. DG was down on the day. It has not performed well. It has been trending to the upside, but it has not been breaking or running to the upside. That was questionable. Why was it not participating on a good market day?

Autos. AAPY and ORLY moved up but were not looking that strong. They were laggards in the move. Were they laggards because of individual stories or is it just a sign that stocks are getting somewhat tired overall and are not ready to move higher? It was a combination of both.

Stocks have run a long way. Many are tired and many are at the point where they need to test. A further move up in the market will not necessarily drive those early leaders further to the upside. On the other hand, the stocks that have been beaten down that have started to turn the corner, they should move to the upside. We did see that occurring as well.

What does this mean in terms of leadership? It means some stocks are tired. We still see many stocks that are coming off of the lows, getting new money pushed their way. As of Friday, there was no reason for any of the hedge funds or mutual funds to stop putting money into those stocks.



VIX. We have not looked at the VIX in awhile; there has been no point. Frankly, there is still no point in looking at it. It has tumbled down to 17 from 30 back in early December. I said it did not seem to matter too much anymore that it had broken free from tracking the market. That is exactly what has happened. It sold off as the market has rallied, which you would expect. But just because it has done that does not mean we should all of a sudden expect a surge or selloff. Why? Because the VIX can move laterally for months or even years at low levels and not indicate a selloff is coming. Just because it is down to an old level does not mean anything. It has to set up a correlation, and right now it is not there.

VIX: 17.1; -0.88
VXN: 18.21; -0.68
VXO: 16.19; -0.84

Put/Call Ratio (CBOE): 0.77; -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: 48.9% versus 50.0%. A dip as the market continues upside but basically still at the flat line as it was for all of January. To the end of 2011 showed a slow, steady increase to this level. Still probing the overdone range and could be part of the picture that tops out the current in January, but it is not there yet. 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: 29.8% versus 28.7%. Right back up to 29.8% again after a brief dip. Bears remain skeptical, but the market is riding that skepticism upside. Basically holding at that 30% level where bears moved down to in early December and have held ever since. Again, bears are not growing but they are not necessarily buying into the upside move. Back and forth around 30% where it has flat-lined for 8 weeks. Again, Bears remain skeptical. Skeptics in the face of a move is a good sign the move continues. Lower but not anywhere near suggesting investors are carefree. The average the past month and more is 30%. The index spent seven weeks over the 35% threshold considered a bullish indicator. For more reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.


Stats: +45.98 points (+1.61%) to close at 2905.66
Volume: 2.123B (+12.39%)

Up Volume: 1.8B (+570M)
Down Volume: 341.64M (-266.36M)

A/D and Hi/Lo: Advancers led 3.98 to 1
Previous Session: Advancers led 1.54 to 1

New Highs: 262 (+97)
New Lows: 14 (-2)


Stats: +19.36 points (+1.46%) to close at 1344.9
NYSE Volume: 827M (+13.29%)

Up Volume: 3.94B (+1.53B)
Down Volume: 622.33M (-1.008B)

A/D and Hi/Lo: Advancers led 3.67 to 1
Previous Session: Advancers led 1.34 to 1

New Highs: 299 (+91)
New Lows: 7 (-1)


Stats: +156.82 points (+1.23%) to close at 12862.23
Volume DJ30: 142M shares Friday versus 114M shares Thursday.


We had a great finish to the week and an excellent week upside as far as stocks are concerned. We have more earnings news coming out next week. We also have more economic data, although it does back off from the onslaught of the prior week.

Wholesale Inventories will be an interesting report, but that is all the way to Thursday. That will be the same day as Initial Jobless Claims. We saw inventories jump up in the Q4 GDP report, and we want to see what they are showing in December and whether they are up. They were expected to rise quite a bit from the prior read. Friday we have the Trade Balance. It will be interesting to see, although no one is paying attention to it. The Treasury Budget is out, but no one seems to care about that either. There will be Michigan Sentiment, and that will be the new preliminary for February. We will see if it can hold its own. It is expected to drop off a bit, but it should probably pick up given the market moves. Stock market gains drive a lot of sentiment, but you have to offset that with very high gasoline prices right now. Frankly, they are shockingly high in February. They will be over $4 come summer, and that will put a lot of angst into American wallets jobs or no.

Despite having purportedly improved the jobs situation, we are still going to have problems when people have extraordinarily high food prices compared to last year. The gasoline prices are also extraordinarily high since the President took office. There are issues he will have to deal with, and I am not so sure that the jobs numbers will hold up. If we keep seeing these incredible manipulations of the numbers, someone will eventually say "What the hell?" Maybe then they will pay attention to what is going on versus just blindly following the pablum being issued. But enough said on that.

What do we have for the week? Technically we have NASDAQ and SP600 at new post-bear market highs. That is an important move. Does it mean you buy? No. It does not necessarily mean you buy at all. The market has run hard to this point with just a little test. We may get some more follow-through push to the upside as some people "me too" it early in the week. Then we may get a test. We will eventually have to have a test of this, but a lot of it will depend on what SP500 and the Dow can do. Can they continue to push higher and make a break as well? They have room to run. SOX and SP500 and the Dow can play catch up and drive higher, and at the same time that would allow NASDAQ and the SP600 to gain some more before we have a test.

Without a doubt, we will find more plays that are in position to move. We could not do much on Friday with the gaps to the upside. Most positions gapped and ran early. You do not want to chase that bus, particularly after the indices have already moved up sharply on the week off of a test. We did not want to chase them, but instead I think we might get some early giveback at some point early in the week. That will give us better entry points on some positions that just gapped and ran away from us. As I have said before, when you get to these levels, the probabilities are not in your favor to chase. We will wait for good opportunity.

There are some stocks that did not move or did not move a lot. That does not mean they are shunned and that no one will pick them up. It just means that, as this market moves up, they are building their patterns. They have not been turned to as the next sector to be anointed with new money. If the market stays healthy and keeps building in better economic data for the future, it will turn to these sectors that are setting up new patterns to break higher. The money will want to go where the chance for larger gains are. That is basically what I am talking about the probabilities. Certain stocks will run too high, then we want to rotate our money into another area that has not run yet and drive it to the upside and make good percentage returns from those.

We will be looking at the next potential areas money can flow to. Money may have already flowed into them at one point, has left it for awhile and is recycling that area and letting it recharge and then comes back into it. Or it just has not made the move yet and wants to find that break to the upside. They are out there. Even as the market has raced higher, some have been left behind. Perhaps they are starting to break down trendlines and reverse to the upside. We will be looking for those to augment our buys.

Again, it is nice to be in the position where you are in plays that you bought when times were not so clear but are now pulling in some good bucks for us again as they continue runs maybe after a pause or maybe straight to the upside. It is no time to sit on our laurels, of course. We will look for additional places to put our money. You have to keep rolling your money into new winners. As you take some off the table, you have to find places to put it if it is there. We will do that.

I noted earlier that on Friday there really was no inclination to sell. NASDAQ closed near its high, and SP600 closed near its high as well. Indeed, all of the indices closed at or very near their highs for the day. No selling pressure; that is true overall. But I want to point something out when looking at some charts of stocks at the close. There was interesting action. There were some Market On Close sell orders that hit. Many stocks sold off right as the market closed. Big orders were put in that drained these stocks to the downside. They bounced back up a bar or two later with a nice recovery, but there were sales out there. Some big money was taking some positions off of the table late in the day.

Looking at the SPY, you can see some big reaches down. Some of these were market orders, obviously, but there was huge volume on these sales. Look at the huge spike in volume in VLTR as it sold off but recovered. That means there were some Market On Close sells. Some big funds were selling on the close. They did not want to sell during the session. They saw the market holding its gains and moving higher into the close, so they waited and put in the orders. Then at the end of the day there was big selling. But it is just in a few. They bounced right back. The thing is, there are some sellers out there. There were some willing to sell into this strength just not in the traditional way that we usually see it.

Next week, we watch for a pullback. We watch to see if we can get something going on a test that gives us a chance to move in and pick up some stocks that may have run away from us during the week or on Friday but come back. If they come back and hold, then we can step in. But we have to watch out. If the big money wants to sell more, we just have to wait. We will mind our positions and take some gain from these good moves upside that we let run on Friday. We will watch our positions, take gain as needed, and then see if there is a deeper selloff or just a test of that rush to end the week that gives us new entry points. One I have been looking at is the GLD. It broke out, and I still think it will go higher. We will just have a play if we can catch it off of a test either at the 10 day EMA as it closed or lower. We will be willing to make that play as well.

We have an interesting market and a really interesting week ahead to see how it tests. We will be ready either way. Things have been going basically according to plan thus far. We have banked a lot of money, so we have some money to put to work, and we also have a lot of money on the table that we will take if things get rocky.

Have a great weekend!

Support and Resistance

NASDAQ: Closed at 2859.68

2862 is the 2007 peak
2879 is the July 2011 peak
2888 is the May 2011 peak and post-bear market high

2841 is the February 2011 peak
2825 is the 2007 closing peak.
2816 is the early April peak.
2796 is the February gap down point
2762 is the February low
2759 is the mid-May low
2754 is the recent 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
The 50 day EMA at 2698
2686 is the January 2011 closing low
2676 is the January 2010 low and the December 2011 peak
The 200 day SMA at 2661
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
2123 is the August 2010 gap down point
2100 from the August 2010 lows

S&P 500: Closed at 1325.54
1325-27 is the March 2008 closing low and the May 2006 peak.
1332 is the early March peak
1340 is the early April 2011 peak
1344 is the February 2011 peak
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

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 1276
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
1090 is the early September 2010 gap up point
1040 from the August 2010 lows and May/June 2010 lows
1011 is the summer 2010 low

Dow: Closed at 12,705.41
12,754 is the July intraday peak
12,876 is the May high
13,058 from the May 2008 peak on that bounce in the selling

12,391 is the February 2011 peak
The 50 day EMA at 12,308
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 11,980
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

January 30 - Monday
Personal Income, December (8:30): 0.5% actual versus 0.4% expected, 0.1% prior
Personal Spending, December (8:30): 0.0% actual versus 0.1% expected, 0.1% prior
PCE Prices - Core, December (8:30): 0.2% actual versus 0.2% expected, 0.1% prior

January 31 - Tuesday
Employment Cost Index, Q4 (8:30): 0.4% actual versus 0.4% expected, 0.3% prior
Case-Shiller 20-city, November (9:00): -3.7% actual versus -3.2% expected, -3.4% prior
Chicago PMI, January (9:45): 60.2 actual versus 62.8 expected, 62.2 prior (revised from 62.5)
Consumer Confidence, January (10:00): 61.1 actual versus 67.0 expected, 64.8 prior (revised from 64.5)

February 1 - Wednesday
MBA Mortgage Index, 01/28 (7:00): -2.9% actual versus -5.0% prior
ADP Employment Change, January (8:15): 170K actual versus 200K expected, 292K prior (revised from 325K)
ISM Index, January (10:00): 54.1 actual versus 54.5 expected, 53.1 prior (revised from 53.9)
Construction Spending, December (10:00): 1.5% actual versus 0.4% expected, 0.4% prior (revised from 1.2%)
Crude Inventories, 01/28 (10:30): 4.175M actual versus 3.558M prior
Auto Sales, January (14:00): 4.20M prior
Truck Sales, January (14:00): 6.04M prior

February 2 - Thursday
Challenger Job Cuts, January (7:30): +38.9% actual versus +30.6% prior
Initial Claims, 01/28 (8:30): 367K actual versus 375K expected, 379K prior (revised from 377K)
Continuing Claims, 01/21 (8:30): 3437K actual versus 3538K expected, 3567K prior (revised from 3554K)
Productivity-Preliminary, Q4 (8:30): 0.7% actual versus 0.7% expected, 1.9% prior (revised from 2.3%)
Unit Labor Costs, Q4 (8:30): 1.2% actual versus 0.7% expected, -2.1% prior (revised from -2.5%)

February 3 - Friday
Nonfarm Payrolls, January (8:30): 243K actual versus 155K expected, 203K prior (revised from 200K)
Nonfarm Private Payr, January (8:30): 257K actual versus 168K expected, 220K prior (revised from 212K)
Unemployment Rate, January (8:30): 8.3% actual versus 8.5% expected, 8.5% prior
Hourly Earnings, January (8:30): 0.2% actual versus 0.2% expected, 0.1% prior (revised from 0.2%)
Average Workweek, January (8:30): 34.5 actual versus 34.4 expected, 34.5 prior (revised from 34.4)
Factory Orders, December (10:00): 1.1% actual versus 1.5% expected, 2.2% prior (revised from 1.8%)
ISM Services, January (10:00): 56.8 actual versus 53.1 expected, 53.0 prior (revised from 52.6)

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

February 8 - Wednesday
MBA Mortgage Index, 02/04 (7:00): -2.9% prior
Crude Inventories, 02/04 (10:30): 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): -$48.2B expected, -$47.8B prior
Michigan Sentiment, February Preliminary (9:55): 74.0 expected, 75.0 prior
Treasury Budget, January (14:00): -$40.0B expected, -$49.8B prior

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

Jon Johnson is the Editor of The Daily at

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