Kwedit.com, which appears to be a like a credit card company, is in an agreement with FooPets and Puzzle Pirates, etailers of games and cyber pets targeting pre-teen girls. Kwedit.com is a new a novel company that is offering children credit cards without parental permission or supervision that can be used on sites such as FooPets and Puzzle Pirates. This is a brilliant plan selling stuff with no inventory and taking a child’s future allowance as payment. After all, what inventory is a cyber pet or a game? The cost involves keeping the servers and programs running. These credit cards are promises to pay in the future for purchases made online today. What are we teaching our children? This company is offering to take the child’s allowance for the purchase of a cyber-pet, food for the pet, toys, housing for the pet etc. They will charge the child who can pay off the debt later by mailing in money or even paying at 7-Eleven, who has agreed to accept Kwedit.com payments.
In this country where we adults obviously have credit management problems, we are now offering our children credit to play. This company is offing to shamelessly take your child’s allowance. Is this company going to track these children’s credit or debt and will that score follow the child into that child’s teenage years and will that lousy score hurt them in the future? It is really getting a bit out of hand don’t you think?
Back to the economy which, next to that of PIIGS (Portugal, Italy, Ireland, Greece and Spain), seems to be getting somewhat better. The concern about the PIIGS is their debt and the disposition of that debt. The fear of the next Lehman/Bear cropping up in Europe has snipped some of the value out of the Euro sending the US Dollar soaring. This has had a depressing effect on dollar based commodities. Here in the USA, the unfortunate reality is that the economy doesn’t feel better, and with increasing utility and real-estate taxes is actually feeling worse. As municipalities live through decreasing tax bases, they have choices; to cut services or increase taxes to those that get the services. Unfortunately, the choice for many communities seems to be to increase real-estate taxes. While we would love to spend money, we have ever growing utility bills, mortgages, living expenses and taxes to worry about removing any extra cash we might have had. So which groups will have money to spend? Children, if they get an allowance, and singles. The rest of us are too far under to spend our way out. Kwedit.com is taking full advantage of the group that has some cash to spend.
Tuesday: December wholesales inventories are released at 10:00.
Wednesday: December international trade is released at 8:30 and Chairman Bernanke testifies on the “Hill.”
Thursday: January retail sales are released at 8:30 and December business inventories are released at 10:00.
Friday: February University of Michigan Sentiment is released at 9:45-10:00.
The US Dollar index rallied in the Friday session and seems to be overly extended on the upside. We have seen this action on previous occasions such as the rally from December 1, 2009 to December 22, 2009, when the US Dollar index rallied 4.46 points returning to the uptrend line on January 13, 2010. We can expect that this sort of behavior will be seen again as the US Dollar index returns to the uptrend line at about 78.27 – 78.78. Naturally, the US Dollar index is above the Ichimoku Clouds for the daily time-frame but remains below the clouds for the weekly and the monthly time-frame. All the indicators that we follow herein are overbought, only the stochastic indicator is issuing a sell-signal, the others continue to point higher. The 5-day moving average is at 79.45. The top of the Bollinger band is at 80.618 and the lower edge is seen at 76.315.
The S&P 500 should rally in the Monday session especially if nothing bad happens over the weekend. The Friday short covering last hour of trading was totally expected. Too bad we couldn’t feel like a genius for that call, it was totally predictable and expected. The stochastic indicator is issuing a buy-signal but all the other indicators that we follow herein continue to issue a sell-signal approaching oversold levels. The 5-day moving average is at 1080.30. The top of the Bollinger band is at 1165.08 and the lower edge is seen at 1049.33. There will be resistance seen at 1075 and at 1095. Downside support will be found at 1036 and 1026. We expect to see this market rally for maybe one or two days. That rally will define much about the market. We are below the Ichimoku Clouds for the daily and the monthly time-frames and above the clouds for the weekly time-frame. When you look at the chart from a weekly point of view, the damage isn’t that awful and indicates that we are in an area of support for this market. We have broken the weekly uptrend line. The indicators continue to point lower on the weekly chart so, be careful.
The NASDAQ 100 looks better than the S&P 500. The stochastic indicator, our own indicator and the RSI are all pointing higher. The NASDAQ 100 actually closed higher in the Friday session. The Thomas DeMark Expert indicator is pointing lower. The 5-day moving average is at 1758. The top of the Bollinger band is at 1928.32 and the lower edge is seen at 1708.80. We are below the Ichimoku Clouds for both the daily and the monthly time-frames. We are above the clouds for the weekly time-frame. The weekly chart has a doji as a result of last week’s trading. Doji’s warn of a possible change in trend or of a period of transition. While we expect to see a continued rally in this index for the Monday session we really must study the quality of the rally before offering a longer term point of view.
The Russell 2000 closed unchanged on the day in the Friday session leaving a doji candle on the chart. This is a transition candle one that warns we could be changing direction. The stochastic indicator, our own indicator and the RSI are all issuing a fresh buy-signal. The Thomas DeMark Expert indicator continues to point lower. The 5-day moving average is at 605.05. The top of the Bollinger band is at 656.04 and the lower edge is seen at 586.26. We would expect to see the market return to the 600 level where, it should feel some resistance. The Russell 2000 closed below the Ichimoku Clouds for the daily time-frame but remained above the clouds for the weekly time frame. There should be a good deal of support for the Russell 2000 at 550 to 560 and lots of resistance above 600. All the indicators for the weekly time-frame are pointing lower so, be careful and very very nibble.
Crude oil looks as though it could go lower although it is oversold enough to mount a rally from this area. We are below the Ichimoku Clouds on the daily time-frame and in the clouds for the weekly time-frame. The market looks and feels as though it has gone too far too fast. None of the indicators that we follow herein are issuing a buy-signal all continue to issue a sell-signal at oversold levels. We would not be surprised to see this market rally in the morning.
Gold looks as though it has fallen out of bed. We believe that this market will rally in the Monday session. The downdraft has been steep and will correct for excesses. The stochastic indicator is curling to the upside but has not issued a buy-signal as yet. We expect to see that signal by the end of the Monday session. We are below the Ichimoku Clouds for the daily time-frame. We are above the clouds for both the weekly and the monthly time-frames. We are approaching areas of support in the 1026 and 990 areas. We expect to see a bounce before these levels are tested.