ANNOUNCEMENT: There is a Global professional conference coming to the
USA on October 8th.
Chicago is the host city for this conference for professional technical analysts from all over the world. We are pleased to announce that this conference will be open to anyone who is interested in attending (pro or not). Please see http://ifta2009.com for more conference details. Day rates are available.
Welcome back to the heating season. Yes, after a wonderful summer of very little air conditioning use, we are facing the fall and winter heating season. It seem almost too cruel for many to have to divide up the few dollars left in the purse among, increasing real-estate taxes, mortgages, heating bills and the wonderful Christmas shopping season. We would be inclined to believe that, although the shopping season will exist, there will be a migration to the “home made,” special “I made it for you” gifts. Actually, wouldn’t you rather get a gift that was made for you than one that was bought? Okay so we can’t make you a jumbo HD flat panel TV set, computer, or electronic devise but we can make you a sweater, a piece of furniture, a work of art or perhaps and short story or family history. None of these are excessively expensive, but are most precious to the receivers. This year, challenge yourself into spending the hours required to make special gifts for people you really care for. That said, it is obvious that you will only have the ability to make a few really good gifts rather than a lot of them. That will make the gifts even more precious to the recipients.
The children are back in school, the traders are back at their posts and the unemployed continue looking for a job. These times are the worst in recent history for the recent college graduates. There are few jobs available to this group of educated off-spring. Many have opted to continue their education, perhaps a master’s degree or a JD or maybe even a MD will help land a job. In that endeavor, these young adults are pilling on the debt. A recent article in the NY Times indicated for all the students preparing to enter the legal field that the costs have escalated to about $200,000.00 and the jobs have declined. Even those graduating for Harvard and Yale are not being offered the compensation offered in the recent past. There are a few bright spots in the employment scene. We have a real shortage of RN’s and we seem to have a need for therapy jobs like; occupational therapy, speech therapy, physical therapy yada yada.
We have never seen, in recent times, so much belly-aching about illegal aliens. Recently we received a copy of a letter allegedly sent to a Senator in which the writer asks how to become an illegal alien. Why you ask, well, apparently, a bill recently passed in the Senate but not in the house as yet, provided illegal aliens who have been in this country for at least 5 years a way of becoming
US citizens. They will have to pay a fine of $2000 and INCOME TAXES FOR THE PAST THREE OF THE LAST FIVE YEARS. Oh, and they must learn English. Naturally to have a deal where you don’t have to pay 2 years of income tax would be fabulous for most of us especially given the difficult economic times we are going thru, but it gets even better, when you think about terminating your health insurance and using the emergency room as your primary care physician. Think of the savings! Another benefit is that the children of illegal aliens will gain preferential treatment relative to schools by receiving “in state rates” for tuition payments. No mention is made of voting status, who cares anyway when the poles are at the cemetery. Oh, forgot to mention that we live in
Hudson
County
NJ, probably the most corrupt county in the
USA. You thought Chicago was bad, come on down to “ole
Hudson
County.”
The August “Jobs Report” was released on Friday. A celebration of a less bad report was seen as the markets rallied in a very lightly traded pre-holiday session. Of the slight improvement in the “Jobs” picture, we hate to throw cold water on this joyous party but the “cash for clunker” did help in saving some jobs and in fact helped the jobs picture as the motor companies rehired laid off workers. The question that needs to be asked is, will this continue or will these same soles lose their jobs again? Only time will tell. Remember also that we will see some of the summer employment leave the job force. The number for September will be questionable. It is one of those “who knows” moments where, try as we might, we can’t get a handle on this one.
This week we will see the quarterly roll of the financial indices. Be alert to the gyration is the market caused by the movement out of September and into December. Thursday, December will be the front month and most of the volume will be seen in that expiry.
Tuesday: July consumer credit is released at 3:00; expect to see this number improve. Wednesday: August beige book is released at 2:00 and Chicago Fed President Evans speaks. Thursday: The Bank of England and the Bank of Canada release their interest rate decisions, July international trade is released at 8:30, and Atlanta Fed President Lockhart speaks.
The US Dollar index retreated in the Friday session but remained above the short-term uptrend line at 77.989. The downtrend line is at 78.967 leading to a point of inflection, should this coil continue, in about three weeks. The nicest thing we can say about the US Dollar index is that it failed to make a lower low. The 5-day moving average is at 78.429. The top of the Bollinger band is at 78.653 and the lower edge is seen at 77.826. Yes, we are coiling, which as you know, will lead to a violent move. We are below the Ichimoko Clouds on the daily, weekly and monthly time-frames. Frankly, our lines work on all time-frames also. The stochastic indicator, RSI and our own indicator are all pointing to lower levels and are on the oversold side of neutral. The Thomas DeMark Expert indicator is pointing higher near the neutral levels. It is very clear that this market needs to close above 78.91 before any bear will become concerned about a short in the US Dollar index.
The S&P 500 is entering into roll-over week with all of the indicators positive. Our trading range is from 975 to 1035, which is 65 handles. We held the 991 level leading to a rally in the Thursday and Friday sessions. Remember the roll is on Wednesday-Thursday. Many of the shorts will cover, causing an upside push in this index. Once the roll is mostly over, we should see this index retreat. We are above the Ichimoko clouds for the daily time-frame, in the clouds for the weekly time-frame and below the clouds for the monthly time-frame. The 5-day moving average is at 1005.25. The top of the Bollinger band is at 1037.20 and the lower edge is seen at 980.26. Remember that there is a gap overhead and that gap is from1050 to 1102.50. This gap shows up on the Market Profile chart. We could melt up should we trade up to that level, actually a trade up to 1039.50 should cause short covering and a further melt to the upside.
The NASDAQ 100 took center stage in Friday’s light volume rally with a sprint to 1640.50 before settling back at 1635.75 for the close. All the indicators that we follow herein are issuing a continued buy-signal with plenty of room to the upside. The 5-day moving average is at 1610.65. The top of the Bollinger band is at 1656.59 and the lower edge is seen at 1575.54. We are above the Ichimoko clouds for the daily and weekly time-frames but in the clouds for the monthly time-frame. One bit of concern is seen on the weekly chart which had a doji for the week. Further, all the indicators on the weekly chart are pointing lower. The longer term charts don’t look as good as the daily chart does. The longer term charts seem to be heavy and having a great deal of trouble making real progress to the upside. After the roll is over, we would expect to see this market retreat and, at the very least, rest a while.
The Russell 2000 has an interesting chart. The dip seen this past week was deeper than the dips seen in the other indices. All the indicators that we follow herein are issuing a buy-signal with plenty of room to the upside. We are above the Ichimoko clouds on the daily and weekly time-frames. The 5-day moving average is at 562.48. The top of the Bollinger band is at 588.75 and the lower edge is seen at 549.01. If this index can close above 578.60 we will see a flurry of activity to the upside. Should the uptrend fail to remove that level, we certainly will see the market retreat and possibly remove the 545.40 level. Remember the roll will be a positive but after that, real value will be needed to hold up this index.
Crude oil has been building a short base at the 67 level. We are above the Ichimoko clouds on the daily and the monthly time-frames but in the clouds for the weekly time-frame. The 5-day moving average is at 68.40. The top of the Bollinger band is at 74.74 and the lower edge is seen at 66.12. So long as the market remains above 65.67, we would expect to see this market work its way back to the 73-75 area. Should the 65.67 level fail to hold up the market, you will see shorts step up their exposure to the short side of this market. The downtrend line is at 71.33, any aggressive move above that level will cause the shorts to cover and inspire the longs to buy more. The indicators are not really trending but are closer to oversold than to neutral.
Last week we wrote; “Gold looks as though it is going to try for the August 6th high of 971.10. …………We are not gold bugs but believe that gold will challenge the old highs and probably make new highs.” We haven’t changed our minds and continue to believe that gold will take out the highs, however; we do believe that some backing and filling will be seen before we see the explosion to the upside. The 5-day moving average is at 975.24. The top of the Bollinger band is at 986 and the lower edge is seen at 920.61. The chart shows that we are above the upper edge of the upper Bollinger band. As you know, we can’t stay there for very long and we do expect to see this market retreat. The indicators that we watch are rolling over to the downside from overbought levels but are not yet giving a sell-signal. We are above the Ichimoko clouds on the daily, weekly and monthly time-frames. If you look at the weekly chart you will see how dramatic the rally has been. We are set up and in place to breakout to the upside. We just need to wait for some more energy to develop before making that run.