Archive for May, 2009

Sunday, May 31st, 2009

Although the S&P 500 was down for four of the five trading days, that decline was much more tempered than the previous declines.  This decline looked like a retreat rather than a water-fall, which in itself is new and different.  That said, we have more room to the downside.  We do see a point of inflection on midday Tuesday, which should result in a more violent move either to the upside or the downside.  That move, should be respected and not fought.  As futures traders, we tend to trade contra the market; this is one time that we should not play that game.  The uptrend line for this coming Friday is at 893 and some change.  We need to stay above that line or risk a retreat to the 850 area, probably the 830 area then the 815 area. 

The Russell indices will be rebalanced on June 26th.  This annual rebalancing is known to have a positive effect on those stocks that are likely additions to the index and a negative effect on those stocks booted out of the indices.  The question will be which stocks will make the grade and which will be dumped.  Remember, the market capitalization on May 29th will likely be a factor in the inclusion or exclusion of the company in the index.  This has been a well known game on the street, trying to figure out which stock makes it in and which stock will fall out of the index.  The companies under consideration must be American companies, no foreign securities permitted.  Remember the two dates, May 29th and June 26th, and watch the action!  Hey this could be better than the Kentucky Derby, Preakness or
Belmont stakes.

Tuesday:  April housing starts are released at 8:30.  Wednesday:  FOMC releases the minutes of the April meeting at 2:00.  Thursday:  April leading indicator index is released at 10:00 and May Philadelphia survey is released at 10:00.  Friday:  Bond market closes early in advance of the Memorial Day holiday and Fed Chairman Bernanke speaks. 

The US Dollar Index rallied in the Friday session, but remains below the downtrend line of 83.551.   On the other hand, you could say that the market failed to close below the uptrend line of 82.373, which could be viewed as bullish.   We will have a point of inflection on Wednesday and we will find out which is the stronger trend.  If we had to guess, we would guess that the action will be to the upside.  All the indicators that we follow herein are issuing a continued buy-signal from oversold levels.  The 5-period moving average is at 82.672.  The top of the Bollinger band is at 87.453 and the lower edge is seen at 81.609.  We are below the Ichimuko clouds on the daily and monthly charts but above the clouds for the weekly time-frame. 

The S&P 500 retreated in the Friday session closing down on the week.  All the indicators that we follow for both the daily and weekly time-frame are pointing lower only the monthly time-frame is positive.  We are above the Ichimuko clouds for the daily time-frame but we are below the clouds for the weekly and the monthly time-frames.  In January, the high for the S&P 500 was 942.75 this past week’s high was 929.50.  The uptrend line is at 875.98 with about a 25 degree angle.  In other words as we continue on in time, the uptrend line will move higher.  The downtrend line for the Monday session is at 913.55.  By Friday, the uptrend line will be at 893 +/- and the downtrend line will be at 900 +/-.  The 5-day moving average is at 894.70.  The top of the Bollinger band is at 931.83 and the lower edge is seen at 825.49.  Please note how similar many of these numbers are even though they are calculated differently.  This tells us that there is some real importance