Market Summary

It appears the sell off may be over as the major indexes break their downtrend line and the Dow, S&P500, and Nasdaq closed back over their 50-day moving averages. The S&P500 is above 1100 which is a milestone. The next target for the market is the June high.

The daily chart shows a breakout to the upside of a falling wedge pattern which is a very bullish sign. Short and intermediate term sentiment is bullish while Long term sentiment is neutral. The chart below of the SPY 240 min is my short term chart showing a bounce as I expected as I said in my prior post at the 50% Fibonacci level filling two prior gap areas. Earnings season has just begun with some good news in earnings however the economy still matters and unemployment is too high. How the future unfolds we will just have to wait and see. Click on chart to enlarge.

The small cap index $RUT has joined GLD and UUP on the green side for the YTD period which is another good sign. For the week, FXI was up 7.02%, $RUT up 6.6%, and EEM up 6.47% and it was green for all listed markets. Click on table to enlarge.

Market Summary

It would appear that we have begun a new leg to the downside with the big sell off on Friday. The last several days rally of 7% off the recent lows seems to have run out of momentum and reversed course. I have placed Fibonacci retracement levels on the image below from which levels we will either bounce off of or pass through as we go lower. Which way we go time will tell. Click on image to enlarge.

Only GLD and UUP are positive for the YTD period. For the week only UNG was up while the FXI was down -4.77% and the small cap index $RUT and the emerging market EEM were both down more than -3%. Click on table to enlarge.

Market Summary

Even though there were only four days of trading last week it was a week that marked the best weekly gain in the market in a year fueled by expectations for the upcoming earnings seasons. As I mentioned in my last post I was expecting a bounce and the question is if this is just a bounce or a bottom in the market? The 240 minute chart of the SPY below shows that we have filled the gap marked by the pink oval. There is still significant resistance ahead at the 109 level which is the 61.8% Fibonacci retracement level from the April high. The real question is will the market go above the recent high in April or below the low in June next? If earnings beat expectations this earning season there is a chance we could take out the April high next. July has proved to be a very good month in the market so far and lets hope it continues. We will just have to wait and see. Click on image to enlarge.

The performance table below shows gold and the US dollar as the only asset classes that are up for the year with the small cap index coming in third place.
It was a good week for most of the funds with the emerging market ETF EEM looking strong. Click on table to enlarge.

Market Summary

Debt is contracting faster than the government can print new money. This has resulted in a deflationary environment and a slowing down of the economy. Stimulus or austerity is the question the G20 was faced with recently and it is evident that the Euro zone has opted for austerity to correct their balance sheet while the US is opting for stimulus. This is reflected in a falling Euro and a rising US dollar. When the dollar rises the stock market falls.

Germany put the retirement-age issue front and center in the EU financial crisis with this saying: “The Greeks go onto the streets to protest against the increase of the pension age from 61 to 63…Does that mean that the Germans should in the future extend the working age from 67 to 69, so that the Greeks can enjoy their retirement?” Spain's government recently proposed raising the retirement age from 65 to 67.

It was a very red week last week in the market and we are now at key support levels. Should the market break below the 1000.00 level on the S&P 500 Index or the 100 level on the SPY there is a chance the market could fall much lower. I think we are at support here and are going to get a bounce. The question is if this expected bounce is just a bounce or a bottom? We will have to get above resistance at the gap noted on the chart below by the highlighted oval at the 106-107 level to move higher. Click on image to enlarge.

Gold is doing only slightly better than the US dollar on the YTD basis. For the week all markets were down with the riskier classes doing the worst. Click on table to enlarge.

Market Summary

The market does not paint a pretty picture. Technically speaking it was a weekly key outside reversal to the downside and the candlestick pattern is known as a bearish engulfing weekly candlestick. The last time we had a week like this was the week of the April 26-30 where we opened higher on Monday and went down all week. Same thing happened last week where the Chinese made the announcement that they would ease currency exchange rates for their currency and the market gaped open higher Monday and sold off all week long. Is this the beginning of a bear market? The market is already weak and deteriorating and the odds of a double dip increase as the market goes lower. Sentiment is bearish. Click on image to enlarge.

Gold is again the leader to the upside up nearly 12% for the YTD period. For the week the China ETF FXI was up the most. FXI could be a stock to watch as a global economic bellwether. Click on table to enlarge.

Market Summary

At the mid year point what can we expect from the rest of the year? Sentiment in the short and intermediate term is bullish and we have made a higher high and higher low on the daily chart. Technically that is all good but what really moves the market is the fundamentals of the economy. Jobs, the housing market, government spending, and retail sales are just some of the indicators that will determine where we go. Ease of credit, the CPI, inflation or deflation, and the business cycle are some of the others. And lets not forget sovereign debt and currency concerns which change and change the market.
Today is options expiration day, the 3rd Saturday of the month, and is often in my experience a turning point in the market. The chart below shows that we have been going sideways for the last several hours and have formed a pennant over the last several days. This could be building a high base which is considered bullish should we break out to the upside. However, we will just have to wait and see. Click on image to enlarge.

Looking at the daily chart in the image above shows a bigger perspective on the market trend. So far it is looking good. Click on chart to enlarge.

GLD has once again topped the list of ETFs moving to the upside for the YTD period passing up UUP which has retreated down as of late. For the week the gasoline ETF UGA was up the most followed by the natural gas ETF UNG while the US Dollar was down the most. Click on table to enlarge.

Mid Week Review

Does the Dow Jones Transportation Average ($DJTA) lead the market? According to Dow Theory as I understand it the $DJTA should lead in a move to the upside in a recovery. Are we in a recovery or is this the beginning of a new leg to the downside in the market? Only time will tell but note that the faster moving average (blue line) on the chart below of the $DJTA has crossed the slower moving average (red line) to the upside yesterday. Click on chart to enlarge.

Notice how the chart of the S&P 500 below has the same moving averages as the chart above but that the moving averages are just crossing today indicating that indeed the $DJTA is leading the market to the upside. Click on chart to enlarge.