Remember the Robot in “Lost in Space” a long ago sit-com? Perhaps that should be the clarion call for the day! “Danger Will Robinson, danger!” Foreign purchases of U.S. securities fell in July. That retreat was the largest one seen in over a year! Not too good when you need foreign purchases to fund deficit spending; oh well, surely there is a good excuse buried in the numbers, somewhere.
Crude oil down for the count!
Crude oil retreated again, giving the consumers a little coin in their pockets. Gasoline is back down, from outrageous to just expensive, but after being outrageous for the summer driving season, expensive looks just great. Not only does this needed increase in family cash flow, help the Christmas shopping season, but it is, fortuitously, just in time for the elections in November.
The cooling economy, which, according to the FOMC statement, is no longer just gradually cooling, but really cooling, finally took its toll on those optimistic stock investors who also just figured out that cooling translates into less corporate profits. The Philly Fed survey fell into negative territory and the US Dollar index retreated, as the prospect of further rate increases by the FOMC diminished. Unfortunately, the costs of real-estate taxes are increasing. Apparently, nobody told these assessors that the price/valuations of homes are falling. What the crude oil market ultimately ceded to the consumer’s pocket, the municipal and state governments took away. Take a peek at New Jersey; there, the state raised its sales tax, and increased the real-estate taxes and untimorously boasts of the highest auto insurance rates in the country. Health insurance hasn’t stopped its constant march to higher policy costs either, but hey, we did get some extra money by not having to pay 3 bucks a gallon for gas. Grateful for small favors? YOU BETCHA!
Diapers that don’t end!
So here we are, baby boomers, on the broad edge of what has long touted as the “golden years,” saddled with our aging parents. It is a gift obligation which we graciously accept although we had long thought to have been done with diapers and the other appurtenances of senility; of course we were ready to accept the grandkids’ need for diapers, but adult diapers? Peripherally, it would appear that the “golden years”, are not yet an option. Many of us are, by circumstance, faced with dealing with this “ungolden” consequence of the passage of time. We could, of course, warehouse our aging parents and other very senior “relative” responsibilities. Nursing home abound, but sadly, they are no more than holding pens for the undertaker; poorly staffed by under-educated, under-committed aids, all too many of whom are intent on the fleecing of the conscience-stricken, but under-motivated offspring, seeking a conscience-sop as an alternative to the direct care obligation for the aging patients-parents. Remember, the characterization in Charles Dickens, “SCROOGE and MARLEY”, where the vultures who awaited the death, are reaping the rewards of that patience, by removing even the bed curtains, while the poor expired soul was still a’ bed? This happens, in real life, everyday. A recent example is one where a patient in an upscale nursing facility died, basically, of neglect. Yes, she was cleaned, but not toileted. She died because her impacted stool ruptured her intestine. The caregivers ignored the rail-thin grandmother’s hardening abdominal region and only gave help after the impacted stool did its rupture thing. Yes, they were alerted by the elderly’s room-mate and even by the family, but ignored the pleas for help. There is no easy answer to this dilemma; you’ve recently seen the Mrs. Astor news story, absent the help of the nursing homes attentions. We can’t compel conscience and, in the final analysis, we have the obligation to care for or arrange for responsible care for our parents, until we can’t. We hate excessive regulations as much as the next guy, but somewhere, someone should take up the cudgel in defense of the seniors, without whose ardent care we, in fact, would not be here, in concern.
The FOMC was on schedule with its scripted event. This news was baked in the market, but what was not baked in was the light-bulb that finally got lit when the market realized that slowing economy correlates to lower earnings, duh, ya think? Then, there was the hedge fund implosion; this added cheaper fuel to the fire.
Last week of the month and the quarter will bring changes.
This week, we enter the last week of the quarter, whereupon, portfolio managers, traditionally wake up and “smell the coffee.” Speaking of coffee, this week Starbucks announced a price increase in their products. As a coffee trader, we look at the retreating price of New York Board of Trade coffee products and wonder why? Even the Robusta contract in London has been on a recent retreat. So, why the price increase? This cost increase surely must be attributable to increased costs of labor, it sure ain’t the coffee cost. And that isn’t a good sign, that is, unless you like inflation. It is a good thing that other coffee producers haven’t followed suit.
Monday: August existing homes sales are released at 10:00 and Dallas Fed President Fischer speaks. Tuesday: September consumer confidence numbers are released at 10:00. Wednesday: August durable goods are released at 08:30 and August new home sales are released at 10:00. Thursday: 2^nd quarter GDP is released at 08:30. Friday: August personal income and consumption is released at 08:30, September Michigan sentiment is released at 09:45-09:50 and September Chicago PMI is released at 10:00.
The put/call ratio is little changed from last week; this week’s reading 130/100 last week’s reading was 131/100. The VIX is in a fix with a reading of 12.59 up from last week’s 11.76, and last month’s 12.31 but lower than last year’s 12.96. Careful here, we are back to believing in fairy tales like Goldilocks.
It looks as though the Monday session might just give the US Dollar index a well-deserved bounce The Index touched the uptrend line and bounced nicely from it. The stochastic indicator is issuing a continued sell-signal, but is at oversold levels and appears to be curling to the upside. The RSI has turned the corner and is pointing to the upside.
Our own indicator will issue a buy-signal in the next session, but the Thomas DeMark Expert indicator continues to warn of lower levels and is issuing a sell-signal. The 5-period exponential moving average is at 85.13. The top of the Bollinger Band is at 85.92 and the lower edge is seen at 84.23. The weekly chart isn’t as friendly as the daily chart and we have 3 of the 4 indicators issuing a continued sell-signal. Only the Thomas DeMark Expert indicator is diverging, but it is issuing nothing, just going sideways, at overbought levels. For so long as the market believes that the FOMC is populated by doves rather than hawks, the US Dollar index will be defensive. Another problem for the US Dollar index is the recent lack of interest in our securities, as indicated by the most recent “foreign purchases of U.S. securities”; report by the US Treasury shows that these purchases fell to the lowest level in quite a long time. This isn’t good for this country, since our debt is being supported by these purchases.
The Euro has moved to the upside, closing above the uptrend line. The stochastic indicator, as well as the other indicators we follow, is issuing a continued buy-signal, but is getting to overbought levels and is beginning to curl over to the down-side. The 5-period exponential moving average is at 1.28058. The top of the Bollinger Band is at 1.29520 and the lower edge is seen at 1.28926. The weekly chart shows us that we are just below the downtrend line, having touched it in the past week. The stochastic indicator, our own indicator and the RSI are all uniformly issuing a buy-signal. The Thomas DeMark Expert indicator is oversold, but is not issuing anything at the moment. The Euro looks as though it could easily trade higher, but at the moment, it could do with some backing and filling.
We have a mechanical sell-signal on the S&P 500 December futures contract. The stochastic indicator and all the indicators we follow, are issuing a sell-signal. There it is: four indicators and a mechanical indicator, all saying: sell! The 5-period exponential moving average is at 1329.53. The top of the Bollinger Band is at 1339.79 and the lower edge is seen at 1304.25. Even the weekly chart shows exhaustion. The indicators on the weekly chart, again, are all in agreement with a sell-signal. This should come as no surprise, considering the recent forays to the upside. We are in the last week of the quarter, so expect to see some portfolio adjustments before the close of the quarter. We are also entering October, the last month of the year for the funds to take their losses, so further pressure on the index will be seen. Remember, as oil drops in price, so too do the stocks associated with the product. So, while a fall in crude prices is good, it may not be that good for the oil-related issues.
The NASDAQ 100 looks exhausted and in need of a rest. The stochastic indicator, in fact, all the indicators are issuing a sell-signal. The5-period exponential moving average is at 1647.62. The top of the Bollinger Band is at 1677.44 and the lower edge is seen at 1551.20. The chart continues to show an overbought market, above the uptrend line and in positive territory. The momentum on the upside is subsiding somewhat and the market seems to be heavy, having difficulty making progress to the upside. The weekly chart verifies that finding. The stochastic indicator on the weekly chart is just issuing a sell-signal. The other indicators are in agreement with that finding. The chart continues to look positive and unless it breaks below 1611.50, we would continue to believe that this could just be some profit-taking.
The Russell 2000 felt the down-draft of the past 2-day sell-off, more than the other indicators have felt. Why? Well, it is simple. These 2000 stocks that make up the Russell 2000 are the small companies; those which generally don’t pay dividends and are at the most risk, should the economy slow down. As told in the Philly Fed survey, the economy is slowing down. The stochastic indicator is issuing a sell-signal, as are all the other indicators followed in this report. The 5-period exponential moving average is at 731.22. The top of the Bollinger Band is at 744.69 and the lower edge is seen at 710.61. We are approaching the lower edge of a channel line. We have not disturbed the bullish chart pattern as yet, but things could change in short order.
How many ways can we say OVERSOLD??? The continuous commodity index is oversold. The stochastic indicator, the RSI and our own indicator are issuing a sell-signal. The Thomas DeMark Expert indicator is issuing nothing, just going sideways. The 5-period exponential moving average is at 366.35. The top of the Bollinger Band is at 397.57 and the lower edge is seen at 358.37. We are testing the lows of June 13-14, which we traded at 363.64. The weekly chart shows that we have violated the uptrend line. We have a 10-count on the bottom and all the indicators we follow are oversold, but not one is issuing a buy-signal at this time. This is telling us that while we are oversold, there could be some more price erosion, before the bounce appears. Advice? Keep your powder dry and stay on the side-lines until this shakes out.
December cocoa has enjoyed a very substantial rally this past week, but it has gotten itself a bit overbought. The stochastic indicator is issuing a sell-signal, as is the RSI. Our own indicator will issue a sell-signal in the next session, while the Thomas DeMark Expert indicator continues to issue a buy-signal. The 5-period exponential moving average is at 14.87. The top of the Bollinger Band is at 15.30 and the lower edge is seen at 14.31. We hear that in the last session, there was some aggressive fund-selling, adding to already outstanding shorts. Further, these funds are in no hurry to cover, that is, unless the high of this past week is removed. That high is 15.35. We would guess that there are some pretty hefty stops above that level, as scale- up buy-stops. The weekly chart paints a different picture. The 15.35 level seen, marks the spot where the downtrend line rests. For this week, that downtrend line is at 15.24. The stochastic indicator, the RSI, and our own indicator, all are issuing a buy-signal. We shall see how this shakes out this week.
The chart of December coffee looks as though it could go up and challenge the downtrend line, which is at 105.15 for the Monday session. The stochastic indicator is issuing a buy-signal, as is the RSI and our own indicator. Even the Thomas DeMark Expert indicator is issuing a buy-signal. This market looks as thought it wants to go higher. The 5-period exponential moving average is at 105.12. The top of the Bollinger Band is at 111.48 and the lower edge is seen at 98.89. The weekly chart looks as though it wants to also go higher. The stochastic indicator and the RSI are pointing to higher numbers, but the Thomas DeMark Expert indicator continues to issue a sell-signal, albeit from oversold levels. Our own indicator is about to issue a buy-signal, but so far, has not done so.
November Frozen Concentrated Orange Juice is oversold. The stochastic indicator is issuing a continued sell-signal, from oversold levels. The RSI is pointing to lower levels and is oversold; our own indicator is in agreement with that finding. The Thomas DeMark expert indicator is going sideways, at neutral levels. The 5-period exponential moving average is at 171.03. The top of the Bollinger Band is at 188.47 and the lower edge is seen at 167.02. We are sitting on the uptrend line on the weekly chart; actually we closed just a hair below that line. The indicators are uniformly issuing a sell-signal. Looks like there could be more downside for November Frozen Concentrated Orange Juice.
November crude oil is extremely oversold and looks as though it will find support at the 58 dollar level. The stochastic indicator is not issuing anything, but is at oversold levels. Our own indicator is issuing nothing of value. The RSI is oversold, but is pointing to lower levels. The Thomas DeMark Expert indicator is not issuing anything. The 5-period exponential moving average is at 61.81. The top of the Bollinger Band is at 73.95 and the lower edge is seen at 59.35. The weekly chart also shows that we can expect to see lower levels, probably testing the 58 area. We are below the weekly Bollinger Bands, so you can see that we will bounce from that level. We are even oversold on the monthly charts. Until this product turns to the upside, we would avoid any position contra-trend and would stand on the sidelines.
Natural gas didn’t need a hedge fund blow-up. It has been in a downward spiral since July. The hedge fund merely helped fuel another sell-off. (Obviously not using natural gas as a fuel) We have an 11 count on the downside. We expect to see a bounce within a session or two and will have to reassess the situation at that time. The stochastic indicator, the RSI, and our own indicator are all issuing a continued sell-signal at oversold levels, and we mean: oversold! The Thomas DeMark Expert indicator is dead neutral, issuing nothing. The 5-period exponential moving average is at 6.113. The top of the Bollinger Band is at 9.238 and the bottom edge is seen at 5.400. The weekly chart looks worse than does the daily chart, only the stochastic indicator, RSI and Thomas DeMark Expert indicator are issuing a buy-signal. It is only our own indicator that is not issuing a buy, at this time, but is curling to the upside. We are in an area of congestion, which can be seen when viewing the monthly chart. All the indicators on the monthly charts are oversold and are pointing lower.
The chart of December gold is forming a saucer-bottom. The stochastic indicator, our own indicator, the RSI and the Thomas DeMark Expert indicator are all issuing a buy-signal. We need to see a close above 601.80 to give us the green light. The 5-period exponential moving average is at 590.70. The top of the Bollinger Band is at 652.29 and the lower edge is seen at 567.50. The weekly chart illustrates a liability to 557.10. Should that level fall, we could revisit the 500 level. The stochastic indicator on the weekly chart continues to issue a sell-signal, but it is curling to the upside. The RSI has already reversed and shows that higher prices are in the future.
The Thomas DeMark Expert is just crawling along the bottom of the chart. Our own indicator is about to issue a buy-signal. The monthly chart looks as though it could break to either side and it is consolidating.
NYA CASH (8344.67)
Resistance 8363.45 8388.68 8400 8423.37 8435.68 8443.42 8478.49 8494.40
8512 8526.76 8580 8598 8634.88 8651.74(H)
Support 8311 8294.64 8275.84 8268.97 8236 8209.66 8190 8163.26 8140.11
8108 8071 8022 8009 7953.14 7924.62 7901.40 7897.69 7883 7872 7855
7824.41 7805 7798.30 7780.33 7753.95 7739.47 7716 7708.11 7693 7677
7667.64 7642.81 7634.58 7621.26 7599.78 7566.02 7546.67 7529.15 7516.48
7498.75 7470.90 7455.70 7422.77 7407 7380.75 7369 7339 7316 7293 7280
7263.32 7251.87 7233 7214 7200 7174.95 7160 7138 7116.60 7107 7091 7084
7060 7047 7028 6993.30 6971.22 6958 6936 6924.00 6913 6906.23 6887 6843
6800 6786 6749.41 6701.47 6699.84 6680
RUI CASH (712.54)
Resistance 715.95 718.67 719 722.86(H)
Support 709 707.55 704.41 701.86 697.41 694.50 690 688 686.50 684 681
678.33 675.65 672.40 670.69 667.14 665.05 663.18 661.28 658.23 656.20
653.80 650.61 647 644.67 641.46 638.70 635.58 633.87 631 628.46 624.98
621 619.20 617 614.25 611.70 609 607 604.665 602.50 599.39 595.70 593.40
590.58 588 585.27 582 579.24
Russell 1000 Value (751.62)
Resistance 752.57 754.94(H) 757
Support 748.55 745.14 744.82 742.95 739.24 735.58 733.51 730.19 727.53
725.26 722.96 720 718 715.11 713.53 710 708.98 705.80 703.39 701.38
700.34 697.65 695.98 693.38 690.61 687.26 684.85 683.16 679.76(just go
short) 677 674 671.25 669.40 667.70 666 663.44 661 659 656 653 650
648.11 644.62 641.05 640 638.05 635 632.90 630 627.20 624.61 620 615
613.48 610.29 608.48 607.76 606.92 604.91 599.92 596 593.73 590.6
Russell 1000 Growth (515.62)
Resistance 517 520.33 522.29 525 527 530 532 534.43(H) 536 539
Support 514.04 511.07 508.41 505.90 503.53 501.78 498 496 493 496 493.36
490.56 488.57 485 481.43 477 475 471 468 464 462 460.87 457.82 455
450.31 445.34 443.88 442 440 438 436 434 432 429 427 425 423 421 418.68
416 414 412 410
TO A0 (Russell 2000 cash) (718.63)
Resistance 721 724.44 727 729.35 732.24 735 737.45 739.75 742.40 746.09
749.70 753 755 758.12 761 764 767 772.12 774.71 776 779 781 784.62(H)
Support 714 711 708.54 706.61 704.40 699.24 696.41 693 690 686 682
679.04 676.39 673.22 671.94 669.05(just go short) 666.36 663.65 659.35
655.95 653 650 647.35 644.33 642 638 635.33 632.73 630.40 628.54 626.91
624.41 621 618 615.31 612.71 609.41 607 601 596 593 590.53 587 584
579.38 577.93 573 570 567 565.21 559.70 558.58 554.13 551.87 548.45 545
541.96 538 536 533 529 526
SPX CASH (1314.78)
Resistance 1319.87 1324.65 1326.53(H)
Support 1311 1306 1298.92 1295.09 1293.57 1289.49 1285.25 1278.90
1268.20 1265.48 1262.08 1257.98 1248.29 1240.29 1235.18 1231.57 1228.45
1222.52 1219.29 1211.27 1202.35 1199.71 1195.90 1192.34 1187.13 1179.59
1175.44 1171.35 1168.20 1164.50 1161.43 1152 1147 1140 1132.84 1130.54
1128 1124.62 1120.19 1118.60 1110 1094 1090.19 1087 1079 1068
NDX CASH (1622.37)
Resistance 1627.54 1635.81 1648.23 1652.26 1660.82 1676.63 1685.66 1697
1706.33 1713.84 1720.15 1724 1735.50 1741.35 1749 1761.46(H)
Support 1617 1611 1601 1589 1581 1589 1574.71 1570.34 1557.70 1548.07
1539.59 gap to 1534.78 1508.94 1494 1486.74 1479.69 1451.88 1448 1438
1428 1420.79 1412.63 1408.59 1399.05 1397.50 1388.20 1380 1374 1366.73
1356 1348.27 1334 1320.95 1309
DX Z6 (84.87)
Resistance 84.90 85.10 85.16 85.25 85.66 85.78 85.82 85.97 86.16 86.45
86.64 86.70 86.99 87.09 87.24 87.62 87.67 87.77 87.80 87.96 88.08 88.13
88.19 88.27 88.33 88.45 88.33 88.51 88.60 gap to 89.17 89.27 89.37 89.39
89.52 89.69 89.84 89.90 89.99 90.05 90.17 90.26 90.34 90.79 90.99 91.06
91.16 91.18 91.22 91.33 91.49 91.55 91.60 91.68 91.74 91.98 92.05 92.27
92.45 92.54 92.61 92.80 93.00 93.28
Support 84.70 84.74 84.68 84.56 84.42 84.28(I) 84.16 83.95(I) 83.85(I)
83.79 83.67 83.60 83.57 83.47 83.41(I) 83.30 83.15 83.05 82.99 82.86
82.72 82.65 82.59 82.37 82.18 82.02 81.98 81.81 81.75 81.66 81.48 81.39
81.31 81.25 81.12 81.00 80.98 80.69 80.22(4/28/95)
Jeanette Schwarz Young, CFP, CMT
c/ o New York Board of Trade
Box 1952 One North End Avenue
New York, New York 10282