Now, the abysmal retail sales numbers have been attributed to those individual investors, who’re thoughtlessly throwing money at an already overbought stock market. Well, perhaps it is a thought, however justified. But, from where we sit, we see money chasing money, raising it higher and higher, yet buying, every dip. Now, we’ve expressed a concern, we are obliged to admit that we do not yet see any topping of this mania, which, absent a different time sequence, which isn’t there, must surely end sadly.
Are we obliged to see every last investor dime, dissipated on the next high-flyer.? We are now able to see the beginnings of some cracks in the foundation of the market. The sell-offs, rare as they are, seem to be getting deeper, and the recoveries? Well, they’re still okay. The recent retreats have been on light volume, which tells us that the retreats are not yet over.
This is a “Crazy Eddy’s” type of market. For those of you who don’t remember, “Crazy Eddy”: he ran a retail chain, supported by a warehouse full of empty boxes, in inventory. Deception was the name of the game, and the public? The victim. Today, with the many mergers and acquisitions, we see multiple combinations ‘intended’? to make the various corporations more cost effective, by way of consolidations. Some of these consolidations are in locations; others are in products, but much of it is on the human side, leading inevitably, to job cuts. Yes, some of these activities do increase earnings by virtue of fortuitous combinations, but they do not increase market share. Corporations have been enjoying the weak dollar which has rendered our exports somewhat more affordable. Thus, those companies with international exposure, have enjoyed a currently robust, global economy.
As to the weak US Dollar, there are far too many dollar-bears out there! This forces us to conclude that the US Dollar will shortly, rally, even further. True, last week was a good week for the US Dollar and, although we shall surely see, bumps, along the way, we do have more room to the upside.
As to inflation, which nearsighted government measures successfully avoid seeing, it is, sadly, alive and well, thank you. Most troubling is not the cost of the tank of gas, because we know that to be temporary; we know that there is a genuine “oil glut” out there, somewhere. We also begin to understand that we have real, imagined and regulatory refinery problems out there and here, too and we are on the front doorstep of the “summer driving season,” a time when prices traditionally surge, emboldened by the anticipation of millions of Americans, driving their pocketbooks off the roads. So, our concern with inflation is now addressed to the food and raw materials categories. There will come a time when these additional costs will be passed on to the hapless investor. Think about the cost of feeding a chicken! Corn and other agricultural are part of the feed-stocks used to fatten these birds up. Necessarily, these costs have been rising, whether due to the increased costs of corn, or the costs of fertilizer, or of the diesel fuel used to power the farm machinery; the costs are there and, like His little apples, that cost will necessarily be passed on. Then, there is the cost of labor. As our US Dollar weakens, it takes more of these little dollars to pay for our value-added imports; thus, the cheap goods sold to us, takes more dollars to buy. That is a cost, passed on to the consumer. Then, there is the cost of transporting these goods to our shores. You are beginning to get the picture? We do have inflation; we just haven’t gotten round to admitting it, as yet.
The US Dollar index dived and then recovered, on the release of the PPI at 08:30 in the morning. The market initially rallied after that event and then retreated, removing the lows seen at the 08:30 release and printing 81.98 by 10:40 in the morning. The market tried again to rally and managed to trade up to 82.10, but then retreated, closing the day session at 82.02. Last week, the US Dollar index rallied for four of the five trading days, falling in the Friday session. We do have a blue 9-count on the chart. The stochastic indicator is issuing a sell-signal, our own indicator is issuing a sell-signal; actually, all the indicators that we follow, are issuing a sell-signal. The 5-period exponential moving average is at 81.928. The top of the Bollinger band is at 82.095 and the lower edge is seen at 81.126. The weekly chart continues to look positive, with all indicators pointing higher. What is very clear from these charts is that the US Dollar index needs to stay above 81.10. That number, 81.10, can be violated, but not by much.
The Euro has a red-9 count on the chart. All the indicators that we follow in this report, are issuing a buy-signal. Friday’s session was the first session of the week to close, higher, on the day. The 5-period exponential moving average is at 1.35532. The top of the Bollinger band is at 1.36995 and the lower edge is seen at 1.35206. The daily chart’s downtrend line is at 1.36702. The weekly chart still shows some risk, to the downside. We have a continued sell-signal, from all the indicators, with the exception of the Thomas DeMark Expert indicator, which is going sideways, at neutral. The weekly chart looks as though the Euro is curling over, forming a rounding top. We would need to see a close above, or, at the very least, a probe above 1.36158, and a further run to1.36593, to convince us otherwise. The indicators, all but the Thomas DeMark Expert indicator, which is at dead-neutral, going sideways, are issuing a continued sell-signal. The market could return to the 1.34468 level without disturbing the weekly uptrend line.
The S&P 500 futures contract recovered much of the loss of the Thursday session in the Friday session. The Thursday and Friday low-prints were identical. The indicators, all but one, are issuing a buy-signal. The Thomas DeMark Expert indicator is issuing a solid sell-signal. The chart, if you look at it without the indicators, looks as though it could be rolling over to the downside. The downtrend line is at 1509.65 for the Friday session. The 5-period exponential moving average is at 1509.00. It is important to note that both the downtrend line and the moving average number are similar; this would underscore the importance for this index to remain above that level, to remain in a bullish position to challenge new highs. The top of the Bollinger band is at 1522.80 and the lower edge is seen at 1472.04. The weekly chart shows four weeks of exhaustion as we move to the upside. Last week, the chart reflects that we made little progress and left a doji-candle, with a marginal new high (2 points above last week’s high) for the week. The indicators followed herein are uniformly issuing a fresh sell-signal. So the least we can garner from this chart is, that we should be cautious. The monthly chart is also showing signs of exhaustion. The indicators on the monthly chart are uniformly overbought and going sideways.
The NASDAQ 100 recovered almost all of the Thursday losses in the Friday session; out-performing the S&P 500. The indicators are reading the same as they are for the S&P 500, with three issuing a buy-signal and the Thomas DeMark Expert indicator issuing a solid, sell-signal. The 5-period exponential moving average is at 1903.31. The top of the Bollinger band is at 1931.49 and the lower edge is seen at 1838.55. The weekly chart shows that the NASDAQ 100 was unable to print a new high for this past week. The candle left on the weekly chart is that of a doji. The indicators are uniformly issuing a sell-signal. We have a scary 17-count on the chart, which is reminiscent of the scary 24-count we saw in sugar, when it was on its rally-tear, to 20 cents. These are times to be cautious, not risky. Use floating stops to protect your gains. A floating sell-stop is placed below the market and follows the market higher as it progresses upward; it does not move downwards as the market retreats. Yes, you can use a floating buy-stop, on the downside, to keep your short alive, but that would be placed above the market; it is used in a declining market, which, this is not.
The Russell 2000 finally made a new high in Wednesday’s trading session, when it printed 840.60. This index has been lagging the larger capitalization indices in recent weeks. Friday’s session saw a good recovery from the drubbing that this index took in the Thursday session. Friday’s session was an inside day. The indicators are reading much the same as with the other financial indices. The stochastic indicator, the RSI and our own indicator are all issuing a buy-signal, and the Thomas DeMark Expert indicator is issuing a solid sell-signal. The 5-period exponential moving average is at 830.56. The top of the Bollinger band is at 841.58 and the lower edge is seen at 820.53. The downtrend line for the Monday session is at 832.17 and the uptrend line is seen at 824.16. By the Thursday session, if the index remains between these lines, we will have a point of inflection. Remember, also, this is an options expiration week. When reviewing the weekly chart, although the Russell 2000 made a fresh high this week, it left a red candle on the chart for the week. The indicators are uniformly issuing a fresh sell-signal. The monthly chart is overbought, with a sell-set up, done.
The continuous commodity index enjoyed a rather robust rally in the Friday session, advancing 4.18 on the day! The same three indicators; the stochastic indicator, our own indicator, and the RSI, are all issuing a continued buy-signal, with room to the upside. The Thomas DeMark Expert indictor is issuing sell-signal. The 5-period exponential moving average is at 404.13. The top of the Bollinger band is at 407.57 and the lower edge is seen at 401.32. The weekly chart is a bit ominous, with a shaven-head candle, with a long tail. All the indicators that we follow herein are issuing a sell-signal. The downtrend line for the weekly chart is at 405.39. It looks as though the “line in the sand” is at 401.14. Below that, we will have a liability to 396.38 and the 389 area. The monthly chart looks as thought this commodity index is rolling over to the downside. Both the Thomas DeMark Expert indicator and the stochastic indicator are in agreement with that finding. The other indicators are confused and going sideways, not issuing anything of value. We seem to be forming a pennant, getting more and more narrow.
July cocoa has been on a tear to the upside for most of the week. Thursday was the high of the session when the market printed 19.50. The uptrend line for the Monday session is at 19.01. The indicators are mixed, with no clear direction seen, as a result of the confusion. The 5-period exponential moving average is at 19.10. The top of the Bollinger band is at 19.78 and the lower edge is seen at 17.88. We do have continued signs of exhaustion in July cocoa’s daily chart. The weekly chart looks much better, with a definite upside bias. We have broken above the downtrend line and the indicators are uniformly issuing a buy-signal. The Chart looks as though this market would like to go higher and perhaps print a new, or near-new, high. If the market fails to print a new high, it could retreat to the 17.55 level.
The chart of July coffee shows that there is some problem as we rally. The specific problem rests at 107.13, which is a horizontal line that has kept a lid on this market. The stochastic indicator, our own indicator, all the indicators that we follow are rolling over, curling to the downside and could issue a sell-signal as early as the Monday session. We are below the uptrend line. The 5-period exponential moving average is at 105.91. The top of the Bollinger band is at 112.70 and the lower edge is seen at 102.34. The Bollinger bands are beginning to narrow, showing the contraction of volatility in this market. Now that the June options are off the board, we will see the true direction of July coffee in the Monday session. The weekly chart shows us that coffee is continuing in its downtrend. The indicators are oversold and trying to curl to the upside, but haven’t done it as yet. The monthly chart looks awful and is oversold. We must stay above 103.25.
Would you believe July sugar is getting overbought? Sure doesn’t feel that way. The stochastic indicator and our own indicator continue to issue a buy-signal, but at overbought levels. The Thomas DeMark Expert indicator is issuing a solid sell-signal. The RSI, well that is going nowhere fast, at neutral. The 5-period exponential moving average is at 9.27. The uptrend line for the Monday session is at 9.22. The top of the Bollinger band is at 9.60 and the lower edge is seen at 9.02. The 20 period moving average is at 9.31. We seem to very range-bound in this market and unless we break 9.43 on the upside, or remove 9.11 on the downside, we will continue in this boring path. The weekly chart verifies the findings of the daily chart. Looks dull and boring, possibly trying to make a bottom.
July Frozen Concentrated Orange Juice has signs of exhaustion. We are entering into hurricane season again. Yes, we know that last year was a bust for hurricanes and the much-ballyhooed storms never arrived; well, they never made land-fall in orange juice territory. This year, the prognosticators are looking for 17 storms. Are they crying wolf or should the market listen? It appears that the market is confused by that information. The stochastic indicator, our own indicator and the RSI are all issuing a fresh buy-signal, but both the stochastic indicator and our own indicator are at overbought levels. The Thomas DeMark Expert indicator is issuing a sell-signal. The 5-period exponential moving average is at 166.49. The top of the Bollinger band is at 171.28 and the lower edge is seen at 150.94. The downtrend line for the Monday session is at 166.73 and the uptrend line is seen at 163.49. By the Tuesday session we will break out of this narrow range. The weekly chart is conflicted. So long as Frozen Concentrated Orange Juice remains above 162.93, we will give it to the bulls.
July cotton printed a new “life of contract low” when it printed 47.52 in the Friday session. All the indicators are uniformly issuing a sell-signal, with more room to the downside. Naturally, the market is below the uptrend line. We could see a bounce in the Monday session, but we wouldn’t trust it to be more than a “dead-cat-bounce.” The 5-period exponential moving average is at 48.62. The top of the Bollinger band is at 52.85 and the lower edge is seen at 47.03. Naturally, the weekly chart looks ugly, also. The stochastic indicator and our own indicator are issuing a buy-signal. Both the RSI and Thomas DeMark Expert indicator are not. The downdraft has been very steep, so, we could see a bit of a recovery.
June gold recovered just a bit from the relentless pounding that it received in the Thursday session. The stochastic indicator, our own indicator and the RSI are all about to issue a buy-signal. The Thomas DeMark Expert indicator is issuing a sell-signal. We pierced the lower edge of the Bollinger band, but did close above that level in the Friday session. The5-period exponential moving is at 676.80. The top of the Bollinger band is at 700.60 and the lower edge is seen at 669.60. The weekly chart illustrates the expansion of the range seen in last week’s session. The indicators are uniformly issuing a sell-signal. The market looks as though it is curling over to the downside. The monthly charts are consolidating and forming a pennant. The monthly chart tells us that to break out our range, we need either to get above 699 or, to trade below 670.
Crude oil looks as though it is making a base. Yes, we have heard that the world is awash with crude oil and that there is too much of the stuff around. Unfortunately, the chart hasn’t heard that information and is telling us that crude oil wants to go higher. The indicators are uniformly issuing a buy-signal. The 5-period exponential moving average is at 62.19. The top of the Bollinger band is at 66.82 and the lower edge is seen at 60.78. The weekly chart shows that crude oil has a downside target of 59.60. Breaking that target, would open the door to the January low of 50.53. The indicators on the weekly chart are somewhat mixed.
Natural gas enjoyed a robust rally in the Friday session, putting it in position to challenge the 8.105 area. The stochastic indicator, our own indicator and the RSI, all, are issuing a buy-signal. The Thomas DeMark Expert indicator is drifting to near-oversold levels. The 5-period exponential moving average is at 7.794. The top of the Bollinger band is at 8.017 and the lower edge is seen at 7.370. The uptrend line for the Monday session is at 7.664. The weekly chart has signaled that it is exhausted. The indicators are uniformly overbought and could issue a sell-signal, as early as this week. The monthly chart shows how narrow the range has been. We have a second doji-candle on the monthly chart. The indicators are, uniformly, going sideways.no signals issued.