Key Levels

The NQ100 through yesterday had become a bit timid with the DELL announcement after the close adding to weakness. There is no price bottom without the NQ100 leading and holding key levels as the market tries to move away from lower consolidation. Last Friday's highs represents a key level to maintain. For the three animals we watch, the DJIA, SP500 spot and NQ100 spot, those prices would be ; 11632, 1294, and 1941.

Rally Needs

Indexes a bit higher this am trying to build on yesterday's close and the GDP number. The DJIA, SP500, and NQ100 all need to climb above last Friday's high and hold to have any chance of moving into the next leg up.

Big Price Week

Once again, important week for price action which will establish whether or not we rally until the end of year or break through the election and beyond. This weeks lows or ever so slightly lower lows next week will be the benchmark for buy/sell.

Base Building

After yesterday's sell-off, indexes trying to find some footing. This range bound action finds the indexes about in the middle of the overall range with increasingly bearish media coverage about banks and brokerage. Base building this week has to develop into the next step up or a softer September will lead to a potentially lethal October.

Trading Paces

These markets are scrambling to attain clear site lines over the wreckage of a disastrous eight year period where nearly every sector of the economy has been damaged. As Republicans beg for another chance to repair the economic events unraveling under their watch, Democrats believe they can do better with a candidate Wall Street desperately fears. Predicting how things work out in both the political arena and in fixing the economic plumbing of the country is helping to drive the current trading values. The trading pace will quicken as fall trading begins with hopes of a clearer picture emerging as to the effects of financial interventions already implemented.

Confirm A Bottom

Early action this morning showing strength in the stock indexes but still remain well of this week's high. We are entering a critical time period for establishing a base for the final three months of the year with closes needed over 11800, 1322, and 1933 in the DJIA, SP500, and NQ100 respectively to confirm a bottom.

The Three Indexes

DJIA is the weakest link right now as the indexes try to fight off the most recent declines. The SP500 follows in the number two spot on strength with the NQ100 continuing to lead the three with the first level of key support down at the 1853 mark basis the spot futures. Taking a cue from NQ strength can be a nervous venture since solid gains can disappear quickly.

Cloudy

News is slapping the futures down as the view ahead is clouded with inflation and bank worries. Technical internals are not bad but the indexes will need an upside reversal to get shake off the pessimism over price potential. Bears need a headline to drive the market lower.

Indexes Will Tip Their Hand

Starting new week with little market energy as mid of August has turned into the quietest action since the beginning of the year. Bulls will try to extend gains again this week but are starting to run into some doubters as to the legs of the current rally. Commodity prices and their correction have had little to do with this rally despite what the market morons think. Stock indexes will tip their hand when next week they create a range which will be the bull/bear dividing line for the rest of the year.

Worth Less

As mentioned in a previous blog, commodity prices declining is a positive as long as it does not couple with the notion of all things being worth less. Commodities are currently in the 50% retracement flight path and will settle into a trading range that will last a significant period of time, especially after the absurd levels they attained on the upside. So it is hard for indexes to get comfortable at higher levels simply because hard assets are correcting. The best cure for the bull is higher prices and we have yet to reach levels to confirm the bottom.

Trying To Rally

Indexes will try to rally today and deflect some of the increased anxiety over whether there will be a test of the lows in the not to distant future. NQ100 continues to be the strong hand with the AAPL cult helping to lead the way. DJIA and SP500 have been hindered by JPM and Deere along with other not so positive earnings results. The bulls still have the upper hand in here but consistantly bearish professional trade is an obstacle.

Chances Of Deflation

Indexes having to defend gains of July and August as financial stocks such as JPM get hurt.
The deflationary implications of commodity and stock prices falling together is being floated and as of yet has not gained much momentum. It would, if accepted, become the cruelest cut of all for the markets as they try to base into the fall.

SP500, DJIA, NQ100

SP500 and the DJIA are trailing the NQ100 in relative strength during this current rally. This is the right configuration but the first two need a boost to close over the June 26th highs to confirm a bottom.

Commodities 50% Rule

Last week commodity prices continued their inevitable crash and stock indexes rallied to solid gains. The two had nothing to do with each other however despite what market folks put out. Commodities are always, always subject to the 50% retracement rule. No matter how high commodities go, they will appear at some point in time half way back from their journey. So calculate that for oil, gold, corn, etc.

Stock indexes on the other hand rallied last week simply due to a pervasive bearish malaise which made it virtually impossible for them to break. Now the bears have been driven to the edge of failure but still hang on as this week begins, looking for trading to reject the closing levels of Friday and resume the despair.

Range Trade

Have had some large gains and losses during the course of the week with the indexes range bound slightly in the upper half way of the range created between the end of June and July 15th. The bulls are leading but not by much and the technicals are flat to sideways. NQ100 is stronger than the DJI and SP500 but it suffering from short term overbought conditions which may be temporary problem.

Top Of Range Targets

Range bound at the mid to upper end of the range is the feature these last couple of days. DJI, SP500, and NQ100 have to close over 11810, 1322, and1933 respectively to confirm the October 07 to July 08 trend is over. Bulls still have the greatest marginal advantage of trading action.

Rally Close But

Nice rally yesterday in the main three indexes this blog follows DJI, SP500 and the NQ100. Almost made it into break out territory but stopped just shy enough to leave room for failure. A case can still be made for either camp although the bears have come up right to the edge of having to move their tents back a distance. A follow through 150 to 200 point rally in the DJI today would end the bears run begun in October.

This Summer's Range

Since entering this trading range on June 26th, the indexes have thrashed around including yesterday's action and the bump up this am. Bull or bear camps can claim victory but the range terrain is summer-like with economic disaster added. Bears have more to prove than the bulls as finding willing sellers at lower levels may be tough. Fed today, but who cares.

Real Estate Watch

The rolling real estate cloud continues to hang over the market as increases in prime mortgage delinquencies are being reported in an article by the New York Times today. Just how long and deep the slow down in all sectors of the economy will be is what the markets are trying to determine at this mid point of the price range since the lows of July 15. Indexes are still somewhat oversold as the prevailing bearish attitude toward price remains intact. Fed announces tomorrow in what is widely expected to be a hold with all attention on the verbiage contained in the release. Bulls need to pony up this week or be dragged down into a real test of the lows.

Directional Supremacy

Unemployment data basically a wash as far early reaction and puts the battle of directional supremacy onto today's trading turf. The month begins with the bulls looking to put together a rally through the last five months of the year while the bears will go with the plan of sideways to lower trade until October when the final death dive will occur.