Defensive

Various bits of data will start to be released today and Thursday. Action has been defensive as the bears believe they have the upper hand on trend. Even the NQ100 has given up significant gains to now appear vulnerable to a downside slide. Bears need to pound the weekly to get any more traction.

The Three

The three elements of the market are up, down, and volatility.
This chart represents the three trading elements in our model's daily performance. The green represents the strength of the up bias, the red the down bias and the yellow, volatility. Thus the model presents an investable bet daily on the up, down, and vol. Up bias over vol. represents and confirms up trends. Down bias under both up bias and vol. represents lack of bear conviction. While the bears have much work to do, the base action of this year is being challenged.

Bears In Charge

Indexes slid early then recovered late yesterday on better volume. This morning the slide is on again, tagged by Bernanke pledging to fight inflation by raising rates now that he believes the worst of the debt crisis is over. A hard break here for the indexes would be welcomed by the bears who have continually struggled to show they have a case for disaster.

Waiting For Break?

Bears hoping the weekend drumbeat of bad news, re-hashed Friday's dive, and general oil freaking would provide a sharply lower overnight beginning of today's trade. Waiting for a move is always dangerous but the bears have had enough of markets that ignore the supposedly horrific state of economic affairs and so accordingly they believe we should be much lower. Well, waiting for the obvious can be expensive but we are at a level where it is put up (down in this case), or cover.

Over Play

Bears took hold in an orderly break pressured heavily by expiration and sank the indexes to levels well within the range bound area traversed since January. There was much hand wringing about oil as it continued a two day rally of approx. 16 dollars per barrel, but it only closed 2.5% above the all time high.

Just as the bears felt uneasy about last Friday's closing rally, this Friday's bulls
are anxious. Both sides have been pressing for big moves and to a large extent they have achieved wide ranges, yet over the same ground. Whether it is the particular inability to make money as a bear without a mindless crash or the absence of a needed moronic upward trend for the bull, one is not quite sure. What we end up with is the over playing and over trading of ranges along with inaccurate hyperbole by business network analysts.

Here is the data for the FTM (for the move) numbers on the DJI average, SP500 and NQ100 spot futures.

DJI -14% off all time high + 5% off FTM low . Last time closed here 3/28

SP500 -14.3% off all time high +8.5 off FTM low. Last time closed here 4/10

NQ100 -59% off all time high/ -11.7% off of FTM high +19% off FTM low. Last time closed here 5/2

Unemployment Edge

Unemployment data this morning giving the bears something to hope for after yesterday's action. Continued pricing of stocks yesterday put a relentless bid in the market and now the question is whether additional pricing can fight off the edge bears have been given early. The key still remains the NQ100's ability to provide leadership for the indexes. The DJI is heavy despite Thursday's gains with no confirmation by the SP500 that the overall range bound action is over.

NQ100 Strength

NQ100 keeps putting the pressure on the bears with moderate pricing and occasional upside runs.
It will have to drag the DJI and less so the SP500 to get rallies over 12800 and 1423 respectively. The DJ Transportation Index continues to dance between double top or break out. Dow Theorists have a strong track record of confirming bottoms as the transportation sector many time does lead the broader indexes higher. All of this is leading to a volatile day tomorrow when the markets get a look at the unemployment data.

Bears Keep Trying

Bears were able to stick some down on the indexes as financial stocks remained on the critical list. Another rally off the daily lows however again spoiled the break as short covering erupted in the last hour of trade. Bears have a bunch of catching up to do if their rhetoric is going to match prices. Some believe this will happen if commodity prices join in a lock step deflationary break over the coming months. With the two party candidates able to frame their strategies, the markets will try to determine the odds of victory for each. As for the overall market indexes, NQ100 is still marginally predicting higher index prices over the coming months.

Range Dog

Moderate selling in the indexes yesterday without any follow through. Continued bank in the tank
data along with ratings worries added to the negative tone. NQ100 is providing best relative performance and will be the leader if these markets are any good. Range dogging is more likely however for all indexes.

June Begins

June arrives with the index markets stuck between the generally bad economic news and trading ranges which have been slightly supportive since the end of January. Macro bears have repeatedly laid-out the downside argument without much result while the bulls seem content simply not having a price disaster. No one is expecting much of any positive news from the unemployment report this Friday but the bears still may need to get any downside work done early in the week. If not, they could find themselves back against the rally side of dull but not harmful economic data.