After trading slightly higher overnight, the Dow and SPX opened slightly lower, and as of this writing, the Dow is now up 15 while the SPX is down 0.98. The other major indexes are mixed, with the Transports leading the way, up 0.10%. Troubles in Europe continue, with reports that inflation printed at 2.6%, driving expectations that the ECB will increase interest rates. Which in turn has the Euro trading higher at 1.4188 after trading over 1.42. The Dollar is off, trading 75.89 and Yen is stronger, trading at 82.76.
News out of Japan is that the impact of the recent natural disasters have begun to be reflected in the economic reports. Japanese PMI plunged to 46.4 from 52.9, the largest decline ever. The disruption in supply chains and manufacturing output is showing up, while input costs increase with the price escalation in energy and raw materials. Stagflation stalks the land. Of course, there is growing concern that there may not be a solution to the Nuclear disaster short of pouring thousand of tons of concrete over the whole mess.
Initial new unemployment claims have missed expectations, printing 388,000 vs expected 380,000. They have also revised last weeks surprising beat of expectation, which now turns out to have been a miss, revised upward to 394,000 for 382,000. The record now for upward revisions is about 98%. Continuing claim are also higher.
The Chicago PMI is reported at 70.6, a decline from the prior month 71.2 but higher than the 69 estimate. Prices paid continue to be a problem printing at 70 and just 3 points lower than the all time high in 1980. The question remain how businesses will be able to pass along price increases that must be implemented in order to maintain margins.
Our Momentum Change indicators are still bullish. There is likely to be resistance around 134 and then at 1341. The action today should give us another opportunity to again tighten stop loss prices.
Best To Your Trading!
Bill
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