Another trending day at the market!

After being higher overnight, the market opened slightly higher, and at this time the DOW is trading at 12813, up 50, while the SPX is up 0.96.  The COMP and the NDX and XLF are lower, while the RUT and DJT are higher.  As should be clear by now, the financials are the big laggards and the Transports are the big gainers.  After setting new recovery highers again yesterday, the market internals continue to offer warnings to be careful.  The volume, the RSI and MACD and new highs vs new lows and Up volume vs down volume continue to show negative divergences, and I think are suggesting caution.

After a week of good earning, and some disappointments, the market seems determined to  trade higher.  For all of you out there who consider themselves well informed financially, I want to remind you that the markets aften trade completely independent of fundamental conditions.  As someone somewhere said...."the market can remain irrational longer that you can remain solvent." 

I did not trade on my own Buy signal as I was looking over my shoulder at some troubling indicators and was of course focused on what I thought I new fundamentally.... that the market was way overbought.  But once again, I was shown that success in trading is to follow your indicators, and when a position, to carefully protect that position with stop loss orders.  I am reminded again that the thing most difficult to manage is greed and fear.

The break out above the neck line of the inverse head and shoulders is a very powerful signal the market is headed higher, at least for the short term.  I have been looking for a pull back to offer an opportunity to get long, but Mr Market has not been very obliging.

The big news continues to be new highs in the Precious Metals, while Copper, the darling of the equity traders, continues to stall and has not been leading as it did all of last year.  The driving force of all the asset class trades is of course the Dollar, which made a new 3 year low, and is now only 2 cents away for a new all time low.  Until the dollar can catch a bid, I don't think the market will demonstrate much weakness.  One asset class that is showing there may be some change in the wind is the bond market, which has been unexpectedly trading higher, in the face of all the inflation fears reflected in the PM's and the market.

As my old friend and manager Captain Gatorbait used to say.. ."Bill, the trend is your friend" ......pause..... "until it isn't".

Best To Your Trading!

Bill

The Market is up, Unemployment claims are up, and the GDP is down!

After being higher as much as 50 Dow points overnight, the market opened flat, and at this time the Dow is trading up 16, the SPX is up 0.92  and the Transports are up 51, or 0.93%.  The trannies are especially strong, as the Dow and the SPX are only up 0.10%  Most of the major indexes made new recovery highs yesterday, after breaking the neck line of the well reported Inverse Head and Shoulders patterns that occurred in most indexes, and also broke through the existing resistance lines.  The only caveat is there appears to be little enthusiasm on the part of the Bulls, as volume continue to lag.  I continue to look for a correction and a test of the break out, my outlook supported by continued negative divergences in the RSI and MACD in all of the shorter term charts for the Q's, the SPY and the DIA
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The two big reports today are the 1st quarter GDP estimates and the weekly new jobless claims.  The GDP estimate printed at 1.8%, down from the 4% consensus just a month ago.  All sectors were lower, and if not for the inventory buildup, the print would have been 0.8%  New jobless claims for the week printed at 429,000 vs estimates at 395,000 and last weeks revised 403,000.  Not the kind of reporting that would convince anyone the economy is improving... and considering the GDP deflator is constructed without considering things like energy and food, it appears the double dip will appear this Summer or early Fall.

Oil is higher at 113.94 and Brent higher at 122.97.  Gold is trading at new highs, 1535.90 as is Silver, trading at 49.34.  The 10 year Note is 3/8 higher, trading 3.314% and the long Bond is 1/2 higher, trading 4.427%.

The reason for all of the above pricing is found entirely in the FX market.  The Euro is 1.479 and the Dollar, after trading below 73 overnight, is currently 73.21.  The declining Dollar is the reason the PM's are higher, the reason the equities markets are higher, and the symbol of the failed policies of the Fed.  We are at the point where the choices facing the Fed are all negative.  If the Fed continues the QE programs and the ZIRP, the Dollar decline only accelerates.  If the Fed raises interest rates, the Dollar rallies and the economy tanks.  If the Fed does nothing, the economy collapses without the QE stimulus and the Dollar likely rallies with out raising the discount rate.  Of course, at the point, we are looking at negative real rates..

Not that anything I said in the previous paragraph has anything to do with the market.  The market and the real world have been disconnected for some time.....the only question is when will the markets respond to the real world?  I will offer an answer... we will see it as the Momentum Changes indicators generate the next Sell signal.

Best to Your Trading!

Bill

The Afternoon After the Fed Theater

Ok.. Now I know what they are going to do.  It seems they intend to continue to do what they have been doing, because the economy is too weak to withdraw their support.

I got it!  But I don't think that he committed to a QE3 immediately.

The market was positive most of the day, with a surge on the close, with the DOW closing up 95 and the SPX closing up 8.42.  The rest of the major indexes also closed up a similar percentage. On the close, the close,. the SPX, the DJI, the RUT, and the COMP all closed with over bought conditions and negative divergences.  Only the Transports closed with decent internals.  It appears that the news the market did not want to hear did not get made, so it was time again to ramp the indexes on the close.

Beyond the Fed showboating, there did not seem to be much, if any news today that impacted the markets.  One Observation though..... the soft commodities are all down on the close, and the Sugar and the Cotton have broken up trend resistance lines...... and these are the commodities that led the rally off the bottom in 8/2010

I think the SPX wants to trade higher, and I am looking for a place to get long.  We will likely get some kind of a pull back on the morrow and I will be looking carefully at how the indexes approach the older resistance, which of course has now become support.

The TLT has been showing good strength and I would like to be a buyer, but I have been burned twice in the past couple of months and don;t want to get burned again.  But if the TLT (an ETF that tracks the 10 year to intermediate Treasuries) can stay strong, the will be signaling that the stock market rally is in danger.

Best to Your Trading!

Bill