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General Market ThoughtsI truly thought on Friday that the action seen in the indexes would lead me to believe that the indexes would continue rolling upward, much like a runaway freight train. Nonetheless, upon evaluation of the index charts I have found a few reasons to think that may not happen: 1) the first 3 weeks of earnings reports are past and after Monday afternoon's AAPL report, there are no earnings reports this week that have any kind of catalytic power, certainly not like NFLX, AMZN and GOOG had this past week. 2) The NAZ did make a new all-time high weekly close but the all-time intra-week high at 5132 has not yet been broken and with NFLX and AMZN already 30% and 37% higher than their recent lows and both either 15% or 10% above their previous all-time highs (respectively), it does seem a bit difficult to think that either of these stocks will continue much higher, meaning the index will have problems going much higher as well. 3) The DOW was not even able to get above the previous 2 retests of the all-time high at 18288, at 18207 and 18169 and already 50% of the DOW stocks have reported earnings and with the exception of AAPL which reports earnings Monday afternoon, the rest of the DOW stocks are mostly in the Health Care or Energy (Oil) industries. Neither of those industries have the capacity to generate catalytic reports at this time. The AAPL report on Monday afternoon could be catalytic but the probabilities do not favor it being so as the stock has already experienced nothing but good reports and finds itself at a fundamental level that further upside of consequence is not likely to be major. 4) Last but not least, the SPX has already reported all of its important earnings reports and though the index did make a new all-time weekly closing high, it was not able to make a new all-time daily closing high and the previous intra-week high at 2119 was only broken by 1 point, which is certainly not all that convincing since earnings reports are no longer going to be part of the ammunition cache the bulls have. 5) Economic reports this week are expected to be worse than they were last month with GDP expected to come out at 1.1%, whereas last month it was 2.2%. The ISM Index is due to come out at 51, whereas last month it was 51.5 and anything close to 50 is not a positively catalytic number. Already the Housing market has been reporting less than expected (even worrisome) numbers and the 20-city Case/Schiller report due out on Tuesday Morning is expected to be less than last month (expected to come out at 4.5% vs last month at 4.6%). 6) Volatility has not totally subsided, in fact more volatility than not has been seen during the past 9 weeks. The VIX index though, closed at 12.21 on Friday and support is decent at 11.50 and strong at 10.00, meaning that even from the volatility chart, further upside of consequence is not likely to be seen. 7) Greece is a big negative hanging over the market that is more likely to help the bears than give any assistance to the bulls. Putting all of this together, versus the momentum to the upside from the new all-time weekly closing highs, does make it difficult (perhaps even very difficult) for the bulls to generate much further buying interest, especially at these levels. I will do more evaluation tomorrow when I study the held stocks charts, but like I said on Friday, with the exception of PCLN and maybe even GS, the rest of the short-held stocks have not given buy signals of consequence yet. As such, I am leaning right now toward keeping the short positions. One good thing though, is that a lot more will be known on Tuesday morning after the AAPL earnings report on Monday night and the 20-city Case/Schiller report on Tuesday AM. Further info of importance will come out on Wednesday with the GDP report and on Friday with the ISM Index report. With these reports due out this week, it is unlikely the bulls will accomplish much on Monday. |
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