Coolhand's Market Analysis

Remember over the weekend when I posted some statistical information about the Top 50 and how when they shift their allocations by more than 20% they've generally been right? In fact, by my measures, they had been right 5 of the last 6 times. This week makes 6 of 7, as we saw a 26% bullish shift in stock allocations going into this week. It didn't start out well on Monday, but in the subsequent trading sessions the S fund managed to close out the week with a 1.43% gain. Not too shabby.

Earnings continue to offer better-than-expected results. Here's how the latest companies fared:
Apple (AAPL 350.70, +8.29), Qualcomm (QCOM 56.94, +1.67), DuPont (DD 55.91, +0.54), Newmont Mining (NEM 59.23, +0.38), Travelers (TRV 61.32, +2.19), Capital One (COF 53.26, +2.73), American Express (AXP 47.11, +0.11), Morgan Stanley (MS 26.48, +0.44), General Electric (GE 19.95, -0.45), Verizon (VZ 36.91, -0.88), McDonalds (MCD 76.91, -1.49), Pfizer (PFE 19.79, -0.60), Amgen (AMGN 53.69, -2.49), and UnitedHealth (UNH 47.81, +3.57).

Economic data disappointed today as initial jobless claims came in at 403,000, which was more than the 390,000 claims economists had been looking for. Continuing claims fared a little better as they dropped by 7,000 to 3.70 million.

The Philadelphia Fed Index was a shock, as it spiked from 43.4 in March to just 18.5 for April. Economists were looking for something closer to 33.0.

March Leading Indicators were up 0.4%, which was better than the 0.2% increase that was forecast.

Here's today's charts:



Momentum improved again today, which kept NAMO and NYMO in a buy condition.



NAHL and NYHL also remained on buys.



TRIN and TRINQ are flashing buys as well.



BPCOMPQ rose again today and pushed through that upper bollinger band, which flips it back to a buy condition.

So after two unconfirmed sell signals, the Seven Sentinels are all flashing buys, which confirms its current buy status. But as I mentioned yesterday, gains have been very tough to come by using this system as volatility has masked any real trend. Since the system first went to a buy condition on March 30th, the S&P has only risen about 8 points in more than 3 weeks of trading. We still have that rather large gap in the S&P from yesterday too, which begs to be filled, so I'm not looking for a whole lot more upside in the short term. In fact, post Easter Monday is historically the weakest of all post holiday trading days.

Our sentiment survey did remain in a hold status (S fund) for next week, but May begins the weaker part of the stock market year and few know what will happen as QE2 winds down over the next 2 months or so. I expect traders to get more defensive moving forward, which sounds odd as sentiment has remained stubbornly bullish in many pockets. I suppose that's what happens when you drink from a punch bowl for an extended period.

Check back Sunday evening for the latest tracker charts. Happy Easter everyone.