Thread: Market Talk / July 2 - 8

After-tax corporate profits climbed by an annual rate of 13.8% to $1.208 trillion in the first quarter, much faster than the previous 8.8% estimate. Let's watch the SPX go up faster than it came down - 1330 on the immediate horizon.

You know, somehow I got this itchy feeling that today will be a plus, and then will be followed by some downward action. I hope I am wrong, but something on the back of my neck tells me we're going to get hit with a downward slide again.....I can't put my finger on anything. I just got a hunch.

I'll move a little off to the sidelines later today...

The TSP talk sentiment survey also tells me this could be a hard week after today-

For the week of 7/03 - 7/07, I am...
Votes Ratio
Bullish (up) 182 66%
Bearish (down) 41 15%
Neutral 53 19%
276 votes total

That's enough positive feelings to make me leary- I'm a contrarian at heart.

We've recently had a triple 9 to 1 upside volume versus downside volume ratio in the last three months. They occured on 4/18, 6/15, and 6/29/06. Historically this has been a bullish signal - snort.

Factory output slows, construction spending dips
U.S. manufacturing growth slowed in June and construction spending in May unexpectedly staged its biggest drop since September 2004, data showed on Monday, adding to signs the economy is cooling.
http://news.yahoo.com/s/nm/20060703/bs_nm/economy_dc_3

I'm pessimistic about Friday's jobs report and am starting to think only a number near expectations will prevent a selloff.

Too high = inflationary fear, market sells off as investors expect the Fed to raise rates more (thus undoing the gains made due in part to the dovish Fed statement).

Too low = recessionary fear, market sells off as investors now worry about profit growth going forward. Of course, the caveat of this scenario is that there'd likely be downward pressure on the dollar, which is good for the I fund.

Whatever happens, I expect the earnings data to turn things positive again... at least, I hope that it does.

In the meantime, I'll be turning more defensive to protect the recent gains and wait for a better situation to take some risks.

Me too, Mike. The shame of it all is that whatever report comes out on Friday, it won't be immediately worth the paper it's printed on, and will be revised weeks and months later to paint a different economic picture. They gotta make sure all of those high paying High School McDonalds & Burger King summer hires were accounted for. Oh... I almost forgot! The new business start-ups; Yard Care and Lemonade Stands! Love the validity of the summer jobs reports.

Seriously, I do hope it's good. My tail-side is getting sore sitting on the G sidelines. I need to get back in the market pit.

Originally Posted by Mike

I'm pessimistic about Friday's jobs report and am starting to think only a number near expectations will prevent a selloff.

Too high = inflationary fear, market sells off as investors expect the Fed to raise rates more (thus undoing the gains made due in part to the dovish Fed statement).

Too low = recessionary fear, market sells off as investors now worry about profit growth going forward. Of course, the caveat of this scenario is that there'd likely be downward pressure on the dollar, which is good for the I fund.

Whatever happens, I expect the earnings data to turn things positive again... at least, I hope that it does.

In the meantime, I'll be turning more defensive to protect the recent gains and wait for a better situation to take some risks.

The Kingdom of TSP
Daily Edition
July 03, 2006 Closing

Yak, Doodles, Tea Leaves & The Tin Box

Kingdom Yak:
Pro-Yak...................................Q3 starts with a mild rally, seeing a end to higher rates.
Con-Yak..................................Lube holding top dollar.

Doodles:
Socks [$SPX] Closed at..............1280.19, up +9.99
Volume (CMF) (money flow).........-0.053, increasing.
Averages (MACD) (trend)............-1.693, increasing.
Momentum (S-STO) (signal).........96.32, increasing.
Strength (RSI) Overbought/sold....[70] 58.39 [30]

Lube (NYM) Closed at..................73.93
Oil Markers................................<70= ok, 70-75= worry, >75= panic.

Tea Leaves:
Charts & Stuff............................Green / Yellow [doodles +5-0, Lube > 70]

Tin Box:
Position.....................................100% socks
Stops [$SPX]..............................Alert: 1267. Trail: 1254.

Tomorrow >> Indep-en-dence Day!.....Cheers!.....

Bad news is once again good news - slower economy means contained inflation with a Fed at rest. The ISM index of manufacturing activity fell to 53.8 in June from 54.4 in May. Gosh I thought for sure my Toad friend (aka Lizard) would be banging the gloom and doom drums on this one. And don't forget construction spending fell 0.4 percent in May. Got Gold?

Originally Posted by James48843

The TSP talk sentiment survey also tells me this could be a hard week after today-

That's enough positive feelings to make me leary- I'm a contrarian at heart.

The survey has sure been a very good contrarian indicator lately but ironically, the only other times (twice) we have seen a 4 to 1 bulls to bears ratio, the S&P 500 ended the week in posituve territory.

Originally Posted by tsptalk

The survey has sure been a very good contrarian indicator lately but ironically, the only other times (twice) we have seen a 4 to 1 bulls to bears ratio, the S&P 500 ended the week in posituve territory.

Interesting Tom, can you pull up those dates, I'd like to take a looksee at the data then versus now.....I don't believe at this moment the situations are the same...

Thanks for the info....