Squawk Box Europe – Bill McLaren

LET’S LOOK AT THE S&P 500 INDEX DAILY CHART

There is a chance, a probability for a high today or Monday. When the July “False Break” low was hit I indicated three probabilities. A new leg up running to a minimum 1247 in 90 to 99 calendar days, a secondary high or fast rally that exhausts before a new high usually 7/8 of the range down in 60 to 65 calendar days. Or a lower double top and this is where the index is now located. So as the index moves into these time window we need to look at the wave structure, volume, price level and the pattern of the trend to confirm the probability. The index is at the “OBVIOUS” resistance of the previous high and now within the time window at 180 days.

There is a 5 wave structure up (5 or 3of 3), volume has been decreasing but not unusual if the trend were up at this stage, but the pattern of trend is not setting up well. Notice how small the daily ranges have become. High points and tops tend to have some volatility. Notice the expansion of ranges during the January top and the April top and in this case the ranges are narrowing. If there is a move down it is possible to see just one to three days down and resumption of the trend due to the resistance being “obvious.”

Running out cycles from the July low has 45 days on the 15th and if a low could indicate a 90 day move up. If this is a counter trend rally in a down trending market the highest probability is to run out 60 to 65 days or out to the first week in September. If there is a high point now it should not exceed 1134. I don’t like the odds for a top due to the small range days and the probability the move down could be a small counter trend down. The small range days leaves a possibility of a large spike up. If today can not advance following yesterday’s reversal up and a daily low is broken I’ll consider a short term move down to trade but I doubt the trend reversal. I hate those small range days as it usually indicates support coming in at high levels and an exhaustion up might be necessary to eliminate the buyers.

GOLD

The two weeks ago I said gold would go to 154 to 157 for a low at 50% of the last leg up. We are now looking for this rally to fail and confirm a downtrend into one of the major support. The move down to 50% of the last leg up to consolidated that leg up. I felt the entire trend since 2008 needed to be consolidated so we are looking for this rally to fail and run down to ¼ of the major range which is the minimum move down to correct or consolidate a major trend or 1122. Once gold establishes a downtrend there is a fast rally as occurred in this uptrend as noted with arrows and this occurs in almost all up trends. So we are looking for evidence this rally will fail at a price above 1212 and possibly on the 12th of August at 1220. If the index runs past 12 trading days there is no high in place and a new high is likely. The pattern of the downtrend was weak so we need solid evidence to conclude a lower high is in place. But that is what we are looking to occur.

Source: McLaren Report

CNBC Squawkbox Europe

LET’S LOOK AT THE S&P 500 DAILY CHART

This is the trend since the July low one year ago. This move down has shown three thrusts down or the classic Elliott wave configuration for a low. The retracements or rallies have been large during this downtrend indicating the pattern of trend has not been strong even though it has dropped over 15%. When retracements are large false breaks are possible. Fast trends and trend reversals come from “false breaks” or breaks to new highs or lows above or below “OBVIOUS” resistance or support that fail to follow through. In this instance the rally has moved well above the previous swing low and that is bullish. The low was a 1/8 extension down as show last report and that is the normal price for a “false break” low. The normal counter trend in a fast trend is one to four day and this has rallied 3 days with the last day a smaller range indicating some resistance. Exceeding the fourth day is critical. The calculated resistance at 1/3 to 3/8 of the range down is 1080 to 1090 and that is important. Exceeding 4 days of rally will indicate a low is in place and a selloff should produce a higher low. There is a turning point on the 13th and a higher low around the 24th would be bullish. There are still only four alternatives: a 30 or 45 day fast run to a secondary high around 1180 followed by a bear trend; a struggling move up to 1247 for a top in September or October followed by a two year bear trend. A struggling movement that stays inside the last range down creating a distribution pattern with 3 lower highs. Or a new low to around 950 followed by a 6 month rally and then a bear trend.

LET’S LOOK AT GOLD

Two weeks ago we forecast a top in gold between the 28th June and 3rd July and that high occurred on the 28th. We also indicated it would not be any higher in price since the price targets had been hit.

The objectives for a decline are 1122 at ¼ major range which keeps the uptrend in a strong position for another rally so there needs to be caution with that support. Then 1/3 to 3/8 at 1075 though 1051 as the ultimate objective. The only problem with my forecast is the last low was only 3/8 retracement of the last leg and that small retracement does keep the last leg up intact. But I expect that to be broken and test 1157, bounce to around 1183 and resume the downtrend. But it must break this current support which I didn’t believe would stop the move down. Timing dates are July 17, August 4th for a possible trend completion and August 16th.

Source:  http://www.safehaven.com/article/17427/cnbc-squawkbox-europe

Stock Market Report 3-2-10

US stocks rose on Tuesday after United Parcel Service (UPS) and DR Horton released encouraging earnings reports.

Gains were broad based on Tuesday, with 28 of 30 Dow stocks rising.

UPS reported a drop in fourth-quarter profit, but forecast a sharp increase in 2010 earnings. Its stock rose over 1%.

The National Association of Realtors’ pending home sales index rose 1%, in line with expectations. The index fell 16.4% in the previous month. DR Horton, one of the top five US home builders, reported its first-quarterly profit in almost three years and its stock jumped 11%. Pulte Homes and Lennar Corp rose over 7%.

Amazon.com slid for a second straight day, falling 2%, and limited the Nasdaq’s advance.

The S&P 500 industrial sector rose over 1%. Cummins and Emerson Electric rose between 7% and 8%. Cummins is a US manufacturer of diesel engines and other power generation equipment. Emerson is an industrial conglomerate that produces technology used by the oil and natural gas industries.

Major automakers, including Ford Motor, General Motors and Nissan all reported improved January sales. Toyota, however, saw a bigger-than-expected decline in January sales, impacted by a major recall.

Credit card companies rose after analysts upgraded companies within the industry. American Express, Discover Financial Services and Capital One Financial rose between 2% and 3%.

So far, 48% of the S&P 500 companies have reported results. Analysts expect earnings to have tripled from the prior year, although the improvement is mostly due to cost cutting and easy comparisons to the fourth quarter of 2008. The financial sector is expected to lead the advance.

In other news, Moody’s Investors Service said the outlook for the US’ AAA credit rating remains stable even with the effects of the credit crisis and recession on government debt and fiscal flexibility.

Commodities

Stock Market Report 21-1-10

Wall Street suffered its worst slide of 2010 on Wednesday as investors worried that lending restrictions in China could hurt the global economic recovery.

Market breadth was negative. On the NYSE, losers beat winners by more than three to one. On the NASDAQ, decliners topped advancers three to one.

Commodity-related shares were hurt by concerns that China may curb its economic expansion. A stronger dollar also put pressure on commodity prices and commodity-related stocks.

Technology shares were among the biggest decliners after IBM gave a conservative outlook, despite reporting better-than-forecast quarterly sales and earnings. IBM shares fell 3.8%.

Healthcare stocks were down on Wednesday. An index of pharmaceuticals companies fell 1.1%. Healthcare stocks had risen the prior day on speculation that the healthcare system would face new obstacles following a surprise Republican election to the Massachusetts Senate seat.

Several banks reported earnings. Wells Fargo & Co and US Bancorp reported better-than-expected quarterly earnings, helped by recent acquisitions. The Bank of America reported a wider-than-expected loss, but said its credit problems were beginning to stabilise. The Bank of America said losses widened to US$5.2B in the fourth quarter of last year, partly due to the bank paying back government bailout funds. The company said the repayments shaved off $US4B from its bottom line. US Bancorp shares added 2.3% while the Bank of America gained 0.6%. Morgan Stanley reported its second-straight quarterly profit, one year after posting a significant loss. The financial firm said it earned US$617M for the quarter versus a loss of $11B a year ago. The result missed expectations, and shares in the company fell around 1%.

In economic news, building permits, a measure of builder confidence, rose to a 653,000 unit annual rate in December, from a 589,000 rate in November, the government reported. Permits were expected to rise to a 590,000 rate, according to a consensus of economists. However, housing starts fell to a 557,000 unit annual rate, from a 580,000 unit rate in November.

The Producer Price Index (PPI), a measure of wholesale inflation, rose 0.2% after climbing 1.8% in the previous month. Economists expected it to hold steady. The so-called core PPI, which strips out volatile food and energy prices, was flat versus forecasts for a gain of 0.1%.

Overseas Markets

Dow down 137 pts to 10,588 (10,517 – 10,720)

S&P 500 down 14 pts to 1,136 (1,129 – 1,148)

Nasdaq down 33 pts to 2,287 (2,269 – 2,304)

SPI 200 Futures down 31 pts to 4,806 (4,776 – 4,840)

FTSE down 92 pts to 5,421 (5,404 – 5,513)

Nikkei down 27 pts to 10,738 (10,725 – 10,861)

Shanghai SE Comp down 95 pts to 3,152 (3,148 – 3,255)

Commodities

WTI Oil down 2.0% to US$77.43/bbl

Gold down 2.4% to US$1,113/oz

Sugar (NY) up 0.4% to USc29.11/lb

Corn down 0.3% to US$3.32/bushel

Wheat down 0.6% to US$4.67/bushel

Natural Gas (Henry Hub) up 0.6% to US$5.54/MMbtu

Silver down 4.5% to US$17.91/oz

Platinum down 0.9% to US$1,630/oz

Palladium up 0.6% to US$469.25/oz

Copper (NY) down 2.6% to US$3.35/lb

Currency

A$ / US$ down 1.7USc to US$0.91 /A$

EUR / US$ down 2.8USc to US$1.41 /EUR

GBP / US$ down 0.6USc to US$1.63 /GBP

US$ / Yen up 0.5 Yen to 91.24 Yen/US$

Stock Market Report 20-1-10

US stocks rose in a broad-based rally as investors bought healthcare shares on bets that a potential Republican victory in Massachusetts’ Senate race could stall President Obama’s reforms and remove a threat to profits in the sector.

The S&P Healthcare Index climbed nearly 2%. Drug maker Eli Lilly rose 5%. Health insurers Humana and Aetna gained 3.6% and 4%, respectively.

All 10 S&P 500 industry groups traded in positive territory.

The Dow also received a boost from McDonald’s, which gained 2.3% on an analyst upgrade. 3M was another notable mover, rising 2%.

Kraft Foods was the biggest drag on the Dow, declining 1.1% after it agreed to a revised cash-and-stock deal to buy Cadbury for about US$19.6B.

In other deal news, Tyco International agreed to buy Brink’s Home Security Holdings for US$1.9B. Brink’s shares surged almost 31.6%.

Large-cap technology companies buoyed the NASDAQ. IBM is expected to report its quarterly earnings after market close. Apple was up 4.2% while IBM advanced 1%.

Citigroup reported a fourth-quarter loss that met analysts’ expectations as the third-largest US bank took charges linked to repaying government bailout funds. On the upside, the company said consumer credit losses dropped in the quarter and that it also set aside less money for bad loans during the quarter. Shares gained 3%.

The Bank of America and Morgan Stanley will report on Wednesday. Goldman Sachs and Google will report earnings on Thursday.

S&P 500 earnings are expected to have almost tripled versus those a year ago and revenue is expected to have risen 7%. However, the jump is largely due to a spike in financial sector results versus an easy comparison to the fourth quarter of 2008 amid the height of the financial crisis. Without the financial sector, earnings are expected to be down 8% and revenue is expected to decline 1%.

Overseas Markets

Dow up 116 pts to 10,725 (10,592 – 10,730)

S&P 500 up 14 pts to 1,150 (1,136 – 1,150)

Nasdaq up 31 pts to 2,319 (2,291 – 2,320)

FTSE up 19 pts to 5,513 (5,431 – 5,532)

Nikkei down 90 pts to 10,765 (10,749 – 10,867)

Shanghai SE Comp up 10 pts to 3,247 (3,237 – 3,269)

Commodities

WTI Oil up 0.8% to US$78.66/bbl

Gold up 0.7% to US$1,138/oz

Sugar (NY) up 4.9% to USc28.98/lb

Corn down 2.6% to US$3.33/bushel

Wheat down 1.7% to US$4.70/bushel

Natural Gas (Henry Hub) down 2.7% to US$5.51/MMbtu

Silver up 1.0% to US$18.82/oz

Platinum up 1.7% to US$1,650/oz

Currency

A$ / US$ up 0.1USc to US$0.92 /A$

EUR / US$ down 0.9USc to US$1.43 /EUR

GBP / US$ up 1.1USc to US$1.64 /GBP

US$ / Yen up 0.4 Yen to 91.14 Yen/US$

Stock Market Report 15-1-10

US stocks traded slightly higher on Thursday, led by the technology sector.

Market breadth was positive. On the NYSE, winners beat losers by four to three. On the NASDAQ advancers topped decliners eight to five.

The technology sector led gains on the back of positive brokerage comments on Oracle and ahead of an expected profit report from Intel. Shares of Oracle, the world’s second largest business software maker, gained 2.5% and led gains on the NASDAQ. Dow component Intel Corp, the world’s largest chipmaker, is expected to report a quarterly profit after market close. Its stock advanced 1.6%. Analysts expect the company to report earnings of 30cps, compared with 4cps in the previous year. IBM and Hewlett-Packard shares also advanced.

The KBW bank index was up 1.4%, led mainly by regional and midsize banks. President Obama proposed a fee to make big banks repay taxpayers for bailouts. Bank shares had declined earlier in the week on concern about the fee, but on Thursday the sector was higher.

On the downside, US economic data appeared to cast doubt on the strength of the economic recovery. Sales at US retailers unexpectedly fell in December and applications for jobless benefits rose last week. A government report showed that retail sales fell 0.3% in December. Economists were expecting sales to have risen 0.5%. Retail sales excluding autos fell 0.2% versus expectations of a 0.3% rise. Helping to soften the blow, the National Retail Federation said holiday sales for the November – December period rose 1.1%, which was better than the retail group’s expectations for a 1% decline.

The number of American’s filing new claims for unemployment rose last week to 444,000 from 433,000 the previous week. Economists expected claims would rise to 437,000. Continuing claims, a measure of Americans who have been receiving benefits for a week ore more, fell to 4.596M from 4.897M in the previous week.

On the positive side, business inventories rose slightly more than expected in November, up 0.4% as businesses re-stock.

Overseas Markets

Dow up 34 pts to 10,715 (10,667 – 10,724)

S&P 500 up 3 pts to 1,149 (1,144 – 1,150)

Nasdaq up 11 pts to 2,319 (2,303 – 2,323)

Russell 2000 up 3 pts to 647 (642 – 648)

SPI 200 Futures up 11 pts to 4,890 (4,874 – 4,899)

FTSE up 25 pts to 5,498 (5,473 – 5,522)

Nikkei up 173 pts to 10,908 (10,774 – 10,910)

Shanghai SE Comp up 43 pts to 3,216 (3,166 – 3,219)

Commodities

WTI Oil down 0.3% to US$79.39/bbl

Gold up 0.4% to US$1,141/oz

Sugar (NY) down 1.0% to USc27.76/lb

Corn down 0.9% to US$3.45/bushel

Wheat down 1.8% to US$4.95/bushel

Natural Gas (Henry Hub) up 2.8% to US$5.77/MMbtu

Silver up 0.4% to US$18.71/oz

Platinum up 2.1% to US$1,612/oz

Palladium up 5.3% to US$447.13/oz

Copper (NY) down 0.3% to US$3.38/lb

Currency

A$ / US$ up 1.1USc to US$0.93 /A$

EUR / US$ up 0.1USc to US$1.45 /EUR

GBP / US$ up 1.6USc to US$1.63 /GBP

US$ / Yen up 0.1 Yen to 91.07 Yen/US$

Stock Market Report 14-1-10

US stocks rose on Wednesday as investors bought financial and technology shares ahead of earnings results from Intel Corp and JPMorgan later this week.

Market breadth was positive. Winners beat losers over two to one on both the NASDAQ and the NYSE.

The healthcare sector was buoyed by a brokerage upgrade of drug maker Merck & Co. Shares in Merck & Co rose 4.4%.

The consumer sector was aided by an upbeat outlook from Kraft Foods, gaining 0.4%. Chocolate maker Hershey is still considering a potential bid for Cadbury, but has not decided whether it will proceed with a formal offer.

JPMorgan, up 1.8%, led gains in the KBW bank index. JPMorgan reports its results later this week. In other news in the sector, the White House is debating taxing companies that took bailout funds to make sure they pay the money back. President Obama is expected to announce the plan on Thursday.

Tech shares gained, with Advance Micro Devices up 5.3% and Intel adding 1.5%. The semiconductor index gained 1.2%.

Google fell 0.9% after the company said it may shut down its China operations over censorship and hacking. Google said on Tuesday it may shut down its Google.cn site after discovering an attempt to gain access to Gmail accounts of Chinese human rights activists. The company said it is one of at least 20 companies that have been attacked. Shares of rival Chinese search engine Baidu jumped 13% and had the biggest percentage gain on the NASDAQ 100. According to figures from tracking firms comScore and Analysis International, Baudi currently controls 64% of the search market in China while Google has 31% of the market.

Energy stocks were under pressure as crude prices slipped. Chevron was the biggest drag on the Dow, falling 0.9%.

The Federal Reserve said in its Beige Book report of economic conditions that while economic activity was at a low level, conditions have improved modestly, and those improvements were broader geographically compared with the last report.

The December Treasury budged showed a deficit of US$91.9B versus $120.3B in November, roughly in line with forecasts for a deficit of US$92B.

Overseas markets

Dow up 74 pts to 10,702 (10,614 – 10,709)

S&P 500 up 11 pts to 1,148 (1,133 – 1,148)

Nasdaq up 30 pts to 2,312 (2,274 – 2,313)

SPI 200 Futures up 27 pts to 4,879 (4,826 – 4,879)

FTSE down 25 pts to 5,473 (5,451 – 5,510)

Nikkei down 144 pts to 10,735 (10,730 – 10,867)

Shanghai SE Comp down 101 pts to 3,173 (3,165 – 3,233)

Commodities

WTI Oil down 0.9% to US$80.08/bbl

Gold up 0.7% to US$1,138/oz

Sugar (NY) up 2.5% to USc28.04/lb

Corn down 8.7% to US$3.48/bushel

Wheat down 6.7% to US$5.02/bushel

Natural Gas (Henry Hub) up 0.7% to US$5.61/MMbtu

Silver up 2.1% to US$18.63/oz

Platinum up 0.4% to US$1,577/oz

Palladium up 0.0% to US$424.00/oz

Copper (NY) up 1.5% to US$3.39/lb

Currency

A$ / US$ down 0.6USc to US$0.92 /A$

EUR / US$ down 0.1USc to US$1.45 /EUR

GBP / US$ up 1.7USc to US$1.63 /GBP

US$ / Yen down 0.6 Yen to 91.48 Yen/US$

Stock Market Report 13-1-10

US stocks slid in a broad sell-off on Tuesday. Financials declined on concerns over a potential government levy on banks, and Alcoa delivered disappointing results that further dampened sentiment.

Banks led the financials sector lower. The KBW bank index was down nearly 2%. Shares of the Bank of America, Citigroup and JPMorgan were off by between 3% and 4%. A senior US official confirmed that the government is considering a levy on financial services firms to recoup bailout losses as part of the fiscal 2011 budget. The banking sector faced another potential hit after the Federal Deposit Insurance Corp floated a proposal that banks whose compensation plans encourage risk-taking would have to pay more for deposit insurance.

Shares of Alcoa fell 11% after the company reported weaker-than-expected results. The company reported a profit of 1cps versus a loss of 28cps a year ago. However, analysts expected earnings of 6cps.

Chevron Corp said its fourth-quarter profit would be sharply lower than that in the previous quarter, sending its shares down nearly 1%. Margins have been under pressure, with the rising price of oil not in sync with the weaker demand globally. A variety of oil stocks fell, with the Amex Oil index losing 2.3%.

Shares of big manufacturers retreated, with Caterpillar sliding nearly 3%.

KB Home reported a quarterly profit for the first time in two years, thanks to a tax benefit. However, the homebuilder’s revenue dropped from that a year ago.

Technology shares also fell, including Apple, which was off 1.6%. Electronics Arts cut its fiscal 2010 forecast, citing weak holiday sales in Europe. The video game publisher lost 8.3%.

Intel and JPMorgan report results this week.

The November trade deficit, released in the morning, widened to US$36.4B, from a revised $33.2B in October. The deficit was expected to widen to US$34.5B.

Overseas markets

Dow down 66 pts to 10,598 (10,569 – 10,663)

S&P 500 down 14 pts to 1,133 (1,132 – 1,144)

Nasdaq down 35 pts to 2,278 (2,273 – 2,299)

Russell 2000 down 10 pts to 634 (634 – 644)

SPI 200 Futures down 52 pts to 4,839 (4,828 – 4,906)

FTSE down 39 pts to 5,499 (5,460 – 5,550)

Nikkei up 81 pts to 10,879 (10,764 – 10,905)

Shanghai SE Comp up 61 pts to 3,274 (3,180 – 3,275)

Commodities

WTI Oil down 2.4% to US$80.55/bbl

Gold down 2.0% to US$1,129/oz

Sugar (NY) up 2.3% to USc27.36/lb

Corn down 0.3% to US$3.81/bushel

Wheat down 6.7% to US$5.02/bushel

Natural Gas (Henry Hub) down 3.5% to US$5.57/MMbtu

Silver down 1.7% to US$18.24/oz

Platinum down 1.4% to US$1,569/oz

Palladium down 2.1% to US$425.25/oz

Copper (NY) down 2.7% to US$3.34/lb

Currency

A$ / US$ down 0.5USc to US$0.92 /A$

EUR / US$ up 0.8USc to US$1.45 /EUR

GBP / US$ up 1.4USc to US$1.62 /GBP

US$ / Yen down 1.7 Yen to 90.97 Yen/US$

2010 Stock Market S&P 500 Strategist Predictions

Below is a list of the 2010 S&P 500 year-end price targets of major Wall Street strategists as surveyed by Bloomberg prior to the first trading day of the new year.  As a whole, strategists are looking for a year-end price of 1,225 for the S&P 500, which translates into a gain of 9.82%.  Deutsche Bank’s Binky Chadha has the highest target at 1,325, while Barclays’ Barry Knapp has the lowest at 1,120.  All strategists are forecasting a 2010 gain.

Source: Bespoken Research

Will The Vix Crack 20 Soon?

The VIX volatility index slipped below 21 earlier today and currently stands at 21.15.  This is the closest the VIX has gotten to 20 throughout the entire bull market, and marks a 75% decline from the closing high of 80.86 seen during the financial crisis.

The VIX has now been above 20 for 287 consecutive trading days, which is the longest streak since 1990 when our daily VIX data begins.  In the bottom chart, we provide a historical look at the VIX along with all of its streaks of daily closings above 20.  We’ve only seen two other periods where the VIX was above 20 for 200 straight trading days or more, and those ended at 239 days in June 1999, and 236 days in May 2003.  In terms of market performance following these long periods of high volatility, the S&P 500 was on the verge of making a mutli-year peak when the VIX broke below 20 in 1999, but it did very well in the months and years following the drop below 20 in May 2003.

Source: Bespoken Research

Stock Market Wrap 14-10-09

US stocks weakened on Tuesday after disappointing sales from Johnson & Johnson missed expectations.

Market breadth was negative. On the NYSE, losers beat winners four to three. On the NASDAQ, advancers topped decliners seven to five.

Financial shares were under pressure. Goldman Sachs fell 1.5% on an analyst downgrade. JPMorgan Chase, the Bank of America and Travelers Companies also declined. The Bank of America said it will waive attorney-client privilege and hand over legal documents related to its controversial merger with Merrill Lynch. The company has been under pressure from regulators for months to provide more information on the purchase.

Among notable movers in the financial sector was CIT Group, which tumbled 14% after the lender’s CEO said he would resign by the end of the year.

The NASDAQ stayed in positive territory after Cisco Systems agreed to buy Starent Networks Corp for US$2.9B. Cisco’s stock added 0.5%, whereas Starent, which makes telecommunications equipment, surged 16.8%.

Healthcare stocks slid after a key Senate committee endorsed a sweeping healthcare overhaul as it gained the support of an influential Republican. The proposal will be merged with the Senate health panel’s version and moved to the full Senate for debate in the next few weeks.

Johnson & Johnson posted weaker-than-expected quarterly revenue as sales of prescription drugs and cardiac stents disappointed. Third-quarter profit topped analyst forecasts, but that was largely because of cost cuts and lower taxes. Third-quarter revenue fell 5.3%. Earnings beat analyst estimates by 7cps, helped by lower research and marketing spending. Shares in Johnson & Johnson fell 2.4%.

Intel reported its results after close. Third-quarter net income dropped to 33cps. Analysts had expected income of 27cps. Revenue fell 8.1%, but was above expectations. Gross margin was 58% in the third quarter, compared with Intel’s initial prediction of about 53%. The company gave a better-than-expected outlook for the fourth quarter. For the fourth quarter, Intel predicted sales would be US$9.7B to $10.5B, compared with analyst estimates for US$9.5B. Intel was halted in extended trading.

Other major companies releasing results this week include JPMorgan Chase, Citigroup, Goldman Sachs, Google, Nokia and IBM.

Crude oil rose to a seven-week high in New York on speculation world energy use will grow as the economy rebounds and as a weaker dollar spurs commodity demand. The Organization of Petroleum Exporting Countries (OPEC) increased its 2010 global oil-consumption forecast on economic expansion in emerging economies. OPEC predicts that total crude consumption will increase by 700,000 barrels a day to 84.93M barrels a day next year, led by demand from emerging markets. This year, the group forecasts global demand will contract by 1.4M barrels a day to 84.24M barrels a day.

Gold futures rose in New York on concern a weakening dollar and rising inflation will enhance the appeal of precious metals.

Overnight Stock Markets 6-01-09

Index/Security Close Chg %Chg

Dow Jones (US) 9,600 +112.1 +1.2

S&P 500 1,040 +15.3 +1.5

NASDAQ 2,068 +20.0 +1.0

US stocks rose as data showed service industries returned to growth after 11 months of contraction.

Banks led the advance, with the Bank of America, JPMorgan and Wells Fargo up between 4% and 7%. The KBW Banking index added 3.2%.

Department store chain Nordstrom climbed 9.5% for the biggest advance in the S&P 500 after analysts upgraded the stock. Limited Brands, the owner of Victoria’s Secret lingerie chain, climbed 7.6% after analysts raised their earnings forecasts for the company.

The US services sector expanded in September at a faster pace than expected, with the ISM’s services index coming in at 50.9, compared to a forecast of 50.0.

Alcoa is scheduled to release third-quarter results on 7 October, the first company in the Dow Jones index to report earnings. The company is expected to report a quarterly loss versus a year ago, reflecting a weak materials sector. Overall, S&P 500 profits for the third quarter are expected to have dropped almost 25% from a year-ago levels. Analysts expect companies to report earnings growth in the fourth quarter.

Among notable movers, Brocade Communications rallied 15% in unusually active trading on reports that it has put itself up for sale. Both Hewlett-Packard and Oracle were cited as potential buyers, according to media reports.

Since bottoming at a 12-year low on 9 March, the S&P 500 has gained 51.2% and the Dow has gained 45%. After hitting a six-year low, the NASDAQ has gained nearly 61%.

Overnight Stock Markets 5-10-09

US stocks fell on Friday as weak jobs data gave more evidence that the economic recovery would be less robust than expected.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about two to one. On the NASDAQ, about nine stocks fell for every five that rose.

US employers cut a deeper-than-expected 263,000 jobs in September, lifting the unemployment rate to 9.8%, according to a government report on Friday. The Labour Department said the unemployment rate was the highest since June 1983. Payrolls have now dropped for 21 consecutive months. Friday’s report also showed companies cut working hours, pushing weekly earnings lower. The average work week shrank to 33 hours in September, matching a record low, while average weekly earnings fell to US$616.11.

Industrial companies in the S&P 500 fell 1.5%, the biggest decline among the index’s 10 industry groups. A report from the Commerce Department showed orders placed with US factories fell 0.8%, more than estimated, after a revised 1.4% increased in July. Excluding transportation equipment, orders rose 0.4%.

Energy stocks tracked crude prices lower. Chevron and Exxon Mobil both declined 1%.

More downbeat news came from General Electric (GE), which slid 3.8% after the CEO said the company was holding discussion on partnerships or an IPO for its NBC Universal unit (NBCU). According to media reports, GE and Comcast were discussing a deal under which the US cable firm would take control of 51% of NBCU with GE keeping the rest.

Apple shares were among the bright spots, rising 2.2% on an analyst upgrade.

The S&P index of consumer staples, up 0.6%, was the only positive S&P 500 sector. The sector was buoyed by a 4.2% gain in PepsiCo, which advanced after analysts upgraded the stock.

Alcoa, the biggest US aluminium producer, is scheduled to release third-quarter results on 7 October, the first company on the Dow average to do so. Analysts expect third quarter profits for companies in the S&P 500 to be down 23% from a year ago. For the fourth quarter, analysts expect profits to be up 63%.

International Stock Market Snapshot

Below we provide our unique trading range charts for 21 major country indices.  For each index, the light blue shading represents between one standard deviation above and below the 50-day moving average.  When the price is within this trading range, it is considered to be in “neutral” territory.  The red zone represents between one and two standard deviations above the index’s 50-day moving average.  Moves into or above the red zone are considered “overbought.”  Moves into the green zone (more than one standard deviation below the 50-DMA) are considered “oversold.”

With the exception of a few Asian countries, most indices shown below are trading into overbought territory.  China’s Shanghai Composite is the only index trading below its 50-day moving average.  Australia, Brazil, South Korea, Taiwan, the UK, and the US look to be the most overbought of the bunch.  After trading in perpetual downtrends for nearly all of 2008 and the first few months of 2009, most countries have now been trading in solid uptrends for five months now, with only a brief pullback here and there.  Brazil, China, Hong Kong, India, Malaysia, Mexico, Singapore, Sweden, Spain, South Korea, and Taiwan have all taken out their 52-week highs in recent months, while the rest still have a bit further to go.

Source: Bespoken Research

CNBC Report by Bill McLaren – 5 June 09

LET’S LOOK AT THE S&P 500 INDEX -DAILY CHART

 

Two weeks ago I indicated the index was going up into the 90 day time window and could be an important high or even a top.  Please understand the trend remains in a strong position holding above swing highs and since the last low the sell offs have only been one day.  So looking to short this market will be very high risk without some evidence but I do have a time window for the next three trading days that could be very difficult resistance.  Price resistance is maximum 1012, then 995 and 963.  A move above Tuesday’s high seems likely and a break of the low of the high day would be the first indication a high could be in place.

LET’S LOOK AT THE 30 YEAR US T-BOND

 

This is the Feds worst nightmare.  Rates are rapidly rising.  Normally this would occur if the economy were improving.  Unfortunately bonds could be falling due to the government policies and not economic demand-we don’t know.  The Fed cannot control long rates-they have tried in the past a failed.  So Bonds could ruin the part and should be watched.  Best date I have to end the move down is around June 16^th but that is not a high confidence cycle but is still a 60% probability.  Could be still in a capitulation move down. Support marginally below 113 then 108.      

LET’S LOOK AT THE US DOLLAR INDEX-DAILY CHART

 

Two weeks ago I said the US DOLLAR was in a panic move down and would not rally past 4 days until the panic was complete.  I indicated the important dates were June 2^nd (the current low) and June 8^th.  The 8^th is Monday and could be another counter trend high if the index goes up into that date and would indicate the panic style of trend will continue.  IF it moves up past Monday then the 2^nd could be a low of some significance. If Monday is a high then June 20^th and July 8^th could be vibrations in “time” and the end of the cycle and possible end of the trend will be July 26^th.  If the Dollar is going down into that end of July date there will be one rally of 7 to 12 trading days before 26^th.  But for now the panic is continuing.  This is very important IF Monday is not a counter trend high then a low of some significance is in place.  The reason for this is the possibility of a “false break” low versus the December low if it can rally past Monday.  If Monday is a high then that “time” factor will be valid.

Source: McLaren Report

A Closer Look at the 200-Day Moving Average

One of the quick-and-dirty tools used to technical analysts is to see where a stock or index is compared with its average price over the past 200 days. This is an easy way to get a read of a stock’s momentum.

Yesterday was a big day for the 200DMA world. The S&P 500 closed above its 200DMA for the first time since December 26, 2007. That closed out the index’s longest run below its 200DMA according to my records which go back to 1932.

That streak, however, is still well short of the longest run above the 200DMA which ran from November 1953 all the way to May 1956. Since the index has gone up over the time, the “above” streaks tend to be longer than the “below” streaks.

On November 20, 2008, the S&P was a stunning 39.6% below its 200DMA. That’s the biggest discount on my records. The only thing that comes close is the reading from this past March.

So does the 200DMA work? The evidence suggests that it’s a pretty good indicator of future price performance. When the S&P 500 has been below the 200DMA, it’s dropped a total of about 20% over the equivalent of 27 years. In other words, the S&P 500 has been below its 200DMA about one-third of the time.

Historically, the best time to invest has been when the S&P is less than 1.7% below the 200DMA.

When the index is above the 200DMA, well, then everything looks much brighter. All of the market’s gain and then some have happen when we’re above the 200DMA which occurs about two-thirds of the time.

The market seems to like nearly every point of being above the 200DMA. Danger only clicks in when the S&P 500 is over 17.5% above the 200DMA which is a very high reading.

Source:Edelfenbein

Percentage of US Stocks Above 50-Day Moving Averages

From our weekly Sector Snapshot report at Bespoke Premium, below we highlight the percentage of stocks above their 50-day moving averages in the S&P 500 and its ten sectors.  As shown, 77% of the stocks in the S&P 500 remain above their 50-days, which is still a high breadth reading compared to levels over the past year.  The ability for this indicator to remain above 50% will be a good measure of the sustainability of the current rally.

The Energy sector has the highest percentage of stocks above their 50-days at 97%.  The next best sector is Materials at 86%, followed by Health Care at 85%.  Telecom (56%) and Consumer Discretionary (59%) currently have the weakest breadth readings.

Source: Bespoken Research

CNBC Report by Bill McLaren – 22 May 09

LET’S LOOK AT THE S&P 500 INDEX DAILY CHART
 

Last interview I indicated the rally may have exhausted into the 60 day cycle.  If that were the case the Key to this strong advance was the number of days and the number of points to the decline.  I indicated if the index exceeded 3 days down it could indicate the uptrend was complete and a downtrend of some sort would take place.  The critical support is 875 and that has still held but the index traded down 5 days.  Although that 5^th day down was just marginally lower.  It has rallied three days and remember the normal counter trend within a trend is 1 to 4 days and this rally failed at 3 days so there could be a lower high in place and the start of a downtrend.  The support below 875 is 863 and very important 831 down to 826.  The 863 support is ¼ of the range up and keeps the uptrend intact so for the bears that is a very important level to be broken.

The next important time window is 90 calendar days from low around the 5^th of June. If the index doesn’t get any legs down it is very likely the index would move sideways into that time window and bring in an important high after a 30 day period of distribution.  If the index doesn’t trend down from here but moves on the side into the first week in June that could be the end of the move up and with 30 days of distribution would represent a very bearish picture.      

NOW LET’S LOOK AT THE US DOLLAR INDEX MONTHLY CHART

The index rallied up from the “false break” low and moved to our forecasted price level of between 1/3 and 3/8 of the last range down.  This level keeps the downtrend intact.  I noted a year ago that countries would attempt to debase their currencies in an attempt to gain a competitive advantage to revive their economies.  The key support on the monthly chart is the 2004 low.  The large amount of volatility the previous 6 months is an indication of a top so there could be a test of the 2008 low or a marginal new low.

NOW LET’S LOOK AT THE DAILY CHART

The index is now in a capitulation style of trend or panic style of downtrend.  This is clear due to the “space” that occurred between the 3 day rally high and the previous low.   The key support is not only the price of the December 2008 low but is also the price of the December 2004 low.  There is a very strong time cycle present that indicates the follow dates can produce a strong vibration in “time.”  The next is June 2^nd and June 8^th – the 8^th is very significant at 96 days from high.  Then June 20, July 8 and the expiration of the cycle on July 26. 

Source: McLaren Report

CNBC Report by Bill McLaren – 8 May 09

May 09 2009 CNBC Squawkbox Europe

LET’S LOOK AT THE S&P 500 INDEX-DAILY CHART
 

Rallies in legs of bull trends have very specific characteristic.  Rallies in bear trends have very specific characteristics.  This rally has developed some bull market characteristics.  You can see when this rally started it move vertically and that is normal for bull and bear trends.  Then the index moved into a struggling move up and can be seen as each new high was immediately reversed, again “normal” no matter the direction of the trend. The index then fell two days and came back up to test the high in 6 days.  If this were a rally in a bear trend the index would have reversed to down at that marginal new high.  Instead the index showed a vertical move up and is a characteristic of a bull trend. 

The trend is currently an exhaustion mode of trending and will exhaust into a high.  If this keeps the characteristic of a bull trend it will correct three days and stay above the previous breakout point or the large horizontal line on the chart and rally to a new high and consolidate 7 to 12 trading days. 

The 60 day cycle expired two days ago and is resistance in “time.”  The previous largest rally was 63 days ending May 19, 2008, so this time period is important. The large outside day down yesterday looks like an exhaustion but remember if this is a leg in a bull trend the correction after the exhaustion will only be three days it will hold the horizontal line followed by another thrust up to a new exhaustion high and then consolidate 7 to 12 days.  If the move down exceeds three days and moves much below the horizontal line then the uptrend is in doubt and further correction will occur. 

LET’S LOOK AT A WEEKLY CHART
 

This is a picture of the bear campaign with the range divided into 1/8^th and 1/3^rd.  As a bear market matures the rallies become smaller and smaller until a final exhaustion of the trend.  Has this occurred?  The previous rally stopped at ¼ retracement which keeps the down trend intact and this rally has just moved above that resistance level.  The previous largest rally was 183 points and this is at 262 points.  Historically if a rally can reach 3/8 of the range down at 1007 it indicates an end to the bear trend.  The market will correct significantly from that resistance but if the index can reach that level it is a strong indication the bear trend is complete and the next selloff will be a higher low.

So the index may have exhausted into the time window of the 60 day cycle.  If the exhaustion is significant then the selloff will exceed 3 trading days and break the support at 875.  If the index is running higher then that will hold and become a springboard for further advance possible out to the first week in June. 

Source: McLaren Report

S&P Price Action

One interesting price level to look at when coming off of market bottoms is whether or not a new bear market (20% decline) would take the index back to new lows.  Up until recently, a 20% decline would have meant a lower overall low, but if the market were to top out now, a new bear wouldn’t mean the March lows would be violated.  This acts as an additional level of support.  As shown below, if a new bear market started following yesterday’s high, the -20% threshold would only take the S&P 500 down to 725.79, which gives investors 50 points to work with before the index reaches the March low of 675.

Source: Bespoken Research