Stock Charts: Stock Market Can't Make Up It's Mind!

$SPX 60 Minute: Market consolidates from early sell off. The price structure is convoluted, but it looks like we might need a little more downside. We should know very soon.  We have wave (a) down, but there are too many options left to count it past that.

$SPX Daily:  Chart 1 reflects the market is stuck between support and resistance.  The blue line is the 38% retracement level.  Chart 2 reflects that price has fallen below the lower pitchfork line.  Chart 3 shows the channel and now that we are below the pitchfork we could easily continue down into wave four over the next couple weeks.

$VIX:  Sitting right at resistance on today's gap up.  Still no bullish confirmation.  Personally, I’d like to see it above 25 for that confirmation.

IBM:  So far, it looks like abc down.  Price is testing the lower BB, and any significant downward momentum should pressure the BBs apart.

JNK:  Stalling in what looks like a little flagging structure right below the 50 day MA.

GOOG:  Failed at major resistance.  Looks like a zig zag down.  Some of the big momentum stocks look vulnerable to a little more selling pressure.  If it's going to make an inverse H&S pattern I've put the target in for the right shoulder. 

$COMPQ:  Pattern looks similar to GOOG only lagging a touch.  If so, and it’s a zig zag down, zag is coming soon.

GLD:  Gold is higher not because the dollar is lower, but over concerns in Europe.  It looks like we move to a new high.

SLV:  SLV is leading GLD, and very close to another new high.  Nothing bearish in this chart.

My Watch List:

JCP:  We sold our position today.  I still think this stock could trade to $36 based on the sideways pattern.  MACD trying to turn high to support price.

KSS:  Looks like the back and filling continues.  Still nothing bearish in this chart and I think it moves higher.

REGN:  Still looks like a corrective move down the past few days.  A move higher would start the process of bringing the BBs together, and that’s what I’m looking for.

NC:  Still in the process of making E.  Too early to trade.

DIS:  Looks like a big cup and handle pattern.  The handle could very well be under construction now.  Too early for a trade but worth watching.

COST:  A move higher off the uptrend line.

SRS:  It’s consolidating right along the 50 day MA.  Is that a base for higher prices?  Any upside in the near future could be bullish.

From My Trading Desk:  We closed our fractional short on NEM, as that turned out to be a stinker.  We sold our full position of JCP.  The gain on that was easily more than the loss on NEM.  This is why the use of fractional positions and full positions on lower risk trades. 

Happy Trading.

J.D. Rosendahl, Rosey

Home Prices Fall, Auto Sales Holding, On-line Sales Up 19%, & Consumer Confidence Jumps!

A lot of interesting data hit the market today:

Home Prices in September Fall Faster than Expected

Prices of single-family homes in September fell more than twice as fast as expected from the prior month, while prices compared to a year earlier rose more slowly than forecast, according to a widely watched index of U.S. home prices released on Tuesday.

The Standard & Poor's/Case-Shiller composite index of 20 metropolitan areas declined 0.8 percent in September from August on a seasonally adjusted basis.

US Auto Sales Seen Holding Above 12 Million Unit   

U.S. November auto sales held above 12 million vehicles on an annual basis, a gain of about 10 percent from a year earlier, driven by month-end discounts and a slow return in consumer demand, according to analysts.
Barclays expects sales to reach about a 12.1 million vehicle annualized rate, down slightly from October's 12.2 million sales rate, but strong enough to show that "the consumer is crawling back, particularly in the more affluent and higher quality credit segments."

 
U.S. Online Sales on Cyber Monday Climbed 19%, Coremetrics Says

Online sales in the U.S. rose 19 percent yesterday, coming in as the biggest Internet shopping day of the year so far as Web retailers gain ground on traditional stores, according to research firm Coremetrics.


The average order climbed 8.3 percent to $194.89, San Mateo, California-based Coremetrics said today in a statement. Sales of luxury goods rose 24 percent. Coremetrics, owned by International Business Machines Corp., is an analytics company that tracks online consumer spending and shopping behavior.

Cyber Monday -- the day consumers return to work after the weekend following Thanksgiving and continue to shop online -- is an indicator of how the rest of the holiday season is shaping up.

Flat-Screen TVs

Amazon posted hundreds of Cyber Monday deals on its site, including one for a 47-inch (119-centimeter) television from Vizio Inc. for $599. The set regularly sells for $998.

Holiday sales over the Internet on Nov. 26, this year’s Black Friday, tallied $648 million, a 9 percent increase from the corresponding day a year earlier, according to researcher ComScore, based in Reston, Virginia.

Consumer Confidence Climbs to Highest Since June

U.S. consumer confidence rose in November to its highest level in five months, helped by improving labor market conditions and a jump in the expectations index, according to a private-sector report released Tuesday.

The Conference Board, an industry group, said its index of consumer attitudes increased to 54.1 in November, the strongest since June, from a revised 49.9 in October.

The median of forecasts from analysts polled by Reuters was for a reading of 52.6.

The October reading was revised down from an original 50.2.

Some economists had expected gains in the U.S. stock market in September and October to give a boost to consumer confidence.

Home Prices Fall:  This is a month over month figure.  Prices are actually ahead of last year's values.  However, the trend may have changed as inventories are up and demand continues to be weak.  The bankruptcy nightmare issue seems to have put people on the sidelines as well.  Unless something significant changes, expect values to continue downward based on the supply/demand equation and the eventual REO boom from the backlog of foreclosures stacking up at big banks.

Auto Sales Hold:  Not to hot not to cold, holding the 12 million level!  The industry is no where near generating enough sales to aggressively hirer back industry workers laid off in the past.  And the expectation for sales to remain constant should keep that dynamic in place.  The upside is sales are not declining, which is a positive because it would have a significantly negative impact on the industry, employment, and GDP.

On-line Sales Up 19%:  This has been the trend for the past several years, so we should expect on-line sales to be robust year over year, and to continue year in and year out as on-line shoppers find better deals.  The most interesting piece of data in this report is the steep discount Amazon is offering on flat screen TV's. 

Amazon does not have the retail distribution chain brick and mortar or employee base costs of traditional retailers.  They are offering prices that should help them gain sales volume, which should impact the traditional retailers in the long run.  Amazon will force other retailers to be more competitive which could hurt profit margins and more importantly hiring as retailers need to keep costs down to compete.  It's an interesting dynamic, but increasing on-line sales is not good as sales flow to a few away from the many retailers.  It's good for consumers though!

Consumer Confidence Jumps:   If you believe the traditional theory, consumer confidence is gaining because of the expected improvement in the economy and jobs.  I think it has more to do with the stock market, as increasing values lift the spirits of the consumer.  I also believe it has to do with those who have maintained employment worrying less about their job safety.  Unemployment has not changed nor has the Main Street economy.  If the stock market rolls over in the first quarter of 2011 as I'm expecting, consumer confidence could turn out to be the contrarian indicator. 

Very interesting data today; some good, some neutral, and some not so good.  The Main Street economy has not changed.  It's only held itself based on stimulus money and corporate cost cutting.  Corporate America is hoarding cash and not putting it to work.  I think what happens after this year is over is a far more telling sign for the economy and the markets going forward.

Hope all is well.

J.D. Rosendahl, Rosey

Stock Charts: Market Bounces Off Intraday Lows.

Sorry for the late post, it's been a long day.

$SPX 60 Minute: Stocks rally back from a large down beginning. Still stuck in No Man’s Land.  We back tested the little down trend line.  50% and 62% retracement levels above.

$SPX Daily: This little flagging structure continues.  A little bullish Doji today.  I still think we are in an abc down, it may have completed, but maybe (b) higher to complete.  Price is stuck in a small No Man's Land.

$VIX:  Another failure at resistance. Nothing really new in this chart.  I’ve relabeled the wedge just for fun.  Nothing I’m using at this point because anything could be going on with this one.

JNK:  Looks to be forming a low but might need a little splash lower.

IBM: Price could expand this corrective phase sideways to allow the MACD to finish its move lower.

My Watch List:

NEW:  Could not hold the pressure lower and snapped back to the lower BB.  So far, it looks bearish, but we're going to need follow through soon.  If so, the pattern calls for a target of $54ish.

COST:  Last night I said this could test the uptrend line and then have another bounce higher.  We got the first half of that today.  A test of the top trend line would be very interesting.  That will coil price further and pinch the BBs.

JCP:  Still my favorite chart because it seems like a low risk trade as price is flagging after a monster move higher.  MACD is trying to turn up but not quite.

KSS:  Last night I said this one may consolidate and if so we should move higher and test resistance.  It seems we are getting the consolidation piece now.

REGN:  Looks like over bought selling pressure so far.  Stuck between minor support and major resistance.

NC:  There's enough to label E finished, but it's too early to take a stance because it could just as easily fall to the 200 day MA and bottom wedge line.  Price moving lower so far only looks corrective.  Any big upside will be interesting.

From My Trading Desk: We took a 1/2 short on NEM today.

Happy Trading.

J.D. Rosendahl

Is Highend Real Estate Ready to Correct? Rich Americans Ditch Home Ownership For Renting

The short answer is YES!  Joseph Pisani of CNBC has some great data to report:  Rich Americans Ditch Home Ownership For Renting

Patrick Lee went from homeowner to home renter this year.

It may sound like a downgrade, but the New Yorker didn't make the switch because he couldn't keep up with payments or because he lost his job. Instead, Lee was nervous about the state of the housing market.

So in March he sold the Manhattan apartment he bought in 2008 for about the same price he paid and moved — along with his wife and child — a few steps away into a luxury, two-bedroom rental unit in a brand new building.

Lee wouldn't disclose what he's paying, but similar two-bedroom apartments in the building usually rent for $11,000 a month.

“I wanted to protect ourselves from prices going down,” says Lee, who is a managing director at a major bank. “I didn’t want to be an owner anymore.”

Lee has company. Demand for luxury rental units has increased as wealthier individuals who can afford to buy are deciding not to, according to brokers and real estate analysts in affluent areas of the country such as New York City, Chicago and San Francisco.

“More affluent Americans are opting to rent as oppose to buy,” says Jack McCabe, an independent real estate analyst and CEO of McCabe Research and Consulting in Deerfield Beach, Fla. “Within the last year, so many people have seen their family and friends get burned in real estate. They don’t see it as being a risk free investment as they used to.”

In Manhattan the demand for high-end rentals has never been hotter. In the third quarter of 2010 there were 200 new leases signed for rentals charging $10,000 a month and up, more than double the 89 leases signed the year before, according to Jonathan Miller, CEO and president of New York City-based real estate appraisal and consulting firm Miller Samuel.

The demand is also being seen in Marin County, right across the Golden Gate Bridge from San Francisco.

Last year, the phones at Foundation Rentals & Relocation office were ringing constantly with high-end homeowners wanting to rent property that they couldn’t sell, but no one was interested in renting them.

Now the firm is getting calls from executives, especially in the technology sector, looking to move into a rental.

“They’re entrepreneurs. They would rather put their cash in their business,” says Darcy Barrow, who founded the firm with her husband Christopher Barrow.

“And get a greater return,” adds Christopher.

What the wealthy understand is why risk the capital or equity in owning a home when one can rent and avoid the risk of further downside in real estate values thereby losing money.  It's really not that hard of an equation.

We have high inventory and low demand, which eventually equates to lower prices.  Whether it's the those with wealth sitting on the side lines or those who are no longer wealthy or less wealthy, the demand side of the equation is very weak.

I know where I live roughly 50% of the homes on the market are high end, which is over $1,000,000 in my community, and they are not moving.  There is scant transactional volume in the highend segment.

The other part of this equation that's already occurring is the correction in highend vacation homes.  Talk to any general contractor or real estate agent in vacation communities and demand is virtually dead.  Part of the problem in vacation homes is they are not essential like a primary residence, and again why risk your capital when another price decline could wipe it out.

The other issue in highend real estate is the repricing of Alt A. and Option Arm programs that adjust the monthly payment higher.  That may cause a lack of affordability for existing owners and bring more supply back onto the market from this subsegment.

I believe highend real estate has some work to do catching up with the greater real estate market by moving lower.  It's an avoid or sell!

Hope all is well.

J.D. Rosendahl, Rosey.

Stock Charts: Market Sells Off on Black Monday

$SPX 60 Minute:  On the intraday, we are in No Man's Land.  This should resolve itself soon.

$SPX Daily:  A little consolidation going on the past week.  The daily MACD is still sliding lower which leaves the door open for a test of the 50 day MA and the lower Bollinger Band.  If so, this should happen soon.

$VIX:  A big up day on Friday, but it still needs to break out of this wedge for something more substantial.  We should test resistance soon.




IBM:  Is failing a little at the prior uptrend line. MACD sliding lower.  It will be interesting to see if price moves lower next week.  If so, that should pressure the market.

JNK:  Continues it's sell off.  It looks like we have a little further to go.  The channel is just for visual, nothing I'm hanging my hat on.

XLF:  Seems like this needs to fall back to support and the lower BB.

My Watch List:  Some new things on the watch list this week.

NEM:  A little H&S top with a break below the neckline.  MACD has rolled and the RSI has plenty of room to support lower price.

FCX:  Stock is sitting on minor support with divergences in place.

COST:  Some pretty good divergences building.  A test of the neckline and then one more bounce seems like the likely outcome.

JCP:  Still stuck inside the flagging structure.  Stock is consolidating.  Even if we need one more push lower, nothing looks bearish.

KSS:  The RSI is over bought and we've had a very impulse looking move higher.  It might be time for some consolidation. That's what I'm looking for because of how wide the BBs are.  If we get that, then the resistance line is the target.

REGN:  Has tested major resistance and is pulling back.  We might have an inverse H&S pattern.  Above the neckline is bullish.

From My Trading Desk:  We had no trades on Friday.

Next Week's Game Plan:  The next week or so is a little odd.  The technicals suggests lower pricing, but we are entering the seasonally strong period of December.  If I enter a trade, the short on NEM seems like an obvious one.

Happy Trading.

J.D. Rosendahl, Rosey

Is The US Ready for This Trend? Hamtramck, Mich., Officials Hope to Keep Bankruptcy Idea Alive

The City of Hamtramck asked several days ago for the State of Michigan to approve their bankruptcy. The State in their idiocy recommended issuing more debt to solve the problem.  But smart people at the City of Hamtramck know that's not going to work:  Hamtramck, Mich., Officials Hope to Keep Bankruptcy Idea Alive

CHICAGO — Officials in Hamtramck, Mich., said they would try to set up a meeting with state Treasurer Robert Kleine in a fresh effort to win permission to file for bankruptcy.

The troubled Detroit suburb sent a letter to the state Nov. 10 asking for permission to file for bankruptcy, warning that it would run out of money by Feb. 1, 2011.

On Wednesday the state denied the city’s request and offered instead three loan options: a 20-year emergency loan, a property tax anticipation note, or authorization to borrow by issuing fiscal stabilization bonds.

But city manager William Cooper said a loan would not be sufficient to address Hamtramck’s long-term financial pressures.

Cooper said officials see little downside to bankruptcy, in part because the city maintains no credit ratings.

Hamtramck bankruptcy would cost entire state

The administration of the City of Hamtramck has requested permission from the State of Michigan to file for Chapter 9 bankruptcy. This should be of concern not just to the citizens of Hamtramck, but to every other citizen in Michigan as well.

Should Hamtramck decide to take the opportunity in bankruptcy not just to walk away from its labor agreements but also to walk away from its debt, the credit ratings on bonds in other entities — cities, counties and school districts as well as the state itself — would be affected. As bond ratings are lowered, the cost of borrowing for municipalities from Grand Rapids to Gogebic to the Grosse Pointes would soar, regardless of their creditworthiness.

Michigan’s relatively high credit ratings on bonds stems in large part from the fact that the state does not readily permit individual entities — school districts, cities or counties — to default on their debt. Once in bankruptcy, all bets are off as to the state’s ability to control Hamtramck’s continued service of its debt.

So it is important for all Michigan citizens that the state manages the Hamtramck situation prudently.

Clinton R. Andrews, Grosse Pointe Park

If it's Clinton's perspective that the state shouldn't let Hamtramck file bankrupcty, his view is off the mark.

1)  Other Municipalities:  There are many cities and counties that are broke lining up to file bankruptcy should Hantramck get the green light.  Is the State of Michigan going to force more debt to bail out ever municipality?

2)  Breaking union contracts:  That's a good thing, that in the long run will let the City renegotiate costs downward to match revenues. 3rd grade math!

3)  Default on bonds:  Hello, buyer beware. Investors took a risk of buying the debt of a broke state, just like those in California and other states.

4)  Credit ratings:  This is the one that's really stupid.  The only reason their debt rating hasn't been lowered to the basement is the rating agencies run around this world with their head lodged in the wrong place.  The city is broke and more debt doesn't make them solvent, it's just a matter of when their rating gets lowered.  Frankly, their cost to borrow should go up, that's a free market.

5)  Michigan:  They already have their own huge budget deficit to deal with and they're in no position to deal with other entities and their budget deficits with any credibility.

His view is one of fear mongering the public with this kind of thinking.  It's time we used bankruptcy as a tool.  Let's put all the parties, the City, the unions, the debt holders, and tax payers into bankruptcy court and let them hash out who's going to eat it and how we get to a balanced budget.


Hamtramck poses first cities test for Snyder

A cry of "no mas" rang out from Hamtramck this week, as beleaguered city officials asked for permission from the state to file bankruptcy.

Like so many cities, Hamtramck has a dwindling tax base that's unable to support the generous labor contracts and other obligations that were forged during better economic times. Without question, Chapter 9 bankruptcy protections could help the city restructure.

Hamtramck would be the first Michigan city to declare bankruptcy if it is allowed, but the line of others awaiting similar troubles is likely quite long. Highland Park's new administration, which just took over from state financial oversight, is already talking about asking for new help. Lots of other cities are struggling with deficits or near the point of state financial takeover, the first step toward bankruptcy

Gov.-elect Rick Snyder will walk into this pool of needy jurisdictions in January, and the expectation will be that he'll help solve their problems -- despite the state's own gargantuandeficit and the concurrent drop in vital revenue sharing dollars.

Here's the real problem for the State and where this gets interesting.  If they give the green light to Hamtramck, the number of local municipalities knocking on the State's door for Bankruptcy approval could be staggering.  Is Michigan ready to implode or will they push it into the future?

If the State of Michigan allows this to become a trend it will spread like a weed to other states especially those with the biggest problems, like California.  It only takes a couple of dominoes to fall, and the momentum should fallow soon there after.

Hope all is well.

J.D. Rosendahl, Rosey

Happy Thanksgiving!

A young man named John received a parrot as a gift.. The parrot had a bad attitude and an even worse vocabulary.

Every word out of the bird's' mouth was rude, obnoxious and laced with profanity. John tried and tried to change the bird's attitude by consistently saying only polite words, playing soft music and anything else he could think of to 'clean up' the bird's vocabulary.

Finally, John was fed up and he yelled at the parrot. The parrot yelled back. John shook the parrot and the parrot got angrier and even more rude. John, in desperation, threw up his hand, grabbed the bird and put him in the freezer. For a few minutes the parrot squawked and kicked and screamed.

Then suddenly there was total quiet. Not a peep was heard for over a minute.

Fearing that he'd hurt the parrot, John quickly opened the door to the freezer. The parrot calmly stepped out onto John's outstretched arms and said "I believe I may have offended you with my rude language and actions. I'm sincerely remorseful for my inappropriate transgressions and I fully intend to do everything I can to correct my rude and unforgivable behavior."

John was stunned at the change in the bird's attitude.

As he was about to ask the parrot what had made such a dramatic change in his behavior, the bird spoke-up, very softly, "May I ask what the turkey did?"

HAPPY THANKSGIVING!! And much joy and peace!
 
J.D. Rosendahl, Rosey

Ireland to Cut Spending 20%, Raise Taxes as Talks Climax

It"s really the only long term solution:  Ireland to Cut Spending 20%, Raise Taxes as Talks Climax

Ireland’s government said it will cut spending by about 20 percent and raise taxes over the next four years as talks on a bailout of the country near conclusion.


Welfare cuts of 2.8 billion euros ($3.8 billion) and income tax increases of 1.9 billion euros are among the steps planned to narrow the budget deficit to 3 percent of gross domestic product by the end of 2014. The shortfall will be 12 percent of GDP this year, or 32 percent including a banking rescue.

Prime Minister Brian Cowen is racing to conclude talks with the European Union and the International Monetary Fund on an 85 billion-euro aid package as his governing coalition crumbles. EU Economic and Monetary Affairs Commissioner Olli Rehn said yesterday Ireland needs to pass next year’s budget “sooner rather than later” as concerns mount the fiscal crisis may spread to other euro nations such as Portugal.

“We have to deliver on this stuff and at least set out some kind of road map that we intend to follow,” said Alan McQuaid, chief economist at Bloxham Stockbrokers in Dublin. “It won’t solve the euro zone problems” because “the market now is sniffing blood and it’s looking for a big fight.”


Bonds Fall

Irish bonds fell today after the country’s credit rating was downgraded yesterday two levels by Standard & Poor’s on estimates the cost of bailing out its banks will escalate.

The decline pushed the yield on the country’s 10-year debt up 52 basis points to 9.17 percent. The premium investors charge to hold the debt over German bonds, Europe’s benchmark, widened by 33 basis points to 619 basis points. The premium reached a record 652 basis points on Nov. 11.

Lower government spending and higher taxes over an extended period is a negative economically, but a necessary evil.  I doubt the impact of these moves in Ireland have a dramatic impact globally because of their economic size.  However, the spreading of these kinds of changes through out the EU could create significant compression economically.

The big question is when does this approach take hold in cities, states, and nationally in the United States?  It's just when higher taxes hit American shores.  Higher taxes equal reduced net income, which in turn compresses consumer spending and real estate values, which in turn lowers tax revenue collections on consumer spending and real estate, which again hit local municipal budgets.

The right long term approach requires short term pain!

Hope all is well and Happy Thanksgiving.

J.D, Rosendahl, Rosey.

$SPX 60 Minute:  Looks like a little abc up, if so it should finish very soon.

$SPX Daily:  Price is stuck in No Man's Land between cluster support and the 50% and 62% retracement levels highlighted on the 60 minute chart.

$VIX:  Tried to drop but rallied back most of the day's losses.  Still grinding in No Man's Land.

IBM:  A back test of the prior uptrend line seems likely.  Will it fail?

JNK:  I've put the channel in just for context.  It looks like a little more down side.

Reader's Question:  When I look at your chart of Kohl's all I see is declining tops while the market has grinded higher, you seem very bullish on the stock?

KSS Daily:  On the daily chart we have what looks like an ABC pattern down (the bearish alt. is this expands into a wedge pattern).  We have a move up, then correction then another move higher, which should be wave 3 or C.  we have a possible inverse H&S with price above the neckline.  Price is expanding the BBs while trading above the upper BB.  We sold our position today and we have 3 very nice trades all for gains so far.  I would by these technicals 9 out of 10 times.  Above the down trend line in red increases the bullish view

KSS Weekly:  More of the same.  Price made a large ABC pattern down, and on the weekly there’s a potential inverse H&S pattern.

The reader has a great question and he’s emailed me several times with his own picks which he has a very solid track record of trading.  I do like KSS, but frankly I hate being long a retailer but that’s my own baggage.  The retail index is moving higher and been one of the strongest performing indexes recently.

My Watch List:

IIIN: This is a reader’s choice from a couple nights ago and looks good. Last night I said it should test the 200 day MA easily, and that’s what we got. Frankly, I should have bought this yesterday and it never entered my brain. BBs are expanding but the RSI has hit over bought. I still think there’s a good chance it closes the gap.

JCP:  The intraday looks like this little move up might be finished and we slide lower with in the wedge type structure.

KSS:  See above

REGN:  A little consolidation today, nothing terribly bearish.

NC:  Wave E:  abc down (A), abc up (B), we should have C down in the very near future to the trend line and the 200 day MA.

From My Trading Desk:  Today we bought REGN on the pull back.  We also bought JCP, which I’m might be early.  We sold our KSS for a nice gain today.  Market closed tomorrow and I’m going to try not to enter any new position on Friday.

Happy Trading and Thanksgiving.

J.D. Rosendahl, Rosey