By Gareth Soloway on August 4th, 2010 12:53pm Eastern Time
After jumping up and down early in the day, the markets are floating higher on extreme light volume during the noon hour. The key today was the ADP Private Sector Employment Report which showed a gain of 42,000 jobs. This was in line with estimates but pushed the market slightly higher as it gave traders some relief ahead of the Friday Non Farm Payrolls Report. On the chart below, note how the SPDR S&P 500 ETF (NYSE:SPY) has floated into the $113.00 level twice today, each time pulling back. While this level is resistance, the more it hits the weaker it becomes and is likely to break if volume continues to drop. The next spot is the $113.25 level.
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By Gareth Soloway on August 4th, 2010 12:08pm Eastern Time
Google Inc. (NASDAQ:GOOG) spiked higher today, taking out resistance at $495.00. After blowing through this point, Google has continued higher, nearing the next resistance of $504.00. This will be a solid level and may be trouble in the short term. In addition to having broken through the first short term resistance point, Google has an inverse head and shoulder pattern that is in play. This is a bullish pattern and could technically reach the $525.00 level before it completes. That tells us that the upcoming $504.00 level of resistance will most likely eventually get broken. Stay tuned for further analysis, guidance and education by joining the Research Center.
Gareth Soloway
Chief Market Strategist
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STOCKS EXTEND FRESH DOSAGE of pre-payrolls buying after US July ISM unexpectedly rises to 54.3 from 53.8; S&P500 will attempt to close above its 10-day MA of 1126 (not broken since May). AUSSIE & LOONIE SOAR against all currencies as wheat extends its 55% rally of the past 4 weeks amid worsening draught in Russia. Aussies leadership is also boosted by the prolonged strength in energy and metals as the Federal Reserve opens the door for the possibility of renewed asset purchases (quantitative easing). QE is becoming synonymous with rallying commodities as was the case in Q1-Q3 2009. Copper nears the key $7,570 resistance, which is the 76% retracement of the decline from the April high to the June low. US crude has the technical momentum required to break above $83.50 (right shoulder), especially if the skirmishes in the Middle East show no abating. And with the FOMC widely expected to confirm its bearishness at next weeks rate decision, AUDUSD eyes 0.9230-35 as the next barrier. Any dovishness from the RBA in Thursdays quarterly monetary policy statement may have a limited impact ahead of next weeks FOMC. AUDJPY is the more likely loser in the even of disappointing US payrolls. USDCAD resistance drops from 1,0320 to 1.0270s eyeing 1.0170s.
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Possible pin bar on the daily close here. If so we have an inside bar yesterday (possible pause for breath) and a rejection of lower price today. i will be looking for a break of Monday close.
By InTheMoneyStocks.com on August 3rd, 2010 8:48pm Eastern Time
Today the retail stocks have come under severe pressure. The popular Retail Holders Trust (NYSE:RTH) is trading lower by 0.93 cents to $89.93. This ETF tracks a basket of the most popular retail stocks that are publicly traded. Therefore, this particular ETF will generally tell us how the retail stocks are doing as a group or sector. As we all know the retail stocks are very important since the United States consumer spending accounts for roughly 70% of the nations gross domestic product (GDP). Many of the leading retail stocks are trading sharply lower today and this could be troublesome for the economy looking forward.
J.C. Penney Company (NYSE:JCP) is leading the decline today falling by over $2.01 or nearly 8.0 percent to $23.47 a share. This leading retailer is now trading below its daily chart 20, 50, and 200 moving averages which is a bearish indication. The stock will have some daily chart support around the $22.00 area in the short term. Should this leading retail stock decline sharply below that support level the next area of important support will be around $20.00. In any case the chart looks weak at this time and the stock could remain under pressure.
Kohls Corp (NYSE:KSS) is another leading retail stock that is trading lower by $1.96 or 4.0 percent to $47.03 a share. This daily chart of the stock actually looks worst than the J.C. Penney chart. This stock is also trading below its daily 20, 50, and 200, moving averages. This stock will have some daily chart support around the $45.00 area in the near term. Should this stock break below the $45.00 support level the stock could test the $42.00 area which is the next important support area.
Nordstrom Inc (NYSE:JWN) is trading lower by $1.55 to $33.95 a share. This stock is actually still trading above the its daily 20 moving averages. Remember this company caters to the more affluent shopper and is less likely to be effected the same way in small economic downturns. The one real negative for this stock chart is that it is trading below its daily 50, and 200 moving averages which still a sign of weakness in the stock.
Anyway we slice it or dice it the retail stocks are selling off sharply today. It is important to remember that when the retail stocks decline it is a direct reflection on the U.S. consumer. In order for this inflationary rally scenario that has been orchestrated by the U.S. Treasury and the Federal Reserve Bank to work the U.S. consumer needs to spend money. Remember, seventy percent of the United States gross domestic product is consumer spending. At this time that necessary spending is limited.
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By Nicholas Santiago on August 3rd, 2010 9:21am Eastern Time
The stock market indexes all surged higher yesterday clearing above important technical resistance levels. Yesterday's rally higher was broad based and very powerful point wise. At face value it looked very impressive. The catalyst for the rally yesterday was a strong Chinese market and a weak U.S. Dollar Index. This seems to be the perfect short term elixir for stock market upside. Who would have ever believed that a stronger Chinese economy would benefit the United States? Who would have ever believed that a weaker U.S. Dollar would really benefit the United States in the long run. The truth of the matter is that these are just short term or temporary fixes to the United States economy.
The goal for the U.S. Treasury and the Federal Reserve Bank is to inflate the economy back to health. This has been tried by many other countries prior with very little success. Japan is the most notable government that has tried to fight deflation with artificial inflation and they have basically flat lined for the past 20 years. What will happen to the United States if China stops growing at a double digit rate? What will happen if the U.S. consumer stops buying so many Chinese goods. The U.S. consumer seems to hold all the cards as they are the largest consumer of goods in the world and consumer spending accounts for up to seventy percent of the GDP in the United States.
China is now facing many headwinds as they have been growing for many years now. Recently China faced an uprising from several workers in the auto industry. Honda Motors LTD (NYSE:HMC) auto workers staged a strike over wage increases and work conditions. Similar disputes have emerged with Toyota Motors Corp (NYSE:TM), and Bayerische Motoren Werke AG(BMW) workers. The Chinese government has also had a long dispute with Google Inc (NASDAQ:GOOG) over censorship which is extremely important worldwide. These are just some of the problems that are beginning to emerge as this large Chinese economy matures. Double digit growth will not last forever as the new middle class begins to grow and will demand more pay and better work conditions.
Last night the Shanghai Index traded lower by 1.71%. Today the U.S. stock market is trading slightly lower retracing some of yesterday's huge advance. Today the U.S. Dollar Index is trading lower by 0.25 cents to $80.67. The weaker dollar will usually help to inflate the stock market higher. When the dollar declines commodity stocks such as Southern Copper Corp (NYSE:SCCO), and AK Steel Holdings Corp (NYSE:AKS) will usually jump higher. However, should the dollar rally higher these stocks will usually decline and sell off. The month of August will not be the normal summer doldrums as the Chinese market will come under the microscope and the U.S. Dollar Index will be nearing important daily chart support levels. Stay tuned the next few weeks should be filled with volatility.
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