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Jul 16

The Market Today

7/16/2012

While the averages were down slightly, this certainly did not tell the story. The retail sales numbers came out, and it was ugly. However, the Empire State manufacturing numbers came out signficantly better than expected. The retail numbers are where the real story lies. The comsumer is starting to cut back on spending. If they are cutting back spending, how is the economy to rebound? Corporations are sitting on record amounts of cash, yet they are not reinvesting this money. Consumers are not spending, how is the economy to sustain this “positive momentum?” The economic numbers have been coming in bad for the last few months. I saw a few news organizations issuing reports that call for the bottom in housing? How can this be? The unemployment picture is significantly worse than the government numbers say they are, and the foreclosures are being held by the banks. This being said, how can they call for the bottom in housing? They must not have all the data, because come in January, these banks will be dumping foreclosures like we have never seen before, pushing down real estate prices significantly. Despite the bad economic numbers, and the German version of the Supreme court, saying that they will not review the two European bailout funds for 2 months, the market held up well today, and has been holding up the last several weeks. The market seems to be trading very similar to what it did last year, and the market sold off significantly in August and September, most likely we will see the same this year. The S&P is trading between two trendlines, the bottom at 1325, and the top at 1375. Whichever line it breaks, determines the next general move. My feeling is it will break the 1325, and a significant move to the downside will ensue. However, should it break 1375, the opposite will be true. I am writing this on a different computer, therefore, I cannot put my chart to illustrate this point, I will update this post with the chart tomorrow morning. In the mean time, stay tuned..

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