I’m Leavin’ On A Jet Plane

Not much has changed this week. The NAPM shows the manufacturing
sector (among others) is still falling deeper into the recessionary abyss.
For the tenth straight month, the NAPM number gave perma-bulls the opportunity
to exclaim, much like Eric Cartman, that the market is not fat…it’s just
big boned.  Add to this more announcements of job cuts and a nasty 400,000
plus unemployment number and, just like that, nothing has changed much from
last week.  Probably the most entertaining events of the week were the
earnings reports in which the CEOs stated that: 

                
1) business was
abysmal
and getting worse. 

                
2) things didn’t look at all better for next
quarter.  

                
3)  they could not give any guidance for the future because this were so
bad.

BUT, lo and behold, they were optimistic about 2002!  Hold on to your
wallets, folks, this is going to get a lot goofier before it’s all done and
the bones of investors are picked clean by the Wall Street buzzards.

On to the technicals. The levels we bounced from yesterday were certainly
reasonable to expect.  After the tremendous moves the indexes have
experienced since early April, we certainly were not to expect them to just
roll over and retrace significantly at this early juncture.  The charts
below illustrate certain nuances of the Nasdaq, Dow, QQV (QQQ volatility index),
and BIX (banking index) that should be considered next week when
formulating a trading strategy.  At present, it appears the Nasdaq
Composite may attempt to rally further to its declining 10- and 20-day moving averages
but faces some stiff resistance there.  The intermediate-term picture
certainly points to a small corrective rally up followed by a resumed
correction of the April-May rally.  Once this correction is completed (in
the next few weeks if it happens at all), we may see the indexes launch another
leg up to challenge the May highs and even the January 2001 highs (if the
spin machine can really get it going on).  It is my opinion that this leg
up will give us some good trading opportunities from the long side with the
intention of turning and burning from the short side once the recovery rally
stalls.

P.S.  Bruce on the message boards, I really look forward to meeting you at
TM
2001.  You really bring a lot of interesting and intelligent information to
the boards.  Plus, thanks for taking your time to defend me against the
bashers who think YHOO will trade $250 again and that the market is
undervalued.