According to Dow Theory, the primary trend of the stock market is “up.” That upward trend would be reconfirmed if the D-J Industrial Average ($INDU/10607.85), and the D-J Transportation Average ($TRAN/4433.66), break above their respective August 9th closing highs of 10698.75 and 4516.35. Such action would also suggest a run toward the Dow’s April 26th closing high of 11205.03.
Risk was firmly back in play during the New York session as markets await tomorrow's conclusion of the latest FOMC meeting. The S&P broke above crucial resistance at 1,130, and ended the session up more than 1.5%.
Earlier today the president had a Town Hall Meeting on CNBC. Even though it didn't meet Itz expectations, the markets rallied anyway, which was a positive. Below James Cramer chimes in on his thought...
Looking at the technicals, that all important 1130; Inverse Head & shoulders Pattern/Neckline gave way as expected. Bottom line more upside to go, near term resistance, ultimate upside target over 1200 on the S&P500. Gold is approaching $1300, more importantly, crude oil is undervalued and should rally off the bullish action in equities as well as silver & copper. Continue to favor ProShares Ultra Crude ETF $UCO.
On Sept. 12 it was noted that crude oil was setting up an ascending triangle.
Crude has tested the completion and now retracing testing $75 level.
On a hourly chart crude is now possibly setting up a 'bear flag', Itz continues to see lower prices ahead for crude oil. Here's a link to a report from thestreet.com on the fundamentals of crude oil. >>LINK
Itz favors using Proshares ETF's such as SCO and/or UCO to trade, see more up-to-date commentary at Twitter
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The seasonal slump came early this year and the S&P is poised to finish 2010 with a bang, according to Katie Stockton, chief market technician at MKM Partners.
With the potential for major political change in the wind, the stock market may well be poised to reassert historical performance characteristics. Thus, investors may stand to significantly benefit next year. *Below chart from Navellier & Associates
The weekly inventory report from the EIA showed that crude oil stockpiles declined by 1.853M barrels in the latest week. However, even with the decrease in inventories, the gap between current and average levels is still at its highest levels of the year. Consensus is that we'll see another weekly drop this Wednesday. The reason for this disparity is that the first week of September typically sees a much larger decline in crude oil stockpiles (3.4Mbarrels since 1983). Enbridge reported another pipeline leak and was forced to shutdown a 670,000 bpd pipeline that supplies several Midwest refineries. The pipeline was leaking several hundred barrels an hour and had to be shutdown. The oil had bubbled to the surface and was flowing down a city street. Because the pipeline is deep underground and now soaked in thousands of barrels of oil Enbridge could not begin digging until late Friday. Enbridge said it could be several days before the leak is fixed and the pipeline reopened. This caused the price of the front month contract of oil to shoot up on worries of a localized crude shortage. This pipeline also supplies Cushing OK and the delivery point for crude futures. I suspect this is a weekend challenge and reasonable thinking will return on Monday along with a decline in crude prices. Itz took a short term position Friday but exited on ProShares Ultra Short Crude OIl $SCO, may reenter Monday, currently sideline cash on UCO/SCO trades. Itz Pix continues to hold RIG, PDE, SU & WLT as energy plays. Transocean Offshore (RIG) rallied +3.52 on multiple news items Friday, Transocean said it was appealing the Swiss regulatory body ruling on its proposed $1 billion dividend. BP's new CEO, Bob Dudley, was quoted by Bank of America as saying BP would not be going after Transocean and Halliburton because their contracts indemnified them against damages even due to gross negligence.
Great report today from my fellow Twitter friend, Ashraf Laidi~~ "View of the Day" column of the Financial Times Sep 7, 2010.
"Silver has not only followed rallies in gold, but usually outperformed, as can be seen in a fall in the gold/silver ratio – the amount of gold that can be purchased with one ounce of silver. Yet, unlike gold, silver is yet to break above its 2008 record high.” >>LINK>>LINK
Dennis Gartman on CNBC's HalfTime Fast Money today...
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September is traditionally the worst month of the year for stocks, but Richard Ross, of Auerbach Grayson, tells CNBC this September may be a pleasant surprise.
Depending how one looks at the S&P 500 chart can give you either a bullish or bearish forecast. Itz believes that the $SPX will rally into the end of the year and maybe getting primed to breakout as the midterm elections get closer. Why? Gridlock, the market loves to see Washington not spend money.
We saw proof of this in the early 90's under the Clinton Administration, when the markets took off after the 1994 midterms. The market has been rallying today off of the global news, from China (PMI), Australia & India news, although the ADP jobs report was -10k, the market was oversold. The next several weeks will be choppy, this Friday's monthly Jobs Report from BLS will be significant. Next week we should see everyone back from vacation and volume will increase and expect to get a more solid picture on where we go from here.
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