Wednesday, June 9, 2010

Signals Worth Waiting For

Looking for some good news to be the positive catalyst for a stock market that seems like it is forming a LTR with the 1050 S&P level. Tonight these headlines at are what I'm waiting for.
Goldman Sachs $2 Billion Hudson CDO Said to Be Target of Second SEC Probe
China's May Exports Surge 48.5% as Demand Withstands European Debt Crisis  
BP Trades as Junk Bond Amid Credit-Default Swap Inversion: Credit Markets  
Australia Added 26,900 Jobs in May, More Than Estimated, on Mining Demand  
New Zealand Boosts Key Rate for First Time in Three Years; Currency Rises 
My expectation now is that there is less chance of 1050 support level giving way to a move lower at the close.The GS headline is just a feel good, populist headline, it does little for the market. Same for the BP headline.China reporting a surge in exports is good news there and that translates to the US, since they own us. China is struggling internally, I've read, trying to stimulate economic growth that is not export driven. At the same time, the Peoples Bank of China is creating restrictive policies on state banks in an attempt to cool the real estate development bubble in the big cities. Job growth in the Australia mining sector is obviously a positive for the commodity driven economy. And the interest rate policy announcement in NZ is good for their economy, although not for the US dollar exchange rate, but there is little commerce that I can think of where the exchange rate matters with NZ.

Below are updates to the recent pair of graphs I've used to observe price trends. First is the S&P 500 index history line. The red horizontal line is on the 1035 level. Since the last post, the Bollinger Band lower band line has move to 1028 from 1041 and the mean line is now at 1095, dropping from 1106. The second graph illustrates the number of companies in the S&P that are trading at a price higher that the 50 day moving average for the company. It can be viewed as an early signal of stronger signals coming.

Click on the graph to update in a new window