Sitting on a Signal: No More Waiting

This morning I felt the conviction to pull the trigger on my equity long exposure and recommended getting neutral. The reality is that there is no longer enough reward potential for the degree of downside risk that appears to be supportable by the technical evidence. I may be early if I get it right, otherwise I'm just wrong. The decision came amid widespread observations of the S&P 500 head & shoulders formation having completed according to some, a notable exception is Carl Swenlin. This evening he and his daughter published their position, saying that they have little confidence that the formation will not complete itself, thereby signalling a bear trend beginning. They described their perspective this way, "Let's be honest, things don't look good right now. The PMO (Price Momentum Oscillator) had a negative crossover today and although support held, Carl and I don't think it is likely to hold much longer. The original set-up was for a rally off the June low, a retracement to about 1080 and then the resumption of the rally. That didn't happen and that is not good."

One of the most vocal technical analysts is Chris Kimble, on DShort.com, who wrote this description of today's activity for his post this evening. "Seems like no matter what business channel you were listening to today, all the "talk was about support, at the 1,040 level." This support line has been in play several times since mid-January.

Is something different this time around, in testing support?

Market Data & Charts: Week Ending 6/25/2010

Below the "Read More" are updates of the charts last posted on June 1.

Market Index	2009 Close	6/25   Close	Week Change	Simple YTD %
Dow Industrials Avg	10428.05	10,143.81	-2.94%	-2.73%
S&P 500	1115.1	1,076.76	-3.65%	-3.56%
Fed Funds Rate	0.25%	0.25%	0%	0%
10 yr T-bond Yld	3.85%	3.11%	-0.15%	-0.74%
5 yr T-note Yld		1.90%	-0.16%
5 yr infl adj Note		0.23%	-0.08%
Implied 5 yr Inflation %		1.67%	-0.08%
2 yr T-note Yld	1.14%	0.65%	-0.08%	-0.49%
2-10 Yr Slope	2.70%	2.46%	-0.07%	-0.24%
90 day T-bill Yld		0.13%	0.04%
Gold ($/oz)	$1,096.95	$1,256.20	-0.13%	14.52%
WTI Oil ($/brl)	$79.36	$78.86	0.96%	-0.63%
VIX "Worry Index"	21.68	28.53	19.12%	31.60%
Credit Spreads		6/25   Close	Week Change
Inv Grade Credit Idx		4.86%	-0.06%
Low Grade Credit Idx		8.89%	-0.05%
Markit CDX Inv Grd Idx		120	5.26%
Markit CDX Mid Grd Idx		174	0.00%

BEA News: GDP and Corporate Profits, 1st Quarter 2010 (third estimate)

The U.S. Bureau of Economic Analysis (BEA) has issued the following news release today:
Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.7 percent in the first quarter of 2010,(that is, from the fourth quarter to the first quarter), according to the "third" estimate released by the Bureau of Economic Analysis.
Also, profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $116.9 billion in the first quarter, compared with an increase of $108.7 billion in the fourth quarter.
 
The full text of the release on BEA's Web site can be found at
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

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U.S. Bureau of Economic Analysis · 1441 L Street NW · Washington DC 20230 · 202-606-9900

Sitting on a Signal: It's Frustrating

Art Cashin is interviewed this morning on CNBC, by their talking heads, about the direction of the markets. He is both a technician and a fundamentalist when it comes to evaluating market conditions. I like his evaluation.

Market Data: Week Ending 6/18/2010

Market Index	2009 Close	6/18   Close	Week Change	Simple YTD %
Dow Industrials Avg	10428.05	10,450.64	2.35%	0.22%
S&P 500	1115.1	1,117.51	2.37%	0.22%
Fed Funds Rate	0.25%	0.25%	0%	0%
10 yr T-bond Yld	3.85%	3.26%	0.03%	-0.59%
5 yr T-note Yld		2.06%	0.03%
5 yr infl adj Note		0.31%	0.04%
Implied 5 yr Inflation %		1.75%	-0.01%
2 yr T-note Yld	1.14%	0.73%	0.00%	-0.41%
2-10 Yr Slope	2.70%	2.53%	0.03%	-0.17%
90 day T-bill Yld		0.09%	0.02%
Gold ($/oz)	$1,096.95	$1,257.80	3.19%	14.66%
WTI Oil ($/brl)	$79.36	$78.11	5.87%	-1.58%
VIX "Worry Index"	21.68	23.95	-16.81%	10.47%
Credit Spreads		6/18   Close	Week Change
Inv Grade Credit Idx		4.92%	-0.10%
Low Grade Credit Idx		8.94%	-0.35%
Markit CDX Inv Grd Idx		114	-8.80%
Markit CDX Mid Grd Idx		174	-9.84%