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Sample Weekly Update

August 15th, 2008

Market Review

As of 3:10 PM (CT)

The markets closed the day fairly flat.  The Dow closed today up about 42 point, while the Nasdaq Composite closed down a little over 1 point.  Oil had another sell off today, trading down $1.24 to $113.77 a barrel.  Also hit today were the precious metals with silver down over 9% today.  Overall the markets finished the week flat and on lower than average volume. Option expiration today did add a little volatility to the markets, but nothing out of the ordinary.   

As of the close of August 14, 2008

 1 WeekAUGYTD
DJIA1.61%2.09%-12.43%
S&P 5002.12%2.02%-11.94%
Nasdaq Comp.4.16%5.51%-7.49%
Nasdaq1004.48%6.23%-5.78%
Russell 20005.69%5.61%-1.53%
DJ Precious Metals-5.42%-15.72%-17.47%

  

Economic Review

A gauge of future U.S. economic growth fell to its lowest level in more than five years and its annualized growth rate hit a four-month low, indicating the business cycle is not expected to enter a recovery phase in the near term, a research group said Friday.The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 126.4 in the week to Aug. 8 from 126.9 in the previous period, revised down from 127.5.The index fell to its lowest since the week to July 4, 2003 due to weaker money supply growth and lower stock prices. The decline was partly offset by lower jobless claims.The index's annualized growth rate plunged to an 18-week low to negative 10.8 percent from minus 9.6 percent, revised down from minus 8.9 percent.U.S. inflation hit a 17-year high last month, underscoring the pressure on Americans who face soaring gasoline and food costs while their job prospects dim and incomes shrink.A series of bleak reports on Thursday spotlighted the dilemma faced by Federal Reserve policy-makers who have little room left to lower interest rates to help a weak economy and are hoping for price relief to avoid the need to raise rates soon to tamp down inflation.The Labor Department said its Consumer Price Index, the most commonly used inflation gauge, rose 0.8 percent in July and year-over-year jumped 5.6 percent, the strongest 12-month advance since January 1991 when the first Gulf War was under way.American consumers' confidence fell in the latest week to just one point away from its all-time low, helped by a historical low in positive views on the buying climate, a survey showed on Tuesday.The ABC News Consumer Comfort Index fell to -50 in the week to August 10 from -49 in the previous week. Its all-time low was -51, reached in May.The index components were mixed, with positive views on personal finances down 1 percentage point to 47 percent and those on the buying climate down 1 percentage point to a record 18 percent. Views on the national economy were unchanged at 10 percent.Confidence measures are generally viewed as a barometer of consumer spending, which accounts for two-thirds of the U.S. economy. However, economists note that consumers do not always act in accordance with their statements to surveys.The U.S. trade deficit shrank unexpectedly in June, as the weak U.S. dollar helped push exports higher and overpowered record-high prices for imported oil, a Commerce Department report showed on Tuesday.The trade gap totaled $56.8 billion, down from a revised estimate of $59.2 billion in May. The monthly tally was also much lower than the $61.5 billion midpoint estimate of analysts surveyed before the report.Both exports and imports of goods and services set records in June, but exports rose by 4.0 percent compared to a 1.8 percent gain for imports.The U.S. trade sector has been one of the bright spots for an economy struggling with a deep housing downturn and credit crunch. Trade contributed 2.4 percentage points to economic growth in the second quarter, which would have shrunk 0.5 percent without that support, according to preliminary estimates.

Technical Review

This has been another volatile week for the major indices.  The major indices are holding below their respective resistance levels, but are also not falling below the recent lows.  The biggest driver of the markets so far has been the commodities and mainly the lower price of oil.  As of this morning, oil is down $3.31 to $111.70 a barrel.  We still feel that oil is oversold at this level, and we continue to feel that the energy sector as a whole will return to their previous higher levels here in the near-term.  We are holding back from moving into a bullish position on the major indices until we see the market move beyond their resistance levels.  Our technical indicators are mixed enough to suggest that the markets are going to have difficulty moving much higher without retesting the lows from which this rally started.  Our Put/Call model is indicating a bearish short-term reading at this time.  Until we see more indications on which we can justify a change in our current position, then we must hold where we are.  Our precious metals model came close to triggering a bullish signal this week, but it has reversed the last two day to keep the model from triggering a change.  The precious metals are currently at a pretty good support level with some higher volume coming in to show some strength.  We will keep a close eye on it next week to see if the metals can reverse back to the upside and trigger a bullish position.  Our international and sector rotation strategies are holding, but are still negative for the quarter.  The commodity correction has affected the performance of these strategies significantly.  When the commodities turn back   

 

SUPPORT

RESISTANCE

DJIA

11000

11650

S&P 500

1269

1327

Russell 2000

645

750

Nasdaq 100

1763

2025

DJ Precious Metals

268

319

   

     * These are near term support/resistance levels that are estimates, and should be viewed accordingly. These support/resistance levels are updated as the levels are violated.                        

ConclusionWe are NEUTRAL (CASH) on the S&P 500, Dow, Nasdaq, Russell 2000, and the precious metals. I will have an update for you next Friday. (Source: Trade station 8/15/2008) (Source: Reuters 8/15/2008) 

Link to Technical Charts 

Link to Miscellaneous Charts   

Rick Roberts, CMA Disclosure

This information is provided for informational purposes only and is not a solicitation, or recommendation that any particular investor should purchase or sell any security. The information contained herein is obtained from sources believed to be reliable but its accuracy or completeness is not guaranteed. Any opinions expressed herein are subject to change without notice. An Index is a composite of securities that provides a performance benchmark. Returns are presented for illustrative purposes only and are not intended to project the performance of any specific investment. Indices are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. Past performance is not a guarantee of future results.     

 

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