S&P 500 Index Analysis (11/30/2010)

Analysis:

Yesterday's Analysis predicted that "both the Chicago PMI and the Consumer Confidence will boost the market." Today, they did not boost the market, but they at least stemmed the market's early loss. Looking ahead to tomorrow, the ISM Manufacturing Index will exceed the highest forecast at 57.2 to reach near 60, and the Motor Vehicle Sales for Nov. will rebound to pre-crisis level. As a result, the market will recover the losses since Thanksgiving towards 1,200.

Strategy:

Hold long at 1,197

S&P 500 Index Analysis (11/29/2010)

Analysis:

The market tests the patience of the Bulls, as it has failed to rise above 1,200. The market also frustrates the Bears, as it has repeatedly offered them intraday profits, only to pare the losses by the close. Today the market pared most of the day's loss to settle slightly lower. Looking ahead to tomorrow, both the Chicago PMI and the Consumer Confidence will boost the market, and the lack of negative news out of Europe will deprive the Bears of any additional ammunition.

Strategy:

Hold long at 1,197

S&P 500 Index Analysis (11/26/2010)

Analysis:

Today the market retreated in a low-volume trading. Looking ahead to next week, the revelation of the details of the Irish bailout on Sunday will soothe investor jittery, and an increase in consumer spending during Black Friday will add optimism for the economic recovery. Consumer Sentiment, ISM Manufacturing Index, and payroll increase will all boost the market. The seasonal Thanksgiving rally was delayed by the Korean skirmish, but the longer the market is held below 1,200, the bolder the Bears will become, and the longer they will refuse to admit to being wrong; thus, the more violent the eventual short-covering rally will become.

Strategy:

Hold long at 1,197

S&P 500 Index Analysis (11/24/2010)

Analysis:

Yesterday's Analysis predicted that "the Initial Jobless Claims will stay below 440,000 for a second consecutive week for the first time in many months," and that "the market will recover most of today's loss." Today the Initial Jobless Claims were 407,000, and the market recovered all yesterday's loss. Looking ahead to Friday, the tension in Korean Peninsula will not escalate, and the details of the Irish bailout will calm investor jittery. As a result, the market will break out 1,200 to rise as high as 1,210.

Strategy:

Hold long at 1,197

S&P 500 Index Analysis (11/23/2010)

Analysis:

Yesterday's Analysis predicted that "the revised Q3 GDP will be 2.4% or higher, as the international trade deficit subtracted less from the GDP due to a weak dollar." Today the revised GDP came in 2.5%. However, the Analysis did NOT predict the North Korean artillery shells landing on a South Korean island, and the market was pulled back by a variety of fear factors. Looking ahead to tomorrow, the Durable Good Orders excluding transportation will show that the US manufacturing sector continues to grow, and Personal Income also grows with improving employment. Finally, the Initial Jobless Claims will stay below 440,000 for a second consecutive week for the first time in many months. As a result, the market will recover most of today's loss while the Euro will have a short-covering rally.

Strategy:

Hold long at 1,197

S&P 500 Index Analysis (11/22/2010)

Analysis:

Over the weekend the Irish finally relented to ask for a bailout from the EU and the IMF. Today, the Bears tried to pull another buy-the-rumor-sell-the-fact trick, but the market had another idea and closed only slightly lower. Looking ahead to tomorrow, the revised Q3 GDP will be 2.4% or higher, as the international trade deficit subtracted less from the GDP due to a weak dollar, and the Fed's minute will disperse any lingering doubt about the Fed's resolve to carry out pumping the full $600 billion into the financial system by next June. As a result, the market, driven by technology stocks led by HP, will rise towards 1,210.

Strategy:

Hold long at 1,197

S&P 500 Index Analysis (11/19/2010)

Analysis:

Yesterday's Analysis predicted that "the market will rise." Today the market rose slightly on the backdrop of encouraging corporate earnings. Looking ahead to next week, the market will continue its upward movement, as the resolution of the Irish banking crisis and the revised Q3 GDP will provide the ground for the market to launch higher.

Strategy:

Hold long at 1,197

S&P 500 Index Analysis (11/18/2010)

Analysis:

Yesterday's Analysis predicted that "the Initial Jobless Claims will be below 440,000, which, along with improving Leading Indicators, will drive the market higher." Today the Initial Jobless Claims came in 439,000, and the Leading Indicators increased 0.5%. The market recovered most of its losses from earlier this week, perhaps validating the conspiracy theory that Wall Street institutions were out there to take profits from late retail bulls and bought at bargains just when the latter threw in the towel.

Looking ahead to tomorrow, the Irish rescue will become more concrete, and Chairman Bernanke's speech will firmly reject the exaggerated concerns about uncontrolled inflation fueled by the Fed's QE2 and will reaffirm the Fed's commitment to carrying out the injection of the full $600 billion into the monetary system by next June. As a result, the market will rise to as high as 1,210.

Strategy:

Hold long at 1,197

S&P 500 Index Analysis (11/17/2010)

Analysis:

Yesterday's Analysis predicted that "the CPI excluding food and energy will be flat or negative, drawing buyers into the bond markets and weakening the dollar." Today the core CPI was flat, and the dollar weakened. Looking ahead to tomorrow, the Initial Jobless Claims will be below 440,000, which, along with improving Leading Indicators, will drive the market higher.

Strategy:

Hold long at 1,197

S&P 500 Index Analysis (11/16/2010)

Analysis:

Today's market rout was all impressive in the sense that it fell through the 1,180-1,185 range and never bounced back. The market action would seem to support the notion that Wall Street institutions conspired to scalp (or shake out) retail investors just as the latter were convinced that the bull market was finally in place. Whatever the theory is, many late bulls no doubt threw in the towel, and the stock market aphorism "buy the rumor, sell the fact" belatedly -- by 13 days -- proves its inevitability like death and tax.

Looking ahead to tomorrow, the CPI excluding food and energy will be flat or negative, drawing buyers into the bond markets and weakening the dollar, and the Housing Starts will hover around the uninspiring 610,000 units. The market will rebound from today's sell-off as investors see values after the froth in the market has been cleaned up in the last few days.

Strategy:

Hold long at 1,197

S&P 500 Index Analysis (11/15/2010)

Analysis:

Friday's Analysis predicted that "retail sales will further boost investors' confidence." Today the October Retail Sales increased 1.2%, supporting the market for most of the day. However, the market erased the gains later due to the strengthening Euro and settled slightly lower. Looking ahead to tomorrow, the Industrial Production will be 0.5% or higher, and the Euro will bounce back higher after the solution to rescue two Irish banks is hammered out in Brussels. As a result, the market will rise as high as 1,210.

Strategy:

Hold long at 1,197

S&P 500 Index Analysis (11/12/2010)

Analysis:

Yesterday's Analysis predicted that "the Consumer Sentiment will not increase surprisingly, and that "the market will continue to drift lower to find a near-term support level." Today the Consumer Sentiment was 69.3, slightly higher than the consensus of 69.0, and the market found support near 1,195 before recovering near 1,200. Looking ahead to next week, now that the market has found its near-term support, it will drift higher as the concerns about Irish bondholders' "haircut" were dispersed by officials, and corporate earnings reports and retail sales will further boost investors' confidence in the market that is still priced below average in relation to earnings.

Strategy:

Bought at 1,197

S&P 500 Index Analysis (11/11/2010)

Analysis:

Yesterday's Analysis predicted that "the market will drop to find a support level upon Cisco's disappointing earnings guidance." Today the market dropped towards 1,200 before closing five points lower. Looking ahead to tomorrow, the Consumer Sentiment will not increase surprisingly. The market will continue to drift lower to find a near-term support level on the backdrop of the weakening Euro, and such a market retreat may provide a buying opportunity.

Strategy:

Long bias

S&P 500 Index Analysis (11/10/2010)

Analysis:

Yesterday's Analysis predicted that "the International Trade Deficit for Sept. will decrease sharply due to a weak dollar and, along with the Initial Jobless Claims below 450,000, will further boost the dollar against the Euro," and that "the market will attempt to retrace back below 1,200." Today the International Trade Deficit was smaller than consensus, and the Initial Jobless Claims were 435,000. The Euro initially dropped upon the news but bounced off support at 1.37. As the Euro recovered, so did the market come off a few points above 1,200 to settle higher. Looking ahead to tomorrow, the market will drop to find a support level upon Cisco's disappointing earnings guidance, and such a market retreat may provide a buying opportunity.

Strategy:

Stopped out at 1,205 for a profit of 8.5 points; currently with a long bias

S&P 500 Index Analysis (11/9/2010)

Analysis:

Yesterday's Analysis predicted that "the market will continue to drift downwards." Today the market settled almost 10 points lower. Looking ahead to tomorrow, the International Trade Deficit for Sept. will decrease sharply due to a weak dollar and, along with the Initial Jobless Claims below 450,000, will further boost the dollar against the Euro. The Euro will also weaken because Olli Rehn attempted to jawbone the market into renewing its faith in the Irish bonds, while unlike voters, the market is not easily being fooled by politicians. As a result, the market will attempt to retrace back below 1,200.

Strategy:

Hold short at 1,213.5

S&P 500 Index Analysis (11/8/2010)

Analysis:

Friday's Analysis predicted that "the market will consolidate with a bias towards 1,200" after being weighed by "the weakening Euro due to peripheral European nations' debt woes." Today the market traded in a seven-point range that never closed the gap from Friday's close, as the market was dragged down by the weakening Euro due to concern about Ireland's debt. Looking ahead to tomorrow, the market will continue to drift downwards, as the market works off the frothy expectations built up in the wake of last week's congressional election and the Fed's QE2.

Strategy:

Hold short at 1,213.5

S&P 500 Index Analysis (11/5/2010)

Analysis:

Yesterday's Analysis predicted that "the market has become over-bought and will find it hard to march higher." Today despite impressive employment increases in Oct., the market edged a few points higher in a range day. Looking ahead to next week, the market will consolidate with a bias towards 1,200, since it never traded in that area. The news that will weigh on the market will be the continued concern on the impact of delayed foreclosures on banks' balance sheets and the weakening Euro due to peripheral European nations' debt woes.

Strategy:

Hold short at 1,213.5

S&P 500 Index Analysis (11/4/2010)

Analysis:

Yesterday's Analysis observed that "the fact that the market did not sell off in the wake of the Fed QE2 sets up the stage for a further upward movement," and predicted that "technology stocks led by Qualcomm and industrial stocks led by automakers will propel the market to close above 1,200." Yesterday's market did set up the stage for today's impressive market movement. Both Qualcomm and Ford settled more than 4% higher today, and the market closed above 1,200. Looking ahead to tomorrow, the overall employment increase will be lower than 60,000, while the payroll increase will be slightly higher than 80,000. The market has become over-bought and will find it hard to march higher.

Strategy:

Offset long at 1,213 for a profit of 53 points; sold short at 1,213.5.

S&P 500 Index Analysis (11/3/2010)

Analysis:

Yesterday's Analysis predicted that "the Factory Orders will be healthy, and the ISM Non-manufacturing Index will bring a positive surprise." Today the Factory Orders saw a healthy 2.1% increase, and the ISM Non-manufacturing Index was better than consensus. The fact that the market did not sell off in the wake of the Fed QE2 sets up the stage for a further upward movement. Looking ahead to tomorrow, the Initial Jobless Claims will be close to 440,000. Technology stocks led by Qualcomm and industrial stocks led by automakers will propel the market to close above 1,200.

Strategy:

Hold long at 1,160

S&P 500 Index Analysis (11/2/2010)

Analysis:

Yesterday's Analysis predicted that "the market will cautiously move higher, as the expected mid-term election results will weigh on the dollar." Today the dollar continued to depreciate against major currencies, and the market moved higher. Looking ahead to tomorrow, the Factory Orders will be healthy, and the ISM Non-manufacturing Index will bring a positive surprise. The weakness of the dollar below $1.40/Euro along with QE2 greater than $500 billion will seal the market above 1,200.

Strategy:

Hold long at 1,160

S&P 500 Index Analysis (11/1/2010)

Analysis:

Friday's Analysis predicted that "whether any upward move by the market will have any legs is somewhat doubtful, and such a market sentiment will result in a fading rally due to profit-taking." Today the market initially rallied on an upbeat ISM Manufacturing Index, but the rally soon faded due to profit-taking and dropped as many as 17 points before settling slightly higher. Looking ahead to tomorrow, the market will cautiously move higher, as the expected mid-term election results will weigh on the dollar. ADM's earnings report should lead material producers higher, as several agricultural products have hit multi-year highs, but the same factors will also negatively affect Kellogg's bottom lines.

Strategy:

Hold long at 1,160