Keeping Tabs, Part 2

As 2011 unfolds the forecasts coming out of Wall Street seem to be very consistent.  Stocks will have a good year, the S&P 500 is forecast to have around a 1250 to 1450 range.  Bonds are forecast lower. The dollar seems to be a question mark.  Gold and commodities are forecast higher with grains expected to be especially hot.  Up until the end of June is expected to be a good period with some question marks around the ending of QE2.  Underlying all this is the expectation that if QE2 does not get the job done QE3 will be enacted.  We will discuss the differences between these consensus forecasts and our outlook later in the week.

The markets, however, are acting like they do not want to begin in the direction of the consensus forecasts.  Gold and commodities are showing signs of rollover.  As I said on Friday, from a charting standpoint on what I would call the proxy for worldwide assets, the S&P 500, Tuesday January 4th was an inside day with the highs and lows falling within the prior day.  This pattern tends to be most important when markets are at extremes and indicates indecision.  Since Tuesday the markets have had three days of trying to probe higher but are not making much headway.

On this Monday morning there are a lot of mixed signals with differences between computer and chart patterns and between commodities and the commodity ETF’s.  This will be resolved soon and a clearer picture will emerge.  While we generally talk about the Macro picture, this market juncture makes the Micro aspects important.

Market   Symbol   Computer  1/4/11   1/4/11   11/7/11  Pattern

                                    Position     High      Low      Close      Call

S&P 500          INX     Long          1274.12  1262.66  1271.50   Mixed

Dollar               DX      Short             79.78      79.12       81.40   Higher

T-Bonds           US       Long            122.03   121.09     121.00    Lower

Gold                 GC       Short         1417.80  1375.00   1369.40   Lower

Silver                SI        Long             30.88     29.32       28.70    Lower

Oil                    CL       Neut             92.07     88.36       88.45    Mixed

H-Oil               HO      Long              2.57        2.48         2.50     Mixed

N-Gas             NG       Short            4.71        4.56         4.42     Lower

Copper           HG       Long             4.47        4.35         4.28     Lower

Cotton            CT       Short            145.00   139.80     140.25    Mixed

Corn               C          Long            623.50   603.25    597.00   Lower

Wheat            W         Long           808.75   783.25    773.75    Lower

Soybeans        S          Long         1390.50  1357.50  1363.50    Mixed

Cattle             LC        Short           106.72    106.00  106.27    Mixed

F-Cattle         FC         Long           123.00    122.37   122.65    Mixed

Hogs              LH        Long             77.83       77.25    79.53    Higher

ETF’s

S&P 500     SPY         Long            127.37    126.19    127.17   Mixed

NASDAQ    QQQQ     Long              55.55     54.93      55.89   Higher

T-Bonds      TLT         Neut              93.76    92.91       92.33   Lower      

Dollar          UUP        Long              22.91    22.76      23.37   Higher

Ag Stocks    MOO      Neut              54.17     53.07      54.41   Higher

Ag Cmdy     DBA        Long             32.08    31.51        31.61    Mixed

Oil Stks       XLE        Neut             69.19     67.52      68.21    Mixed

Gold            GLD        Neut           136.28   134.16     133.68    Lower

Cons Stks   XLY         Long             37.99    37.44      37.70     Mixed

Fin Stks      XLF         Neut             16.38    16.14      16.22      Mixed

Rel Est        IYR          Neut             57.08   55.56     55.58       Mixed

Semi Cd     SMH        Long             32.91   32.47      32.83      Mixed

J-Yen         FXY          Neut           121.01  120.19     119.03      Lower

Euro-D      FXE          Neut            133.51  132.39     128.64     Lower

EU-Stks     IEV           Long             39.99  39.38       38.51      Lower

China-Stk  FXI          Neut             44.32   43.78      43.68      Lower

1-3 Yr Tr   SHY          Long             84.01   83.92      84.00     Mixed

7-10 Yr Tr  IEF          Long            93.88   93.48      93.86      Mixed