Bad Macro Data Bad For Stocks This Week

The SPX500 lost .85% and was accompanied down by Dow industrial, Trannies and Utilities as all were red on the week with transportation leading the fall with an almost 3% loss. Moreover, the index pushed down through the 8600 support shelf looking as if it is making a run down to the 7700 low. Utilities, after an impulsive series down from the 657 all-time high, has cut out a contracting type corrective series from the 565 March near low and looks as if it is going to roll over at least to the 524 August low–could be a C or 3. If this move down from the highs is an impulse, it should reach the 2040.

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Price action was pretty erratic for the SPX 500 on the week pushing down off the upper light black dotted trend line running down from the 2137 all-time high. This trend line has rejected price 4 times this week; and, if it gives way with a close on the daily, the index should have no problem getting to new highs. However, given the intermarket picture; it looks like fear is creeping back into the markets as money ran into the bond markets Friday as investors dumped stocks in what appears to be a run for safety. I would also like to point out that Shanghai Composite Index has staged a five wave decline losing a staggering 11% before making a 3 wave counter trend rally to the 4698 high just shy of the 4709 50% retracement of the move down from said high—pointing to more downward movement for the Chinese index in an C or 3rd wave. Even though this all paints a very bearish picture, the SPX, as mentioned above, is sporting an overlapping three wave corrective like series from the all-time high which could very well push up to one more all-time high before we get the big move down anticipated to the 1819 low. Gold has moved down from the 1232 high, however, it is still stuck between the 1200 and the 1180. The metal needs to break away from this zone soon. Since gold has been flat against the buck, it means that it has been going up in other curreneis as the buck has. Gold as with oil and the rest of the commodities should give up some more ground before this deflationary spin takes a breather. Remember that rates, technically, although down this week are still threatening to make a run for the 3.0.

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The Buck this week gained just .82% against its peers. That plus the 3% gain from last week are nice runs up which are contracting now in a B or about to make one more swing up to the 98.45 for said B. Structurally, the index is looking very bullish and should hold at these levels and bounce up testing the 98.45 wave 2 overlap highs. At a smaller degree, the index is now resting on the 96.88 61.8% Fib confluence. The drop from the near 97.77 high has laid out support shelf at the 96.85. A break below this and the Buck could head down to the 95.50. Minor support is at the 96.45; however, I feel this won’t hold much if the buck rolls over from here. The momentum and count is pointing to higher highs before this move is done. If it does keel over soon, then the 97.77 high will be capped an A of three larger swings labeled in Green up to test the 100 high (see weekly). Notice the test of the 97.52 Harmonic resistances. If it fails, then the fifth wave should be a 61.8 of the swing up from the 94.82 low. This level is key and could very well hold price for a Blue B wave contraction which, if so, should be shallow holding above the 96.00. Price is now contracting and should make a break of the 96.78 mentioned support shelf or the 97.77 May 17 high. I am favoring a move to the 98.45 for Blue A but not forgetting about the possible move down to the 96 level.

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Money ran from stocks into the bond markets as they rallied nicely this week pushing the 10 year yield down 4.5% to the 2.095% on Friday’s close. The 10 year yield is pushing down against the 2.091 50% retracement of the move up from the 1.845 low and should bounce to higher highs. However, a move back above the upper black trend line now acting as resistance is needed to confirm the immediate move up in three waves to the 3.0.

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Friday Crude Nymex mini shot up a staggering 4% Friday. The move carried over the upper minor trend line down from the 62.57 high but closed below it Friday at 60.30. The move calls the immediate move down into question, however, does not invalidate it. Price needs to move down now confirming this view. The count you see in the chart is of my first Alternate count on Crude Nymex Mini which sports an incomplete C wave to finalize at the 64 handle. From there, we should get five big waves down into the low 30s possibly. From the 1hr, the move up from the 56.50 May 28th low is a complete 3 waves with what looks like a 4th wave forming on the contraction down from the 60.61 May 29th high. The move is short enough to warrant a 4th wave forming. However, if price drops below the 59.21, chances are good it’s heading down to test the 56.50 May 28th low and very possibly run through it. But as mentioned, if this contraction should hold above the 60.10 contracting sideways, chances are very good we are getting a wave up for a complete impulsive series near the 62.00. This should only be the first wave of five bigger ones to the 64 handle at Fibonacci confluence.

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Gold has pushed down to the 1190 in what is so far 4 waves down from the 1232 high. From the 1190, the yellow metal is expected to move down to test the 1170 low in its fifth wave at smaller degree. Bear in mind, that there is a good chance price will bounce of the 1180 for a shallow Green 2 if this is a 3rd of a 3rd wave run down from the 1232 to the low 1000s. Price is currently consolidating just above the 1180—a level the metal has been trying to push through for some time. I am waiting for a move down through this level soon for a test of the 1170 low for a complete five before the index moves up in its Green 2 retracing the move down from the 1132 May 18th high by little as mentioned. The ensuing fall should be a deep 3rd wave run.

Next week will be a great week for some market moving news. Monday should kick things off nicely with Personal Consumption Expenditures, Personal Income, Market Manufacturing and the ISM manufacturing prints coming out. Manufacturing figures have been declining 6 months now and only just recently have leveled off–the last 2 prints have been 51.5. Consensus is looking for a 52. I believe if this number misses either way the Dollar Index will move nicely on it. From there, until Non Farms Friday, it is a rack of tier 2 data, but enough to add up for a good picture of how things are in the economy. And let me remind readers that the Marco Data has been abysmal for well over 6 months now. There had better be some kind of lag for QE3 because if numbers keep sliding the buck will suffer. However, I don’t think much because this macro data malaise the US is now coming to grips with is global. If the US does not outperform Europe and Asia soon, the Buck could trade sideways for the rest of the year in between 92 to 102.

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