Fundamentals
T'was a nice bounce last week which ran counter to the weekly cyclical fundamental indicator.
The WCFI declined yet again last week on continuing weakness in sensitive materials prices.
Investors and traders adopted the assumptions of more monetary / fiscal support through key areas
of the global economy and a settling down of Spain's private sector financial system (bailout
funds were offered). The Fed's balance sheet shrunk slightly further last week, signalling no
easing immediately at hand. Players wound up the week taking good news as "on the come" or
out ahead -- China monetary easing, G 20 worries about growth, the upcoming FOMC meeting
and yet another Euro summit with the US and the rest of non-Euro G20 breathing down Merkel's
neck. Positive breezes, but breezes nonetheless.
Technical
Last week's rally came off "sold out" readings for breadth and for selling pressure per share, but
there was no strong "give up" volume to mark the end of the downturn as there was in the late
stages of the 2010 and 2011 price corrections. My weekly chart remains negative and the
intermediate term sell signal of early May remains in effect. The chart indicators have not
turned positive and show further room to the downside. The weekly SPX chart has been very
helpful over the past couple of years, so it has my respect. $SPX weekly
I did not post the SPX daily chart. It looks a little better, but price failed to take out the 25 day
m/a, leaving me with the same uncertainty as the weekly. I will probably watch the shorter
term action carefully this week to see if the rally does have any legs beyond last week's pop.
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