There is a lot of resistance for the .SPX between 1406 thru 1450. I wouldn't expect the .SPX to blow through that quickly. .SPX crossed its 200 ema and that is positive as is the fact the 50 ema turned up. This AM the .SPX moved to short-term overbought.

I have been selling some into this rally -- mostly rebalancing and portfolio simplification. I am reducing my extreme overweight on energy, ag and commodities a bit so that I am just overweight and buying positions a bit more defensive if the recession proves to be more stubborn than Mr. Market seems to expect..

I opened a position in consumer staples which has defensive characteristics. It is a contrarian move since it was the only sector to lose money in April. It will benefit if the commodity Bull is over so it somewhat hedges my overweight position there. I think it is possible that companies like Coke, Pepsi and P&G are the undiscovered side of higher living standards in developing countries. -- At least the trade isn't crowded.:-)

Looking for a good inverse SPX etf.  Nothing high octane just a 1:1 etf.

Thanks

Gordon

http://www.proshares.com/funds/sh.html   is the addy for SH, pro shares 1x the inverse of the S&P 500.

I almost started a posirion in a regional bank today [WBS], but I backed off.  I am doing nothing until I read the weekend charts.

uh

Thanks UH

2509868 

2512733

This just looks like too much of a carbon copy of the Oct '73  and Nov '81 secondary crashes to have me believe anything positive is going to happen in the next 6 months.

SPX raised to the 400dma at the same time the 200dma crossed the 400dma downward.  Then all hell breaks loose to the downside.

 Looks just like a current version of the SPX chart.

Gordon

It was a good week as the Bears' case was damaged by some fine technical action:

• The S&P broke its "lower highs" pattern and it settled above 1407;

• The DJIA and NASDAQ 100 (LCs) both popped above their 200-day MAs;

• There was fairly broad US sector participation:
  
• DJ Industrial Goods, Retail, Telecom, and Tech made 2008 highs;
• Transports soared close to all-time highs;
• Financial Services and Banks lagged, but were stable;
• Resources and Oil & Gas correctly slightly from very overbought conditions;

• The DJ World Index is at 2008 highs, also taking on resistance;

• EM equities were very strong, particularly in Brazil and China;
  

• The USD stabilized as the Fed started acting more like the ECB.

It would be wrong to speak of a powerful break-out on the US indexes given that the big moves on Thursday and Friday came on fading, below-average NYSE volume.  The NASDAQ showing a bit more life.

It seems a bit surprising that the 5- and 10-year T-bill rates stayed in their recent trading ranges for the week.  But T-Bill buying could have several explanations.

The Vix declined well below its XMA - the first time that's happened in a long time.  That's not predictive of anything, however it is a prerequisite for a more sustained rally going forwards.

Says David Snowball's Fund Alarm commentary this month:

"By the way, my sudden realization that the S&P500 has indeed returned less than a good money market account over the past decade is modestly horrifying."

He goes on to talk about the new D&C Fund, and concludes with a general D&C observation:

"All of the Dodge & Cox funds suffered in late 2007 and 2008 as a result of two factors. One is fallout from the sub-prime meltdown. None of the D&C funds directly owns any of the troubled derivatives or any company central to the problem, but its investment in financials and in industrial companies with financial subsidiaries (General Electric comes to mind) hurt it. The other factor was poor performance in the health care sector, which Stock overweights. Being disciplined, the managers took the broad weakness in the sector as an opportunity to buy at depressed prices. As a result, they boosted their health care exposure by nearly 80% in recent months. It’s far too soon to say whether they’ll be vindicated – though Balanced, Stock and International performed excellently in March – but the odds are stacked strongly in favor of folks who trust D&C’s discipline.

And in an article in the NYT,

"Over all, 46,000 manufacturing workers were laid off last month, and 326,000 such positions have been lost over the last year, the Labor Department reported. Construction remained the focus of contraction, losing 61,000 jobs. Retailers eliminated 26,800 jobs.

Health care continued to be a rare bright spot, adding nearly 37,000 jobs. Restaurants and bars added 18,000 jobs. Professional and business services, which includes accountants, architects and management consultants, added 39,000 jobs."

No mention is made of the increase in government jobs (9,000 jobs) ; nor of the fact that although hourly rate went up a penny, weekly pay decreased $1.75 (fewer hours).

It's good to have more bartenders, burger flippers, and home/nursing home health aids; and they all do their part to making the employment figures good, which is what we want. And provide career opportunities for American youth as well as lesser qualified new citizens/visitors. After all, remember we need 150,000 new jobs each month just to stand still (population growth).

One thing that happened this week that is worth watching is what may be the beginning of sector rotation out of some of our themes -- energy, ags, miners and into beaten up sectors such as Fins and Tech.

If this trend continues it will need some help from earnings reports and several key themers reports earnings next week as do several laggards. Several miners and energy companies report earnings and outlook next week as does tech giant CSCO -- which killed a tech rally last quarter. In the energy sector the big one is probably RIG. If the rotation is sustainable it will need some fuel from these reports.

Unfortunatey Ag is quiet next week with the next biggie DE not reporting until something like May 14. Agrium however reported a bullish outlook this week.

Looking at my portfolio for the week there was very good performance among high divvie paying investments -- CEFs, BDCs and MLPs -- which I attribute to a continued search by investors for yield as MM rates dwindle. (This is not an area we tend to focus on much here.)

It is fair to note that the .SPX and EFA and many sectors are mildly overbought and facing overhead resistance. A bit of a consolidation would be helpful for this advance.

A good article on the Revised Sell in May strategy by one of its leading proponents is here. MAY and an historical perspective. HERE One thing proponents often fail to mention is that Seasonality has been very wrong quite often lately. For instance we just finished the Best Six Months on April 30 and if that was the Best, Heaven Help our portfolios.

For anyone like myself heavily invested in the global growth story it is comforting to know that now that the protracted Chinese fertilizer and iron ore negotiations are resolved the BDI has resumed its upward advance. BDI Except when influenced by unusual event such as commodity negotiations, the BDI seems to be an excellent indicator of global economic activity.

DI,

If I remember correctly, you dumped your DSX last month.  Given the BDI numbers, any thoughts on DSX at this point in time?

In an effort to follow up on DI's link, I checked the MACD indicators on the major stock index's and all are currently on a buy signal according to the MACD only.  A word of caution is that the MACD derives it's signals when one moving average cross's over another moving average.   Regardless of the # of days in each moving average, any moving average is a lagging indicator.  Consequently the MACD tells us what we should have been doing last week or the week before.  Price, volume, and volatility are real time indicators.

The price charts for the week and for friday indicate that the CRB index is in an intermediate term correction although it did rally on friday.  $TNX also went up on friday, but was flat for the week and is near the top of it's trading range. Stocks gained for the week, but were generally flat on friday.  WTIC and NG had about a 5.5% correction for the week but were flat on friday.  The USD gained about 1% for the week..

Using Mr Murphys work on how various asset class's affect each other, we can see that interest rates have been rising, weighing on stock and commodity prices, but adding some strength to the USD.  If those trends continue, MACD will begin to make crossovers on the major index's,  possibly late next week.  An additional thought is that inflation is the boogeyman of bonds.  If the bond market senses any increase in inflation, interest rates will go higher and bear more weight on stock and commodity prices.

uh