Monday, August 19, 2013

Technician Tom McClellan: Stock Market to Remain Weak Into September

by James J Puplava CFP
Financial Sense

Jim welcomes noted technician Tom McClellan, Editor at McClellan Financial Publications. Tom sees a continuing pattern of stock market weakness, likely bottoming in September. He discusses the Hindenburg Omen, and believes the indicator was distorted by recent weakness in bond funds. He also discusses the four-year Presidential Cycle Pattern. Lastly he sees some bullish indicators for gold (see charts). Also, Ryan Puplava has the Market Wrap-up, Erik Townsend covers commodities and Rob Bernard looks at interest rates and fixed income.
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ITT Educational Services, Inc. (NYSE: ESI)

ITT Educational Services, Inc. provides postsecondary degree programs in the United States. It offers master, bachelor, associate, and career oriented education programs in various fields, such as information technology, electronics technology, drafting and design, business, criminal justice, and nursing and health sciences. The company's information technology programs include communications, network administration, network technology, software development, systems technology, and technical support; and electronics technology programs comprise communications, computer technology, electronics product design and fabrication, industrial electronics, instrumentation, and telecommunications. Its drafting and design programs consist of architectural and construction drafting, civil drafting, computer aided drafting, electrical and electronics drafting, interior design, landscape architecture, mechanical drafting, and multimedia communications; business programs comprise accounting, business administration, financial services, manufacturing, marketing and advertising, and sales; and criminal justice programs include corrections, cyber security, investigations, and security and policing.
Please take a look at the 1-year chart of ESI (ITT Educational Services, Inc.) below with my added notations:
1-year chart of ESI (ITT Educational Services, Inc.) After breaking through its $20 resistance in May, ESI has been stuck in a sideways move for the last (3) months. During that time the stock has created a key level of support at $23 (blue) and in addition, the stock has formed a level of resistance at $28 (red). A break below $23 should mean lower prices for the stock and a break above $28 would most likely mean higher prices ahead.
The Tale of the Tape: ESI is trading within a rectangle pattern. The possible long positions on the stock would be either on a pullback to $23, or on a breakout above $28. The ideal short opportunity would be on a break below $23.
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US Dollar - no clear trend

The US Dollar, as measured by the US Dollar Index or USDX, started the year off on the strong note and looked to have regained its status as "King Dollar" until the beginning of last month when it put in an outside reversal week lower on its weekly chart. Interestingly, it put in the same exact pattern a year ago in the same month. (By the way, for those are not technical analysis geeks like I unfortunately am - an outside reversal week pattern is one in which a market which has been trending higher makes a NEW HIGH for the week only to then CLOSE LOWER than the previous week's LOW. It is generally regarded as a fairly reliable BEARISH signal).

It is difficult to point to an exact reason for this change in sentiment towards the Dollar right now given the fact that the US economy is in better shape than Europe and Japan ( that is not saying much) and appears to have entered a season of rising interest rates accompanied thus far by a soaring stock market. For the first half of the year that was all that investors needed to see and into anything US Dollar related they ran. Something has changed that - or at least it so seems.(more)Please share this article

James Dines – Gold, Silver & A New Super-Major Bull Market

from KingWorldNews:
Dines: “Remember, gold moves on its own cycle. It has come down with the whole raw materials crash in China, and it’s dragged down every single raw material including rare earths, uranium, everything. But gold is different. Curiously enough we have been getting an upturn in some of these rare earths and uraniums. They seem to be moving together for some reason. The answer to that is probably somewhere deep in mass psychology.
But the most important thing to remember about the geopolitical situation is that gold is a hedge against two things: Currency debasement, in other words too much printing of phony paper money, and also geopolitical fears….
James Dines Audio Interview @
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Harry Dent ~ Dow Crash to 3500 in 2014

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Economy Turning Down: Martin Armstrong

While Wal-Mart turned down, all retail sales are off significantly and we will see this on a wide scale basis and this will be the “fundamental” behind the decline and fall of the US share market into the weeks ahead. Ever since the ECM turned, the share market is slipping. With the crash in retail sales taking place, the domestic analysts will see only a bear market and economic recession. Indeed, it may “feel” like 2007 to many. This is similar to the “feel” that the British had in 1985 as foreign capital started pouring in when the pound fell to $1.03. The Brits thought the real estate market was over priced whereas the foreigners saw it like a sale at Harrods.
DJFOR-W 8-12-2013

We should see the Dow drop into next week. The ideal target will be Monday. Support is 148250 and 14805. The next area will be 14450. We should start to see volatility rise the last wee of August into the first week of September.
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US Weekly Economic Calendar

time (et) report period Actual CONSENSUS
  None scheduled        
8:30 am Chicago Fed national activity index July   -- -0.26 3-mo.
10 am Existing home sales July   5.21 mln 5.08 mln
2 pm FOMC minutes 7/31      
8:30 am Weekly jobless claims 8/17
N/A 320,000
9 am Markit "flash" PMI Aug.   -- 53.7
9 am FHFA home price index June   -- 7.3% y-o-y
10 am Leading indicators July   0.5% 0.0%
10 am New home sales July   487,000 497,000
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