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MARKETS HELD UP WELL UNTIL FRIDAY

The stock markets have held up pretty well in the two weeks in which I have not added any new comments in the investment strategy blog. However, on Friday, April 17 markets in the United States, Europe and China all dropped. There are ongoing concerns that Greece and its creditors are struggling to find a deal that can keep the country from defaulting on its debt. I continue to believe that Europe is just kicking the can down the road for Greece and eventually it will not make its payments to the International Monetary Fund due in May. Also an oncoming problem is our corporate earnings for the first quarter. Honeywell international fell 2% after reporting disappointing first-quarter results and American Express revenues fell short of expectations and drove the stock down more than 4%. Investors are concerned that disappointing corporate earnings for the Standard & Poor’s 500 are expected to report earnings down 1.6% from a year earlier. That would be the first quarterly drop since 2009. There was also worrisome news from China. After markets closed in Asia, Chinese financial regulators issued warnings about that countries soaring stock market. Regulators said they will tighten rules on borrowing to buy stocks. The Shanghai stock market has more than doubled in the last 12 months. Chinese regulators recognize that it could have created a bubble and now it is trying to rein back speculation. Chinese markets on Monday are expected to drop significantly and could affect world markets.

US PRIMACY ON WOLD ECONOMICIS IS SEEN EBBING

The above title is not mine but that of the New York Times headline on Saturday, April 18. Below the title is the subtitle of “concerns expressed as world leaders meet.” The article begins, “as world leaders converge here for their semiannual trek to the capital of what is still the world’s most powerful economy, concerned is rising in many quarters that the United States is retreating from global economic leadership just when it is most needed.” The article indicates that there is a chaotic global shift, especially toward China which the Obama administration appears helpless to stop. For years, China has threatened to establish institutions to rival those dominated by the West, like the IMF, World Bank and Asian development Bank and even to establish its currency as a reserve currency to rival the dollar. In the meantime, the United States has had problems securing a 12 nation Pacific trade agreement has set off perhaps the biggest fight of his presidency within his own party with trade unions, environmentalists and liberal’s activities lining up in opposition to the White House. Even the Export Import Bank a lending institution could be killed by June, by a concert by conservatives in Congress. A former Obama treasury official now with Peterson Institute said “we’re withdrawing from the central place we held on the international stage.” Failure to bolster the IMF and other institutions could weaken the West’s  hand in the confrontations like the one with Russia over the Ukraine, and fears that the IMF and World Bank will be unable to rebuild the shattered countries in the Middle East. Sen. Tim Kane Democrat of Virginia said “the network of international rules and institutions is a peculiar US creation that has helped foster peace and prosperity for decades. The US has built this up not only for our own benefit but for the world. That we are now stepping back from a leadership role is highly problematic.”

KEEP AN EYE ON THE CHART BELOW FOR BREAK OUT POINTS BELOW RESISTANCE OR ABOVE SUPPORT AREAS. Particularly  watch for a breakout below Dow 17,147/17,000, NASDAQ 4605/4545, S&P 500   1991/1973. That would change the Intermediate trend to DOWN

 Current  Dow NASDAQ S&P 500
17,826 4,931 2,081
Short Term UP UP UP
Int. Term UP UP UP
Long Term UP UP UP
ForecastedTrendd  DJIA NASDAQ S&P 500
Short Term Down Down Down
Int. Term ? ? ?
Long Term Sideways? Sideways? Sideways?
Breakout Points DJIA NASDAQ S&P 500
Short Term Up (Resistance) 18,288 5,042 2,120
Short Term Down (Support) 17,147/17,0000 4605/4,5455     1,991/1,9733
Int. Term Up (Resistance) 18,974 See Fibonacci Projections above 5,002 See Fibonacci Projections above 2,486 See Fibonacci Projections above
Int. Term Down (Support)  15,855         /15,356 /14,688 4,166 3,986/3294 1,820 /1,560
Long Term Up (Resistance) 18,974 5,132 3,044
Long Term Down Fibonacci Support 50%12,000  62% 10,750       50%2,958  62% 2,555 50%1,390 62% 1,177
 10 yr Treasury 1.85 Gold 1,203 Oil 55.14  
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