THE STOCK MARKET HAS BEEN IN A TRADING RANGE ALL YEAR
Since the beginning of the year the US stock markets have been in a close trading range. For the Dow the top of the range is 18,288 and a bottom of the range at 17,147; and for the NASDAQ the high is 5042 and a low of 4605 and for the Standard & Poor’s 500 the high as 2120 and a low of 1991. Soon one of these areas is going to be broken either on the top or on the bottom. As this is and continues to be a Bull Market, it is most likely that the breakouts will be on the top. However, we continue to believe that the forces on the negative side are strong and will eventually win out. In the meantime, enjoy the bull market until it breaks below the bottom range that we have indicated.
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.
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
|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|