The DOW Rails rose sharply yesterday and needs to still rise about 2% more to even give hope of a Dow Rail and Industrial buy confirmation. It needs to rise another 5% to actually give a DOW buy signal.

World market this week

Edvard Munch's famous painting “The Scream” went for a scary $119,922,500 at a Sotheby's auction. It's a record for a work of art sold at auction.


The Spain sold 3yr bonds at a yield of 4.04%, up sharply from the 2.62% in the previous sale. Spain also sold five-year bonds, at an average yield of 4.75% up from a yield of 3.57% in the previous sale. These are 30% to 40% increases in the cost of replacing Spanish debt as it matures
France’s presidential election descended into an exchange of insults and accusations. The worst is expected in August again when the Europeans are on vacation and there is no one to respond to crisis. Hollande is expected to win in France and nothing he has proposed has ever worked anywhere in the world before, so France is expected to decline economically.

Euro-region unemployment rose to the highest in almost 15 years and manufacturing contracted for a ninth month running, adding to the fear the Obama Depression has taken hold again there.  Michael Hewson, an analyst at CMC Markets, said the figures are "likely to prompt further calls from EU leaders affected by rising unemployment to call for an easing of austerity, from EU leaders and Berlin is particular." However, he added this will likely be resisted by the people of Germany, "conscious of the fact that the worst of the crisis appears to be staying outside their borders for now."


China has been declining for more than a year now. Chinese inflation data disappointed, with March consumer price index rising 3.6%. If the economic output grew 8% and inflation grew 3.6% that means real growth in China has declined to 4.4%.

http://finance.yahoo.com/echarts?s=000001.SS+Interactive#symbol=000001.ss;range=my;compare=;indicator=ema(100,200)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined;


Emerging markets are still lower than last year’s high and look like a head and shoulder sell signal.

http://finance.yahoo.com/echarts?s=%5EMERV+Interactive#symbol=^merv;range=2y;compare=;indicator=ema(100,200)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined;



American Economy

Reports showed U.S. business activity expanded at the slowest pace since November 2009, adding to evidence that manufacturing is cooling. The confirmation Wednesday that factory orders in the USA have dropped 1.5%, at an -18% in annual rate.

Personal Income Mar 0.4% up from 0.2%

Personal Spending Mar 0.3% down from 0.8%

PCE Prices - Core Mar 0.2% up from 0.1%

Chicago PMI Apr 56.2 significantly down from 62.2

ISM Index Apr 54.8 up from 53.4

The Construction Spending number for Mar was manipulated. They took an extra –0.3% in February so that they could hide the fact that March was –0.2% not +0.1% as Obama had them report. Obama’s economic report lied again. March construction spending was down –0.2% but Obama manipulated the numbers and reported it improved 0.1%. For details look at this site.

http://biz.yahoo.com/c/e.html

Auto Sales Apr down for Chrysler and Ford, up for Obama-motors.

Yesterday

MBA Mortgage Index 04/28 0.1% improved from -3.8% due to seasonal selling

ADP Employment Change Apr 119K plummeted from 209K Very bad

Factory Orders Mar -1.5% collapsed from 1.3% even with 0.2% manipulation

Crude Inventories 04/28 2.840M shrunk from 3.978M –not good

Today

May 3 7:30 AM Challenger Job Cuts Apr

May 3 8:30 AM Initial Claims 04/28

May 3 8:30 AM Continuing Claims 04/21

May 3 8:30 AM Productivity-Prel Q1

May 3 8:30 AM Unit Labor Costs Q1

May 3 10:00 AM ISM Services Apr-

This Week

May 4 8:30 AM Nonfarm Payrolls Apr

May 4 8:30 AM Nonfarm Private Payrolls Apr

May 4 8:30 AM Unemployment Rate Apr

May 4 8:30 AM Hourly Earnings Apr

May 4 8:30 AM Average Workweek Apr



Market outlook May 3, 2012

The markets are within striking distance of upper resistance areas. A big move is expected Friday and options activity is high. Since the VIX is low and indicating complacency we anticipate the stock market will drop until investors show some caution. It seems everyone thinks the move will be up and that means complacency. It could be Obama leftist euphoria seeing his job rating is recovering a few points this week. It is scary how leftist the investors have become.

If the broad market is doing so well why are we still a few percent below the high of a year ago and a lot below 2007? Why is the broad market still lower today than in 2000? Why is the real USA GDP annual rate this latest quarter only 0.7% now down significantly from its 2.1% annual rate the last quarter?

Speculation in HD, IBM, INTC, KFT, MCD, PFE, WMT stocks appears responsible for the distortion seen in the DJI. Apple rose 30% but earnings peaked last year. If it is a good buy, how come Apple had a higher quarter last year when the price was 30% lower? Apple is not a component of the DJI else the DJI would be in real trouble.



The DOW Rails rose sharply yesterday and needs to still rise about 2% more to even give hope of a Dow Rail and Industrial buy confirmation. It needs to rise another 5% to actually give a DOW buy signal. No confirmation means there is no DOW buy signal since the collapse in August of 2011. It is still looking like a head and shoulder Dow sell signal forming in the Rails too.

http://finance.yahoo.com/echarts?s=%5EDJT+Interactive#chart1:symbol=^djt;range=2y;indicator=ema(200,100)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined

The NYSE indicates we are 7% below what is required for a buy signal. On a quarterly cycle basis (look at 6 months), the New York Stock exchange second neckline was confirmed being broken on the down side. On an annual cycle basis (look at 2009 to today) it appears the head and shoulders is already in place and the market is about to break down for that mini cycle. On an economic business cycle basis (up to 20 + years) it shows the economy peaked in early 2000 and began to decline during the Clinton administration. http://finance.yahoo.com/echarts?s=%5ENYA+Interactive#symbol=^nya;range=2y;compare=;indicator=ema(200,100)+volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

The VIX shows extreme complacency. A sharp computer sell-off could end the current rally any moment now and trigger huge stop-losses.

http://finance.yahoo.com/q/bc?s=%5EVIX&t=2y&l=on&z=m&q=l&c=

Baltic Dry Index has just peaked this past month at only at 10% of its 2008 high. This is a sign that China’s recovery is stalling. Obama is not fit to lead the world out of the Obama depression that he in his ignorance declared during his campaign to frighten people into considering a pro-Marxist president who has delusions of grandeur.

http://www.bloomberg.com/quote/BDIY:IND/chart

Stock market update:

Asian markets were lower last night. China up 0.1%, Hong Kong down –0.3%, India down –0.9%, Taiwan –0.2%. Japan closed.

European markets were up half way through their day, in a range of -0.4% to +1.3%

American market futures are up about 0.2% in after hour trading at 7AM EST.