Sample Weekly Update

November 30th, 2007    

Market Review 

As of 9:30 AM (CT), the markets are up so far.  The Dow is up over 110 points this morning while the Nasdaq is lagging with only a 4 point gain.  The main push behind the markets the last few days has been the likelihood that the Fed will come in and lower rates before the end of the year.  The economic news released this week has been quite weak, and the health of the consumer is concerning.  Oil is down this morning, trading near $89 a barrel. Oil was up as high as $99.11 on Monday, but with better inventories and production increases has caused oil to trade well off of those highs.  Precious metals are down this morning, and have been down for most of the week.    

U.S. personal spending edged up a smaller-than-expected 0.2 percent in October while prices rose at a modest pace, Commerce Department data showed on Friday in a report that may heighten concerns about the health of the U.S. consumer.Personal income grew at a 0.2 percent annual rate in October, below the 0.4 percent reading in September.Economists polled by Reuters had expected a 0.3 percent gain in spending, and a 0.4 percent increase in personal income.Real spending, which strips out inflation, was unchanged in October, after a 0.1 percent rise in September.U.S. house prices posted the first quarterly drop in 13 years in the third quarter, dragging down the annual appreciation from the third quarter of 2006 to the slowest pace since 1995, the Office of Federal Housing Enterprise Oversight said on Thursday.Compared with the second quarter of 2007, house prices fell by 0.4 percent, the housing finance company regulator said in a statement on its Web site.That decline pressed the annual price change to 1.8 percent, the lowest four-quarter rise since 1995.The number of U.S. workers filing new claims for jobless aid rose by 23,000 last week to the highest since February, government data showed on Thursday, although the impact of the Thanksgiving holiday may have contributed to volatility in the data.The Labor Department said initial claims for state insurance benefits totaled 352,000 in the week ending Nov. 24.This compared with forecasts for a much more modest 332,000 claims and follows a downwardly revised 329,000 claims the prior week. This was previously reported as 330,000 claims.The last time weekly claims were as high was in the week of Feb. 10 when they reached 356,000, the Labor Department said.U.S. existing home sales fell 1.2 percent in October to a record low 4.97 million-unit pace, according to a report on Wednesday that showed the downturn in the U.S. housing market was deepening.Home prices fell at a record pace and the inventory of homes for sales increased as the housing market felt the pinch of tighter lending standards.The median existing home price fell 5.1 percent from a year ago to $207,800 and the total housing inventory rose 1.9 percent in October to 4.45 million existing homes for sale, a 10.8 month supply at the current sales pace.The sales pace was the lowest since the realty trade group began tracking both single-family and condo sales jointly in 1999.Economists polled by Reuters were expecting home resales to fall to a 5.00 million-unit pace from the 5.04 million-unit rate initially reported for September. The September sales pace was revised to a 5.03 million unit rate.The Conference Board's U.S. consumer confidence index fell to 87.3 in November from a downwardly revised 95.2 in October, the private business research group reported on Tuesday.  October's number was originally reported at 95.6. Economists polled by reuters had forecast a median reading of 91.6 in the November index. 

Technical Review 

Well, you should have seen that we went to a neutral position of the markets on Wednesday.  We have been at some oversold levels recently, and this is why we have acted on the move up on Wednesday.  We are not quite convinced that this is the move into a year end rally, but we wanted to be cautious.  With the move this week, we are at some near-term resistance levels, and we would like to see if they can be violated on the upside before we look at taking a bullish position.  We broke out of some bullish wedge formation and broke out of the falling channel also this week.  The resistance levels that we are looking at are 1490 on the S&P 500, 13,400 on the Dow, 2110 on the Nasdaq 100, and 790 on the Russell 2000.  I think that the risk levels on the economy have not reduced any this week, but the market likes the possibility of a further rate cut next month.  I have explained before that rate cuts are not a quick fix, and that it may take six or more month form the date of the cut before we see any results.  The other thing I talked about last week was that the “Bulls” are going to do whatever they can to get some sort of rally by the end of the year.  This maybe the start of that rally, but we are looking at the resistance level to see if they will hold or be violated.  With the low last week, we saw a nice test of the August lows.  This test formed a double bottom, and we could see some backfilling next week.  If we see some sort of test of the lows next week, this may give us an opportunity to go bullish at a lower level.  It is not uncommon to see a test of the upper trendlines after a break, so anything is possible.  If we see enough to cause up to take a bullish position, we feel that it will be short lived and we could see continued selling pressure after the first of the year.  Next year is an election year, and election years are usually bullish.  We will discuss this in more detail at a later date.    

    * These are near term support/resistance levels that are estimates, and should be viewed accordingly. These support/resistance levels are updated as the levels are violated.                        

Conclusion

We are NEUTRAL on S&P 500, Dow, Russell 2000, and the NASDAQ 100, and on the DJ Precious Metals.  Let us see what happen here the next couple of trading days, and please check you emails or the site for future signal changes.  I wish you a great weekend.  (Source: Trade station 11/30/2007) (Source: Reuters 11/30//2007) 

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Rick Roberts, CMA  Disclosure This information is provided for informational purposes only and is not a solicitation, or recommendation that any particular investor should purchase or sell any security. The information contained herein is obtained from sources believed to be reliable but its accuracy or completeness is not guaranteed. Any opinions expressed herein are subject to change without notice. An Index is a composite of securities that provides a performance benchmark. Returns are presented for illustrative purposes only and are not intended to project the performance of any specific investment. Indices are unmanaged, do not incur management fees, costs, and expenses and cannot be invested in directly. Past performance is not a guarantee of future results.