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Next week economic reports are: Mon: ISM Index, and Construction Spending, Tue: Personal Income, Personal Spending, Factory Orders, and Auto Sales, Wed: ISM Services, Thu: Unemployment Claims, and Fri: Nonfarm Payrolls, Hourly Earnings, and the Unemployment Rate.

Notable earnings next week include: Mon: TEVA HUM, Tue: CMCSA SIRI, Wed: PRU NT CI CVS DUK CPN HL TWX SINA, Thu: G OATS VIA UL TOT TOL SLE ONXX GFI CLX CQB, Fri: CBJ

I plan to continue trading puts on my "predictable" stocks, including two index ETFs, a biotech, and an internet.

The economic data reported Fri showed continued on high trend growth with disinflation (at the core level, excluding food and energy) in the second quarter. Real output growth has slowed from with 4% in 2003 & 2004 to just over 3 1/2% so far this year, while a core inflation rate fell from 3% last quarter to 2%. Consumption growth slowed from 3.5% to 3.3%, investment growth jumped 9%, and net exports increased over 12%. Also, gadget inventories declined.

Nasdaq has rallied 310 points in three months, and hit a new four-year high at 2,201 Fri morning. The economic data suggest market pullbacks will be limited, in any event we've entered the seasonally weak period of Jul-Aug-Sep past a big run-up. Consequently, there may be a consolidation period rather than a correction over the next few months.

The first printing down south is a Nasdaq monthly chart. The long Price-by-Volume bar (on left side of chart) is a "sticky" area, needle 1,750 and 2,250, that's difficult for Nasdaq to deviate aloft or below. However, if Nasdaq can occur skyward and hold the 80 month MA at 2,257, then it may sustain a rally to 2,645, the 38.2% Fibonacci level. Nasdaq has an open gap at 1,905, and the monthly Parabolic SAR buy signal (green dots) is currently at 1,904, which are support levels.

The second weather chart is a SPX daily year-to-date chart. SPX has resistance at 1,253, which is a multi-year Fibonacci level. The rising 10 day MA, currently at 1,232, has been recent support. There are many support levels midst 1,185 and 1,225. However, the 50 and 200 day MAs are key levels. If SPX closes downhill the 200 day MA, then it may dog the gaps at 1,174, 1,143, and 1,138.

It's unlikely Nasdaq will hold 2,200 short-term. However, if it does, then 2,257 is special major resistance level. Also, it's unlikely SPX will hold 1,253 short-term, which is a multi-year resistance level. I expect a more volatile trading range under those levels, since the volatility indices are so low. Consequently, SPX may test the 20 day MA next week, and test lower levels in Aug.

Next week economic reports are: Mon: ISM Index, and Construction Spending, Tue: Personal Income, Personal Spending, Factory Orders, and Auto Sales, Wed: ISM Services, Thu: Unemployment Claims, and Fri: Nonfarm Payrolls, Hourly Earnings, and the Unemployment Rate.

Notable earnings next week include: Mon: TEVA HUM, Tue: CMCSA SIRI, Wed: PRU NT CI CVS DUK CPN HL TWX SINA, Thu: G OATS VIA UL TOT TOL SLE ONXX GFI CLX CQB, Fri: CBJ

I plan to continue trading puts on my "predictable" stocks, including two index ETFs, a biotech, and an internet. If the market rises higher, there are several large cap bank and drug stocks that should outperform, with less risk than most other stocks on pullbacks. See PeakTrader.com Top Stock Picks section for more information.

Charts at liberty at PeakTrader.com Forum Index

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