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Sunday, October 11, 2009

Weekly Review - on the rebound

What a rebound! Five straight days of gains are certainly a welcome comeback from the previous two weeks of declines. Time for the bears to take control again?

We'll look at where we are today in some of the charts that follow and see if we can figure out where we are going.

The view from Alert HQ --

Charts of some of the statistics we track at Alert HQ are presented below:

SPY vs.Moving Average Analysis, 10-09-2009This first chart tracks our moving average analysis. With stocks doing a quick about-face this week we see the number of stocks above their 50-day MA surging upward (the yellow line). It is close to crossing above the magenta line, the number of stocks whose 20-day MA is above their 50-day MA. If this does come to pass, it will be a bullish signal.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.

SPY vs.Trend Analysis, 10-09-2009
As can be expected, we can see the number of stocks in a down-trend has decreased. What I didn't expect is that the number of stocks in up-trends would continue to decline. These two usually move in opposite directions so this is a bit of a worrisome sign.

Conclusion --

One chart bullish, the other chart half-bullish. I guess you can't have everything.

So, the chart setup is pretty decent; however, the real catalyst this week will be in the form of earnings reports. The bellwethers will be out in force: Johnson & Johnson (JNJ), Intel (INTC), JP Morgan Chase (JPM), Citigroup (C), Goldman Sachs (GS), Nokia (NOK), Google (GOOG), IBM (IBM), Bank of America (BAC) and General Electric (GE).

Though earnings may the primary objects of interest, there are a decent set of economic reports on tap this week including retail sales, the consumer price index, the Philadelphia Fed index and industrial production.

It can be assumed that economic reports will continue the "less bad" theme so the market's short-term direction will surely be dependent on earnings. A big miss by a few of those bellwethers and rebound could turn into slump.

Disclosure: no positions in any stocks mentioned

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