Tuesday, November 15, 2005
Issue Contents:
| 09:38 | The Day Ahead Economic releases and news |
| 10:00 | Avoid the chop Protect profits |
Good morning, today is Tuesday November 15th. Producer prices1, ex food and energy, declined by the largest amount in two years last month, but this will be cold comfort to those who pay for food and energy. As it stands now, inflation is running near the top of the band most economists believe the Federal Reserve is targetting for inflation.
``The underlying story is one of very little transmission of high energy costs to other products so far,’’ said David Resler, chief economist at Nomura Securities International in New York. Still, ``the Fed is going to raise rates in all likelihood at the next meeting in December.’’ ``We’re starting at a point where inflation is at the top of the range the Federal Reserve thinks is acceptable and they don’t want it to break through,’’ said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. (Bloomberg)
Retail sales, except for automobiles, have not been suffering, so far, as a stronger than expected gain in retail sales of 0.9% last month suggests consumers are a brave and hardy lot. With gasoline prices in retreat, further supporting the consumer, firmer asset prices in the retail sector seem likely.
Market Statistics for Monday November 14, 2005
| Symbols in Up Swings | 469 |
|---|---|
| Symbols in Down Swings | 204 |
| Up/Down Swing Ratio | 2.29 : 1 |
| Up Bars | 42% |
| Down Bars | 30% |
| Inside Bars | 12% |
| Outside Bars | 11% |
| Close > 20EMA | 42% |
| Close > 50SMA | 60% |
| Close > 200SMA | 61% |
| 20EMA > 50SMA > 200SMA (trend up) | 35% |
| 20EMA < 50SMA < 200SMA (trend down) | 19% |
Clients: Please read yesterday’s status message if you’ve not already done so.
US Market Calendar
- 8:30 am: Producer Price Index – Oct.
- 8:30 am: Retail Sales – Oct.
- 8:30 am: Empire State Manufacturing Survey – Nov.
- 8:55 am: Redbook – Nov. 12th week
- 10:50 am: Federal Reserve Vice Chairman Roger Ferguson to speak about asset price levels at the Bank of Mexico conference
Canadian Market Calendar
- 8:30 am: Existing Home Sales – Oct.
- 8:30 am: Manufacturing Shipments & Orders – Sep.
Earnings and the Federal Reserve
For earnings highlights, please see today's WSJ Earnings Calendar.
For a list of upcoming speeches, congressional testimony, Federal Open Market Committee material, and statistical releases, please visit the What's Next page of The Federal Reserve Board website. Recently released Federal Reserve Board material, including market moving FOMC decisions and speeches by members, will be found on their What's New page.
1 U.S. Producer Prices Excluding Energy, Food Decline by Most in Two Years
2 U.S. Retail Sales Fell 0.1%; Ex-Autos Increase 0.9%
YM – 5M
First up, a test of the range high yesterday has so failed; its best to avoid trading within this narrow band of chop, per the chart. Should price regain 10720 aggressive traders might consider a long on any setup above that level, otherwise 10730 is the key high awaiting a retest… if at all.
In the big picture we are reminded that price has been rallying straight up for some time now, with only pauses – no serious retracements – since late October:
YM – 135M
Price doesn’t go straight up forever, and we can see that volume has been dropping steadily; a pull back to the 20, perhaps 50, period moving averages at some point is more than likely to happen. 10640 – 10650 is the first key target to the downside; 10550 needs to hold if price heads down to the 50 period moving average.
The trend may remain intact on the daily charts, even as the trend intraday heads down for one or more days, so we’ll want to look for opportunities to form as price pulls back.