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Today I'm From Missouri

Daily State of the Markets
Thursday Morning - April 26, 2012

Good Morning. Fool me once, shame on you. But fool me twice... Well, that's the stuff that trading ranges are made of. As I've mentioned a time or twenty over the past couple of weeks, I'm of the mind that the stock market is stuck in a consolidation phase. And unless the bulls can get their act together in a big way, I'd also be willing to bet that this sloppy period of back-and-forth action may continue for a while.

However, I am a firm believer in the idea of staying in tune with what the market IS doing (as opposed to what I think it "ought" to be doing). As such, I will have to give our heroes in horns some credit this week. You see, just about the time the grizzlies in the bear camp had everyone convinced that it was time to start loading up on some SDS (ProShares Ultra Short S&P 500 etf), VXX (iPath VIX Short-Term), OFF (eTracs Fisher-Gartman Risk Off), or some EUM (Short emerging markets etf), the bulls pulled an Apple (NASDAQ:AAPL) and a Boeing (NYSE:BA) out of their hats. And boom, just like that, the S&P 500, NASDAQ, and DJIA are right back to the top end of their respective little trading ranges.

Never mind the crummy Durable Goods report, which just happened to miss badly and sport the worst decline in orders seen in more than 3 years. Forget the bad action in purported economic bellwethers such as FedEx (NYSE:FDX) and Caterpillar (NYSE:CAT). Just ignore the report that the UK has slipped back into recession or that the PMI's for the Eurozone were NOT pretty. Forget the anti-austerity movement that seems to be cropping up in places like France and the Netherlands. Oh and the idea that China is slowing isn't going to really affect anything, is it? Nope, with Apple once again blowing away earnings estimates and the minds of analysts everywhere based on the number of iPhones the company sold last quarter, the fear that started to present itself at the beginning of April has been replaced with Apple-mania. Oh, and, of course, the hope that Ben Bernanke will provide yet another fix of QE if we see another bad jobs report next Friday.

As long-time readers know, I am a card-carrying member of the glass-is-at-least-half-full club and one who believes in following time-tested systems to guide their market moves. As such, after the action we've seen so far this week, it would easy for me to say that it looks like the bulls may have rediscovered their lost mojo - especially if my systems give me an all-clear signal soon.

However, as I mentioned at the outset of this morning's meandering missive, it sure looks to me like we've got a consolidation phase on our hands. So, how do I reconcile my current dilemma? Here's how: Although I currently reside in the foothills of Evergreen Colorado, I've decided that I am going to hail from Missouri today so that I can see if the bulls can "show me" if they've really got what it takes to break on through to the other side of this little trading range. In other words (and yes, I'll try English this time), at this particular point in time, I think I'd prefer to wait for higher prices before adding any long exposure.

To be sure, this goes against the idea of "buy low and sell high" as waiting for the bull camp to prove themselves before jumping back into the pool is clearly a "buy high and sell higher" approach. And while I clearly understand that waiting for this type of "proof" can certainly be expensive, I also know that "Sell in May and go away" has been a stellar approach to the market for six years running. So perhaps a wee bit of caution on April 26th might make some sense.

Unless, of course, our bovine buddies can really turn it on here. If the folks wearing the rose-colored Revo's can convince the shorts to cover and the dip-buyers to get back in the game - all accompanied by a little "oomph" from the market internals - then maybe it will be time to get back in the game. But until the bulls can "show me" a little something here, I am tempted to keep my Missouri license plate on my desk and my hands in my pockets.

Turning to this morning... Europe bourses are down for the most part and Asian markets were little changed overnight. And after yesterday's big run up on Apple's news and hope for another QE fix, stock futures are pointing to a slightly lower open at the present time.

On the Economic front... Initial Claims for Unemployment Insurance for the week ending 4/21 fell 1,000 to 388K. The reported total was above the consensus estimate for 373K but technically below last week's revised total of 389k (from 386k). Continuing Claims for the week ending 4/14 came in at 3.315M vs. consensus of 3.300M.

In addition, we'll get the Bloomberg Consumer Comfort and Pending Home Sales later this morning.

Thought for the day... Try smiling early and often today...

Pre-Game Indicators

Here are the Pre-Market indicators we review each morning before the opening bell...

  • Major Foreign Markets:
    • Australia: +0.25%
    • Shanghai: -0.09%
    • Hong Kong: +0.79%
    • Japan: +0.01%
    • France: -0.73%
    • Germany: -0.20%
    • Italy: -1.07%
    • Spain: -1.77%
    • London: +0.15%
  • Crude Oil Futures: -$0.06 to $104.06
  • Gold: +$8.30 to $1650.60
  • Dollar: higher against the yen and euro, lower vs. pound
  • 10-Year Bond Yield: Currently trading at 1.96%
  • Stock Futures Ahead of Open in U.S. (relative to fair value):
    • S&P 500: -3.60
    • Dow Jones Industrial Average: -24
    • NASDAQ Composite: -6.67

Positions in stocks mentioned: AAPL

For more of Mr. Moenning's thoughts and research, visit StateoftheMarkets.com


The opinions and forecasts expressed herein are those of Mr. David Moenning and may not actually come to pass. Mr. Moenning's opinions and viewpoints regarding the future of the markets should not be construed as recommendations. The analysis and information in this report and on our website is for informational purposes only. No part of the material presented in this report or on our websites is intended as an investment recommendation or investment advice. Neither the information nor any opinion expressed nor any Portfolio constitutes a solicitation to purchase or sell securities or any investment program. The opinions and forecasts expressed are those of the editors of StateoftheMarkets.com and may not actually come to pass. The opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security nor specific investment advice. One should always consult an investment professional before making any investment.

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Disclosure: I am long AAPL.