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Monday Market Movement – The Low Ranger

|Includes: DIA, IWM, QQQ, SPDR S&P 500 Trust ETF (SPY), USO, UUP
 

What a wild month this has been.  

As of Friday’s close, all of our US indices were off at least 2.5% from the end of April with a week to go in May.  We got the pattern we anticipated for the month but we’re only as good as our last call so now what?  

Well, to a large extent that will depend on how we handle those 2.5% lines but that is just going to be a measure of how well (if at all) we are staving off a major correction.  There is plenty of POMO power left in the Fed’s gun with Stock World Weekly reporting $28Bn in the first 4 days of the week to be showered on our Bankster buddies.  

Also on the schedule for next week are New Home Sales on Tuesday, Durable Goods and Home Prices on Wednesday, GDP (2nd Estimate) along with the usual Jobless Claims on Thursday and Friday, in case anyone hasn’t left early for the long weekend – it’s Personal Income and Spending along with PCE Prices AND Pending Home Sales.  

So Friday could be a REALLY depressing day on the data front, where we see Incomes dropping, prices inflating and home sales dropping off a cliff – all ahead of a holiday weekend that will make or break the retail season with gas still around $4 a gallon (35% more than last year). 

None of that matters though, as long as the Dollar behaves itself and refrains from showing any signs of life.   We tested 76 in early futures trading this evening (I am writing this post early as I won’t be around in the morning) but NO ONE wants to see the Dollar that strong – especially the guys who are in charge of it in America so it was quickly and firmly slapped back (so far). It’s really all about Europe but first, let’s take a closer look at the big picture on the S&P:  

Note how we are forming a similar pattern coming into a similar holiday weekend to the one we had for Martin Luther King weekend, 2010.  At the time, on January 19th, with the S&P at 1,150 – I asked the question "Have the Markets Become Comfortably Numb" where I summed up the apparent indifference to bad news by saying: "I have a
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