VIRDIGO MARKET RECAP WEDNESDAY 4/23

VIRDIGO INVESTMENTS (closed positions only):

VI%

MARKET MOVING EVENTS:

1)      ECONOMIC: NEW HOME SALES

‘In an unsettling setback for an already unsteady housing sector, new home sales fell very sharply in March, down 14.5 percent to a 384,000 annual rate that is far below the Econoday consensus for 455,000 and far below the low end estimate of 440,000. Revisions offer a marginal offset, with February and March revised upward by a combined 19,000.

Prices, arguably unsustainably high prices, are a major factor constraining sales of new homes, as they are for sales of existing homes. The median price surged 11.2 percent last month to a record high of $290,000. Year-on-year, new home prices are up 12.6 percent. This compares with a year-on-year decline in sales — not gain in sales — of 13.3 percent.

Low supply of homes on the market has also been constraining sales although this factor, because of the decline in sales, eased sharply in March. Supply relative to sales rose to 6.0 months, well up from 5.0 and 4.8 months in the prior two months and compared against 4.2 months in March last year.

Regional data show sweeping declines across the Midwest, West, and South. The Northeast, which is by far the smallest market for new homes, shows a gain. The Dow is moving to opening lows in immediate reaction to today’s report.’

VIRDIGO STATEMENT: Wednesday appeared to be a consolidation day in the market. Major indexes held up well compared to other leading sectors.

SPX: Still searching for the elusive SPX1900. The MACD is still firmly in positive territory with a bullish posture. The MACD also has not reached extreme levels yet.

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VOLATILITY:The VIX:VXV ratio looks like a turn is possible as the MACD is turning hard without an actual crossover. Extreme levels have not been reached yet which would mark a Market Top (short term).

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LEADING INDEXES: A DEFENSIVE day in the market with the major indexes holding up better than the leading OFFENSIVE sectors (typical consolidation).

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VIRDIGO MARKET RECAP TUESDAY 4/22

VIRDIGO INVESTMENTS (closed positions only):

VI%

MARKET MOVING EVENTS:

1)      ECONOMIC: EXISTING HOME SALES

‘Sales of existing homes have yet to recover from the Federal Reserve’s decision, way back last year, to begin withdrawing stimulus. For the seventh time in eight month, sales of existing homes contracted, at minus -0.2 percent in March to an annual rate of 4.59 million. Year-on-year, sales are down 7.5 percent which is the steepest rate of contraction since May 2011.

Unattractive mortgage rates are only one reason for the sales weakness. Another is high prices which, in stark contrast to the contraction in sales, are up, not down, 7.9 percent year-on-year. The median price soared in March, up 5.4 percent to $198,000.

Low supply is another reason for the sales trouble, though the weakness in sales during March did lift supply relative to sales slightly, at 5.2 months vs 5.0 months in February.

Regional data show March weakness in the South and West and monthly strength in the Northeast and Midwest. Year-on-year, all four regions show declines.

The housing sector remains the weak link in the economy and the weather isn’t to blame, at least not in March. The Dow is showing little initial reaction to today’s results.’

VIRDIGO STATEMENT: The market continues the quest for SPX1900 (only 20 points away).

SPX: Price has now broken out north of the Fibonacci Arc as expected. Strong resistance is converging at SPX1900. The MACD is firmly in positive territory with a bullish posture.

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VOLATILITY:The VIX:VXV ratio continues its descent after hitting the extreme area (Market Bottom / Long Opportunity). The MACD is firmly in negative territory with a bearish posture (bullish for market).

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LEADING INDEXES: BIOTECH continues its bounce (SCTR SCORE now at 76.1 and rising). A very OFFENSIVE day for the market…

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VIRDIGO MARKET RECAP MONDAY 4/21

VIRDIGO INVESTMENTS (closed positions only):

VI%

MARKET MOVING EVENTS:

1)      ECONOMIC: NONE

VIRDIGO STATEMENT: No Economic Events today. An extremely boring session today as the market floated sideways to higher.

SPX: Price is currently breaking up out of the Fibonacci Arc as expected. No re-tests of support yet so caution is warranted. Major resistance at SPX1900, major support at SPX1800. Odds favor a +30 top move over a -70 bottom move.

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VOLATILITY:The VIX:VXV ratio continues its descent. Nothing happening here…

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LEADING INDEXES: BIOTECH the winner today as its SCTR Score rises from the ashes to 25.4.

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VIRDIGO MARKET RECAP THURSDAY 4/17

VIRDIGO INVESTMENTS (closed positions only):

VI%

MARKET MOVING EVENTS:

1)      ECONOMIC: JOBLESS CLAIMS

‘Though adjustment issues tied to Easter may be at play, unemployment claims nevertheless are signaling very solid improvement in the jobs market. Initial claims came in at a better-than-expected 304,000 in the April 12 week, just under Econoday’s low estimate. The prior week, which saw a major break lower, is revised only 2,000 higher to 302,000.

The April 12 week is the sample week for the monthly employment report and the comparison with the March 15 sample week shows a sizable 19,000 improvement. A sample-week to sample-week comparison of the 4-week average, at 312,000 vs 329,500, shows a 17,500 improvement. The latest 4-week average is the lowest of the recovery going back to October 2007.

Continuing claims, which are reported with a one week lag, also show convincing improvement. Continuing claims for the April 5 week fell 11,000 to 2.739 million. The 4-week average is down 33,000 in the week to 2.785 million which is more than 100,000 below the month-ago trend. The unemployment rate for insured workers is at a recovery low of 2.1 percent.

The spring thaw has been giving a sizable lift to economic data, most prominently for jobless claims. Though the question of Easter adjustments is in the background, today’s report is certain to lift expectations for the April employment report.’

 

2)      ECONOMIC: PHILADELPHIA FED SURVEY

Activity in the Mid-Atlantic manufacturing sector is picking up further steam this month based on the closely watched Philly Fed index which jumped 7.6 points to 16.6 to signal the strongest rate of monthly growth since September. New orders are up 9.1 points to 14.8 for the strongest reading since December.

Shipments have been particularly strong this month, up a very sizable 17.0 points to 22.7 for the strongest reading in more than three years. Employment also popped higher, up 4.2 points to 6.9.

Other readings include a small build for backlog orders, a small draw for inventories, and sizable slowing for delivery times — all positive readings for activity. Price pressures remain moderate.

The Philly Fed index fell into the negative column during the unusually heavy weather of February but has since bounced back strongly in yet another indicator that is showing spring strength. The Dow is moving up from opening lows in immediate reaction to today’s report.’

VIRDIGO STATEMENT: The Virdigo System realized gains once again this morning with the long weekend and Options Expiration. The system logged from +1.42% to +29.23% on a 6 day trade. See above for 2014 Year to Date figures.

SPX: Price has ran right up into the Fibonacci Arc. Expect a slight pullback, then a break to the upside as usual. The MACD is moving into positive territory with a bullish posture.

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VOLATILITY:The VIX:VXV ratio is simply getting crushed (no surprise there). The MACD is moving into negative territory with a bearish posture (bullish for the market).

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LEADING INDEXES: A mixed day with OFFENSIVE leaders struggling. NATURAL GAS the big winner (no surprise with a SCTR SCORE of 99.4Capture

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VIRDIGO MARKET RECAP WEDNESDAY 4/16

VIRDIGO INVESTMENTS (closed positions only):

VI%

MARKET MOVING EVENTS:

1)      ECONOMIC: HOUSING STARTS

‘Housing starts picked up in March but not as much as expected. However, strength was in the single-family component while it was expected to be in the multifamily component. So, the expectations shortage really is not bad. Overall starts rose 2.8 percent after a 1.9 percent increase in February. The March annualized pace of 946,000 fell short of analysts’ forecast for 965,000 and was down 5.9 percent on a year-ago basis.

Single-family starts jumped 6.0 percent, following a 2.9 percent rise the month before. Multifamily starts slipped 3.1 percent in March after no change the month before.

Overall permits dipped 2.4 percent in March after surging 7.3 percent the prior month. The annualized rate of 990,000 was up 11.2 percent on a year-ago basis. The median market forecast was for 1.010 million. The softness came from the multifamily component which declined 6.4 percent after a 22.8 percent spike in February. The single-family component rebounded 0.5 percent, following a 1.7 percent dip in February.

Overall, the headline number was below expectations but the fact that moderate strength was in the single-family component is encouraging. Last month’s data in permits suggested more strength in the multifamily component. But the multifamily component is volatile and based on recent permits, there still is strength in that component. The gain in the single-family component is a bonus.

On the news, equity futures were little changed.’

 

2)      ECONOMIC: YELLEN SPEECH

‘Fed Chair Janet Yellen spoke today and focused on her view that the economy is still far from maximum employment and that low inflation is more likely than a jump above 2 percent goal inflation. She does see a return to full employment in about 2 years. Yellen reiterated her position that there likely is more slack in the labor market than indicated by the unemployment rate (recall that she likes the BLS U-6 measure of underemployment). She sees by the end of 2016 an unemployment rate in the range of 5.2 percent to 5.6 percent and inflation ranging from 1.7 percent to 2.0 percent. Along with other economists, the Fed chief indicated that an unusually harsh winter has made interpreting recent data difficult. Looking ahead, Yellen stated that an eventual increase in policy rates will not be based on just one indicator. Overall, Yellen’s comments were dovish. Taper is likely to continue in measured steps and not accelerated. The first increase in the fed funds rate likely is no sooner than 2015.’

VIRDIGO STATEMENT: Once again, the market shows a little bit of bearishness and most traders see only doom and gloom, however, a few days pass and we’re only 30-35 SPX points off all time highs.

SPX: Price is running into resistance at the middle of the Bollinger Band. These Fibonacci Arcs usually break out to the upside…notice the top of the Bollinger Band is right above SPX1900. The MACD has a bullish posture in negative territory.

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VOLATILITY:The VIX:VXV ratio has gone quiet since hitting extremes. The MACD has a bearish posture in positive territory (short term bullish for the market).

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LEADING INDEXES: Not the type of leadership you want to see from OFFENSIVE sectors today (SEMIS in the red). BIOTECH the big winner today (horrible SCTR score though at 7.3).

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VIRDIGO MARKET RECAP TUESDAY 4/15

VIRDIGO INVESTMENTS (closed positions only):

VI%

MARKET MOVING EVENTS:

1)      ECONOMIC: CONSUMER PRICE INDEX

‘Consumer price inflation warmed up a bit in March, topping expectations at the headline and core levels. Headline inflation firmed to a 0.2 percent rise after posting a 0.1 percent rise in February. Analysts expected 0.1 percent. Increases in the shelter and food indexes accounted for most of the headline increase. Excluding food and energy, CPI inflation also rose to 0.2 percent from 0.1 percent the prior month. Market expectations were for 0.1 percent.

The energy component eased 0.1 percent after declining 0.5 percent in February. Gasoline fell 1.7 percent in both March and February. Food price inflation, however, continued strong with a 0.4 percent jump in each of the latest two months.

Turning to the core rate, besides the 0.3 percent increase in the shelter index, the indexes for medical care, for apparel, for used cars and trucks, and for airline fares also increased. The indexes for household furnishings and operations and for recreation both declined in March.

Year-on-year, overall CPI inflation was 1.5 percent in March, compared to 1.1 percent in February (seasonally adjusted). The core rate increased 1.6 percent year-on-year, matching the rate for February. For March, not seasonally adjusted year-ago percent changes for total and core CPI were 1.5 percent and 1.7 percent, respectively.

Consumer price inflation firmed in March, but it was for just one month-not yet setting a trend. Within the Fed, the hawks likely will point to the stronger numbers while the doves will say it is too early to say that inflation is up to the 2 percent goal. Meanwhile, driving is cheaper and eating is more expensive.’

 

2)      ECONOMIC: YELLEN SPEECH

‘Janet Yellen did not directly address monetary policy in her prepared comments. She noted that Basel liquidity standards do not fix wholesale funding problems and said that the Fed is considering more steps to fix these problems. She made the general comment that the global economy has yet to recover from the recent financial crisis. ‘

VIRDIGO STATEMENT: The elevated volatility level is producing some larger swings in the market. This is a day traders dream, but can be heart wrenching for intermediate term traders. Remain patient.

SPX: Price has broken back up into the trading range, but most importantly, it has closed in the range. The long term support levels have held (lower channel support and re-test of red trend line). The MACD is in negative territory within the high probability turn range moving into a bullish posture.

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VOLATILITY:The VIX:VXV ratio remains elevated, however, the MACD is turning down indicating potential market bullishness. The volatility level is also in the high probability turn range where market bottoms are usually identified.

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LEADING INDEXES: A very mixed session. The highest SCTR scores belong to all DEFENSIVE sectors (UTILITIES, ENERGY, and NATURAL GAS).

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VIRDIGO MARKET RECAP MONDAY 4/14

VIRDIGO INVESTMENTS (closed positions only):

VI%

MARKET MOVING EVENTS:

1)      ECONOMIC: RETAIL SALES

‘The spring rebound in economic readings may actually be taking place-at least according to retail sales. Retail sales grew 1.1 percent in March after rebounding 0.7 percent in February (originally up 0.3 percent). Much of the latest advance came from motor vehicles which jumped 3.1 percent, following a 2.5 percent rebound in February. Excluding motor vehicles, sales increased a still healthy 0.7 percent, following a gain of 0.3 percent in February. Gasoline sales held back the total as this component declined 1.3 percent after edging up 0.1 percent in February. Other components were generally strong in March. Retail sales excluding autos and gasoline increased 1.0 percent after gaining 0.4 percent in February.

In the core, strength in March was in furniture & home furnishings; general merchandise; building materials & garden equipment; clothing & accessories stores; nonstore retailers; and food services & drinking places. The advances in furniture & home furnishings component and also building materials & garden equipment suggest that housing is having ripple effects that are boosting the economy. These gains also could be related to coming off adverse winter weather.

Weakness for March was seen in electronics & appliance stores and in miscellaneous store retailers.

Essentially, consumer spending appears to be playing catch up after consumers were forced to stay inside during adverse winter weather. Today’s numbers will likely nudge up GDP forecasts for the first quarter.’

VIRDIGO STATEMENT: It appears the market is attempting to build a base on support. A potential Inverse Head & Shoulders pattern is emerging targeting SPX1855.

SPX: As long as the SPX can hold support, it is bullish for the market long term. The MACD is in extreme territory where turns likely happen (lower green lines).

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VOLATILITY:The VIX:VXV ratio is in Market Bottom territory. The MACD is currently bullish (bearish for the market).

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LEADING INDEXES: OFFENSIVE leaders are moving to the front. This is a precursor to bullish breakout. BIOTECH still showing relative weakness.

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VIRDIGO MARKET RECAP FRIDAY 4/11

VIRDIGO INVESTMENTS (closed positions only):

VI%

MARKET MOVING EVENTS:

1)      ECONOMIC: PPI-FD

The PPI for total final demand jumped 0.5 percent in March, well above the Econoday consensus for a gain of 0.1 percent. The reading for February was minus 0.1 percent.

Total final demand excluding food & energy rose even more, up 0.6 percent after falling 0.2 percent the month before. The consensus called for a 0.2 percent increase. Total final demand excluding food, energy, and trade services rose 0.3 percent vs a 0.1 percent gain in February.

Year-on-year, PPI final demand rose an unadjusted 1.4 percent in March. Final demand excluding food & energy was also up a year-on-year 1.4 percent.

Details include a sharp 0.7 percent monthly gain in services prices, more than reversing the prior month’s 0.3 percent decline. Final demand food prices rose very sharply, up 1.1 percent in March following a 0.6 percent increase in February.

Price data are suddenly showing some life, including this report and yesterday’s import & export price report. The absence of inflation pressures has been a concern among policy makers. Today’s report may lift forecasts for Tuesday’s consumer price report. ‘

VIRDIGO STATEMENT: Once again, good economic news causes the market to continue its slide. The headlines remain positive.

SPX: The SPX has reached strong support as it is now hitting the bottom of the trend channel and convergence with the red downward sloping trend line. The MACD is now in bottoming territory so look for a potential reversal.

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VOLATILITY:The VIX:VXV ratio continues its spike and is now in topping territory (market bottom). Look for a turn in the market as most indicators are at extremes and showing signs of an imminent reversal.

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LEADING INDEXES: A DEFENSIVE week (VOLATILITY the big winner at +6.96%). Look for the strongest OFFENSIVE sectors to break out and lead the next rally (TECH, SEMIS, INDU, SPX).

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VIRDIGO MARKET RECAP THURSDAY 4/10

VIRDIGO INVESTMENTS (closed positions only):

VI%

MARKET MOVING EVENTS:

1)      ECONOMIC: JOBLESS CLAIMS

Easter can play havoc with economic data and may be at play in a stunning 32,000 drop to 300,000 in initial jobless claims for the April 5 week. This is the largest drop in more than 10 years and, though the Labor Department says there are no special factors involved, may be due to seasonal adjustments as Easter last year fell on March 31

But it’s hard to get around improvement in this report. The 4-week average is down 4,750 to 316,250 which is more than 15,000 below the month-ago reading and which points to tangible improvement in the jobs market.

Continuing claims are also coming down, down 62,000 in lagging data for the March 29 week. The 4-week average is down 19,000 to 2.824 million. The unemployment rate for insured workers is at a recovery low of 2.1 percent.

Today’s report may prove to be an outlier but, even the latest initial reading aside, claims are pointing to new strength in the labor market.’

VIRDIGO STATEMENT: Good economic news in the JOBLESS CLAIMS is bad news for the market. A 39 point drop in the SPX in one session is one of the worst days this year.

SPX: The SPX has broken the trading range to the downside this time after a recent Bull Trap move. Lots of support right underneath current price levels. The MACD is firmly in negative territory showing a bearish posture.

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VOLATILITY:The VIX:VXV ratio has spiked to a higher high, and the MACD is now pointing higher (bearish for the market).

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LEADING INDEXES: A DEFENSIVE session today as the OFFENSIVE leaders all got hammered.

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