Monday Morning Chartology-4/18/11
Steve Cook on Disciplined Investing

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The Market
    
    Technical

       Monday Morning Chartology

    The reverse head and shoulders formation continues to develop and may in fact be complete.  I have marked the parameters in orange.  If the S&P pushes back above the neckline that would be a very positive indication for stock prices.






    Gold remains strong.  Indeed its performance since busting free of that sextuple top is right out of the text books.





    The VIX is toying with the lower boundary of its trading range.  A confirmed break below it would be positive for stocks.  It would also clearly be a Sell signal for our recently purchased insurance (VXX).





   Fundamental
 
         
Here is a tally of this week’s earnings reports and it is not nearly as bad as I thought that it would be:
https://mail.chapmanhext.com/owa/?ae=Item&t=IPM.Note&id=RgAAAACao2ilNAElQrneCS4VkP7VBwBwSL0gAx0qRa5T2h5meP5eAAAA%2f8hHAABwSL0gAx0qRa5T2h5meP5eAAABAOaMAAAJ&ph=0&cb=0

      News on Stocks in Our Portfolios
 
    Earnings reports:

                Reported        Expected

Genuine Parts            $.80            $.76
Schwab              .20              .19
Eli Lilly                     1.24             1.16

Economics

   This Week’s Data

   Other

    The following data all comes from Doug Short.  It explains a lot about why our outlook is below consensus and why I am worried that even I could be too optimistic.  This is today’s must read:

    This latest update of the Consumer Metric Institute’s growth index reveals consumer health at a new low.  Since the consumer accounts for roughly 2/3rds of the economic activity, this is not a good sign.  Why the discount with the Market.  One word--Bernanke (short).
    http://dshort.com/articles/2011/0415-CMI-new-low.html

    More data from Doug Short on the state of the consumer (medium):
    http://dshort.com/articles/retail-sales-review.html

    One last bit of analysis, this time on inflation.  Recall that after the very tough ‘stagflation’ of the 70’s, the government changed the way it calculated inflation.  This chart compares today’s unadjusted rate with that period.  Small wonder that consumers today are experiencing the same malaise of that of the 70’s; and small wonder why the consensus growth forecast is starting to retreat.
    http://dshort.com/inflation/inflation-update.html

Politics

  Domestic

More of your tax dollars at work (medium):
http://michellemalkin.com/2011/04/15/goodbye-americorps-hello-foodstampcorps/

 










Posted 04-18-2011 8:21 AM by Steve Cook