Mid Day Market Thoughts 13 May 05

Last night, all the US indices were figuring out where to go after the Consumer/Retail Spending and Unemployment figures were released. Retail spending came in higher than expected (cant remember how many months in a row was it) but jobless claims increased. From a strictly technical viewpoint, the trend was still down even after the 1-day reversal yesterday. And after the traders came back from lunch, the market sold down into the close (another 100pt slide). Short-term market breadth indicators were already suggesting that the short-term cycle/fluctuation/swing (or whatever you wanna call it) could be turning down. So what happened last night was a confirmation. But that doesnt mean that it should sell down to hit the lower boundary... long position(s) have to be established once the high pivot at 10,400 (for the Dow) is breached... or any earlier buy signal(s) from other indicators are given.

Back to the discussion about economic indicators.... was initially wondering what impact would the higher retail spending be having on the market, 2 things that immediately came to my mind were the works of Joe Dagnino (Profiting in Bull & Bear Markets) and Dave Kansas (theStreet.com) with regards to economic indicators. Joe talked about the components of the leading, coincident and lagging indicators while Dave reckons the Unemployment (Jobless claims) numbers carry more weight than the retail spending data. A quick check on the LCL (Leading, Coincident, Lagging) chart showed that the lagging line is still on the way up.... and would probably continue to go up since the Fed is probably going to continue raising interest rates to the 4.25% mark (market consensus?). So unless the Fed ease up a little or productivity increases, a longer-term rally may still take some time to come.

So while waiting for the big trend to come (if ever), I'm quite content to engage in some short-term fluctuation trading. Well see if the 17May low pivot materialises or not.... in the meantime, I'd better get back to my 'research' on explosive short-term option strategies. Cos the gains from the singapore market with my risk management system isnt very lucrative.... I'll probably starve to death if I became a full-time trader in the Singapore market (with the kind of risk that I'm willing to take).

The first half of the Singapore market is slightly down (normal) together with Hang Seng and Nikkei. Another uneventful day I suppose...