Thursday Wrap-Up

12,646 – Yipee, we're back to our May 9th lows!

We have made nice progress over last week but let's not hurt ourselves patting ourselves on the back just yet as we still have oil at $125, which is still A LOT and we have still not broken out over the levels we didn't break out over last week.  Volume over the past 2 days has been very light so we're going to need to see more to confirm an up move, even if we do get something solid.  While traders have not all "sold in May," it looks like many of them have decided to go away so it could be a long, slow road to recovery.

The last time we did the Big Chart was Tuesday, the 20th and oil was trading right about $126.  We generally lost a lot of ground in the past week and, as I said last week, we are just floating around in the range between our "Feeling Better" levels that we set way back in January after the big drop, and the critical 200 DMAs, which are proving very tough to break.

We have added red boxes to the Transports, the Hang Seng, the BSE (which took a huge hit) and the FTSE (UK economy looking grim) and that is our main measure of progress from week to week, everything else is just noise so let's continue to be cautious until we see more than "window dressing" improvements in the markets.  VERY interestingly, the Russell survived as the only index to make progress so we will consider a breakout on the small caps as a good early sign of a turnaround.

We are within striking distance of the 200 DMA on the Russell, the Nasdaq and the Transports, which is just where we want our leadership to be so let's take all those levels seriously but also be aware that those levels are in reach only because they have come down a few points since last time we looked and declining 200 DMAs are not generally cause for celebration!

Tomorrow is a big data day with Personal Income and Spending along with PCE Core Inflation ahead of the bell and those could be very scary numbers indeed.  The Chicago PMI comes out at 9:45 and the revised Michigan Consumer Sentiment report is at 10 but it's doubtful that will change from the very sad 59.5 it was already measured at.

Next week is data heavy, with ISM numbers, Construction Spending, Productivity, Payrolls, Inventories and Consumer Credit next Friday and the week of the 9th we get the Beige book so plenty of things for the market to react to up ahead after this relatively calm week.

Oil is down but we need it to stay down so people can start getting back on their feet but the downside to Congress cracking down on speculators is that it's distracted them from doing something concrete about the housing issue and 7,000 families a day continue to lose their home – this is not the kind of thing you can stick your head in the sand over.