Tuesday, April 14, After Market Close

The market declined today on moderate volume. The sentiment indicator graph to the right show we are still within the bullish rally that began on March 9th. The market will need a strong down day with the S&P hitting below 815 tomorrow or Thursday for the bears to make a claim to be in control of the market. The bulls looked weak today.

As of this writing, the futures market looks to an open on the downside tomorrow, but this can change; certainly with the major market maker, Goldman Sachs, now doing a lot of their trading in the overnight futures market. Stochastics appears to indicate the market should go down in the early morning, then rally into the afternoon.

Right now, the rally is stalling on lower and lower volume, and will need some good news to keep it going. We got some bad retail news today, which will continue to adversely affect the market. We will get more economic and earnings annoucements this week, and depending on how bad or good the news is will determine the direction of the market for the rest of the week. Neutral news will be perceived as good news.

Here's a great article by Frank Barbera, who comes up with absolute knock-out analysis. In the article, he explains how the economy and stock market should fare in the coming year. For those of you who do not want to read the article, Frank sums it up (after much analysis) by saying the following:

"... we can now look back at the last four to five recovery cycles and note that each one created successively fewer and fewer jobs, with the quality of jobs also degrading consistently from cycle to cycle. This suggests that America is likely heading for an eventual currency crisis, which through devaluation will result in a cheapening of American labor and potentially down the line, the beginning of a new cycle of reverse globalization where manufacturing returns to the US.

For now, while a bounce is on the horizon, it has all the earmarks of a “hollowed out” event, one which will have an empty ring for the average guy on the street, and one which may kick start a new cycle of rising interest rates accompanied by a steadily falling Dollar. While the newspapers and cable channels may herald this as good news, in my view the risks ahead are for a temporary lull followed by a second and eventually even deeper crisis phase."