StreetSmartPost

Monday, July 19 2010. 9:15 a.m.

Last winter, global central banks were in synch with each other, assuring markets that stimulative policies would remain in place until a durable recovery is secured, that “pre-mature withdrawal of stimulus would be avoided, and when the time arrived the withdrawal would be in a co-operative and co-ordinated way.”

Sounded easy. But it’s turning out to be difficult.

With global economies in recovery mode, but recovery slowing, serious debates and arguments are taking place, apparently even within the U.S. Federal Reserve, between those who believe global economies have recovered enough and if policy tightening is delayed it will risk bubbles, inflation, and financial shocks, and those who are concerned that the economic recovery is stalling and removing stimulus at this point would be pre-mature and assure a double-dip back into recession.

The contagious debt crisis in Greece raised near panic over the record global budget deficits incurred by the rescue and stimulus efforts, and has the G-20 countries pledged to cut their annual deficits by 50% over the next few years. Most European countries are already instituting ‘austerity’ measures of pay and pension cuts, lay-offs, cuts in government spending, and new taxes, in an effort to achieve that goal.

The U.S. Fed apparently disagrees, and worries that austerity measures at this point could harm the economic recovery. It promises to keep interest rates at near record lows for the foreseeable future, and according to the minutes of its last FOMC meeting is even beginning to think about what it could do to re-stimulate the economy if necessary.

Yet in the U.S., the Fed’s stimulus programs of buying real-estate related securities and treasury bonds, and the government’s rebate program to home-buyers have been allowed to expire (with worrisome results so far).

The problem for markets is that if those in charge, with their huge staffs of economists, and access to far more information than even the most informed investors could ever have, cannot agree on which of such diverse paths to take, how could markets hope to get it right.

The result is a worried and uncertain market.

Headlines Elsewhere:

Financial Times: “Bankers Concerned Over Stress Test Results. Senior bankers and regulators across Europe have expressed deepening concerns that the stress test exercise of 91 banks will produce a skewed table of institutions based on misinformed comparisons of financial strength. They have grave reservations about the way in which the exercise has been conducted and are worried the markets will misinterpret the outcome.  One finance director said, “It is not a question of whether we will pass. It is that the market will compare our stressed capital ratio with others that have been calculated in an entirely different but untransparent way.”

Wall Street Journal: “China Becomes Top Energy Consumer. China is now the world’s biggest energy consumer, knocking the U.S. off a perch it held for more than a century, according to new data from the International Energy Agency.”

Subscribers to Street Smart Report: There is an important Special Report and hotline on the website for you from yesterday (Sunday) afternoon.

Non-subscribers: This would be a timely time to subscribe to our Street Smart Report.

Asian Markets Were Down Again Last Night.

The DJ Asia-Pacific Index closed down 0.9%. Japan was closed for a holiday.

Among individual markets that were open:

Australia closed down 1.5%. China closed up 2.1%. Hong Kong closed down 0.8%. India closed down 0.2%. Indonesia closed down 0.6%. New Zealand closed down 0.7%. Singapore closed up 0.5%. South Korea closed down 0.7%. Taiwan closed down 0.5%.

Markets This Morning.

European markets are up this morning. London is up 0.6%. Germany is up 0.5%, and France is up 0.5%.

Oil is up $.33 a barrel at 76.34.

Gold is plunging another $10 an ounce at $1,182.

Markets In the U.S.

This week will be another fairly heavy week for potential market-moving economic reports including those related to the important housing industry; the Housing Market Index, Housing Starts, Mortgage Purchase Applications, and Existing Home Sales. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

The 2nd quarter earnings reporting season will also continue of course.

Meanwhile the market remains concerned about the pile-on of evidence that the economic recovery is slowing sooner and more than had been forecast.

Pre-Open Indicators.

Our pre-open indicators are pointing to the Dow being up 45 points or so in the early going.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($10 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

Gold’; U.S. Dollar; and the potentially important market pattern for this week.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘Is the Economic Recovery Just An Illusion?’ you can either scroll down to Saturday’s post, or click here!

Subscribers to Street Smart Report: There is an important Special Report and hotline on the website for you from yesterday (Sunday) afternoon.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

Saturday, July 17, 2010. 11:00 am.

The market correction of Jan/Feb began as December quarter earnings began coming out, even though those earnings were impressive.

The current more serious correction began in April when the March quarter earnings began to be released, even though they were also impressive. And as in January, some of the companies with the best March quarter earnings saw their stocks sell off the most.

And here we are only a week into the June quarter earnings period, and although those earnings are again beating Wall Street’s estimates, yesterday the market may have begun selling off again, given the big 262 point reversal by the Dow. (Or perhaps it was just a decline to retest potential support at the short-term m.a.).

Three weeks ago, as I showed you at the time, the market had become short-term oversold beneath 21-day moving averages to a degree that almost guaranteed at least a short-term oversold rally.

I had warned that the resistance at the intermediate-term 20-week moving averages (next chart) was likely to halt the rally, as happened with the previous brief oversold rallies, since only the short-term technical condition had changed, while nothing had changed in the intermediate-term technical picture, or in indications that the economic recovery is stalling.

If yesterday’s big decline was the end of the rally it stopped just short of the 20-week m.a. But if it was the end of the rally it would still confirm that the m.a., which was typically overhead resistance in the 2007-2009 bear market, and then support through the bull market last year, is likely to again be significant resistance in rally attempts as the market correction resumes.

Either not understanding technical analysis, or not wanting to believe in it, Wall Street and the media have to translate the situation into references to earnings or economic reports, things most people can easily grasp.

We can play it that way too, although we prefer to use both technical and fundamental analysis in our work.

That fundamental situation is that even as bellwether companies in important business sectors, including Alcoa, Intel, Goldman Sachs, and General Electric, have reported healthy 2nd quarter earnings that beat forecasts, economic reports that were worse than forecasts continued to pile in.

This week’s reports included that retail sales fell 0.5% in June; automobile sales fell 2% in June; mortgage applications for home purchases fell to a 13-year low; more than 600 smaller banks that received TARP bailout loans could collapse or have to be taken over because they can’t afford the loans; small business confidence fell in June after several months of improvement; the U.S. trade gap worsened to $152.3 billion in May to its worst level in 18 months, prompting economists at J.P. Morgan and Macroeconomic Advisors to significantly lower their estimates of 2nd quarter GDP by 0.8 percentage points to 2.4%; the New York State Mfg Index unexpectedly fell to just 5.1 in July from 19.6 in June; the Fed’s Philadelphia area Mfg Index fell to 5.1 in July from 8.1 in June; and yesterday it was reported that the University of Michigan’s consumer sentiment index plummeted to 66.5 in July from 76 in June (the consensus forecast was that the July reading would be 74.3). And even the Fed weighed in this week with the minutes of its June FOMC meeting, which showed the Fed was more concerned in June about the economic recovery than it indicated in its announcement after the meeting. 

You might prefer to read more encouraging opinions, and Wall Street and the internet has plenty of them.

But I suspect if you’re going to make profits in this kind of market, searching for second opinions until you find one that supports bliss, while ignoring what is going on with the market technically, and with the economy’s fundamentals, will not be the way to go.

Headlines Elsewhere:

Financial Times: “The Great Re-regulation Turns Into The Great Escape. What happened to the Great Re-regulation of the financial industry? After the financial crisis, it was beyond argument that existing regulations had failed, and would need to be rethought. Only a few months ago it looked as though the Great Re-regulation might turn into the Great Revenge as politicians planned to squeeze the banks. Now it begins to look like it will be the Great Escape – for the banks.”

Associated Press: “Regulators Shut Dow Six More Banks. Regulators on Friday shut down three banks in Florida, two in South Carolina, and one in Michigan, bringing to 96 the number of banks to succumb this year to the recession and mounting loan defaults.”

Subscribers to Street Smart Report: There will be a Special Report and hotline on the website for you by late afternoon tomorrow (Sunday).

Yesterday in the U.S. Market.

That was ugly. Not a good way to send the market into a weekend. The market was down from the open, on still another string of negative economic reports, and closed just about on its low.

Volume picked up, with 1.5 billion shares traded on the NYSE, but that’s usual for an options expirations day. Market breadth was decidedly negative, with a 4:1 ratio of declining stocks to advancing stocks on the NYSE, an a 7:1 ratio on the Nasdaq.

Yesterday’s intraday chart:

The Dow closed down 261 points, or 2.5%. The S&P 500 closed down 2.9%. The NYSE Composite closed down 3.0%. The Nasdaq closed down 3.1%. The Russell 2000 closed down 3.8%. The DJ Transportation Avg. down 3.2%.

The U.S. dollar etf UUP closed up 0.2%. The Treasury bond etf TLT closed up 0.5%. Gold closed down a big $16 an ounce, at $1,192, back under $1,200.

Yesterday in European Markets.

European markets gave up earlier gains to close down. The London FTSE closed down 1.0%. The German DAX closed down 1.8%, and the France CAC closed down 2.3%.

Global markets for the week.

Only a 1-week rally off the short-term oversold condition of two weeks ago? Perhaps.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($10 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

Emerging Markets not so negative? S&P 500 (indicators and signals on both short-term and Intermediate-term); and the potentially important market pattern for next week.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

Next week’s Economic Reports:

Next week will be another fairly heavy week for potential market-moving economic reports including those related to the important housing industry; the Housing Market Index, Housing Starts, Mortgage Purchase Applications, and Existing Home Sales. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

The 2nd quarter earnings reporting season will also continue of course.

I added my new weekend newspaper column ‘Is the Economic Recovery Just An Illusion?’ to the blog at noon-time yesterday. If you haven’t already read it you can either scroll down to it, or click here!

Subscribers to Street Smart Report: There will be a Special Report and hotline on the website for you by late afternoon tomorrow (Sunday).

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

Friday, July 16, 2010. 9:15 am. Top post added 11:45 a.m.

There’s too much money happy to be right where it is, not about to come out of hiding and provide fuel for the economy.

Don’t ask me who’s got it all, but in spite of the bad times U.S. households, afraid of the stock market and real estate, are sitting on almost $8 trillion in cash (money markets and CD’s). Corporations, finally making decent profits after the recession, but worried that economic growth is slowing again, and already having idle capacity due to the recession, are not spending their cash flow for new factories or equipment, but simply hoarding it. America’s non-financial corporations are sitting on $1.84 trillion in cash, the highest percentage of their assets in cash in almost fifty years. They won’t even pay it out to their investors in the form of higher dividends to soften the hit their investors are taking from declining stock prices, too concerned they might need the cash to survive another economic slowdown.

In the financial sector, the too-big-to-fail major banks, flush with cash from the $billions of profits they’re making from their trading desks, and the capital they were provided by the bailout plans, and still more capital raised by selling additional shares to investors, are holding onto the cash. They won’t act like banks and lend it out, either because credit-worthy potential borrowers are scarce, or because they make more by using it for proprietary trading and deals to become even bigger.

Even hedge-funds, known as big risk-takers, are sitting on unusual levels of cash. After losing big time in the 2007-2009 bear market, and short-term in the current market correction, they are under pressure from their investors to take less risk.

Hoarded cash is a big problem for an economic recovery.

The economy needs consumers to spend on goods, so businesses will spend for labor and supplies to produce more goods, creating jobs, making banks more willing to lend if more consumers have jobs, and businesses are making more assured profits.

Each group needs the others to make the first move in a financial catch 22. Consumers won’t buy because too many don’t have jobs. Companies can’t provide jobs because consumers aren’t buying. Banks are happy to stay out of it and use their cash to make acquisitions to become even bigger. Investors are happy on the sidelines. Although making close to zero return on their cash, at least they’re not losing money in the stock market.

It took the government to step in last year and get things moving by giving potential home-buyers cash to make down-payments on homes, cash for clunkers to buy new automobiles, cash to financial firms that was used for trading to bid up the price of stocks and commodities.

Through it all not much non-government cash moved into play. Most houses that were sold were to first-time home buyers who received the rebates, or auctioned and foreclosed homes at bargain prices by those hoping to flip them later. Most auto sales were just pulled ahead from future quarters by the rebates. Once the rebates expired, housing collapsed, and auto sales are in decline again.

In spite of the impressive new bull market in stocks, investors continued to pull money out of stocks and equity mutual funds all last year. Lipper FMI reports that money finally started to flow into mutual funds this year. But after $7.4 billion had flowed into funds during the 2^nd quarter, the flow reversed dramatically, with $11.6 billion pulled out of equity funds in the week ended July 7.

So is it a real recovery or just an illusion of one, artificially produced by government spending but unable to stand on its own?

Concern is growing that if it turns out the recovery is stalling too significantly, what stimulus tools are left, with interest rates already close to zero, massive amounts of mortgage-related assets already on the Fed’s balance sheets from the bank rescue last year, quasi-government mortgage giants Fannie Mae and Freddie Mac already in trouble themselves after being by far the major lenders in the now stalled housing recovery, and Congress in no mood for another round of stimulus efforts that would boost federal budget deficits even further.

It leaves mostly the hope that somehow or other the inflow of cash and artificial stimulus last year jump-started confidence enough to feed a continuation of the recovery on its own, and that this is only a minimum pause to collect itself.

But there is little evidence of that, with real estate sales collapsed once the home-buyer rebate plan expired, retail sales, consumer confidence, and manufacturing slowing even faster than economists can revise their forecasts.

My December 31 forecast for 2010 still stands, that problems in the real estate sector would return once the rebates expired, that consumers would hunker down again, and that investment profits this year can be really substantial but will mostly come from downside positioning, at least until the important market low I expect in the October/November time-frame.

The rest of post is unchanged since 9:15 a.m.

Big Bank Reports Disappoint?

For the most part the financial firms reporting 2nd quarter earnings this morning have disappointed the markets, with pre-open futures turning more negative as the reports have been released. It looks like the banks did not make the large trading profits that had dominated their previous earnings reports.

Citigroup (symbol C) reported its net income for the quarter fell 10% even though its loan losses for the quarter were down. The bank also shifted $1.5 billion from its loan loss reserves during the quarter, which helped to boost the earnings.

Bank of America, BAC, reported its 2nd quarter income was up 15%, and that it also lowered its loan loss reserves by 17%, a balance sheet move which boosted its earnings. It said its revenue from trading bonds, currencies and commodities was down $500 million from the year ago $2.9 billion.

General Electric, (GE) reported its financial divisions improved, helping it report its first increase in quarterly profit since 2007, but that its industrial divisions saw sluggish sales.

Goldman Settlement Ridiculous!

Late yesterday, Goldman Sachs settled the SEC’s civil fraud charges by agreeing to pay a $550 million fine, “while neither admitting nor denying the charges” that the Wall Street giant misled buyers of mortgage-related investments prior to the multi-billion dollar collapse of the sub-prime mortgage market.

The fine is pocket change to Goldman and must have Goldman executives laughing up their sleeves. The settlement amounts to roughly 5% of Goldman’s huge $12.2 billion 2009 profits, being about two weeks worth of profits.

An SEC spokesman said the SEC was interested in settling quickly to send a message to the rest of the financial industry. Robert Khuzami, director of enforcement at the SEC said the settlement is a stark lesson to Wall Street firms that they will pay “a heavy price if they violate the principles of honest treatment and fair dealing.”

Some message. Some lesson. Also some coincidence that of all days the SEC could have announced the good news for the banks it did so the day before banks were due to release 2nd quarter earnings that for the most part are disappointing.

Yesterday in the U.S. Market.

Mostly to the downside until the final half hour. The Dow was down 126 points in the first hour of trading and stayed down the rest of the day, but that last hour spike-up closed it down only 7 points or 0.1% for the day.

Market breadth was fractionally negative on the NYSE with 1,454 stocks up, 1,549 down, but more than 2:1 negative on the Nasdaq, with only 884 stocks up, and 1,759 down.

Yesterday’s intraday chart:

The Dow closed down 7 points, or 0.1%. The S&P 500 closed up 0.2%. The NYSE Composite closed up 0.2%. The Nasdaq closed down 0.1%. The Russell 2000 closed down 0.9% The DJ Transportation Avg. down 0.5%.

Of the safe haven etf’s, the U.S. dollar etf UUP closed down 1.2%. The 20-year treasury bond etf TLT closed up 1.0%. Gold closed up $1 an ounce.

Yesterday in European Markets.

European markets were down yesterday. The London FTSE closed down 0.8%. The German DAX closed down 1.0%, and the France CAC closed down 1.4%.

Asian Markets Mostly Closed Down Again Last Night.

The DJ Asia-Pacific closed down 0.5%.

Among individual markets:

Australia closed down 0.4%. China closed flat. Hong Kong closed flat.  Japan closed down 2.9%. India closed up 0.3%. Indonesia closed up 0.4%. New Zealand closed down 0.6%. Singapore closed up 0.5%. South Korea closed down 0.7%. Taiwan closed down 0.5%.

Markets This Morning.

European markets are up this morning. London is up 0.8%. Germany is up 0.4%, and France is up 0.2%.

Oil is down $.52 a barrel at $76.12.

Gold is plunging $15 an ounce at $1,193.

Markets In the U.S.

This week has been a fairly heavy week for potential market-moving economic reports, including Retail Sales for June, minutes of the Fed’s last FOMC meeting, the Producer Price Index, and Consumer Sentiment. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Wednesday, it was reported that Retail Sales fell 0.5% in June, and the minutes of the Fed’s last FOMC meeting revealed the Fed as being more concerned about the slowing economic growth than it let on in its announcement after the meeting two weeks ago.

Yesterday, it was that new unemployment claims fell by 29,000 last week, an encouraging number. But the NY State Mfg Index fell to just 5.1 in July, from 19.6 in June. Its new orders index fell to 10.1. The Phila area Mfg Index fell to 5.1 in July from 8.1 in June, much worse than the consensus forecast that it would rise to 10.  Producer Prices fell 0.5% in June, led by a 2.2% decline in food prices. It was the largest monthly decline for food prices since 2002. And U.S. Industrial Production was up 0.1% in June.

This morning it was reported that the Consumer Price Index declined 0.1% in June, while the core rate rose 0.2%. Year over year CPI is up only 1.1%, while the core rate is up only 0.9%. Still more evidence that inflation is not the problem but deflation. Still to come is Consumer Sentiment at 9:55 a.m.

But the U.S. market seems more focused on the disappointing bank earnings reports this morning.

Pre-Open Indicators.

Our pre-open indicators are pointing to the Dow being down 60 points or so in the early going.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($12 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

Street Smart Report’s current intermediate-term signals for Gold, the U.S. Dollar, and U.S. Treasury Bonds. And the potentially important historical weekly market pattern for this week.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

Subscribers to Street Smart Report: The new issue of the newsletter is on your website from Wednesday and a hotline from Wednesday evening.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

Thursday, July 15, 2010. 9:15 am. Updated at 10:30 a.m. to add new top post.

The market rolled over in April into what turned out to be an intermediate-term correction of 16% for the major indexes. Since then there have been four rallies that began when the market became oversold short-term beneath 21-day moving averages.

The first two, marked A and B in the above chart, ended quickly when the major indexes reached the short-term resistance at their 21-day m.a.’s.

The third rally, marked C did not end until it reached the intermediate-term resistance at the 20-week m.a. shown in the next chart.

In doing so it left a potential head and shoulders top in place, and the question of whether the current short-term rally will also be halted without breaking through the important potential resistance at the 20-week m.a.

Please subscribe to Street Smart Report to see what our indicators are telling us to expect!

NOTE: The rest of this post is unchanged from the 9:15 upload.

The Fed Is More Concerned About Economy.

9:15 a.m.

The minutes released yesterday of the Fed’s June 22-23 FOMC meeting revealed more concerns about the economy than was implied in the Fed’s announcement after the meeting.

In the meeting Fed governors cut their forecasts of economic growth for the year, and discussed whether they need to take steps to keep the economy in recovery mode.

Their main concerns were the debt crisis in Europe, the housing market’s significant backslide since the stimulus efforts expired, stubbornly high unemployment, and the declining stock market.

A significant change was the discussion of the potential need for new stimulus efforts, an about-turn from the discussions at previous meetings of when and how they should reverse more of the stimulus efforts and perhaps begin to raise interest rates.

Fed Chairman Bernanke will be providing his semi-annual testimony to Congressional committees next week, which should bring some interesting questions.

In this morning’s headlines:

Associated Press: ‘Foreclosures on Track to Reach a Million by Year-End. Nearly 528,000 homes were taken over by lenders in the first six months of the year, a rate that is on track to eclipse the more than 900,000 that were repossessed in 2009, according to data released this morning by RealtyTrac Inc., a foreclosure listing service.”

Yesterday in the U.S. Market.

A mixed day, but after 7 straight up days. Can’t fault the market for taking a rest.

No impact from Intel’s impressive earnings report. Not much volatility. The Dow was down only 60 points at its low, up only 37 points at its high, and closed up only 3 points, virtually unchanged.

Light volume, only 1.05 billion shares traded on the NYSE. Market breadth fairly negative with 1,322 stocks up, 1,654 down on the NYSE, 1,102 up and 1,519 down on the Nasdaq.

Yesterday’s intraday chart:

The Dow closed up 3 points, or 0.03%. The S&P 500 closed down 0.01%%. The NYSE Composite closed down 0.1%. The Nasdaq closed up 0.3%. The Russell 2000 closed down 0.4% The DJ Transportation Avg. up 0.7%.

Of the safe haven etf’s, the U.S. dollar etf UUP closed down 0.2%. The 20-year treasury bond etf TLT closed up 1.0%. Gold closed down $2.80 an ounce.

Yesterday in European Markets.

European were also mixed with small moves. The London FTSE closed down 0.3%. The German DAX closed up 0.3%, and the France CAC closed down 0.1%.

But Asian Markets Closed Down Last Night.

Among individual markets:

Australia closed down 0.5%. China closed down 1.9%. Hong Kong closed down 1.5%.  Japan closed down 1.2%. India closed down 0.2%. Indonesia closed down 0.1%. New Zealand closed down 0.9%. Singapore closed down 0.3%. South Korea closed down 0.4%. Taiwan closed down 0.1%.

Markets This Morning.

European markets are mixed with only fractional moves this morning. London is down 0.1%. Germany is up 0.3%, and France is up 0.3%.

Oil is up $.19 a barrel at $77.23.

Gold is $5 an ounce at $1,213.

Markets In the U.S.

This week has a fairly heavy week for potential market-moving economic reports, including Retail Sales for June, minutes of the Fed’s last FOMC meeting, the Producer Price Index, and Consumer Sentiment. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Yesterday it was reported that Retail Sales fell 0.5% in June, and the minutes of the Fed’s last FOMC meeting revealed the Fed as being more concerned about the slowing economic growth than it let on in its announcement after the meeting two weeks ago.

A bunch of reports today. So far it has been that new unemployment claims fell by 29,000 last week, an encouraging number. But the NY State Mfg Index fell to just 5.1 in July, from 19.6 in June. Its new orders index fell to 10.1. And Producer Prices fell 0.5% in June led by a 2.2% decline in food prices. It was the largest monthly decline for food prices since 2002.

Still to come are Industrial Production at 9:15 a.m., and the Phila Fed Index at 10 a.m.

Pre-Open Indicators.

Our pre-open indicators are pointing to the Dow being up 30 points or so in the early going.

This blog provides free and ‘Premium’ Content.

The premium content area allows us to provide more information that investors should find useful, without violating the trust of our paying subscribers to Street Smart Report. The premium content’s small cost ($12 a month) is the equivalent of one cup of coffee a week.

Better yet, why not subscribe to the full Street Smart Report Online package at the equivalent cost of two cups of coffee a week and get all that it provides, which includes access to the premium content of this daily blog. Just click here and then on ‘Subscribe’ at the top of the page it takes you to.

In the premium content area today:

A surprising change in investor sentiment as measured by last night’s AAII poll. Resistance levels that are liable to halt the rally. And the potentially important historical weekly market pattern for this week.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘A Rally With Legs? – Give It a Maybe!’ click here!

Subscribers to Street Smart Report: The new issue of the newsletter is on your website from yesterday and a hotline from last evening.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe? At least subscribe to the premium content of this daily blog.

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

**** End of Today’s post*****

Wednesday, July 14, 2010. 9:15 am.

After the close yesterday, Intel (INTC) reported earnings of 51 cents a share in the 2nd quarter compared to a loss in the same period last year. Even more impressive, Q2 revenues were up an astounding 34%. Earnings and revenue easily beat both the company’s prior guidance and Wall Street’s estimates.

The company also raised its guidance for the rest of the year, and made very positive remarks regarding the economy, saying corporations have begun upgrading computers and servers, encouraged by an improving economy and the new cycle of computer models and operating systems.

Not So Uplifting Reports.

All the market cared about yesterday was the 2nd quarter results of Alcoa and CSX, easily ignoring a significant amount of not so positive forward-looking information.

For instance:

Britain’s Office of Budget Responsibility warned that Britain’s new austerity budget will result in greater public-sector job losses than originally reported.

There was also the report that the U.S. trade gap worsened to $152.3 billion in May, its worst level in 18 months, as increased imports from China more than offset the small growth in U.S. exports, an imbalance that is weighing on the slowing U.S. economic recovery. The larger than expected trade deficit caused several economists, including those at J.P. Morgan Chase, and Macroeconomic Advisors, to significantly lower their estimates of 2nd quarter GDP by 0.8 percentage points, to 2.4%.

And the report from the National Federation of Independent Businesses that small business confidence declined in June after several months of improvement. In the June poll only 10% of small businesses plan on new hiring, down from 14% in May, while 8% plan to lay-off employees, up from 7% in May. The number of small businesses planning to make capital expenditures over the next few months fell to 19%, just 3 points above the 35-year record low. Small businesses account for most of the employment in the U.S.

Then there was a warning from global bank HSBC’s chairman that the financial crisis is not over and markets should not be complacent regarding the possibility of future shocks.

And the Commerce Department report that wholesale inventories in the U.S. rose 0.5% in May for a fifth straight month,while sales fell for the first time in more than 12 months, indicating that manufacturing will be slowing going forward, in an effort to work off unsold inventories.

This morning the Congressional Oversight Panel reported that the TARP bank bailout program that helped large banks so substantially, may have actually harmed smaller banks, which are now struggling to try to pay back the taxpayer loans. Part of the problem is that when the large banks took their share of the money, adding billions of capital and liquidity to their balance sheets, investors were happy to buy up the large amounts of additional shares the banks issued, providing the banks with still more capital, which they used to pay back their TARP loans. Small local banks don’t have that same access to the stock market. The Chair of the panel said it’s troubling because the program was not intended as a bailout of Wall Street, but to boost lending and support consumers and home ownership, and small banks are also basically the lenders to small businesses. The panel concluded that many smaller bailed-out banks could collapse or be taken over because they can’t afford to pay back their TARP money, “while the ‘too big to fail’ banks grow even bigger.”

This morning the Mortgage Bankers Association reported that mortgage applications for home purchases sank to a 13-year low last week in spite of near record low mortgage rates.

And the Commerce Department reported that retail sales fell 0.5% in June, the second straight monthly decline, with auto sales down 2%.

In this morning’s headlines:

Wall Street Journal: ‘Fed Sees Slower Growth. Federal Reserve officials are likely to reveal Wednesday a cut in their assessment of the growth outlook, and are divided on how aggressively they should act if the economy slows further. . . . . Having already cut interest rates to near zero most of the Fed’s options for spurring growth aren’t very appealing.”

So it’s not all about 2nd quarter earnings beating estimates.

Yesterday in the U.S. Market.

A very impressive rally day, especially given that it was primarily based on Alcoa’s 2nd quarter earnings report, in which it beat Wall Street’s carefully conservative estimates by 2 cents a share, while ignoring a number of troublesome reports, such as the NFIB’s report that small business sentiment declined in June after several months of improvements, and Merrill Lynch’s report that its survey reveals that fund managers have turned bearish on their outlook for global economies for the first time since during the recession.

The Dow shot up from the open and did not show any sign of turning negative, closing up 146 points for the day, very close to its intraday high. Volume was not heavy at just 1.1billion shares on the NYSE, but was better than Monday. And market breadth was positive, with roughly five times as many stocks up as down on both the NYSE and the Nasdaq.

Yesterday’s intraday chart:

The Dow closed up 146 points, or 1.4%. The S&P 500 closed up 1.5%. The NYSE Composite closed up 1.7%. The Nasdaq closed up 2.0%. The Russell 2000 closed up 3.4% The DJ Transportation Avg. up 2.0%.

Of the safe haven etf’s, the U.S. dollar etf UUP closed down 0.2%. The 20-year treasury bond etf TLT closed down 0.9%. Gold surged up $14 an ounce after its big, but lesser plunge yesterday, and is now up $2 an ounce for the week so far.

Yesterday in European Markets.

European markets also closed up strongly yesterday. The London FTSE closed up 2.0%. The German DAX closed up 1.9%, and the France CAC closed up 2.0%.

Asian Markets Closed Up Last Night.

Among individual markets:

Australia closed up 1.3%. China closed up 0.8%. Hong Kong closed up 0.6%.  Japan closed up 2.7%. India closed down 0.3%. Indonesia closed up 0.7%. New Zealand closed up 0.6%. Singapore closed up 0.8%. South Korea closed up 1.3%. Taiwan closed up 1.5%.

Markets This Morning.

European markets are down some this morning. London is down 0.7%. Germany is down 0.2%, and France is down 1.0%.

Oil is down $.53 a barrel at 76.62.

Gold is down $5 an ounce at $1,208.

Markets In the U.S.

This week will be a fairly heavy week for potential market-moving economic reports, but not beginning until tomorrow. Reports will include Retail Sales for June, minutes of the Fed’s last FOMC meeting, the Producer Price Index, and Consumer Sentiment. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

This morning’s report was that Retail Sales fell 0.5% in June, somewhat worse than the consensus forecast of a 0.4% decline.

Still to come are the minutes of the Fed’s last FOMC meeting, which will be released at 2 p.m. this afternoon.

Meanwhile the market is not as excited about last night’s earnings report from Intel as might have been expected.

Pre-Open Indicators.

Our pre-open indicators are pointing to the Dow being down 30 points or so in the early going.

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