Monday, May 4, 2009

Market Monday's

The SPYs are in a bit of an odd place technically. They are still in an uptrend but they have broken their primary uptrend that started in early March. In addition, they are still having trouble getting above the 88 level which is technically important. In addition, prices have lost their upward momentum. But the price/SMA picture is still solid with prices above all the SMAs, all the SMAs moving lower and the shorter SMAs above the longer SMAs.

I included a three month chart simply to show that the old trend line looks like the "real" trendline. It has more contacts with prices.

The QQQQs are the best performing average out there. Notice how prices continue to move higher. Also note prices are above th 200 day SMA, albeit with weak bars. That move is technically very important.

The IWMs are still in an uptrend and have gotten about important technical resistance. In addition, the price/SMA picture is very bullish as well.

So -- what gives with this rally? Where are the fundamentals backing it up? The latest GDP report showed a 6.1% contraction -- although there was an encouraging pick-up in consumer spending. But there are serious questions as to whether or not that can continue with household wealth getting clobberred in from real estate, stocks and job losses. The drop in inventories led some to argue we'd see a pick-up in orders.

This somewhat backed by the data, but then there is this:

Eighteen of 19 carload commodity groups were down from last year, with only the catch-all category of all other carloads defying the trend and showing a 12.8 percent increase. Declines among the remaining commodity groups ranged from 8.0 percent for grain mill products to 62.4 percent for metals.

Intermodal volume of 184,509 trailers or containers was off 17.8 percent from last year, although up 0.7 percent from the previous week this year. Container volume fell 12.4 percent from last year, while trailer volume dropped 37.1 percent.

Total volume was estimated at 27.7 billion ton-miles, off 21.1 percent from 2008 but up 1.8 percent from the previous week this year.

And consider this:

The American Trucking Associations’ advanced seasonally adjusted (SA) For-Hire Truck Tonnage Index fell 4.5 percent in March, marking the first month-to-month decrease of 2009. The gains during the previous two months, which totaled 4.5 percent, were erased with March’s drop. (February’s increase was revised down to 1.5 percent.) In March, the SA tonnage index equaled just 101.4 (2000 = 100), which is its lowest level since March 2002. The fleets did report higher volumes than in February, as the not seasonally adjusted (NSA) index increased 10.2 percent, but that is well below the 15 to 20 percent range that NSA tonnage usually rises from February to March. In March, the NSA index equaled 104.7.

Compared with March 2008, tonnage contracted 12.2 percent, which was the second-worst year-over-year decrease of the current cycle. In December 2008, the largest year over-year contraction, tonnage dropped 12.5 percent from a year earlier.

All things being equal, if things were getting better we'd be shipping more stuff. Yet the year over year numbers are still bad. That tells me we have a long way to go.