Planet Mars The science laboratory Curiosity landed on Mars after being launched last November and the first images are being sent back to Earth. It has plans at least to move around for the first Martian year (687 Earth days) in search for conditions that may  have supported life. Hopefully this will generate enough enthusiasm to convince congress to keep supporting such missions.

We had a good rally this week not far from testing this year's highs or setting new ones. The small caps however are still underperforming and are needed. The market in general is becoming overbought so in net we may have a decline by the end of the week. The second quarter earnings season is almost over, with less than 10% of the companies still to report. Total earnings for the 455 S&P 500 companies that have already reported results (as of Thursday, August 9th) are up 4.4% from the same period last year.

Before we get to today's charts some  entertainment.  

Kaori Kobayashi  is a Japanese jazz saxophonist and flautist. American jazz has a huge following in Japan whether it be traditional, mellow or fusion. This song was written by Michael Masser who has written a ton of hit songs. The song in the USA was first made popular by George Benson in 1984.  Kaori here performs Nothing's Gonna Change My Love for You. Her home page is  KaoriKobayashi.com  Send her a tweet @kaori_manager


 

Another excellent Japanese jazz saxophonist also known for great bebop is Saori Yano - her Facebook - here performing I got Rhythm.

First-time claims for U.S. unemployment benefits unexpectedly showed a modest decrease in the week ended August 4th, according to a report released by the Labor Department. The report showed that initial jobless claims fell to 361,000 from the previous week's revised figure of 367,000. Economists had expected jobless claims to edge up to 367,000 from the 365,000 originally reported for the previous week. At the same time, the report showed that the less volatile four-week moving average crept up to 368,250 from the previous week's revised average of 366,000.  graphs - RTTNews

A strong increase in exports combined with a drop in imports combined to shrink the U.S. trade deficit much more than expected, according to figures released by the Commerce Department. Commerce Department figures project a total level of U.S. exports of $185 billion for June with imports of $227.9 billion leading to a deficit of $42.9 billion. The deficit marks a 10.7 percent drop from the revised May level of $48 billion, which was itself revised down from the $48.7 billion initially reported. While most economists had expected the deficit to decline, most had predicted a far smaller drop to $47.5 billion.

Labor productivity in the U.S. rose by more than expected in the second quarter, according to a report released by the Labor Department, although the report also showed a sharper than expected jump in labor costs. The report said productivity increased by 1.6 percent in the second quarter following a revised 0.5 percent drop in the first quarter. Economists had been expecting productivity to increase by about 1.3 percent compared to the 0.9 percent decrease originally reported for the previous quarter. At the same time, the Labor Department said that unit labor costs rose by 1.7 percent in the second quarter compared to economist estimates for a 0.9 percent increase. The report also showed a substantial upward revision to the pace of unit labor cost growth in the first quarter, with costs surging up by 5.6 percent compared to the 1.3 percent growth previously reported.

Wholesale inventories slipped 0.2% in June to a seasonally adjusted annual rate of $481.9 billion, the Commerce Department said Thursday, mostly on a drop in petroleum stockpiles but also as inventories for automotive, furniture and metals categories fell. May inventories were revised lower to a flat reading from an initially reported 0.3% gain. The ratio of inventories to sales edged up to 1.20 from 1.18 in May.

With second-quarter earnings largely in the books (over 84% of S&P 500 corporations have reported), today's chart provides some long-term perspective to the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today's chart illustrates how earnings declined over 92% from its Q3 2007 peak to Q1 2009 low which brought inflation-adjusted earnings to near Great Depression lows. Since its Q1 2009 low, S&P 500 earnings have surged (up an inflation-adjusted 1129%) and currently come in at a level that is well above its dot-com bubble peak and fast approaching its credit bubble peak. It is interesting to note that the original run up in real earnings from Great Depression lows to dot-com highs took over 67 years. The current spike has taken 37 months. Also, current Q2 earnings times four would make for a new inflation-adjusted high for S&P 500 corporate earnings. Therefore, as long as earnings do not decline, S&P 500 companies are on pace to make a new all-time record in earnings by Q1 2013 at the latest. 

This past week's  sectors.

This past week's indices  - 

The Dow is up 1.5% for the month, closing on Friday just 71 points off this year's closing high. It seems inevitable that it will at least test the  highs, though the markets are short term overbought at the moment. The S&P 500 is also close to its high of the year with the NASDAQ trailing and the Russell 2000 still underperforming. Oil may be headed for It Ctr., Bollinger band just over $96 and  gold is only in a tight range so far this month, but holding Over the Ctr., Bollinger band.  

The 60 min. chart shows that while there was a nice move at the end of the day on Friday, there was no big breakout from the range the last few days. Note how tight the Bollinger bands are, which generally precedes an extended move that could be in either direction. 

The Dow weekly showing how close it is to breakout resistance and note that the top Bollinger band is at 13,421, so would not be overbought "band wise" until above that level. The noticeably negative feature of this chart is the volume, which has been declining the last four weeks. 

A longer term daily view also noticing the drop in volume, which is customary in August. 

The Dow futures had tested its lows here at the S2 pivot for Friday and then broke out above the trendline for a rally back up to the 127.2% Fibonacci projection. 

By Wednesday the utility average had dropped to the 50 day EMA but managed a bounce Thursday and Friday on declining volume. 

The transport average is not suggesting an improving economy, as it dropped this week, closing just slightly under the 50 week EMA. 

The NASDAQ summation index, which had shifted to sell in the second half of July is back on a buy at the moment. The next chart, however, does not confirm this bullishness as yet. 

The moving average of the number of new highs on the NASDAQ still below that former support line and we see no improvement. 

This shows the break out of the range on the NASDAQ 60 min. chart, though note that the RSI has dropped under 70, the histogram is negative the MACD has a negative crossover. 

The NASDAQ 100 futures in a very tight range the last few days still with better than even odds of testing the 2745 Fibonacci level. 

This mechanical NASDAQ 100 ETFs from our stockcharts public page has been on a buy since the last week of July. 

This shorter-term 15 min. chart of the ultra of has  clearly defined support and resistance lines nearby. 

The volatility index continued dropping closing on Friday at 14.74. 

The semi conductor index which has been very weak since early spring, had a 4% run this week above the 50 week EMA. 

Priceline having gapped down to the 61.8% Fibonacci retracement and former resistance, now support, may bounce some here. There is a longer-term trendline, which is now below that and it would intersect the Fibonacci level late in the month. If that could be tested later on it may be a significant buying point with a stop just below. 

The number of new highs minus new lows on the NYSE has not made a turn up to follow the price action and this will need to happen for a lasting rally higher. 

76% of stocks on the NYSE are now trading over their 50 day moving average. 

The bullish percent indicator for the S&P 500 clearly remains on a buy. 

S&P 500 daily with a close just 15 points below this year's high. 

The S&P 500 60 min. chart with its continual higher lows and higher highs very close to the dotted line resistance overhead. 

The it 15 min. chart shows the distinct range the last four days. 

The 15 min. mechanical chart with its whipsaws the last four days. 

The S&P 500 futures, closing near the high of the week, but with some negative divergence at the moment on the RSI. The Fibonacci 161.8% is at 1410.

Also from our public page the ultra S&P 500 ETF remains on a buy and very close to overhead resistance. 

The Russell 2000  underperforming the large caps and here you see the overhead resistance levels, as it is still 46 points away from this year's high. 

This 60 min. chart showing a closer view of the next resistance levels overhead, with some possible support below on a test of that broken trendline. 

The very short term Russell 10 min. mechanical shifted back to buy the last time after one o'clock on Friday afternoon for a nice little rally into the close. 

The 3-X Bull ETF for the Russell 2000 dropped under this little triangle on Friday and was unable to move back over by the close. 

The banking index moving sideways by time and just doing that is getting closer to the descending top line of this triangle. 

This closer view showing the low volume consolidation right at horizontal resistance. 

More sideways consolidation in the retail sector up modestly this week. 

The Dow Jones world stock index had a significant gain this week, closing up 1.7%. That 250 area is significant as it is the top trendline of this triangle. The position in the triangle time wise would be appropriate for a breakout if it reaches the top line. 

The Shanghai index could not just keep dropping without it more noticeably affecting the other markets and  last week it had a bullish hammer candle, and it followed through this week with a nice 1.7% bounce. 

The Russian trading system now in its third month of gains and for August up almost 4%. 

The commodity ETF last week closed back above the 50 week EMA  and this week continued its move, closing over this green line resistance. The more major resistance would be at the 200 week EMA shown overhead. 

Oil closed up over 2% for the week, closing over the 20 week MA and $.50 below the 50 week EMA. 

Gold futures ran to the 50% Fibonacci retracement and pullback during the end of the day on Friday. This would be an appropriate point for  a decline and if not, the next Fibonacci level is at $98.82. 

Natural gas continued its decline this week, dropping almost 3%. 

On natural gas futures we see the 50% retracement level gave some support in early July and may do so again. If not, a drop to the 61.8% level would put both RSI and MFI into over sold territory. 

The natural gas fund having dropped from above the top Bollinger band is getting closer to the lower one. 

The natural gas ultra ETF having reached the Fibonacci 127.2% projection level and also horizontal resistance from early in the year  has pulled back and is nearing the 61.8% level of this last move. It had gone up 100% since the June buy after a 70% run in the springtime. 

Gold weekly is just hanging around its moving averages, though the 20 day is now just slightly below the 50 day EMA. 

Gold futures remaining above this small triangle trendline on this longer-term chart. 

The shorter-term chart shows an another triangle with its trading points from either top or bottom trendlines. 

The gold miners ETF closed up 4.6% this week, closing just three cents under the 20 week moving average, though the volume was light. 

Our mechanical for GDX remains on a buy. 

Silver had a minor gain this week with SLV closing up 1%. 

Copper also bounced 1% for the week, it remains under the 200 week EMA. 

The  euro after a two-week move higher, consolidated on this weekly view. 

The euro futures dropped back to this steep trendline in this view after having moved up in what we thought may be an inverted head and shoulders.  If it does bounce here and moves higher we still show a measured move target at the dotted line. 

The US dollar unchanged for the month. 

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Check the updated Earnings Calendar on all overnight holds.

This week's economic calendar for the USA.