Decoration Day 1899 now called Memorial Day, originated after the American Civil War to commemorate the fallen Union soldiers of the Civil War. Southern ladies' organizations and southern schoolchildren started a tradition of decorating graves of Confederate soldiers and this tradition has turned into a national holiday recognized by all states and now to honor all Americans who have died in all wars. Pictured here are daisies collected in 1899 to decorate the graves. It has also now become the unofficial start of summer and a big day for picnics and beach going.

The market got a bump last week though no noticeable increase in new highs. We thought the market may rally then pullback once again to test the lows but so far no test. We did not close at the high of the week but did close positive despite continued worries  about the European economy and the slowdown in China.  Historically this week is one of the best of the year so if it were to live up to history it could set a tone for the summer. Mike Burk reminds us that for the past 50 years or so all of the market's gains in June have been made during the 1st week.

Before we get to today's charts some  entertainment. Last May YouTube celebrated its sixth birthday with an announcement that more than 48 hours of video were being uploaded every minute and that the site was racking up 3 billion daily views. To celebrate birthday number 7 YouTube has announced that a whopping 72 hours of video is being uploaded to the site every minute! 4 billion views per day. They put together a birthday video of their own.

Steve Reich (now 76 years old) you will know if you listen to Hearts of Space as his music is often on the program. He has been referred to as America's greatest living composer. I had really liked his unusual piece It's Gonna Rain made in 1965, his first process music piece. During 1974-1976 he composed Music for 18 Musicians and preformed it for the first time in NYC in 1976. A recording was then  and released (available in our store) and I bought a copy in that year and it remains one of my favorite serious musical pieces  from the 20th century.  The performance of this composition takes from 60 to 75 minutes as there is some provision that allows the performers to repeat some sections longer than scored. The video today is only the first 13 minutes of the piece and was recorded at the sold out performance in the Opera City Concert Hall in Tokyo, May 21, 2008. Steve Reich is wearing the black shirt and cap and plays the piano. His Twitter   @stevereich

Demand for new U.S. homes increased more than forecast in April as low mortgage interest rates and an improving economy drew buyers. Purchases rose to a 343,000 annual rate, up 3.3 percent from a revised 332,000 in March, the Commerce Department reported today in Washington. The median forecast in a Bloomberg News survey of economists was 335,000. Data released Tuesday showed sales of existing homes rose in April in every region.  U.S. home prices are up 2.7 percent in the 12 months through March as values increased in every region, a sign that a housing recovery is gaining traction. graphs -  RTTNews  

After reporting a sharp drop in durable goods orders in the month of March, the Commerce Department released a report showing a modest increase in durable goods orders in April. The report showed that durable goods orders edged up by 0.2 percent in April after tumbling by 3.7 percent in March. The steep drop reported for March reflected a revision from the 4.2 percent decrease that had been reported previously. Excluding a 2.1 percent increase in orders for transportation equipment, durable goods orders fell by 0.6 percent in April compared to a 0.8 percent decrease in March.

According to the Department of Labor, new unemployment claims for the week ending May 19 came in at a seasonally adjusted level of 370,000, a slight decline from the previous week's revised level of 372,000.The previous week had initially showed new unemployment claims holding level at 370,000 from the week before, so the revisions mark a slight increase. Nevertheless the report for May 19 still comes in below the expectations of most economists, who predicted a slight increase to 371,000. The four-week rolling average of new unemployment claims, a figure that eases some of the week-to-week volatility in the reports, also showed a slight decrease, dropping 5,500 to 370,000 from the previous week's revised average of 375,500.

Crude oil stockpiles rose 900,000 barrels to 382.5 million barrels, compared with an average survey estimate of a build of 500,000 barrels. The American Petroleum Institute, an industry group, reported a 1.5 million-barrel build in its weekly report released late Tuesday.

For some perspective on the long-term performance of the stock market, today's chart presents the Dow priced in another global currency -- gold (i.e. the Dow / gold ratio). For example, it currently takes less than a mere eight ounces of gold to 'buy the Dow' which is considerably less than the 44.8 ounces it took back in 1999. Priced in gold, the Dow has been in a massive 12-year bear market. Recently, the downtrend of the Dow (priced in gold) has slowed to its slowest pace since peaking at the end of the previous century. In fact, the Dow (priced in gold) is now testing resistance of its reduced downtrend channel thanks in part to a significant correction in gold itself.

The University of Michigan Consumer Sentiment Index Final number for May came in at 79.3, which is the highest reading since October 2007, two months before the NBER’s date for the onset of the last recession.
The sentiment index has trended upward since its inception in 1978. Added here a linear regression to help understand the pattern of reversion to the trend. Also highlighted is recessions and included real GDP to help evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy. (econintersect.com)

This past week's  sectors.

This past week's indices  - 

We have three more days of trading to see how the monthly charts finish but there is the possibility that this pullback has ended. The Dow, NASDAQ and S&P 500 are all over their center dotted Bollinger band while the Russell 2000 and oil are below. The rally this week brought the indices off their lows and by next week's newsletter we will have a single day of a new monthly candles to look at.

The 60 min. multi-index chart shows the market rally was actually Monday and Tuesday as by Wednesday it gave up those gains to only get some of them back by the close on Friday. The movements again went from lower Bollinger band to top bands for the first move then lower volatility the rest of the week. Not drawn here, but you can envision the triangles defining the pattern for last week and the trades that can be made using those. 

The weekly Dow chart had dropped to the 50 week EMA and horizontal support. So the bounce so far was just technical in nature as it has no confirming volume. This is however is not so uncommon as we have seen the moves from December into March also with the lack of volume. 

The daily Dow chart shows some basing around the 200 day EMA. The market was very oversold, as shown by the RSI which was as low as it was last August. It has made an initial bounce but sometimes RSI will go back under 30 as it has on Friday before a more substantial rally. The 20 day moving average is now under the 50 day moving average, which is bearish but could correct after a few days of rallying. The Fibonacci levels mark additional support zones. 

Here a closer daily view showing the Friday decline taking the Williams indicator back under the 80 line and closing under the 200 day EMA. The histogram remains negative and there's been no MACD crossover as yet. 

The Dow futures chart was in a nice vertical rise but it dropped under the pivot point on Friday, dropping near the S1 pivot for the day. 

The utilities remain between the 20 day moving average and 50 day EMA and it had increased volume 

The weekly transportation index shows the 4% gain not quite made up for the losses of the week before but they did close back over the 50 week EMA and above the broken  horizontal trendline. The histogram is still negative as is MACD. 

The NASDAQ summation index is not fast to make a direction change and at the moment remains on a sell despite the minor rally this week. 

The number of new highs on the NASDAQ was not significant so we have not even seen an upturn on the moving average of new highs in blue. It did close still above the green line support. 

The weekly NASDAQ in a parallel channel gave a bounce at the lower line and the 50 week EMA but so far it's just a bounce. 

In the shorter timeframe 60 min. chart there was this breakout from the descending parallel channel and the moving averages could cross for an additional buy signal with out much upward movement. The RSI and MACD did mark the lows of the week. 

On the longer term view of the NASDAQ 100 futures please see the bounce came at the 38.2% Fibonacci retracement level. RSI had not quite gone under 30 which is not essential but it gives a bit more confidence of a sustained rally if it first does move that low.

The NASDAQ 100 ETF mechanical chart so far has one green bar and no signal to go long. 

The volatility index dropped a bit but still is over 21.

There is no constructive information on the semiconductor index, other than a minor bounce with the rest of the market as it was near some minor weekly horizontal support. 

The NYSE new highs minus new lows tested the dotted line support area and so far has held and at that point the S&P 500 rallied back above the dotted line support it had broken briefly. 

In this view we have the NYSE on top closing back over the descending trendline by a bit. In the lower section we see the moving averages of new highs minus new lows has closed at the lowest level of the year. 

22% of stocks on the NYSE he are now trading over their 50 day MA off the low of 12%. The extreme readings often lead to a decent rally but sometimes there is a double dip as the chart shows. 

Our bullish percent indicator is close but has not yet switched to a buy signal. 

The weekly S&P 500 s closed back over the horizontal support green line and also back over the 50 day EMA if the rally continues there will be additional resistance at the 20 day MA near 1358

The weekly mechanical chart is not fast to respond and has remained on a buy all year. 

The daily mechanical however shifted to a sell early this month and has gone back to a buy this week though MACD also on the chart has not yet crossed over. 

The daily of the S&P 500 did have the RSI and Williams signal a buy though not yet from MACD or histogram. 

The closer daily view shows a bit higher volume Wednesday and Thursday and lower volume on the selloff on Friday which is good. 

The 60 min. view of the S&P 500 closing back at the 50% retrace  level back towards 1422

On Friday the S&P futures got only as far is R1 pivot and then closed back under the daily pivot point. On a close back over 1326 it would be pretty good odds that it will go to the 127.2% projection at 1335 which is also the 38.2% retracement level 

The Pro shares ultra short went long on May 3 and had an EMA crossover and a break of a trendline late this week which would have many selling. The moving averages are so close that a decline on Friday of the S&P would cross them back over to buy . 

The ultra long for the S&P 500 just needs to go back over this little trendline or perhaps 52 to mark a possible change of trend at least short term on the S&P 500.  These charts are live on our stockcharts public page

Another proxy for the S&P 500 remains short though watch for a possible breakout and then EMA crossover. 

This longer term spy chart shows the close still under the 38.2% Fibonacci retracement level. 

The Russell 2000 60 min. had a 20 point move from the low  as RSI went over 30 and MACD crossed over. 

And the 15 min. Russell 2000 as seen on our charts public page showing the support and resistance currently. 

The Russell 2000 3X ETF broke above the descending trendline this week and here like with the S&P 500 futures, we see some Fibonacci projection levels for a close over $49.27. The RSI moving for the second time over 30 was at the bottom at 44.51. 

The banking sector dropped less than one point below the March support line and closed back over it, but unless there is some better movement to the upside, this could become a bear flag. The Williams and Russell however were in oversold territory. 

The retail sector gained almost all of its losses from the previous week rising 2.74%. 

The Dow Jones world market index remains unsurprisingly very week and made less than a 1% gain this week. 

The emerging markets ETF could not even put in a gain for the week, but did close still over the 38.2% retracement level 

The a FTSE was at a significant 61.8% retracement level. Putting in a bounce but remains under that broken trendline with the MACD still pointing lower. 

The Canadian Venture exchange was at a perfect point for a rally as it was deeply oversold on the indicators and at the same time at the trendline. This bounce could continue and do so pretty well if gold continues its upward movement. 

Many signs of a weakening economy in China did not help the Shanghai composite as it closed down slightly for the week. 

A slowdown in China and some recessions in Europe continued to put pressure on commodities in general as our ETF lost an additional 1% this week. A drop to that 30 line would again take RSI under 30 and may be a better buy point, if it comes. 

You can almost hear the 200 week EMA calling out to crude oil, but as its volume is diminishing and it is under the lower Bollinger band, it may rally first before dropping lower. 

The longer-term weekly chart shows an additional reason why it should go a bit lower to tag this trendline. 

The crude oil June futures chart almost to the 61.8% retracement from the low last October. RSI had been extremely low and has bounced up a bit. 

Natural gas prices had gone so low (and was at the channel bottom) that power plants that can burn coal or nat gas snitched to nat gas to save money. Well now the prices is higher so the savings are less and at the same time they have been getting large stock piles of coal as they have yearly contrast. The warm winter also meant there was less energy used. All of this means that natural gas may have some headwinds in the near term . 

The ultra long for nat gas had moved up about 70% from the initial buy as Williams dropped the last time under 20 as the priced dropped under $52. RSI also dropped under 70. It has became oversold on Friday but is below the 200-period EMA on the 30-min chart. It closed at support but be cautious as there may be more reaction to the large coal stock pile news.

This daily BOIL charts so retracement levels and the broken trend line though the horizontal is also the 38.2% retracement.  

Longer term view of BOIL showing the big potential at some point.  

The 1X ETF for natural gas- long term 

Gold having tested this trendline moved up and is now at the horizontal line again also. RSI had been in oversold territory under 30 and Williams now is slightly back above. 

A closer view of the gold bounce this week as RSI and stochastics signaled a buy at the low 

Gold futures chart showing the RSI buy two times. The second was at the test of that broken descending trendline 

The gold ETF is back at the lower Bollinger band but still under this multi-year parallel channel. 

For short term trading you can use a short term chart such as this gold ETF 60 min. chart closing at the trendline. 

Going into this week GDX gold miners ETF had a pretty great set up. It had low RSI and Williams and had moved to cents below the 2010 low and had rallied from there. At the same time gold was at a long term downtrend line so this 8%  rally came right on cue. 

We dusted off this chart we used to show and two weeks ago started to present it in this newsletter with the idea that gold stocks would begin to out perform the gold metal. This demonstrates they sure did as the gold miners (green and red line) greatly exceeded the gold line representing gold price. 

GDX had been in this long decline since the end of February and broke above the trendline as RSI and Williams signaled the buy. 

Along with those buy signals our mechanical trade also switched to buy near 41 and closed near 35 on Friday. 

The 60 min. GDX chart additionally shows the top trendline break and then the movement over the 200 period EMA by Friday. 

Silver could bounce here as it is oversold but wouldn't everyone like to see the real test of that trendline and horizontal line. It came within $.30 of that low but really testing it would be nice as well. 

Here a 60 min. chart showing some potential trades on the long side on a break over this little trendline. 

The silver futures showing that bounce as RSI again went over 30 which signaled the previous two buys a year ago and then in December. 

Our mechanical trade has one a green bar but has not yet signaled a buy. 

Copper was very indecisive this week closing down just one cent exactly at the 200 week EMA 

Palladium in the prior week had a tiny rally and this week dropped more in a very bearish candle which could take it under the Bollinger band - shortly. 

The euro futures continued their decline and now there is at least a 70% chance that they will continue to drop to the 127.2% projection level. 

Because the euro was dropping we put the ultrashort on the watchlist and it has moved up the last three days. There was however declining volume.  

The monthly US dollar chart shows this big 4.6% rally this month but note when that happened in the last quarter of 2010 it dropped for many months after that. An eventual continued rally could take it back near 85 and the top trendline 

The weekly dollar chart shows the four weeks rise in a row and the breakout this week, but nearing the 61.8% Fibonacci retracement and is now over the top Bollinger band though RSI is not yet over 70. 

This monthly US dollar chart shows the break of the trend line that began in 2002, 10 years ago. 

And here in overview daily chart. 

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Political content. Ron Paul pledge page Be a model of peace and economic reform.   The only logical and honest choice for 2012 to help fix the broken governmental system and stop the reckless wars that all the other candidates want to continue.

This week's economic calendar for the USA.