Flora for May Day. From ancient Rome Flora was a goddess of flowers and the season of spring. Her festival, the Floralia, was held between April 28 and May 3 and symbolized the renewal of the cycle of life, drinking, and flowers. Her name is derived from the Latin word "flos" which means "flower." Our May Day is then related to this ancient festival. The painting is what the Italian painter Sandro Botticelli thought she would look like. Painted about 1486. Botticelli may be best know for his painting The Birth of Venus from 1486. Happy May.

 It was an up week across the board with just under or over a 2% gain for the major indices while the US dollar retreated. We had looked for some window dressing and if that is what helped the move it was welcome though the indices have yet to move back above the highs of the year. They are not very far away, but if they are able to break out, everyone would want to see much higher volume to make one believe that it could be sustainable. Heading into May everyone knows the saying "Sell in May and go away," though we have seen some good results in May as well. Mike Burk tells us that since 1928 the SPX has been up 55% of the time in May with an average loss of -0.3%. During the 4th year of the Presidential Cycle the SPX has been up 67% of the time with an average loss of -1.3% (helped considerably by losses of 22.1% and 22.9% in 1932 and 1940 respectively). The best May for the SPX was 1933 (+14.4%) the worst 1940 (-22.9%). The SPX has not had a double digit % move, either way, in May since 1940. This past week, the economic news was mixed. But even with the poor GDP report on Friday the markets continued higher. This week we have PMI and ISM numbers along with factory orders and on Friday the nonfarm payrolls and unemployment rate. So as we are at resistance and the key points to watch, if they do break higher, is the volume of the trading and the number of new highs. This number did increase last week, but is lagging behind the price move and this is somewhat cautionary as we will see in the charts below.

Before we get to today's charts some  entertainment.  

Guitarist William Ackerman founded the New Age music record label Windham Hill Records in 1976. From his incredible album It Takes a Year, the song Impending Death of the Virgin Spirit was and is very respected. Many have since preformed it and here we have a version by Adam Werner playing guitar and Michael Manring on bass. On YouTube some of the comments from viewers say it all.  "This music utterly pierced my heart." -  "As it did mine. One of the most crisp, emotionally stirring pieces ever written for an acoustic guitar." - "If a guitar cried, this is how it sounds." "Totally agree.  This is the best I've heard, other than the original." -  "You feel the ache, the tears, streaming from the strings. Truly beautiful honor to the originator of this song. " "... m a s t e r f u l .."  @MichaelMANRING   @adamlwerner  

About the USA  GDP - The rate of growth of the U.S. economy slowed more than expected in the first quarter of 2012, according to figures released Friday by the Commerce Department. The initial estimate of growth in the U.S. economy showed a 2.2 percent growth rate, down from the 3 percent growth posted for the final quarter of 2011

 New unemployment claims dipped slightly for the third week in April, disappointing economists who had predicted a notable drop. According to the Department of Labor, new unemployment claims for the week ending April 21, came in at a seasonally adjusted level of 388,000. That marks a marginal drop of 1,000 new claims from the previous week's revised level of 389,000, which itself was revised up from the 386,000 initially reported. Most economists had forecast a somewhat significant drop in the level of new claims, predicting the figure would fall to roughly 375,000.

Pending home sales, which represent signed contracts for purchases and help forecast finalized sales, rose 4.1 percent in March to 101.4 on a monthly index from the National Association of Realtors. That's the highest level since April 2010, when the index reached 111.3 ahead of a tax-credit deadline. March's number, coming off a 0.4 percent gain in February to 97.4, also lends credence to reports that first-quarter closings were the best in five years. Pending home sales for last month came in 12.8 percent higher than the 89.9 the index reached in March 2011.

Sales of new homes fell in March by the largest amount in more than a year, indicating that the U.S. housing market remains under strain despite some modest signs of improvement. The Commerce Department said Tuesday that sales dropped 7.1 percent in March to a seasonally adjusted annual rate of 328,000 units. That followed a 7.3 percent increase in sales in February. This figure was revised up from an initial estimate that February sales had fallen 1.6 percent.

New orders for durable goods in the U.S. for March fell at the largest rate in several years, according to figures released by the Commerce Department. Advance estimates of new durable goods orders for the month came in at $202.6 billion, a 4.2 percent decrease from February levels, marking the largest monthly decline since January 2009. 

With first-quarter earnings season well underway (over 65% 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 1120%) 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 34 months. In the end, if corporate earnings were to continue to beat expectations (of those that reported so far this quarter, a relatively high 70% have beat expectations), then inflation-adjusted S&P 500 earnings could make new, all-time record highs this year -- a dramatic reversal from three short years ago. 

This past week's  sectors.

This past week's indices  - 

On the monthly major index charts the Dow now looks flat for the month having made up for its losses the first three weeks and if Monday is positive it could put in its seventh month of gains. The other indices could do the same though they would have to rally harder on Monday. Oil had a small uptick this month but is still in the lower half of last month's trading range while gold in its third month of decline has a pattern that often resolves itself to the upside.  

On the 60 min. multi-index charts for the Dow in the top section, we show a possible measured move where both blue lines are of the same length, this demonstrating another reason for resistance near this level. You see the low this week was on Monday with a minor dip on Tuesday for the S&P 500 and the rally for the rest of the week 

The weekly chart of the Dow shows the minor  pullback to support and the rally these past two weeks but on lower volume moving  right to this resistance. There is however room to run to the top Bollinger band without becoming overbought and the RSI is also low enough to support a move. You see resistance up at the 13,500 area. 

And here the daily chart clearly showing the oversold condition in the first part of the month as the prices dropped belowthe Bollinger bands and the current situation at resistance, though this week the histogram moved positive as the MACD crossed over. 

You know that the Dow futures had stalled at the 127.2% Fibonacci projection level and now we have returned to it. As this is a  longer term view, tis does not illustrate the 13,500 area but the longer-term projection and the possibility at the 161.8% at 13,979. That would have a better than even odds of getting there with a strong close over the lower level. 

Here in the very short term  120 min. chart we see the close resistance at 13,271. On this time frame the RSI buy came on Monday and the sell via RSI on Thursday on a drop below 70 and the price was rejected at the 127.2% level. This gave about a 300 point potential profit. These charts or streaming live each day during usual market hours on our share page.

Tuesday through Friday were good ones for the utility average as it broke solidly above the triangle and up over the horizontal resistance at 467 is well.. And you'll notice that this move was accompanied by higher volume. 

This is the  weekly chart of the transportation average in consolidation with negative histogram up 0.6 percent this week. 

The NASDAQ summation index had a crossover buy at the end of the week and typically during the first couple of days there can be some whipsaws untill the lines move apart a bit further. 

This shows the moving average of the number of new highs on the NASDAQ with its small turn up but not yet significantly. 

The 60 min. chart for the NASDAQ broke above the down trend line and then soon after the moving averages crossed for another buy signal as now RSI and Williams are both in the over bought territory with a bit of negative divergence on the histogram. 

On the NASDAQ 100 futures we see that it is not so close near to its former recent high though did close back over the 161.8% level.

For this move the Qs renko chart did switch back to a buy this week. 

The 60 min. chart had a gap back up over the descending channel with EMA crossover as well. 

The semiconductor index dipped briefly under the 50 week EMA but recovered nicely closing up 2.6% for the week. 

The volatility index closed quite a bit lower near 16. 

The uptick for the moving average of number of new highs minus new lows on the NYSE is noticeable and it came at support but if the prices make new highs we would want to see this making new highs as well to confirm. 

Now 58% of all stocks on the NYSE are trading over their 50 day moving average. 

Our lazy S&P 500 now only five points under its multi-year high. 

The ETF for the S&P 500 just two points under its high. 

The 60 min. spy chart shows the gap up and the crossing of the moving averages and in the breakout out of the parallel channel and slightly above horizontal resistance. 

The daily renko S&P 500 chart also remains on a buy this week while the histogram is still a tiny bit negative and the MACD possibly about to cross over. 

The daily S&P 500 for three days now back over the 20 day moving average. 

Here the break out of the triangle with a very nice move from there. 

The S&P 15 min. illustrates the move as a result of the Apple earnings announcement. 

And the 10 min. renko S&P 500 chart which can have multiple whipsaws, but also signals some decent entry or exit points for short term trading. 

During the last move the Dow had gone to its 127.2% target while the S&P 500 lagged if it does this time break above the 1420 level the note possible resistance at 1431. 

On the short term level also note the 78.6% retracement is at 1405 and often during bounces that can  forestall moves higher. 

With the rally of course the ETF for the S&P 500 rallied as well with the EMA crossover buy and the move up from there. 

And the short basically a mirror image. 

The  Russell 2000 had been lagging but had a nice gap above the 50 day EMAa on Wednesday and followed up Thursday and Friday up above additional resistance 

And here a 60 min. view as it broke clear of its triangle downtrend line. 

This 10 min. Russell renko chart shows the first buy of the morning switching back to a sell by 10 AM but followed with a buy and the excellent move up for the rest of the day 

As bond yields continue very low, the prices are still moving up with the possibility of a crossover of the 20 and 50 day averages which would be bullish for bond prices. 

The daily banking index chart showing the move just barely above the declining trend line but over the 20 day moving average.

Here a closer view. So now that trendline should be support at the 20 day moving average with resistance back at the recent high and top Bollinger band. 

As the financials have been moving higher, of course the ultrashort ETF has been moving lower. This is a 5 min. chart and can be watched for a possible entry on pullbacks of the financial sector. Note the trendline and watch for a crossover to signal a short term buy. 

The retail sector ETF had not dipped much during its three-week decline and in the last week moved it back to new highs. 

This week the London financial times index tested its lows from the week before and ended flat on the week. 

The Shanghai index also earlier in the week, was lower but ended up pretty flat in what is often a constructive pattern which at the moment has good potential of testing the 50 week EMA. 

Our commodity tracking ETF had dipped to the 50 week EMAa and a bit below this week, but recovered with a small rally. 

Oil moved up a bit this week, but it was on lower volume. Although it remains above the 20 week moving average, this is a pattern  could result in a bear flag resolution. 

The oil futures in a pretty clear parallel channel at the moment. 

As you know we have been watching natural gas for quite some time and received the first chance at a RSI buy with the test of the former low of $2.40 and last week we pointed out it had again gone below 30 on the RSI but this time had also hit trendline support, indicating a good chance for a rally. Many times in the past when this has rallied from support it has moved up 50%. This week it moved up 13%, but intra week it was higher. 

As our vehicle for trading we showed the ETF boil as it had a nice consolidation on its 60 min. chart and looked ready to break above the trendline. On this 120 min. chart we show the results of that Monday buy as it moved from the six dollar low to the 78.6% retracement with a 26% gain. Natural gas of course can be driven by politics and recent bills  a week ago gave it added buy strength, but as it can be quite volatile some people like to have a core position with a stop under the recent low and then trade around that by selling  exaggerated moves higher and buying dips at supports. 

Gold as been attempting some moves higher moving up a bit this week but the daily chart shows it now at resistance trendline and also its 50 day EMA. 

The gold futures chart shows its close was at the 50% retracement level. 

And the longer term view shown by the gold ETF. 

The gold miners did move higher all week closing just at bit above this non precise trendline. As the 20 day EMA moved slightly over the 50-day EMA which is bullish there was also some last minute buying and an uptick in volume 

The mechanical trade for the gold miners did switch back to a buy covering your short, on Friday. 

The silver ETF ran into trendline resistance from its rally the past couple of days and if it breaks higher the next resistance is near  31 and the trendline above that. 

And here the silver futures having broken support had moved back above it this week under the down trend line. 

The mechanical trading for silver remains on a short 

.

By the close on Friday Palladium, which had dipped earlier in the week, closed back over the 20 day moving average with slightly increased volume. 

Copper ran up 4% this week closing over its 20 and 50  week moving averages and back over the broken trendline with resistance now  at four dollars. 

The euro futures for June are above the downtrend line and just at the 38.2% retracement level 

The US dollar was lower but remains over its 200 day EMA and if it touches it soon it would be back under the lower Bollinger band so watch the RSI for possible reversal. 

The dollar futures for June did close at the 200 day EMA on Friday and the lower Bollinger band. So there may be a short term bounce and that could correspond with a dip in the equities market. 

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Check the updated Earnings Calendar on all overnight holds.

 

Political content - skip if not interested.   Dr. Ron Paul was the guest host on CNBC last Monday. He demonstrated his vast knowledge of history, the economy and foreign affairs and clearly showed that he is the only candidate that has solutions for many American problems.      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.