(The Weekly Digest reproduces the morning capsules made available every morning before the market open in the Real Time Feeds to the paying subscribers.)

QE ADDICTS FIGHT ANOTHER POSITIVE DATA POINT

October 26, 2012

Another positive economic data point was reported on the U.S. economy this morning.  GDP grew by 2% vs. 1.9% consensus.

Better economic data means less chance of QE expansion.  QE addicts do not like better economic data.

Where will the markets go next?  It depends on who wins the battle between QE addicts and those who like a better economy.  There is no way to tell who will win in the short-term.  The best course of action is to stay vigilant and nimble.

Gold futures are at $1709, silver futures are at $32.06, and oil futures are $86.27.

S&P 500 resistance levels are 1410, 1415, and 1424; support levels are 1400, 1380, and 1368.

DJIA futures are down 27 points.

QE ADDICTED CROWD DOES NOT REACT WELL TO GOOD ECONOMIC DATA

October 25, 2012

Lots of economic data was released this morning.  Most of it was stronger than expectations.  Stronger data means less chance of QE expansion.    The QE addicted crowd showed its disappointment by promptly selling on strong economic data.  However the selling is being met by those who believe a strong economy is better than QE.

Initial unemployment claims came at 369K vs 375K consensus; durable orders at 9.9% vs 8%; and durable orders ex-transports 2% vs 1% consensus.

In the very, very short-term the market is over sold, expect a rally attempt.

Gold futures are at $1713, silver futures are at $32.11, and oil futures are $86.44.

S&P 500 resistance levels are 1415, 1424, and 1439; support levels are 1410, 1400, and 1380.

DJIA futures are up 57 points.

THE FED DAY

October 24, 2012

This afternoon the Federal Reserve will announce the results of its two-day FOMC meeting.  Please stay alert around 2:15 pm ET in case there are opportunities resulting from the Fed announcement.

Flash China PMI moved up to 49.1 in October from 47.9 in September.  This data shows that at least for the time being, economy is stabilizing in China.

The data from Germany shows the recession is getting deeper; manufacturing PMI dropped to 45.7 from 47.4 and services PMI dropped to 48.1 from 49.2.

Markets are oversold in the very, very short-term.  Expect recovery attempts.

Gold futures are at $1709, silver futures are at $32.01, and oil futures are $86.81.

S&P 500 resistance levels are 1415, 1424, and 1439; support levels are 1400, 1380, and 1368.

DJIA futures are up  46 points.

STOCKS AND GOLD LIKELY TO FALL

October 23, 2012

Stocks and gold are likely to fall, at least at the open.  Yesterday gold and silver moved up on rumors that Fed will enlarge QE3.  Stocks moved up in the afternoon after a positive call by Goldman on AAPL started gaining wider circulation.  Our algorithms show that shorts were scrambling to cover in the afternoon.

Our models correctly anticipated that earnings would be weak.  Earnings release this morning from DJIA components DD and MMM are weaker than consensus.

The downturn offers opportunities to buy good stocks at lower prices and take profits on our short positions.

Gold futures are at $1709, silver futures are at $31.86, and oil futures are $86.84.

S&P 500 resistance levels are 1424, 1439, and 1444; support levels are 1410, 1400, and 1380.

DJIA futures are down  152 points.

S&P 500 AT AN INFLECTION POINT

October 22, 2012

S&P 500 is at an inflection point.  If the market goes up from here, bulls will contend that the bottoming pattern is complete and now it is off to the races.  On the other hand if the market breaks down from here, bears will contend that the topping pattern is complete.

The best course of action is to be nimble and watch without a preconceived opinion.

Gold futures are at $1724, silver futures are at $32.17, and oil futures are $89.90.

S&P 500 resistance levels are 1439, 1444, and 1450; support levels are 1424, 1415, and 1410.

DJIA futures are up 16 points.

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