Market Analysis for Apr 14th, 2004

Bulls Trying to Hang On
By Mike Paulenoff,

If you didn't know what happened yesterday and you walked in today, you'd think that it's no big deal that the S&P was down 2, the Nasdaq down half a point, and Dow Futures down 19. But that really belies the volatility that we've seen over the last two days, starting with yesterday morning's retail sales.

Using the June E-mini S&P as our gauge, you had a high yesterday of 1150 and a low today of 1120. What's happened in between there has been profit-taking on the good news of retail sales yesterday along with fear and trepidation at the end of yesterday going into the Intel earnings and the president's speech. And this morning you had CPI, which, along with retail sales, has been a very big data number. By that, I mean they show a strong economy and the prospect of inflation starting to heat up.

So the bond market people, starting back when unemployment figures came out 1 , weeks ago, have been out in force because they're sensing the labor market is picking up, retail sales are strong, and now inflation and commodity prices are starting to heat up and showing up in the CPI data. So the bond market has become a factor and it's taken bond yields from 3.80 to 4.15 over the last 3 weeks. That has gotten the attention of the stock market, and stock investors have to grapple with the idea of what to do now.

What we have going on in the E-mini S&P as we speak is that the range for the day is 1120.75 up to 1132, and the E-mini S&P has just rolled over and started to accelerate to the downside and has broken 1126. That 1126 level represents the mid-point of today's range. We're at 1125 as we speak, and if 1125 or 1124.75 breaks, then there's a good chance that the selling pressure will continue, especially if it happens in the final hour of trading. You will have had a round trip today from 1120

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