Reading Assignments:

• Yen Rises as Central Banks Reduce Stimulus
• Goodhart says BOE May Pause Bond Purchase Program
• George Soros Transcript: Capitalism Versus Open Society
• Why Bother Analyzing Companies?
• U.S. Stock-Index Futures Drop Before Consumer Spending Report

Pre-Market:

Good Morning, and happy Friday! Yesterday was quite a welcome day after several consecutive ugly days in a row. All US indices posted healthy gains – the DOW and S&P over 2 % (2.05 % and 2.25 %, respectively), with the broader NASDAQ lagged a little by posting a gain of 1.84%.

Right now, at 7:43 AM, futures are down in the US and in most world markets. On the economic front today, we have at 8:30 AM personal income and outlays, and a little later around 10 AM consumer sentiment. Consumer spending played a big part in yesterdays rosy GDP report, so I’m thinking consumer sentiment will be watched closely today.

Today I am expecting somewhat of a pullback in the markets on month end profit taking, despite some conflicting indicators I have which suggest otherwise:

Market Candle Scan Indicator: yesterday, my candle market indicator posted a perfect 116 to 0 bullish engulfing to bearish engulfing pattern scan, the first I have ever seen such a perfect bullish reading. Based upon this indicator alone, we would expect a resounding market follow through today.

The DOW and S&P indices also posted bullish haramis, suggesting a positive day today in these markets, while the NASDAQ looked less optimistic with a white candle, but no bullish harami. Since the NASDAQ is a broader measure, I would look at this as a cautious sign about the overall market health.

Bullish Percent Indices: are not as optimistic — yesterday only one of 16 bullish percent indices was green, while all the rest were “no change” or red.

McClellan Oscillator: Yesterday, although the McClellan Oscillator turned up, the McClellan Summation Index was down. The McClellan Summation Index is a popular market breadth indicator that is derived from the number of advancing and declining stocks in a given market. It is derived from the McClellan Oscillator by tracking its daily accumulation or “summation”. This provides a longer-term view of the McClellan concept. Many people regard it as an excellent indicator of the overall “health” of the market and the market’s current trend.

Chart Pattern Index (CPI): My chart pattern index of some 1800 stocks averaging over 500,000 in volume turned “Neutral” yesterday, indicating a possible turning point away from the recent bearish sentiment readings. This could be interpreted as a bullish signal for the market that needs follow through confirmation today.

So if I have totally confused you with all this, maybe that’s the signal we should read from all this — today is a “let’s see” day. It’s not so important how we start out today with futures down as it is how we finish today — a positive finish today would signal to me that next week stands to be a good, positive start for November, while a negative finish today would suggest to me that yesterday was a fluke spike which was media induced with the positive GDP numbers. This would further suggest to me that we could see continuation in the short term pullback in the indices.

Have a great weekend; I’ll be away from the market today, away in the mountains shooting pictures of some waterfalls. Next week I plan to make some more moves in my retirement portfolios with some international buys, and hopefully I can open up some more day/swing trading account positions.