Tuesday, April 17, 9:25 a.m.

This week is a quite heavy week for economic reports. They include Retail Sales, the Empire State Business Index, The Phila Fed Mfg Index, Housing Starts, Existing Home Sales, Industrial Production, the Leading Economic Indicators, etc.

So far they’ve been biased toward the negative.

Retail sales surprised on the upside, rising 0.8% in March. But the Empire State (NY) Business Index fell sharply, from a reading of 20.2 in March to only 6.6 in April. The Housing Market Index, which measures the optimism of home-builders, declined for the first time in 7 months, dropping from 28 in March to 25 in April (on a scale of 1-100). This morning it was reported that New Housing Starts fell an unexpected 5.8% in March, compared to the consensus forecast of a gain of 1.3%. And Industrial Production remained flat in March for the 2nd straight month, versus the consensus forecast that it would be up 0.3%.

But the most important report will be the usually quite unimportant new Weekly Unemployment Claims on Thursday. The weekly claims usually  are fairly volatile. So the four-week moving average, which smooths out the weekly variations, is usually considered more useful in identifying the trend than the individual weekly number.

However, the shocking surprise of the Labor Department’s monthly jobs report for March, that only 120,000 jobs were created in March compared to the forecast of 240,000, has moved anything related to the employment picture to the front burner. That’s understandable since it had been the several months of positive monthly surprises in the jobs reports that provided the clearest evidence that the economic recovery was picking up steam.

It’s still being hoped that March’s jobs report was an aberration. But the surprise jump of 20,000 new unemployment claims last week raised concerns that the jobs slowdown is continuing in April.

And that is going to make this Thursday’s weekly claims report particularly important. Another big jump would be bad news, while a decline in claims would keep hopes alive that March’s big decline in new jobs, and last week’s big jump in claims were aberrations.

In Saturday’s post I noted how the market had reacted in its usual historical pattern to a surprise in the jobs report.

And that the typical pattern around options expirations had been working out so far, the week before the expirations week (last week) tending to be down. The other half of that pattern being that the week of the expirations, which this week is, tends to be positive.

The next short-term pattern regarding April is that the second half of the month is usually weaker than the first half, especially if the options expirations week is positive.

The market’s short-term sideways action since mid-March gave way to a short-term correction over the last two weeks, foreseen by the short-term technical indicators.

It has the short-term Relative Strength Index at its short-term oversold zone, supporting the thought that this week will be positive.

But is the DJ Transportation Avg., which often leads the market is both directions, warning that the market may be vulnerable to an intermediate-term correction?

The intermediate-term technical indicators on the Transports (but not the other major indexes) have turned negative, and the Index is potentially close to breaking down through the intermediate-term support at its 20-week m.a.

To read my weekend newspaper column ‘More Impetus For A Summer Correction!’ Click here.

Subscribers to Street Smart Report: In addition to the charts and updates in today’s premium content area of this blog, there is an in-depth ‘Gold, Bonds, Dollar, Inflation’ report in the subscribers’ area of the Street Smart Report website from yesterday, and an in-depth ‘US. Market Signals and Recommendations Report’ will be there tomorrow.

A mixed day. The Dow was up 137 points mid-day but gave almost half of it back in the afternoon to close up 71 points.

The Dow closed up 71 points, or 0.6%. The S&P 500 closed down 0.1%. The NYSE Composite closed up 0.2%. The Nasdaq closed down 0.8%. The Nasdaq 100 closed down 1.1%. The Russell 2000 closed up 0.2%. The DJ Transportation Avg. closed up 0.7%. The DJ Utilities Avg closed up 0.9%.

Gold closed flat at $1,657 an ounce.

Oil closed up $.24 a barrel at $103.07 a barrel.

The U.S. dollar etf UUP closed down 0.4%.

The U.S. Treasury bond etf TLT closed down 0.2%.

European markets also fell back from their earlier highs and closed mixed. London closed down 0.8%. Germany closed up 0.6%. France closed up 0.5%.

The DJ Asia-Pacific Index closed down 0.7% Sunday night on the renewed euro-zone debt fears, and down 0.6% last night.

Among individual markets last night:

Australia closed down 0.3%. China closed down 0.9%. Hong Kong closed down 0.2%. India closed up 1.2%. Indonesia closed up 0.3%. Japan closed down 0.1%. Malaysia closed down 0.1%. New Zealand closed up 0.2%. South Korea closed down 0.4%. Singapore closed down 0.2%. Taiwan closed down 1.9%. Thailand closed down 0.8%.

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European markets are up this morning. The London FTSE is up 1.1%. Germany’s DAX is up 1.5%. France’s CAC is up 1.7%

Oil is up $1.59 a barrel at $104.51.

Gold is up $4 an ounce at $1,653.

This week is a quite heavy week for potential market-moving economic reports, including Retail Sales, Housing Starts, Existing Home Sales, Industrial Production, etc. To see the full list and times for each release click here, and look at the left side of the page it takes you to.

Yesterday’s reports were that Retail Sales were up 0.8% in March, much better than the consensus forecast of an increase of 0.4%. But the Empire State (NY) Business Index fell sharply, from a reading of 20.2 in March to only 6.6 in April. And the Housing Market Index, which measures the optimism of home-builders, declined for the first time in 7 months, dropping from 28 in March to 25 in April (on a scale of 1-100). The sub-index measuring sales expectations for the next 6 months fell 3 points, while measurements of prospective buyer traffic fell 4 points. (The index hasn’t been at a positive level of 50 or above since 2006).

This morning’s report were that New Housing Starts fell an unexpected 5.8% in March,compared to the consensus forecast of a gain of 1.3%. The disappointing number probably should not be a surprise given the decline in home-builder optimism in March reported yesterday by the Housing Market Index. Permits for future construction rose 4.5% in March. But those numbers have not meant much lately, since they rose sharply in February yet this morning’s report of new starts was another disappointment  And Industrial Production remained flat in March for the 2nd straight month, versus the consensus forecast that it would be up 0.3%.

But the market is ignoring economic reports, concentrating on earnings, which continue to successfully beat Wall Street’s lowered estimates, while the positive influence of positioning in front of Friday’s expirations continues to have its influence.

Our pre-open indicators are pointing to the Dow being up 80 points or so in the early going.

To read my weekend newspaper column ‘More Impetus For A Summer Correction!’ Click here.

Subscribers to Street Smart Report: In addition to the charts and updates in today’s premium content area of this blog, there is an in-depth ‘Gold, Bonds, Dollar, Inflation’ report in the subscribers’ area of the Street Smart Report website from yesterday, and an in-depth ‘US. Market Signals and Recommendations Report’ will be there tomorrow.

I’ll be back with the next regular blog post on Thursday morning at 9:25 a.m.

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