Ten straight and fresh intermediate highs take a break on Friday despite a bevy of upgrades. For the five day period the S&P500 (SPY) is up another 1.86% on stronger levels of technically-extended green shoots discounting and fearful wall climbing by money managers trying to keep pace with the Jones'.

THE WEEKLY NUTSHELL

• Bulls make it seven-in-a-row to fresh intermediate highs after out-the-gate trade dispute with bears. Stateside officials' tariff imported tires from China. China retaliates with investigation of dumping practices from US chicken and auto exports. Bulls finish the day up 0.50% in SP-500.
• Early Tuesday tussle finds bulls once more renegotiating fair trade practices into higher ground. Aiding eight-in-a-row, better-than-expected Empire and retail sales data. Latest chiming of "recession now likely over" from Bernanke. Green shoots momentum in materials, mining and oil services (XLB, GDX and OIH) groups spearhead for broader market as Dollar (UUP) strikes fresh lows. Mixed report from Best Buy (BBY) finds concentrated selling, as does Citigroup (C) on equally-mixed prospect of it issuing secondary to reduce Uncle Sam's stake.
• Non-humping Wednesday and ninth-straight "mooove" into higher ground. Expiration-related "moo-mentum", overseas gains and continued favor for commodities aid bulls efforts. CPI and IP & CU data also keep bulls breathing easier. Fist-pounding "Buy, Buy, Buy!" for Apple (AAPL) from Mad Money's Cramer following FASB homework spearheads NASDAQ strength.
• "Turnaround Thursday" kinda sorta as bulls take fractional pause after striking highs for tenth straight session. In-line reports with fingers on profit-taking key in Oracle (ORCL) and FedEx (FDX). No real surprises from housing and building permits data and mixed but still weak weekly claims report. Philly Fed latest regional manufacturing report to beat. AMR (AMR) takes off following deep-pocketed passengers on board with liquidity of $2.9B for the debt-laden outfit. Bulls continue to take a stab at green shoots groups (SLX, XLB and GDX) but profit-taking efforts establish red chutes technical tops.
• An expired bull peters out Friday. Upgrades (PG, CVX, KBH, TOL and SBUX) and a dearth of economic findings and corporate confessionals attempt to boost bulls to eleven in a row out-the-gate. In the end, well-spent fearful wall climbing / green shoots inspired bull gets a rest to close out a relatively quiet, albeit heavy-volume Quadruple Witch.

ON TAP THIS WEEK

In corporate confessionals this week, it's a light calendar for officially-slated earnings reports but warnings or pre-announcement surprises might come into play. Kicking off the period, the once venerable homebuilder Lennar (LEN) is expected to post a loss of -$0.46 per share versus last year's $0.56.

Still-mounting losses at the homebuilding giant haven't been a problem for bulls busy building shareholder value made of technically-extended green shoots materials. LEN has been a relative strength champion with gains of more than 100% since the market's last corrective lows were forged in early July and much stronger than the homebuilders ETF (XHB) own admirable gains of about 50%.

Of the earnings names in the bull's stable, Research In Motion (RIMM) will undoubtedly prove the most anticipated. The NASDAQ 100 component manufacturer of the popular Blackberry handheld device product line is expected to produce profits of $1.00 per share and an improvement of 16% from the year-ago period when it reports Thursday evening. Technically speaking, contrarians schooled in Fibonacci patterns may want to do the homework on two Gartley / Butterfly patterns potentially setting up for a bearish reversal if shares get into an extension zone from $87 - $92.

On the economic docket, the FOMC rate decision headlines a busy week for various reports such as three separate releases on the housing market and a bevy of meetings by global leaders. Wednesday afternoon the Fed is widely-expected to keep rates flat to help mend the economy and not make any language shifts worthy of rattling Wall & Main in its attached policy statement.

Separately, President Obama is meeting with China's President Tuesday, while UN and G-20 meetings will take place the following two days. Traders will also be watching the bond market closely as more than $200.0B will be auctioned during the week.

And finally, "Profit From It?" CNBC's Week Ahead column was spied cheerleading for the bulls by pointing out traders have put aside the notion of a pullback in favor of near-guaranteed chasing by underweighted and underperforming portfolio managers. With just two weeks left in the quarter those folks will most certainly, in their eyes, be forced to bid in an effort to get close to matching the likes of the S&P500's quarterly gainer of more than 16% and the Jones' 15%.

Weekly Calendar of Key Reports
Monday:
Economic Leading Inds (0.7%)
Earnings Lennar (LEN), Synnex (SNX)
Tuesday:
Economic US Housing Price Index (0.5%)
Earnings CarMax (KMX), Carnival (CCL), ConAgra (CAG), FactSet (FDS), Progress Sftwr (PRGS), AAR Corp (AIR), HB Fuller (FUL)
Wednesday:
Economic Weekly Crude, FOMC Decision
Earnings AutoZone (AZO), General Mills (GIS), Bed Bath & Beyond (BBBY), Cintas (CTAS), Comtech (CMTL), Paychex (PAYX), Red Hat (RHT)
Thursday:
Economic Weekly Claims (560K, 6.19M), Existing Homes (5.35M)
Earnings 3Com (COMS), Rite Aid (RAD), McCormick (MKC), Texas Ind (TXI), Research In Motion (RIMM), TIBCO (TIBX), Finish Line (FINL)
Friday:
Economic Durable Orders (0.3%, 1.0%), Michigan (70.5), New Homes (440K)
Earnings AZZ (AZZ), KB Homes (KBH)

TECHNICAL PICTURE

Figure 1: S&P500 (SPY) Weekly Chart

Ten days of higher highs and gains of 6.30% punctuated by a doji high outside the upper band and an overbought RSI 14 hint at strong evidence of a healthy price consolidation for the SP-500 or slightly nastier profit-taking worthy of anxiety-filled headlines of "Worst Loss Since""

How much backing and filling is necessary and will it ultimately represent a change in trend? Nobody but Mr. Market (GS) really knows. But even without taking into account the 62% run from March and the notorious damage both September and October have enjoyed historically-a bare minimum pullback given the current price volatility would be estimated at 3% to 5%.

My better technical guesstimate is "SP-1000" will come back into play and corrective action of 7% to 10% will be delivered before buying the trend makes better sense while risking much less directionally near potential support. That type pullback is where the rally of the last ten days began and would still find the entire 55% worth of gains from the March lows through August intact. To which and in viewing a weekly logarithmic uptrend line (not shown), the 50-Day MA and weekly neckline-makes ample sense to this market strategist.

MARKET LAB

Bullish Technicals

• Breakout of daily / weekly downtrend from Sept 2008 highs DIA.
• Weekly Inverse H & S being breakout from October lows. "MM" of 113 - 120.

Bearish Technicals

• 1930 Bear Market Rally repeat and "W" pattern SPY?
• Weak calendar months of September and October.
• Consistent weekly breakouts suspect.
• Ten Day "Higher High" Bollinger Gravestone Doji in SPY. RSI 14 overbought.
• Bollinger and YTD test in VIX.
• Healthy corrective action back to "SP-1000."
• Third time the charm? Potential W5 Daily and W4 Weekly in SPY.
• SP-500 > 20% above 200-Day MA.
• "Sidelined money" chatter running heavy.
  

Chris Tyler
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
Visit Chris Tyler's Forum

The information offered here is based upon Christopher Tyler's observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.