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Today begins a week full of important economic numbers for the Asian and European markets, as well as for our markets. March Trade Balance numbers started this week's economic numbers schedule for us, reported at 8:30 ET. Experts had forecast a deficit of between $40.5 and 41 billion, with the prior deficit at 40.3 billion. Actual figures showed a trade gap of $43.5 billion, the second highest on record. March exports were up 0.6% from February's, to $82.8 billion. Our futures didn't appear to react immediately, with S&P futures down 3.80 points, DJI futures down 25 points, and Nasdaq futures down 8.00 at 8:40 ET, roughly near their levels at the time of the announcement.

Previous to this announcement, futures had been trending down overnight, perhaps reacting to two developments. One was the news of terrorist bombings in Saudi Arabia that targeted compounds housing Westerners. The other might have been the surprising downturn in the Nikkei after the midday break. Although the futures had been trending down, the response had been muted. This weekend, Alan wrote a great article for the futures corner about watching reactions in the futures to determine market strength or weakness. For those who haven't yet read this instructive article, here's the link:

Japan started off the day's economic releases with a report showing that Japanese March private-sector machinery orders rose 3.8% from February's levels and 11.7% from year-ago levels. Germany added to the day's release of economic numbers, showing an increase of 0.3 points to 18.7 points in the May ZEW Indicator of Economic Sentiment. The Indicator still remains below the 33 historical average, however. These economic releases were watched, but currency issues and earnings releases seemed to impact foreign markets more than these releases. That was particularly true in Japan, where the Nikkei rose in early trading when the dollar weakened against the yen, but then plummeted 150 points off its high to close down 30.86 points after reports circulated that U.S. Treasury Secretary John Snow commented that currency interventions should be kept to a minimum. A Marketwatch.com article attributed the afternoon plummet to that cause and also mentioned the possibility that the Japanese government may have again been involved in some clandestine intervention efforts to prop up the sagging dollar, a rumor that Japanese officials declined to confirm.

JC Penney (JCP) and Wal-Mart (WMT) reported this morning. JC Penney's EPS was $.20, with expectations of $.18 on earnings of $61 million. Those numbers were down from $.29/share and $86 million a year ago, with sales falling 3%, with the department store and catalogue unit down 7.1%. EPS estimates for Wal-Mart were for $.42 on revenue of $60.69 billion for the quarter, with the actual number at $.42. Sales rose 9.7% to 56.7 billion, weaker than expectations. WMT closed at 56.70 yesterday, up $.90 or 1.61% on average volume.

WMT appears to be bidding down in the pre-market. After reporting yesterday that Mother's Day sales were disappointing, the stock underperformed the RLX for the day, with the $RLX gaining 2.28% yesterday. That underperformance with respect to the $RLX doesn't appear to be a long-term trend for Wal-Mart, however, but if the economy really is improving, perhaps the performance of the discounters might bear watching. Both WMT and the RLX are on P&F buy signals. I looked at a Stockcharts.com Perfchart, showing performance comparisons. That Perfchart showed Wal-Mart outperforming the $RLX, which itself was outperforming the SPX.

Wal-Mart's bar chart shows the stock having recently pulled back after challenging the upper Bollinger band and resistance in the 57.50 area. The daily chart shows oscillators that cycle up and have plenty of room to run, with the possible exception of the RSI, now nearing levels indicating overbought conditions, and the MACD which is just now making a tentative bullish cross. Most shorter-term moving averages have made bullish crosses of the longer-term averages, and WMT has been finding support lately from its rising 21-dma, currently at 55.34. A rising trendline has been supporting prices since the middle of March, with that trendline currently crossing near 55, also an area of horizontal S/R. Studying the daily chart, I don't see any obvious areas of divergence setting up. The ADX level near 25.28 shows a still-trending market, although the ADX level has been sloping down lately as the MACD did, too, so there's some possibility that the strength of the trend may be waning. The weekly chart also shows prices near the top of the Bollinger band. Here, though, stochastics perhaps try to roll over, with RSI still turned up but approaching levels indicating overbought levels, and a mostly flat ADX that shows a range-bound market.

All the evidence taken together may indicate that although WMT has performed well lately in comparison to both its sector and the SPX, the stock may still somewhat range-bound on a longer-term basis, and the strength of the current trend may be waning. With weekly oscillators showing overbought or nearly overbought conditions, the daily ones showing bullish moves, and the hourly oscillators approaching overbought levels, the indicators are mixed across the time frames. This mixture of overbought and oversold levels sometimes predicts choppy trading, which would fit with the range-bound trading predicted by the longer-term ADX. I could see another tepid attempt to retake 58 and could also see a fall back to support at the 21-dma, the rising trendline at 55, the lower BB at 58.70, or even the grouped MA's currently near 53. As it looks in early trading, the downside test may come first, but pre-market trading is notoriously unreliable.

Fair value for the S&P 500 today is $-.35. That price will not change during the session. HL Camp & Company set their computers for program buying at $0.44 and for program selling at $-1.92. Their fair value for the NDX 200 is $1.72, with program buying set at $3.90 and program selling at $-1.06.

Linda Piazza

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