The Dow, S&P 500, Nasdaq, and Russell 2000 all have a sidelines rating; however, market internal indicators do not support the trends. In fact, market internal indicators are much more bullish and support a bulls on top thesis for trading next week.

The TICK shows that institutional buying took place this week in Financials, which led other sectors hire on Friday. That’s an offensive sector, not a defensive one.

The Elder system applied to the S&P 500 daily and weekly time frames both give buy signals. That’s a bullish bias.

The VIX in both short and mid-term futures are downtrending meaning that PUT buying or hedging is falling off. That’s bullish for the market.

The percent of stocks on the NYSE that are trading above their 50 day moving average is 67%. That’s a bullish bias. The percent of stocks trading above their 200 day moving average is 57%. Again, a bullish bias.

This is the biggest divergence I’ve seen between market internal indicators and the trend ratings on the major indices.

Be careful in this market folks because divergences between trends and market internal indicators are risky by nature: half of the equation says sidelines while the other half says buy.

JB should be back from vacation next week and so I’m looking forward to seeing how he’s going to personally trade this market next week. Even if you don’t buy what he does, he’s a professional swing trader and so you can gauge the swings in the market really good just by noting if he’s sending you three or four stocks he buys on Monday and Tuesday, or if he’s staying back in cash. Please note that I’m talking about his alerts that go out to your smartphone on what he actually buys in his own personal trading account, NOT his watch list that’s released the night before. To learn more about JB’s alert service, click here!

Fundamental analysis reports that moved markets last week were: Wednesday’s International Trade, and Friday’s PPI.

The International Trade report showed that the U.S. trade balance in May narrowed, thanks largely to lower oil prices. Exports made a partial comeback. The trade deficit narrowed to $48.7 billion from $50.6 billion in April (originally $50.1 billion). Expectations were for a deficit of $48.7 billion. Exports rose 0.2 percent, following a 0.9 percent decline in April. Imports fell 0.7 percent after a 1.6 percent drop the prior month.

The PPI report showed that the PPI unexpectedly edged up instead of declining as expected. Seasonally adjusted gasoline prices actually rose along with food prices. The producer price index in June edged up 0.1 percent, following a sharp 1.0 percent plunge the prior month. The consensus called for a 0.4 percent decrease for the latest month. The core PPI rose 0.2 percent, following a 0.2 percent gain in May. Analysts forecast a 0.2 percent increase for June.

Fundamental analysis reports with the greatest probability of moving markets next week are:
Mon – Jul 16, 2012 = Retail Sales
Tue – Jul 17, 2012 = Industrial Production, Consumer Price Index
Wed – Jul 18, 2012 = Housing Starts