The Nikkei keeps chugging uphill…

…but hugging the trendline. This is a concern, because it shows technical weakness. The question is, will it finally overcome it’s high of 18,300 or not? Given enough time, it should do just that, but the question of the day is, will there be enough time?

Some glass is broken in the China shop…

…and no one seems to be worried about it. The Shanghai index was down 7.22% on Thursday morning, but no one seemed the least bit worried. Last night it was down another 6.1% before recovering to a modest loss. In the last three days, the Chinese market declined more than it did on February 27^th. Yesterday’s headline in the London Financial Times stated, “Markets Relaxed on China Plunge.” After all, it was predicted, wasn’t it?

The Dow is extending.

This market is going down in the annals of history as possibly the longest rally, ever. Today marks the 65^th trading day since the March low. The final rally in 1987 before the crash was 67 trading days long. The longest in recorded history was in 1946, which was 77 trading days long. Unless we establish a brand new record, could we see an end to this sometime between June 5^th and June 19^th? Stay tuned. Thanks for the info goes to Jeffrey Cooper at www.minyanville.com.

The bond rally that failed…

The expected bond rally failed to materialize. The worry that the Federal Reserve might cut rates diminished with the newly-released manufacturing report. The Fed minutes reveal that they see the risks to the economy from inflation lessening.

“The Committee's predominant policy concern remained the risk that inflation would fail to moderate as expected. Future policy adjustments would depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.”

Why are builders not in decline yet?.

Thursday the Census Bureau reported that while residential construction tumbled 14 percent in April from a year earlier, non-residential construction jumped nearly 13 percent.

So construction workers are still finding jobs for the time being in the commercial construction projects. At the same time, homebuilders are reluctant to lay off workers in case there is an upsurge in demand.

The dollar makes its first milestone.

The $64,000 question is now answered. Yesterday, the dollar closed above its 50-day moving average. Once an index clears the 50-day moving average, it will find future support at that level in future pullbacks.

``The dollar sentiment is improving in the short term on the back of robust data,'' said Alan Ruskin, head of international currency strategy in North America in Greenwich, Connecticut, at RBS Greenwich Capital Markets Inc. ``It is hard to talk about a hard landing and to sell the dollar off at this point.''

Notice how the sentiment on the dollar has changed so quickly from very negative to somewhat positive. This is as I had stated a few weeks ago that sentiment would change once the dollar rallied above the 50-day moving average.

The media is still bullish on gold.

Gold climbed again today after finishing an impulse down in mid-April. Traders are still bullish on gold and continue to look for a rally past $698.00 per ounce, the last high made in April.

“"Having spent some time consolidating, the metal is now in a far better position to push towards key chart resistance located at $694," James Moore, an analyst at TheBullionDesk.com, told clients.”

Finally! The uptrend in gasoline prices is broken.

Gasoline futures and retail prices have moderated in recent days in part on a perception that domestic refining capacity is finally catching up to demand. That perception got a boost from the inventory report from the Energy Information Administration, the Energy Department's statistical arm, which showed that gasoline stockpiles increased by 1.3 million barrels, or 0.7 percent, to 198 million barrels last week, slightly besting analyst expectations.

A minimal drop from here would be to $2.15 per gallon (wholesale) , which translates to roughly $3.00 per gallon at the pump. That would be a welcome relief. The fly in the ointment is that hurricane season began today. Some of our major gasoline refineries are located along the Gulf Coast, so they may be vulnerable to major storms

It’s make or break time for NatGas prices.

The Energy Information Agency reported this week that the amount of natural gas in storage is 21% above the 5-year average storage level for this week. The broken trendline suggests price relief is on its way.

MarketWatch reports that natural gas suppliers are still jittery about hurricane season, but balancing that with more than adequate supplies in storage.