|
|
money investment, investment help
* * * *
8/04/08 Technical Traders Report
* * *
NOTE: DUE TO EDOUARD HEADING OUR WAY, THE REPORT IS ABBREVIATED THIS EVENING SO WE CAN GET BATTENED DOWN.
MARKET ALERTS
Targets hit alerts: MANT; NUE
Buy alerts: CXW; MPWR
Trailing stops: IBB
Stop alerts: BKE
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the SSR alert service you can sign up at the following link:
http://www.investmenthouse.com/alertttr.html
SUMMARY:
- Third down session to start the week but outside of commodities there was no dumping.
- FOMC meeting on tap for Tuesday, and market may be ready to bounce after this 3-day test.
Commodities hit but overall market, while down, was not hammered.
The economic data was not bad with personal income at 0.1% (-0.1% expected though down from 1.8% in June), spending rose 0.6% versus 0.5% expected and 0.8% in June. June factory orders jumped 1.7% versus the 0.7% expected and upwardly revised 0.9%. Not bad though orders are measured by dollars versus number of goods. Thus a rise in the cost of goods means a rise in factory orders even if orders for a certain number of goods remain flat or even decline. That is important because we know there is inflation. The personal income and spending numbers were better than expected, but they also show a core PCE rising at 0.3% on the month versus the 0.2% expected and that puts it at a 2.3% clip, revisiting the December 2007 level. Overall PCE rose at 0.8%, the largest gain since 1981. Inflation adjusted Prices continue to move higher thus factory orders continue to move higher but it can be very deceiving in times such as these.
So, with outwardly decent data shadowed by clearly continuing inflation, stocks were not thrilled. Futures were lower and stocks opened lower. Surprising given oil started weak and was hammered (closed at 121.41, -3.69, but was lower intraday). This time, however, the oil down, stocks up trade did not work. First, oil has played with breaking the 120-122 support, but it hasn't done it. Second, oil was joined with a general plunge in commodities. The idea circulating on the TV was there was a perception that commodities were falling because of lower demand due to previously surging prices that damaged world economies. It did. It hurt the US. Judging from the sharply and unexpected slowing in Europe, it hurt them as well.
That is a good reason stocks did not rise as oil fell, but it is not the only reason. Commodities were also lower because there is a large fund liquidating its positions in commodities trades. It has take a beating and called 'uncle.' There was a sharp selloff in the first two hours, then some stabilization, then a sharp selloff in the last hour. Systematic selling in the commodities from one (or more) big funds. With these sectors down so hard they impacted the rest of the market so much so that it could not bounce positive even though DJ30 did hit positive intraday and NASDAQ came within a point of doing so. So despite supposed worries about demand destruction and world economic slowing, the indices were not slaughtered. The closed lower, but it investors did not take out the hammer.
TECHNICAL. Down on the session but as noted above, not slaughtered. It was a volatile session with two big down legs to one to the upside. One early, one late, and that trumped the midday bounce. Up and down, undecided action even if it did close down. Not heavy selling and that is part of the basing process.
INTERNALS. Breadth was decidedly negative at -2:1 but volume was mixed. While most stocks were lower, many were positive at some point during the session. Again, it was a late turn down that pushed them negative. The lower volume shows there was no dumping.
CHARTS. The indices are slipping further below near support with this selling, but even after three days to the downside they are still above the late July higher low. That means the indices can make an even higher low and thus keep the rebound alive. The selling, while sustained the past three sessions, is not that severe. More like a slump through lack of enthusiasm. With oil dropping there is still the potential for a continuation of the rebound. The key is that it breach 120 and stay there and lower. If that happens quickly the market would see that as giving the market a B12 injection and that will help the indices. None are selling on extraordinary volume and indeed Tuesday as the FOMC meeting runs its course we would not be surprised if the market bounces back.
LEADERSHIP. Monday saw the death of the former leaders in oil and commodities, and that took its toll on the market overall even though the current leaders held up well. Transports took a bit of a breather while medical and health services had an overall solid session. Some techs are doing well (e.g. SYNA), but they still have yet to get it all in one pile so to speak. OVERALL, however, while leadership remains thin, the market is working on it with a little upside here, a little downside there, and sideways movement the whole time. That is some good basing activity, something this market has to do to generate the leadership needed to ultimately drive it higher.
THE MARKET
MARKET SENTIMENT
VIX: 23.49; +0.92
VXN: 27.56; +1.59
VXO: 24.85; +0.59
Put/Call Ratio (CBOE): 0.97; -0.02. Market is down for a third day but the ratio has not moved back over 1.0. For this rally, however, the put/call ratio did its work with 13 consecutive closes above 1.0 spanning June and July.
Bulls versus Bears:
For the second time this year bears are crossing above bulls, doing so basically where they did in March on their way to much more extreme readings just about the time the market made the March low and started the last rally. Positive for the market and if SP500 is going to hold the long term trendline is the place to do it.
This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market doesn't have the cash to drive it higher.
Bulls: 30.0%. Up modestly from 29.2%. On a rise, but still below the 35% level, below which is considered bullish. Up from 27.8% on the low this round, moving back up toward the 31.9% a month back and the 30.9% low hit in March. Steep drop from a rebound high at close to 50% on the run through May. In March the indicator did its job with the dive below 35% and the crossover with the bears. Now it is going above and beyond. Bulls and bears have crossed over again, doing so even before the prior lows are hit. The bulls and bears were eye to eye in mid-February and have crossed. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator. This is smashing that. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.
Bears: 50.0%. Still rising as bears remain worried, up from 49.4%. Bears, despite what the bulls are doing, continue to increase, up from 48.9% that was up from 47.3%, 44.7% and 39.3% before that. A steady, strong rise and still going. Well above the bullish level and the highest since 1995. Again, that is one of the best indications that sentiment is getting extreme on the negative side. It is again past 35%, the level that historically indicates too much pessimism. As with the bulls the jump in bears did its job after hitting 44.7% in the third week of March that was up from an already freakishly strong 43.3% the week before. Up sharply from a low of 19.6% on the last rally. Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). This is a huge turn, unlike any seen in recent history.
NASDAQ
Stats: -25.4 points (-1.1%) to close at 2285.56
Volume: 1.962B (-9.88%)
Up Volume: 542.317M (-208.072M)
Down Volume: 1.355B (-16.266M)
A/D and Hi/Lo: Decliners led 2 to 1
Previous Session: Decliners led 1 to 1
New Highs: 51 (+15)
New Lows: 140 (+47)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: -11.3 points (-0.9%) to close at 1249.01
NYSE Volume: 1.228B (+0.13%)
Up Volume: 404.167M (-133.447M)
Down Volume: 814.547M (+138.3M)
A/D and Hi/Lo: Decliners led 2.02 to 1
Previous Session: Advancers led 1 to 1
New Highs: 33 (-2)
New Lows: 139 (-2)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 Chart: http://investmenthouse.com/ihmedia/SP600.jpeg
SP400 CHART: http://investmenthouse.com/ihmedia/SP400.jpeg
DJ30
Stats: -42.17 points (-0.37%) to close at 11284.15
VOLUME: 170M shares Monday versus 189M shares Friday. More low, low volume as it tests. As with the other indices, no dumping ongoing.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
TUESDAY
FOMC one-day meeting concludes at 2:15ET and no one expects the Fed to raise rates, but the question is how many dissenters there will be that want rate hikes and what kind of posturing the Fed makes regarding inflation. Despite it all, remember that Bernanke views pushing a recovery as more important than fighting inflation so there won't be a rate hike with the kind of numbers still coming out of the economy.
As noted above, looking at the lack of intensity in the overall selling we could see the market start the rebound tomorrow even ahead of the FOMC decision. If oil falls below 120 decisively and cannot get back up, that would help convince investors the rebound should come to an end. After all, gasoline is down to 3.88/gallon nationally, the lowest since . . . May. Seems longer ago than that; shows how bad the energy bite is. Thus, as oil goes lower . . . it won't hurt.
Thus we may see some more downside early as stocks continue to follow through a bit lower, particularly as those hedge fund(s) involved in unwinding their commodities trades clean up a bit more. After that downside, and even if it doesn't occur, we still are looking for a comeback from this last three-day slump. We will look to use any early weakness to take some gain on the downside that is ripe to take and then see if there are some solid stocks of leadership character ready to make the move higher, give us the buy, then make us some money.
Support and Resistance
NASDAQ: Closed at 2285.95
Resistance:
The 18 day EMA at 2302
The 50 day EMA at 2337
2340 from the March 2007 low
2340 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
2358 is a 50% retracement of the June to July selloff.
2370 from the April 2006 peak
2378 is the mid-February peak; 2379 from the October 2006 peak
The 90 day SMA at 2383
2386 is the August 2007 intraday low
2388 is the June 2008 low
2392 is the April 2008 peak
2419 is the January 2008 peak and the early February peak
The 200 day SMA at 2447
2451 is the August closing low
2500 from interim August lows.
Support:
2286 is the first April 2008 gap up point.
2261 is a March 2008 interim low
2202 is the January 2008 low
2155 is the March 2008 low
S&P 500: Closed at 1249.01
Resistance:
1257 is the March low
1270 is the January low
1285 is the recent July peak
The 50 day EMA at 1295
1317 from the February low
1320 is a 50% retracement of the May to July selloff
1324 is the April low
1331 is the June low
1345 is an ancient trendline
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
The 200 day SMA at 1380
1387 is the April 2008 intraday high
1396 is the February 2008 peak
1406 is the August and November 2007 closing low
Support:
1244 is an August 2005 peak
1240 to 1221 are September 2005 peaks1234 is the July 2006 low
1234 is the late July low
1224 is the June 2006 low
1176 from the Q4 2005 lows
1167 is the January 2005 low
1154 from the May 2005 lows
1142 is the 2005 closing low
Dow: Closed at 11,284.15
Resistance:
11,317 from March 2006
11,634 is the January intraday low
11,637 is the 2004/2005 up trendline
11,670 is the May 2006 intraday high; 11,642 closing
The 50 day EMA at 11,700
11,731 is the March 2008 low
11,982 is a 50% retracement of the May to July selloff
12,050 from the March 2007
12,070 from the early February 2008 lows
The 90 day SMA at 12,188
12,250 from late March 2007 lows
12,518 is the August intraday low
The 200 day SMA at 12,554
12,573 is the mid-February high
12,743 is the November low
12,750 to 12,768 is the February 2008 peak and a series of lows and highs from August 2007
12,786 is the February 2007 peak
12,845 is the August closing low
13,092 is the December 2007 intraday low
13,133 is the May 2008 high
Support:
11,131 is the late July 2008 low
11,061 from February 2006
10,912 peak from March 2005
10,854 from December 2004
10,701-10,705 from July 2006, July 2005
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
August 4 - Monday
Personal income, June (8:30): 0.1% actual -0.1% expected, 1.8% prior (revised from 1.9%)
Personal spending, June (8:30): 0.6% actual versus 0.5% expected, 0.8% prior
Factory orders, June (10:00): 1.7% actual 0.7% expected, 0.9% prior (revised from 0.6%)
August 5 - Tuesday
ISM Services, July, (10:00): 48.7 expected, 48.2 prior
FOMC policy statement (2:15)
August 6 - Wednesday
Crude oil inventories (10:35): -81K prior
Consumer credit, June (3:00): $6.4B expected, $7.8B prior
August 7 - Thursday
Initial jobless claims (8:30): 420K expected, 448K prior
Pending home sales, June (10:00): -1.0% expected, -4.7% prior
August 8 - Friday
Q2 Productivity, preliminary (8:30): 2.5% expected
Wholesale inventories, June (10:00): 0.6% expected, 0.8% prior
End part 1 of 3
|
money investment
investment help
|
