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us stock market, trade stock
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8/11/08 Stock Split Report Update
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MARKET ALERTS
Targets hit alerts: RIMM
Buy alerts: ARO; ESRX; PKI; SXE; UTHR
Trailing stops: None
Stop alerts: BIDU
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/alertssr.html
SUMMARY:
- NASDAQ leads the way as indices put a nice finish on this stage of the rally.
- Quiet on the economic data, big on the dollar and Europe.
- Time for NYSE large caps to step up and give NASDAQ, small caps a hand.
- Small caps led off the March lows and rolled over. Now back close to that level we have to watch closely.
Stocks start slow, add to gains, but NASDAQ is already at the 200 day SMA.
After a big week last week there was not a lot of news to drive stocks on Monday. Oil was firming on the Russian war news, but oil was basically flat so any firming meant it simply wasn't falling 4 points. Some earnings were out but that is winding down considerably; they certainly did not move the market Monday morning. Futures were slightly lower suggesting the market was going to take a morning breather from last week's gains to start expiration week.
The indices did start lower, but the dollar strengthened once more sending gold lower (closed at 830.10, -34.70). Russia announced it had completed the main thrust of its attacks, and that helped oil ease. The market started to firm itself and NASDAQ, led by its small caps, took to the lead as it and SP600 turned positive early. A nice, steady run into the early afternoon saw NASDAQ join NASDAQ 100 and SP600 over the key 200 day SMA. Oil recovered off its lows (closed at 114.56, -0.64) and the market stalled out, fading into the last hour. A bounce with 25 minutes left turned DJ30 to positive once more, and all the indices held the green to the close.
You can say oil caused the market to stall, but it was still lower on the session. Looking at the action, however, noting NASDAQ put in 185 points since last Monday's closing loss and bumped its head at the 200 day SMA Monday, the more likely explanation is that the market is a bit winded on this last dash higher, at least from the leading NASDAQ's perspective. SP500 and DJ30 are up, but they were not nearly as successful as NASDAQ and SP600 on this run. Thus maybe they will take up the baton and run a bit, giving NASDAQ a chance to take a blow. Not that NASDAQ has to fall right here. It is moving up on rising, above average volume, and while not great levels of volume, its stocks are undergoing more accumulation than the NYSE large caps. It can still put in some more upside, but the point for us is that it is getting a bit more extended here for new buys. A rest would do it good with respect to new entry points, SP600 as well. As for the NYSE large caps, this would be a good time for them to find some buyers.
TECHNICAL. Intraday the action was again pretty much textbook with the indices starting softer and then building into a nice gain, moving SP500 and DJ30 off of their 50 day EMA that they recaptured last week. NASDAQ moved through its 200 day SMA. NASDAQ 100 and SP600 moved further above their 200 day. Then the wheels almost came off in the afternoon. DJ30 fell to negative while SP500 threatened to do so. NASDAQ and SP600 were never in trouble of doing that, but they closed off their highs, NASDAQ giving up 21 points, not quite half its gain. They recovered late and held positive, but it was not as strong as it has been. After a week of upside that is not a major issue, more typical than anything.
INTERNALS. NYSE was quiet with so-so breadth (1.6:1) while NASDAQ and its small caps were out in front sporting solid 2.2:1 breadth. NASDAQ also showed better volume with trade moving up over average after a decent though less than awe inspiring week of trade last week. Once more NYSE trade lagged well below average as the NYSE large caps are providing little leadership outside names like, once again, MCD and JNJ.
CHARTS. As noted, NASDAQ moved through its 200 day SMA easily but then faltered and had to scramble to reclaim it at the bell. It joins SP600 and NASDAQ 100 over that level but after a week of upside bought it to this resistance point NASDAQ is a bit extended. SP500 moved further off its 50 day EMA, stalled some at 1315 resistance, but held onto its gains. Lackluster but still moving higher. DJ30 is just tagging along as it has been. SP600 is on a tear, 5 points from its June high, its recovery high off of the January and March lows.
LEADERSHIP. Small cap NASDAQ is taking over leadership of the move. NASDAQ was up but NASDAQ 100 lagged overall tech, showing the small cap strength. Medical and healthcare remained solid, apparel retail was solid again, and chips even the bigger chips, were help leading as well. Leadership continued improving as more patterns build and are completed. The up and down yet upsloping trend has continued the process of base building. This process should continue and even be enhanced as the market stages a pullback after this last rally.
SUMMARY. After a good run higher NASDAQ rallied through its 200 day SMA and then faded. It looks a bit winded though that does not mean it cannot put together more upside from here before it tests. NASDAQ is important as it has been a leader early in this move and thus if it gets a bit top heavy and takes a rest likely the rest of the market will follow. That gives some better entry points after a rest and also some new stocks as more bases are completed. Of course it would be nice if SP500 and DJ30 actually came around; wishful thinking.
THE ECONOMY
No reports Monday. All of the talk centered on the dollar's continued rise, gold's continued fall, and oil struggling to hold on and not tank further. Technically oil tapped toward a support point intraday and then rebounded. Still negative for the day but this is where it tested and held to start May, so it is going to try and find some support there. Thus we can expect a bounce from oil and some corresponding backfilling from the stock market.
More worries about Europe surfaced Monday, specifically regarding Germany with comments from some economists that it could show negative growth this quarter. It is really struggling as is Europe in general. All of this is boosting the dollar in its impressive turn.
THE MARKET
MARKET SENTIMENT
VIX: 20.12; -0.54
VXN: 24.19; -0.05
VXO: 22.26; +0.38
Put/Call Ratio (CBOE): 0.86; -0.06
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: 34.0%. Jumped up from 30.0% closing in on that 35% level, below which is bullish. Still bullish though a long way up from the 27.8% on the low this round. Hit 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: 43.6%. Steep drop from the 50.0% peak on this move hit last week. Still well above the 35% threshold so still a LOT of bearishness out there. This bounce off the July lows is instilling some confidence, however. A steady rise to 50% on this move: 48.9%, 47.3%, 44.7% and 39.3% before that. A steady, strong rise. 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: +25.85 points (+1.07%) to close at 2439.95
Volume: 2.302B (+2.57%)
Up Volume: 1.787B (+67.679M)
Down Volume: 498.436M (+76K)
A/D and Hi/Lo: Advancers led 2.23 to 1
Previous Session: Advancers led 2.47 to 1
New Highs: 122 (+39)
New Lows: 99 (-12)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
For the third time, NASDAQ moved through its 200 day SMA (2437), hitting 2461 on the high, stretching toward the mid-June peak at 2483 but it was not yet ready to make the attempt at that level after taking on the 200 day. It also has 2500 before it can think about the twin peaks at 2550 from May and early June. After a good surge this move is getting older and that close off the high after moving through the 200 day shows some of the age. Still looking overall spry, however, and even if it does make a pullback thus far NASDAQ is pulling out the leaders to push it higher. Expecting some backfilling this week, but again, that is part of the process and a good orderly pullback leaves NASDAQ in good position to move higher again.
NASDAQ 100 (+0.78%) as it held the Friday move through the 200 day SMA and stretched that move higher. It ran into resistance at 1950 and stalled, giving back more than half of its gains on the session. Big run from 1800 to 1962; as with NASDAQ it is ready for a test of the 200 day.
NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: +9 points (+0.69%) to close at 1305.32
NYSE Volume: 1.263B (+1.43%)
Up Volume: 812.871M (-156.473M)
Down Volume: 437.779M (+167.49M)
A/D and Hi/Lo: Advancers led 1.61 to 1
Previous Session: Advancers led 2.85 to 1
New Highs: 82 (+34)
New Lows: 92 (-23)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
After breaking through the 50 day EMA (1294) Friday, Monday SP500 continued the move, putting a bit of distance on the 50 day, something you want to see for a test of the break over that level as it gives it some room to do it. Still lagging well behind NASDAQ, nowhere near the 200 day SMA or other key resistance levels. Would be a great time to step up, but we are not counting on it.
SP600 (+2.26%) was once more a dynamo, adding 2% to Fridays near 3% gain. It has cleared all resistance leading up to the early June peak at 402. Super strong, the leader of the market. It may not reach much higher on this move; it closed off its high at 398. Great move and some backfilling to set up a run at that June high is normal and positive.
SP600 Chart: http://investmenthouse.com/ihmedia/SP600.jpeg
SP400 CHART: http://investmenthouse.com/ihmedia/SP400.jpeg
DJ30
A gain, but gave back 85 points of its move before settling just over the 50 day EMA (11,690) it broke through Friday. No volume as trade fell even lower. DJ30 volume has not cracked average in three weeks, i.e. since the first three sessions of the move off the low. Since then volume has dried up to a veritable dustbowl. Not worrying much about DJ30; it is a follower right now and it is showing no signs of changing its colors anytime soon.
Stats: +48.03 points (+0.41%) to close at 11782.35
VOLUME: 183M shares Monday versus 212M shares Friday. No volume at all.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
TUESDAY
The economic data picks up Tuesday, but it is still just the trade balance and Treasury budget, and those aren't what you call market movers in most cases. There are some more earnings, there is oil, there is the dollar. Those metrics have controlled the action on this rally.
What next? As noted, NASDAQ and NASDAQ 100 look a bit tired, not weary, just tired. SP600 is very strong but it has closed rapidly on its June high. It could put in some more upside and challenge that level, even take it out, but it would be spent at that point and need a breather.
The interesting thing is, expiration has yet to come into play. Volume should pick up Tuesday to Thursday and then we could see our old friend volatility come into play as positions are rolled and shuffled given the continued rally. The gains put stress on the shorts and these gains require they take action and could provide that additional upside impetus to take them to next resistance. When that is over, however, the buyers are likely going to wait for some retrenching to move in once more.
It would be nice if SP500 got off the dime and used the rest by NASDAQ and SP600 to pick up some leadership characteristics, i.e. actually make more than one good move back to back. That just shows the financials are still an albatross around its neck, and as much as we would like to see it step up as NASDAQ and SP600 take a break, we are not counting on it. Thus after NASDAQ and SP600 finish their current runs we look for the rest of the market to test at that point as well.
Now we also have to consider that after this move the indices, NASDAQ and SP600 included, despite their solid moves, have shot their ammunition on this run. A string of higher lows and higher highs is great, but SP500 and DJ30 have no volume, and NASDAQ's trade, while stronger and showing good price/volume action, is not huge. It all smacks of a summertime rally in the midst of a bear market so we have to remain on our toes. Key will be what happens when SP600 gets up to that June high; double top or a pullback to rest and take it on again? On the move off the March low into June, the small caps led the charge and then rolled over. Thus we need to stay on top of them as they test that level once more.
Support and Resistance
NASDAQ: Closed at 2439.95
Resistance:
The 200 day SMA at 2439 is still there
2451 is the August closing low
2500 from interim August lows
2551.50 is the May peak; 2550 is the June peak
2603 is the early January gap down point
Support:
2419 is the January 2008 peak and the early February peak
2392 is the April 2008 peak
2388 is the June 2008 low
2386 is the August 2007 intraday low
The 90 day SMA at 2386
2378 is the mid-February peak; 2379 from the October 2006 peak
2370 from the April 2006 peak
The 50 day EMA at 2346
2344 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
2340 from the March 2007 low
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 1305.31
Resistance:
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
1348 is an ancient trendline
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
The 200 day SMA at 1374
1387 is the April 2008 intraday high
1396 is the February 2008 peak
1406 is the August and November 2007 closing low
Support:
The 50 day EMA at 1294
1285 is the recent July peak
1270 is the January low
1257 is the March low
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 11,782.35
Resistance:
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 12,142
12,250 from late March 2007 lows
The 200 day SMA at 12,503
12,518 is the August intraday low
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:
11,731 is the March 2008 low is bending
The 50 day EMA at 11,690
11,670 is the May 2006 intraday high; 11,642 closing
11,639 is the 2004/2005 up trendline
11,634 is the January intraday low
11,317 from March 2006
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 12 - Tuesday
Trade Balance, June (8:30): -$61.9B expected, -$59.8B prior
Treasury budget, July (2:00): -$86.8B expected, -36.4B prior
August 13 - Wednesday
Import prices ex-oil, July (8:30): 0.9% prior. Will they fall given the oil decline?
Retail sales, July (8:30): -0.1% expected, 0.1% prior
Retail sales ex-auto (8:30): 0.5% expected, 0.8% prior
Business inventories, June (10:00): 0.6% expected, 0.3% prior
Crude oil inventories (10:35): +1.6M prior
August 14 - Thursday
CPI, July (8:30): 0.4% expected, 1.1% prior
Core CPI (8:30): 0.2% expected, 0.3% prior
Initial jobless claims (8:30): 436K expected, 455K prior
August 15 - Friday
New York Empire State PMI, August (8:30): -5.0 expected, -4.9 prior
Net foreign purchases, June (9:00): $57.5B expected, $67.0B prior
Capacity utilization, July (9:15): 79.8% expected, 79.9% prior
Industrial Production, July (9:15): 0.0% expected, 0.5% prior
Michigan sentiment, August preliminary (10:00): 62.0 expected, 61.2 prior
End part 1 of 3
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