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money investment, investment help
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6/18/09 Investment House Alerts
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IH Alert Subscribers:
MARKET ALERTS:
Targets hit alerts: None issued
Buy alerts: AKS; UCO
Trailing stops: BOOM; PCU; SLB
Stop alerts: BJS; MEOH; SNDK
SUMMARY:
- Another day of no movement at support.
- Technology pensive ahead of RIMM earnings, dollar trades remain weak, but financials rebound, helping NYSE indices to a modest gain.
- Continuing jobless claims make another try at breaking the string of records.
- Dollar index holds key 80 level.
- Leading Indicators bump higher.
- Philly Fed leads a rebound in regional manufacturing
- RIMM earnings send it lower, but it then recovers . . . along with the rest of tech.
Indices hold support again, but as seen in May, that is not an automatically good thing.
Jobless claims were in the range and thus palatable to investors, though if you can swallow 608K jobless claims your throat is getting pretty stretched out. Continuing claims fell to a mere 6.68M, down 148K and the first decline since the third week in January. Of course we had another 'first' decline in CC's three weeks back, but that was revised away the following week. The 148K decline is a rounding error when you have close to 6.7M claims. In that light, hardly impressive.
Futures were up after the report, but they whittled back the gains in futures by the open. A flat open was bought and then the Philly Fed manufacturing report came out much better than anticipated (-2.2 versus -17.0) and the LEI (Leading Economic Indicators) clocked in at 1.2 versus the 1.0 expected. Sounded better, but the market sold back from the early bounce on the numbers. They recovered and stocks moved laterally and slightly higher the rest of the session, but another late dip closed the indices mixed once more.
The dollar was down early but it recovered and closed higher (1.3893 versus 1.3944 Wednesday). That kept the dollar index over 80, the point we are watching as the dollar struggles to hold its upside trendline break. Even with a stronger dollar, however, oil closed modestly higher (71.28, +0.25); hardly a big move but a significant move as it broke with the dollar somewhat. We bought some more UCO (crude oil 2x ETF) as a result, along with the fact that it closed up again off its test. Bond yields bounced sharply as well (1.25% 2 yr, 3.82% 10 year after it closed at 3.67% Wednesday). Maybe that was the 'economic recovery' aspect many were touting with respect to the LEI and Philly Fed, but if that is recovery we are in for a very sad recovery. Well heck, that makes sense because we believe given the response to the economic crisis (money printing, government spending of that phony money, resultant inflation) the recovery will be sad.
It was enough to close the market mixed with the NYSE indices moving higher gratis the financials that rebounded after getting boxed around Wednesday. NASDAQ and company were lower as the leading index (NASDAQ broke out and is now testing) took a breather ahead of RIMM. Important to see it recover, and though RIMM was down immediately after its results, it and the rest of tech were right back up after the initial downside action.
TECHNICAL.
INTERNALS. Breadth was sloppy at 1.4:1 NYSE and 1.1:1 on NASDAQ, but it was also somewhat interesting. NASDAQ was lower but breadth bumped positive. Some large cap weakness ahead of RIMM took NASDAQ down but the breadth shows overall the index was fine. Volume tailed off notably on both exchanges after a good showing Wednesday when NASDAQ posted a gain, modest as it was. Expiration trade on Wednesday, sleepy summer trade on Thursday. Maybe some more trade Friday on expiration.
CHARTS. Another day of no movement as the indices hold right above support. NASDAQ is holding its November peak in a very narrow range on low volume. SP500 bounced off its support as the financials rebounded from their Wednesday selling. No real movement ahead of expiration, and indeed the intraday ranges are very narrow. Friday may bring a bit more volatility, but the next real move likely will not come until next week. At that point we see if SP500 continues its test lower, i.e. that this pause and doji was just that, a pause, and the doji is a continuation doji. NASDAQ will need to hold its November peak, the breakout point. In doing so remember that support is not an exact price; it is a range around that price and an index can undercut a prior price point and then rebound.
LEADERSHIP. Financials were up and maybe they can actually turn to the upside after this last shakeout from there flat 6 week patterns leading into this week. There was some volume on the bounces though still well below average; nothing proved yet, and indeed, GS looks as if it is setting up for another move downside after a lower volume Thursday bounce. Energy and commodities are hanging on, barely so. We will see if they can recover off the pause or just resume the move. Given oil moved higher as the dollar moved higher, we are watching to see if there is a break in the action between these stocks and the dollar. Tech is trying to set up still as well. Healthcare stocks are perking up still, but even those are very spotty despite a lot of hype around them as the next place money will head and shoulders. In sum, leadership is basically lacking right now as the dollar trades struggle, tech tests its breakout, financials are a question mark, and healthcare, despite the hype, still needs work. Pretty much matches the overall market action right now.
THE MARKET
MARKET SENTIMENT
VIX: 30.03; -1.51
VXN: 30.03; -1.44
VXO: 28.53; -1.57
Put/Call Ratio (CBOE): 0.94; -0.19
Bulls versus Bears:
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: 44.8%. Fading from 47.7%. The pullback has culled the herd a bit after the rally spiked the reading from 42.5%. Broke free from the 40.9% where it hung around for three weeks. Steady rise from 36.0% just 6 weeks back. Has passed 43.2% hit mid-April before anticipation of stress tests. Over the 35% threshold, below which is considered bullish, but this is not a bearish indication yet. Has to get up to the 60% to 65% level to be bearish. Dramatic rise from 21.3% in November 2008, the bottom on this leg. This last leg down showed us the largest single week drop we have ever seen, falling from 33.7% to 25.3%. Hit 40.7% on the high during the rally off the July 2008 lows. 30.9% was the March low. In March the indicator did its job with the dive below 35% and the crossover with the bears. 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: 26.4%. Bears growled a bit more, up from 23.3%. Still well off the 37.2% and the 37.1% in mid-April as the rally continued higher. As with bulls, below the 35% threshold considered bullish and starting to approach bearish levels (for the overall market). Now far from off the high on this run at 47.2%. For reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: 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). That was a huge turn, unlike any seen in recent history.
NASDAQ
Stats: -0.34 points (-0.02%) to close at 1807.72
Volume: 2.039B (-17.43%). Not much trade for expiration week. That leaves Friday as a possibility for some stronger trade, but as it is expiration it really does not mean a lot.
Up Volume: 835.871M (-545.081M)
Down Volume: 1.243B (+94.72M)
A/D and Hi/Lo: Advancers led 1.14 to 1. Advanced overall despite a slight decline in NASDAQ. Most of the weakness was in NASDAQ 100, but just slightly so.
Previous Session: Advancers led 1.1 to 1
New Highs: 27 (+4)
New Lows: 6 (-14)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
Still in the test of its breakout over the November high at 1785. Tapped that level on the Wednesday low and bounced modestly, but could not advance the ball Thursday. Still a good test, still holding that key level. The RIMM earnings could have posed a problem and we will see how it plays out Friday morning, but after an initial selloff RIMM was back up and other NASDAQ stocks were buoyed.
NASDAQ 100 (-0.14%) is holding its June gap higher, filling part of the gap as it holds 10 points over the early May peak. Kind of in no man's land below the October gap point and the May peak. Reaction to RIMM will tell the near term tale.
SOX (-1.84%) again held over its 50 day EMA and right at the March/May up trendline. Those two breakouts and two failures loom over it as a double top, and that makes this test of the trendline quite important. Chips are choppy, SOX is choppy, and this is an important level to hold. Still watching for potential upside plays from the chips; if NASDAQ holds its breakout SOX should do the same with its up trendline.
NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: +7.66 points (+0.84%) to close at 918.37
NYSE Volume: 1.088B (-17.31%). After picking up the first three days of the week, trade faded to very low levels even in terms of this month's low trade. Expiration week so you cannot make much of it.
Up Volume: 685.156M (+277.945M)
Down Volume: 394.749M (-504.904M)
A/D and Hi/Lo: Advancers led 1.37 to 1
Previous Session: Decliners led 1.33 to 1
New Highs: 15 (+6)
New Lows: 40 (-10)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP500 continues looking top-heavy here as it holds the 900 level and the 200 day SMA (904.25), but is also below 925, tapping that and the 18 day EMA (923) on the high. If it stalls here that keeps it below the early May peak and has the look of a head and shoulders top to it. Doesn't help that it broke lower from the January high at 944. Still looking for a test of 875, and this has the look of setting up for that move. A failure here is worth some more SPY positions or some SDS positions.
SP600 (+0.63%) held its 200 day SMA again, keeping it comfortably over the 259 support level (closed at 268). Nonetheless its pattern is similar to SP500 and a failure at 270 has the look of a right shoulder to a head and shoulders. Those always set up but often don't consummate, so take it with a grain of salt. Both SP600 and SP500 could simply move laterally and higher, forming an ascending triangle or pennant. At a transition point here and the first step for both SP500 and SP600 is how they handle the test of this support.
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Still holding 8500 where it stalled in May and broke through to start June. Important level for the Dow and it has not given it up yet. We were saying DJ30 would follow SP500, but if DJ30 continues this action it could be the one leading the way.
Stats: +58.42 points (+0.69%) to close at 8555.6
Volume: 220M shares Wednesday versus 240M shares Tuesday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
FRIDAY
No scheduled economic data but it is quadruple expiration meaning every option and futures contract expires. With so much expiring you typically get some volatility as the positions are rolled out in big program moves starting at various times through the day.
We don't typically do a lot of buying on Fridays, particularly expiration Fridays when the indices are in pullback mode and showing some wear and tear as are the NYSE indices. SP500 is struggling and is still waiting on the financials to emerge from their comas and make a move.
On the other hand, there are some well positioned techs, China, and even steel stocks that have made great pullbacks to important levels and are in position to move. If they do we don't want them to run away; we can pick up a few positions if the show the right stuff. With the post-market recovery among RIMM, et al after the initial selling on its earnings we could see some decent moves. Other stocks were not notably lower after RIMM announced, but they responded when RIMM responded after that initial selling.
Again the dollar is worth watching and how oil responds to it along with the energy and commodities. As noted, steel was moving up again and maybe that is a precursor for the others. Watching to see how things set up for next week and will look to position ourselves with some new positions if warranted and close others if warranted.
Support and Resistance
NASDAQ: Closed at 1807.72
Resistance:
The 10 day EMA at 1820
1897 is the October post gap intraday high.
1947 is the October gap down point
1984 from late September
2099 is the mid-September low
2169 is the March 2008 double bottom low
Support:
1786 is the November intraday high
1780 is the November 2008 closing peak
1773 is the May peak
1770 is the mid-October interim peak
The 50 day EMA at 1734
1673 is the prior April peak
1666 is the intraday January 2009 peak
1664 is the May 2008 low
1661 is the April 2009 prior peak
The 200 day SMA at 1659
The January closing peak at 1653 (intraday)
1623 is the early April peak
1620 from the early 2001 low
1603 is the December peak
1598 is the February 2009 peak, the last peak NASDAQ made
1587 is the March 2009 high is getting put to bed again
1569 is the late January 2009 peak
1542 is the early October 2008 low
1536 is the late November 2008 peak
1521 is the late 2002 peak following the bounce off the bear market low
1505 is the late October 2008 closing low.
1493 is the October 2008 low & late December 2008 consolidation low
S&P 500: Closed at 918.37
Resistance:
919 is the early December peak
The 10 day EMA at 925
930 is the May peak
935 is the January closing high
944 is the January 2009 high
1000
1050
Support:
The 200 day SMA at 904
899 is the early October closing low
896 is the late November 2008 peak
The 50 day EMA at 896
888.70 is the April intraday high.
882 is the early May low
878 is the late January 2009 peak
The prior April peak at 876
866 is the second October 2008 low
857 is the December consolidation low; cracking but not broken
853 is the July 2002 low
848 is the October 2008 closing low
846 is the April peak
842 is the early April peak
839 is the early October 2008 low
833 is the March 2009 peak
818 is the early November 2008 low
815 is the early December 2008 low
805 is the low on the January 2009 selloff. KEY Level
800 is the March 2003 post bottom low
Dow: Closed at 8555.60
Resistance:
8588 is the May high
The 10 day EMA at 8616
8626 from December 2002
8829 is the late November 2008 peak
8934 is the December closing high
8985 is the closing low in the mid-2003 consolidation
9088 is the January 2009 peak
9387 is the mid-October peak
9625 is the October closing high
Support:
8521 is an interim high in March 2003 after the March 2003 low
8451 is the early October closing low
8419 is the late December closing low in that consolidation
The 50 day EMA at 8377
8375 is the late January 2009 interim peak
8315 is the February 2009 peak
8307 is the April 2009 intraday high
8221 is the May 2008 low
8197 was the second October 2008 low
8191 is the prior April peak
8175 is the October 2008 closing low. Key level to watch.
8141 is the early December low
The early April intraday peak at 8113
The early April peak at 8076
7965 is the mid-November 2008 interim intraday low.
7932 is the March 2009 peak
7909 is the early January low
7882 is the early October 2008 intraday low. Key level to watch.
7867 is the early February low
7702 is the July 2002 low
7694 is the February intraday low
7552 is the November closing low. KEY Level.
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
June 15 - Monday
NY Empire Manufacturing, June (08:30): -9.41 actual versus -4.60 expected, -4.55 prior
Net Long-Term TIC Fl, April (9:00): $11.2B actual versus $60.0B expected, $55.4B prior (revised from $55.8B)
June 16 - Tuesday
Housing Starts, May (08:30): +17%; 485K expected, 458K prior
Building Permits, May (08:30): +4%; 508K expected, 498K prior
PPI, May (08:30): 0.2% actual versus 0.6% expected, 0.3% prior
Core PPI, May (08:30): -0.1% actual versus 0.1% expected, 0.1% prior
Capacity Utilization, May (09:15): 68.3% actual versus 68.4% expected, 69.0% prior
Industrial Production, May (09:15): -1.1% actual versus -1.0% expected, -0.7% prior (revised from -0.5%)
June 17 - Wednesday
Core CPI, May (08:30): 0.1% actual versus 0.1% expected, 0.3% prior
CPI, May (08:30): 0.1% actual versus 0.3% expected, 0.0% prior
Current Account Balance, Q1 (08:30): -$101.5B actual versus -$85.0B expected, -$132.8B prior
Crude Oil Inventories, 06/12 (10:30): -3.87M actual versus -1.7M expected, -4.38M prior
June 18 - Thursday
Initial Jobless Claims, 06/13 (08:30): 608K actual versus 604K expected, 605K prior (revised from 601K)
Leading Indicators, May (10:00): 1.2% actual versus 1.0% expected, 1.1% prior (revised from 1.0%)
Philadelphia Fed, Jun (10:00): -2.2 actual versus -17.0 expected, -22.6 prior
End part 1 of 3
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