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world stock market, us stock market
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6/25/09 Investment House Alerts
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IH Alert Subscribers:
MARKET ALERTS:
Targets hit alerts: None issued
Buy alerts: BNI; CMG; CTRP; SBUX
Trailing stops: None issued
Stop alerts: CERN
SUMMARY:
- Market pulls an unexpected rally on end of quarter, another good bond auction.
- Continuing claims jump back up and are revised higher yet again.
- 7 year bond auction another nice one.
- Russell rebalance to be lively, but not a great buying opportunity.
Some early end of quarter window dressing helps spark an unexpected rally.
Thursday the market pulled an unexpected but rather decent rally when it looked like that was the last thing it wanted to do. There was some end-of-quarter action and a good bond auction, not to mention that Ben Bernanke did a credible job for himself in front of Congress.
Stocks needed it. The economic data released Thursday was no great shakes. The Q1 GDP revision (this is one of the last revisions we will see) came in at -5.5%. That was better than the -5.7% originally reported, but when you are taking about 0.2% when you are at -5 or worse it is all semantics. The economy is in very serious trouble - all you need to do is look at the jobless claims and ask those people who are suffering job losses. The weekly claims rose again, rising to 627K versus the 600K expected. The prior week was revised higher as well, up to 612K from 608K. What we have is an inability to break through the 600K level. If you recall back to the Greenspan era - or even before all of these disastrous events happened last fall - 300K was an inflection point for the Fed. If jobless claims fell below 300K, it considered that a point where it had to worry about job tightness and "wage-led inflation". There is really nothing historical that proves wage-led inflation, but it is just one of the indicia that the Fed looks at as an overall picture that things may be tightening up or getting to the point where you can see some pricing pressure. While Greenspan would have you believe that that was a cause of inflation, it was nothing of the sort. We all know what the textbook inflation definition is, and it is not whether people are employed.
The dollar was lower coming in at 1.3989 Euros. It has hung around that 1.40 level. It fell down to that level and then bounced back to the 1.3-ish range and has been pinballing back and forth. It is holding a range which keeps the dollar index above the 80 level on its test. It has not been able to take off and move up, but it also has not broken down. At this stage of the game, not breaking down for the dollar is not bad if you are looking for a stronger dollar ahead.
Oil was up. It rose to $70.30, up $1.63. It was torched earlier in the week, but has come right back to $70. There is a bid under oil even though oil demand is still at 2001 levels or less (and we know what happened in 2001). What we are looking at is some seriously weak demand even as prices move up. There is speculation and that is part of the inflation trade. That trade has gone underwater of late, given that the commodity and energy stocks have sold, but oil has held its own. That black gold many consider as "good as gold" given the printing presses that are running around the world. The Fed came out yesterday and said it is not that worried about inflation, but the Fed would not come out and say that; if it is worried, it will let its rate hiking do the talking. It is not going to try to jawbone inflation. You cannot do it as we learned that back in 1974 under the Ford Administration with the WIN buttons where we were trying to 'whip inflation now.' You cannot talk down inflation, you have to knock it down as Paul Volcker showed us later in the early 1980's.
The market started lower on this not-too-good news. Within ten minutes, however, it caught a bid and it was off to the races for the rest of the day. The market never looked back with the indices posting 2% or better gains into the close. It never came back to test and never really looked back. SP500 did not give us that look down toward 875 - not yet.
The move had a lot of floor traders and even money managers who were driving the action scratching their heads as to what was going on (some of them were probably scratching other parts of their anatomy as well, but we will not go into that). I checked with a lot of floor traders and some market makers and they said there was a lot of program trading driving the action. Program trading is where the big funds have computer programs that execute at certain levels. As the market is pulling back they maybe trigger what they call "buy stops" - kind of like a stop-loss, but as the market comes back, or when a stock hits a certain point, it triggers a buy order. Those program trades feed off of one another, and that was driving the action. Why would they be buying at this point, i.e. four days before quarter end? There has been some money made in some of what you would call riskier plays - small caps, emerging markets. We are getting to the end of June, the end of the second quarter, so we started seeing some window dressing pop up. We started talking with more people and in the afternoon they were telling us that is what was going on. They were dumping some of the riskier issues while picking up some of the household names to put in their second quarter prospectus. There is also going to be the Russell rebalance on Friday, and we will see a lot of volatility because there are stocks coming in and out of the various indices and you will have fund managers that have to sell Russell stocks based on who is going in and who is coming out and the reweighting that takes effect when that happens - we will see volatility and volume. Why did we get window dressing this far out? There is the Russell rebalance on Friday followed by a shortened holiday week next week. A lot of the fund managers are getting it done now ahead of next week when they will be on vacation -we saw a lot of managers buying up the household names today to get it over with and thus we may just see the window dressing trade dissipate come Monday.
There was also another good bond auction. The 7 year Notes enjoyed a very good bid to cover ratio and they were bid very well with interest rates falling. That was the third very good auction of the week, and that helped buoy investor confidence and brought bond yields lower as well. As noted, the Bernanke testimony was not bad either. Congress was barking questions about what kind of undue influence he pushed with respect to the Merrill Lynch acquisition. We are dead set against government being involved in any aspect of our lives, but at the same time you have to wonder why these hearings are happening at this particular time. What is the answer to that? Usually the answer is all politics. There is a lot of push to take Bernanke out of the Fed role, because he was a Bush appointee, and install someone who is an Obama appointee. There has been a lot of talk about Larry Summers being in that position, and there is no question that he is qualified, although I seriously wonder about him because when he was Energy Secretary he did not seem to have a clue many times. Although he is a brilliant man who is obviously well qualified, he is in the inner workings of the Obama administration. It is not like the usual situation where a Fed Chairman is basically tangential-to but outside-of an administration before he is made Chairman. That is what happened with Bernanke and Greenspan. Summers would come from the bowels of the Obama Administration, and if you put Summers there, it has an incredibly bad smell, the taint of being an inside job with an insider who will work with the Administration in order to get the Administration's policies done, versus an autonomous individual, such as Greenspan who confounded both sides of the aisle while he was Fed Chairman for those long 18 years. In any event, the market seemed to like what it heard from Bernanke, and it liked the bond auction; with the bid under it and the program trades, the indices logged nice 2% + gains.
TECHNICAL
INTERNALS.
Breadth was very good at 4:1 on both NYSE and NASDAQ. Volume crept higher on both, but it was still below average. It was no blow-out day by any means. We are seeing summertime action and the volumes are lower. They have been creeping higher on some selling and now creeping higher on some buying. There is a dead heat going on, and if you look at the indices you can see that. A lateral move threatening to break down, threatening to break higher and unable to do either. That is going to change somewhat on Friday but not that greatly. There will be volatility as the Russell's rebalance because there will be buying and selling of a lot of stocks. There will be a lot of volume coming in, but volume that does not mean much. The market will be spinning its wheels, and just passing money around - it is like taking taxes from one and giving it to the other. There are a lot of transactions taking place, but you are going nowhere and creating nothing with the taxation. They are creating nothing with all of these changes, but they are just buying and selling to adjust to whatever weight they need to place upon these different stocks that go into the indices.
CHARTS.
SP500 went from roll-over ready on Wednesday as it rallied and sold back down, to a sharp bounce. It bounced really in no-man's land; it was not at support or resistance, it just bounced. That is another indication that shows you there was program action at work. We saw a lot of buy on close orders that also show the programs were at work getting a jump on the 4th of July week and their window dressing for their prospectus that will come out in July.
The spurt higher on SP500 took it past the December peaks - just past them at 919, and the index closed at 920. The key resistance is on 925-30. This rally came out of basically nowhere when it was set to test 875. No matter; the market is going to do what it is going to do whether we think it should go down or not. The thing is, SP500 has not broken out of the range or taken out this next resistance level. It is still right there and could turn back just as easily. Tomorrow will not be as big a day on the SP500 because most of the Russell stocks are your smaller cap and mid-cap stocks. Therefore you are not going to see as much action in the SP500. I posit - and I could be wrong, which happens on a daily basis - that it may not go anywhere on Friday. Early next week we may see it come right back down. The point is, the SP500 is still banging around in a trading range where it looks top heavy and looks like it wants to fall over, but as we have seen with this market all along, it just is not doing it.
NASDAQ started lower as well. In the pre-market it looked as if it was going to stall and roll over. Talking to floor traders in the first few minutes, they said it looked heavy, but then the buy-stops were hit and the bids came in and that pushed the market higher. It is hard to deny NASDAQ looks pretty good. It moved up on Wednesday with a nice gap and, even though it started lower on Thursday, it rallied right back. Indeed, NASDAQ is looking very healthy. It broke higher, gave up some of that breakout, but then it came right back over, moving back over the November highs and took out that interim lower high that it hit last week. The NASDAQ is acting very strong - as a leader should. It is hard to argue with that kind of move, but it is hard to argue with any move the market makes because the market will go where it is going to go regardless of what we think.
LEADERSHIP.
We saw some good moves in some of the big names that continue to pop up time and again as leaders. They have been choppier lately, no doubt about that. All leadership has been choppy. It has been hit with the recent selling, whether it is a pullback or a move laterally. We did see the China stocks make some great breaks higher. We saw steel hold up and start to move higher - some of those steel patterns all of a sudden look quite good again after the appeared as if they would roll over and drop off the face of the earth.
With NASDAQ looking good, there are some big tech stocks that look solid. Transports came out of nowhere and are looking pretty decent again (not all of them, but certain segments such as the railroads). There are some semiconductors that were in good shape as well. Chips have been struggling of late with the double top and a break down again of another breakout but there are good stocks in that sector that continue to hold their own and pull the rest of the index with them. So we do have some quality leadership though, overall, the market still needs some time to set up. If you look at SP500, it is still trying to work on a test and a base. It makes sense that a lot of stocks are doing the same thing while the market moves up and down in a range and tries to establish a base that it can move higher off of. Remember, the market can fail in the first breakout attempts, come back and base, then bang around, get some footing under it, form that bottom and then move higher. That is what we are seeing right now and what it is trying to do. While it does that, we can pick shots here and there but we also have to have the overall perspective that the market is moving in this range so we do not want to get too bent out of shape by these moves such as today that came pretty much out of the blue.
THE ECONOMY
Jobless claims rebound, continuing claims recover.
The jobless claims came out and they were worse than expected. They did not blow to the upside but there was a solid recovery in losses. That is kind of a perverse way of saying it, but that is what has happened. The 600K level has acted as a barrier, and now it is bouncing up off that level.
Continuing claims actually broke down to a lower level for once and it was not revised away this time - they were back up again nonetheless this week. Continue claims rose to 6.73M from roughly 6.71M the week before. Prior to that, three weeks ago there were 6.8M. There was a drop off, and that is what got everyone excited, but they moved right back up. It does not tell us that things are much better, but it tells us that two weeks ago what we saw was the job market is still the same. All we saw were people falling off of their extended benefits and going off the rolls, and that is why the continuing claims dropped.
When you see the jobless claims still holding above 600K and ticking higher, and when you see continuing claims moving back up after a drop off, you realize that there are new people coming onto the rolls as other people fell off before. There is really no improvement in the jobs market and that is what we expected at this stage because there is not a lot of improvement in the overall economy. There were better numbers as we saw with the durable goods yesterday, on Wednesday. Business expenditures are picking up, but that is a long way away from hiring people. That is why we cannot look at the jobs number as an indicator of whether the market is recovering, but we can just look at as an indicator, down the road, to the comfort level of the US citizen and how strong a recovery may be. If the job market recovers but is weak, the recovery would not be that strong.
Bond auctions draw plenty of eager buyers for US debt.
Again, the 7 year bond auction was a nice one. $27B was sold, and the interest rate was 3.329%. It was expected that they would have to pay up to 3.36% in order to move the Treasuries. The fact that they did not have to pony up with the extra interest was a very solid indication of the appetite for US Treasuries. In May, things were not nearly as positive. The US had to pony up with higher interest rates in order to attract foreign investors to come in and buy our bonds. We were worried with all the money printing and the inflation that was being talked about that we would have some kind of issue with respect to that. As it turns out, as the month changed, the concerns about the world economy have turned investors back toward the US dollar and towards US Treasuries. Indeed, we saw double the bids in the June auction from the May auction. The 7 year showed a 2.82 bid to cover ratio versus a 2.26 bid to cover in May. As we saw yesterday, I think it was the 10 year (I do not want to get that wrong a mind is a terrible thing to lose) but it showed an excess of 3:1 bid to cover ratio. That is a very strong appetite when there is worry about whether or not the world is going to recover from this recession and how fast.
Is the US now a great risk for everyone? Well, yes, when you compare it to the other alternatives in the world. Relative to 5 years ago, 6 years ago, 10 years ago - not as good, but again compared to everything else out there, it is. If you want safety for your money and you are worried about financial markets, you go to the US dollar and you go to the US bonds. That is the way it has been, and still is, even with our huge debt for this year and our incredibly huge debt and deficit for next year. People still look at us and realize that we are not that bad compared to other places they could put their money.
THE MARKET
MARKET SENTIMENT
VIX: 26.36; -2.69
VXN: 27.25; -1.78
VXO: 25.87; -2.63
The VIX was down sharply on Thursday. It fell to 26.36, I think that was roughly 2 points or so. That puts it smack dab in the middle of what used to be the normal range from 20-30. If you were up toward 30, you had high volatility, and if you were down toward 20 you had low volatility or complacency. We are right in the middle of the old norm.
This just goes to show you how much panic and fear there was in the market last fall when volatility shot higher. Typically it does shoot in the 40's, 50's, 60's, 70's - do I hear 80? Yes, when times get very seriously dangerous from the perspective of the market. Now things have calmed down and we are at normal ranges. We are going into a normal "worst recession since the Great Depression" kind of period, versus the Great Depression II. We have one of these "worst recession since the Great Depression" recessions every ten years or so. Or every eight years if you look at the political calendar and the presidential elections because how many times have we heard in a political campaign speech that "this is the worse recession we have had since the Great Depression." We heard it when Bill Clinton ran for office the first time, and in this past campaign - frankly it was correct this past time in terms of length, and we will have to see how deep this one is. Thus far with the -5.5% it is pretty ugly, we just have to see how long it stretches out. A lot of people are worried it is going to stretch out a long time; we heard today that there is going to be a bear market until 2020. That is one of those what they call "secular bear markets" that runs for decades while you have cyclical bull markets inside of that. In any event, do not let that kind of talk scare you. The market goes up and rallies, it goes down and rallies - it does not matter if you are in a bear or bull market, as we saw in the 1970's where there were great runs to the upside during a secular bear market. You just have to know where you are and know how much you can get out of the runs. Basically the market tells you what it is going to do for these bigger trends, and you just ride them until it bucks you (as Kevin Costner said in "Tin Cup" - one of my favorite movies, by the way, not because he is an underachiever, but because it was just funny when he plunked a shot in the drink).
Put/Call Ratio (CBOE): 0.9; +0.05
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: 43.6%. Down from 44.8% as the choppy market is still culling the herd some. Fading from 47.7% it spiked to up from a low of 42.5%. Broke free from the 40.9% where it hung around for three weeks. Steady rise from 36.0% just 8 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: 28.7%. Up from 26.4% and 23.3% the week before. 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: +37.2 points (+2.08%) to close at 1829.54
Volume: 2.173B (+2.91%)
Up Volume: 1.956B (+66.864M)
Down Volume: 265.877M (+844K)
A/D and Hi/Lo: Advancers led 4.16 to 1
Previous Session: Advancers led 1.44 to 1
New Highs: 38 (+2)
New Lows: 8 (-8)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
I do not want to beat a dead horse, but NASDAQ kind of pulled one out of the hat today, though not as much as SP500. It was looking to make a lower high, a second lower high - since coming back off of its breakout over the November peaks. It gave that level up just this past week, but as we often say there is usually a range of support versus a particular level of support. For NASDAQ that range is the November peaks down to the May peaks. It held that range. Then, when it had some positive bids put under it, it took off to the upside. ORCL had some decent earnings, and there has been other good news from the likes of AAPL and RIMM. There are some general, positive vibes about the future for technology and that is keeping NASDAQ in a continuing uptrend versus the other markets that have cracked their uptrends (though they have not broken down). NASDAQ is clearly a leader, and thus its break higher on Thursday when there was some bid under the market is not a surprise. It was really interesting to watch the action on NASDAQ: it broke below those November peaks, it gave up that breakout but it held at the May peaks as noted. Often when you see a stock or an index break below one support level, you think it is out of the game, but it bounced right back up. The sellers could not keep it down, and it went higher today after the Wednesday gap. That is a very bullish sign for a stock or an index. As we have been saying, NASDAQ is still in its uptrend and this is somewhat of a confirmation of the strength of that uptrend. Even if SP500 should test down to 875, or even 850, NASDAQ is still showing the kind of strength where it could hold these levels while SP gets its house tidied up and gets ready to make the next move higher.
The SOX was interesting too because it bounced off of the 250 level. That is good support. It did that on Wednesday and Thursday it bounced up to 260. That is a resistance level and puts it just below its up trendline from March. SOX has had a good run, but it had a heck of a volatile run, giving up breakouts three times, forming a double top, coming down, hitting support, bouncing off support, coming back up to the trendline and - what happens next? Only SOX knows the answer to that. There are some good semiconductors making really good moves. They may not be all the brand names that you know, but what people consider second echelon - the ones that are actually doing all the heavy lifting such as MRVL and MCHP. Those are the ones doing the work along with some other names, and they are keeping the semiconductors in a stronger position. This is going to be a key time for the chips as they come back up to that trendline. They are there now, but are they going to be able to break through? It is very similar to SP500 in that they have come back to resistance and are at a point where they are going to have to make a break and that will be telling as to whether or not they move forward now or just have more consolidation time to set up the eventual breakout attempt.
Remember, we are still in an overall uptrend in this market. We still have a lot of liquidity. There have been some issues the past two weeks with whether some of that stimulus and liquidity would be withdrawn. Remember the G8 came out and said it would think about pulling some of the stimulus out. Yesterday the Fed came out and said their plans have not changed, and that they would buy $300B in Treasuries, would put 1.2T in mortgage-backed securities, another 200B in asset securities. Its plans are staying to same. It is going to continue to fund and purchase as it said it would because it has to - because we have a huge deficit that we have to fund. Right now they are not talking about a second leg to the stimulus package, but if things do not improve, you can bet your bottom dollar - and of course that is OUR bottom dollars for those of us who pay taxes - that they are going to try to do one and we will end up paying for it. If we know anything from this administration, it will favor those who are tax receivers versus those who are taxpayers. I do not want to sound like I am too much of a proponent of one side or the other, but I am just being a market person and a taxpayer. We generate money for people and we are the ones who get taxed. That is the way it works, so we have to be cognizant of that and how it will impact the market. I will get off my soapbox now because, as usual, I digress.
NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: +19.32 points (+2.14%) to close at 920.26
NYSE Volume: 1.178B (+6.9%)
Up Volume: 998.565M (+211.181M)
Down Volume: 122.241M (-172.552M)
A/D and Hi/Lo: Advancers led 3.99 to 1
Previous Session: Advancers led 2.48 to 1
New Highs: 25 (+8)
New Lows: 47 (0)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP500 was not the same as NASDAQ, of course. It is below its May peak and it is in that weaker pattern. It is not breaking down again, however. It can fail a breakout once or even twice is still come back, base, set the foundation, and then make the breakout. That is what it is trying to do here. We want it to go down to 875 or 850 for a better base, but what we want and what the market does typically are not the same things. We know what we think would be best for the market, but a lot of times it cuts a move short and takes off - it just depends. When you have a lot of liquidity in the world that is being pushed in or foisted upon the financial markets, then you will have these kinds of moves that truncate what would otherwise be a good pullback.
We thought that SP500 would make a deeper test before it made a breakout. I still think that is going to be the case. It did not make any significant break or headway on Thursday with the push up. It may try later, but with Friday being Russell-dominated and next week being the end-of-the quarter with a holiday (so not much trade going on), a lot of the move that we saw that would be made for the end of the quarter was probably done on Thursday. Thus, after this week, we may just see SP500 come right back down and make that test. The action on Thursday did not change the overall picture other than changing the fact of whether or not SP was going to test imminently or not. I say it is a fact - it is not a fact, it is a belief. Again, the only thing that really changed on Thursday was whether or not SP500 came back immediately to test or it put that day off for another few days or a week.
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Held 8250 and jumped nicely up to the next resistance at 8500ish (early May peaks at 8588). That is the same kind of pattern SP500 is in with its rebound. Moving in tandem. Not a bad jump but still some significant resistance and something of a head and shoulders forming up.
Stats: +172.54 points (+2.08%) to close at 8472.4
Volume: 222M shares Thursday versus 189M shares Wednesday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
FRIDAY
You know Friday is not our favorite day of the week for buying. A lot of times we will get rallies on Friday where we can lock in nice gain, we have some stocks that are in decent shape and could give us a chance to take some partial profits on Friday if we get a good push higher. With the Russell rebalance, I do not know if that will be the case. There are going to be stocks going up, stocks going down, and there is going to be a lot of volume that will hit late in the day with market on close orders. You are going to see volumes zoom and a lot of volatility late in the session, and it is going to be a bit of a wild day to be buying and initiating new positions.
Nonetheless, that said, we still see stocks that we like. There are stocks that took off today, maybe gapped higher or ran early that we did not really get a chance to get into. If they get volatile and pull back some, we will be willing to take a few positions in them ahead of next week. If they give us a good entry point and it is a good stock in great shape otherwise, then we are going to buy some of it, Friday or not. We are not smarter than the market, and if a stock says it is in a great position to be bought then we will buy it - we may not load the boat with it, but we will buy some of it. That is what we will look at on Friday. Even though it is an unreliable session with volume and volatility based on the rebalance, we know stocks that we like ahead of this because these stocks have not really been influenced yet by the Russell buying that goes on late in the day on Friday; that is when most of this will happen. So these stocks have set up ahead of this, not because of the Russell rebalance but because they have buyers or sellers, so we can look at how they react. If they give us an opportunity and it does not break the pattern, one would be crazy not to step in. We will look at new positions if there is a good opportunity to step into stocks that we are already looking at. It may give us a chance to get some that got away and maybe are coming back a little bit, that do not look like they will test if SP500 tests.
As far as existing positions, with all the movement on a Friday we are not too wild about doing anything with them. If something threatens to get out of hand, moves may have to be made, but if it is an unreliable session with respect to how stocks are going to move, I am of the mind to let them continue on without getting too panicky if one moves against us one way. As I said, by Monday - it is a holiday week - all or most of these pressures will be gone and there will be more of a reversion to the mean, a reversion to the trend - the stocks we are in prior to today's program buying that is likely associated with end of the quarter window dressing and the Friday Russell rebalance which is going to throw things completely out of whack.
Our plan is to sit tight. We have a few bullets, one in the chamber, we know what we want to look at and if they come by and are in our sights and in our target, I would load up and take a shot at them. The goal is not to try to get our limit for the day, but to pick some big, fat ones that walk in front of us and take them and put them into our bag for next week when the trend likely resumes.
I want you to have a great week. We will see you again tomorrow, but remember Friday is going to be something a bit different. We do not see a Russell rebalance all the time, so watch what happens and see how stocks react, especially late in the day. This is a great experiment time for a lot of people who do not look at the market that much; you can see things such as programs hitting today, a rebalance on Friday, and then likely see a resumption of the trend come next week. Do not get bent out of shape for what happens on Friday because it is going to be somewhat volatile. Of course as soon as I say that, it will not be - but that is part of the unexpected nature of a rebalance session. There will likely be a lot of volume, and then we will see were the pricing shakes out. Have a great evening and I will see you tomorrow to get set up for next week and the Fourth of July. There is always opportunity, even on these short weeks. Have a great evening - see you then.
Support and Resistance
NASDAQ: Closed at 1829.54
Resistance:
1880 is the June peak
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 intraday peak
1770 is the mid-October interim peak
The 50 day EMA at 1745
1716 is the May closing high
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 January closing peak at 1653 (intraday)
The 200 day SMA at 1647
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 920.26
Resistance:
930 is the May peak
935 is the January closing high
944 is the January 2009 high
1000
1050
Support:
919 is the early December peak is bending
899 is the early October closing low
The 200 day SMA at 896
The 50 day EMA at 898
896 is the late November 2008 peak
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 8472.40
Resistance:
The 10 day EMA at 8474
8521 is an interim high in March 2003 after the March 2003 low
8588 is the May high
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:
8451 is the early October closing low
8419 is the late December closing low in that consolidation
The 50 day EMA at 8379
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.
Jun 23 - Tuesday
Existing Home Sales, May (10:00): 4.77M actual versus 4.82M expected, 4.66M prior (revised from 4.68M)
Jun 24 - Wednesday
Durable Orders, May (08:30): 1.8% actual versus -0.9% expected, 1.8% prior
Durable Orders, Ex-T, May (08:30): 1.1% actual -0.5% expected, 0.4% prior (revised from 0.8%)
New Home Sales, May (10:00): 342K actual versus 360K expected, 344K prior (revised from 352K)
Crude Inventories, 06/19 (10:30): -3.8M bbl, -3.87M prior
FOMC Rate Decision, (2:15)
Jun 25 - Thursday
Initial Claims, 06/20 (08:30): 627K actual versus 600K expected, 612K prior (revised from 608K)
Q1 GDP - Final, Q1 (08:30): -5.5% actual versus -5.7% expected, -5.7% prior
Jun 26 - Friday
Personal Income, May (08:30): 0.2% expected, 0.5% prior
Personal Spending, May (08:30): 0.4% expected, -0.1% prior
PCE Core, May (08:30): 0.2% expected, 0.3% prior
Michigan Sentiment-Rev, June (09:55): 69.0 expected, 69.0 prior
End part 1 of 3
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