|
|
world stock market, us stock market
* * * *
8/13/09 Investment House Alerts
* * *
IH Alert Subscribers:
MARKET ALERTS:
Targets hit alerts: None issued
Buy alerts: CEDC; GTLS; RHB; SMTC; VCLK
Trailing stops: None issued
Stop alerts: None issued
TO VIEW THE VIDEO MARKET SUMMARY CLICK THE FOLLOWING LINK:
http://investmenthouse1.com/ihmedia/marketsummary.wmv
SUMMARY:
- Market again has reason to sell but does not.
- Lateral consolidation continues as sellers again make two tries at selling but come up short.
- Retail sales disappointingly week.
- Jobless claims just not getting better.
- Friday has some interesting economic data.
- Market trying to consolidate laterally once again.
Market shakes off bad news, avoids selling off.
The market had every reason to sell Thursday. There was continuing talk about what the VIX and the SP500 put/call ratios were indicating. I wrote on Monday that the VIX was in the same position it was in before the big decline and fall in the fall of 2008. The SP500 puts are showing 2:1 in favor of the puts. That also occurred before the big drop and in June when the market fell. Those indications are something that people are still talking about. The day after I wrote about what the VIX is showing, CNBC came out with a special report on it - maybe they should have called me up and had me on again.
There was also some negative news on Thursday on the economic front. Jobless claims once again have bounced higher, and retail sales were much worse than expected. Same store sales showed that people are going to Wal-Mart as it had a 2% increase, but they were not going shopping very much anywhere else. The market had every reason to sell, but it did not and there were some positives. Germany and France had 0.3% growth in their GDP. We have had four quarters of declining GDP, which is the worst since World War II. With Germany and France showing positive numbers, they may be starting to pull out of the recession (and maybe the US will follow).
A lot of this recession came about because of the panic of 2008 when everyone thought we were going into another Great Depression. That is not the case, and things are repricing and restructuring back to a more positive level. We are hardly positive in terms of the economy, but we are not staring at the abyss anymore and are seeing some natural improvement as businesses and investors are feeling a little bit better about what the economy is showing. We will find out more about that tomorrow when we get the Michigan Sentiment numbers. It was not all bad, but it was not great. The market had every reason to sell because the bad economic news far outweighed any positives; nonetheless, futures were up and the market opened higher. It did not last because the sellers who have been around for the last couple of weeks came back in with a bit of vigor. They pushed the market down in the first half hour, then the market rebounded back up in the afternoon. The sellers came back in the afternoon, but were not able to keep it down as the afternoon selloff made a higher low and the market rallied back up into the close.
There were no spectacular gains. The indices were up less than 1%, outside of the SOX which led the market and rebounded sharply with more than a 2% gain . On the net, the news was not that great, but it could not keep the market down. Once again the sellers were there, but they could not keep the buyers from bouncing the market back up. NASDAQ and NASDAQ 100 both closed with a 0.5% gain. SP500 closed with a 7.7% gain and moved back over that November 2008 peak at 1,006. Those are positives for the market as the sellers simply cannot keep the pressure up long enough to take the market down. It does not mean it is out of the woods, however. It is still at the top of the recent range and a big 15% move, but the sellers keep failing to take down the market.
TECHNICAL
INTERNALS.
The internals were not spectacular. The breadth was 2:1 on the NYSE and 1.2:1 on NASDAQ. Those are not the kind of huge moves you see when the market really gets a bid under it. Volume was weak as well. It fell to 2B on NASDAQ, which is below average, and NYSE did not even make $1B. It was at 913M shares, down 30% from Wednesday. Those are hardly strong moves on an upside day. You would like to see better volume than that, and that is true, but you have to consider what the indices are doing.
CHARTS.
The indices had that big 15% move and are moving laterally. Everyone seems to be anticipating a decline, but they are not falling. Remember when they did this last time? There was the big rally off of the March lows, a move laterally in May, and then they ripped higher into June. Then there was a move laterally a bit more, and a rip higher in July. It had every opportunity to sell off because the economic news was a bit better (but not great), yet they consolidated in a lateral range and moved higher. That is happening again here, but does that mean that they are going to hold the range? Of course not, but this is a very nice, tight range. There is a lot of reason to sell, but as of yet the sellers cannot push it down. They are going to keep trying, however. We still have problems with the VIX and the SPYders- the SP500 puts - but until the trends are broken you have to go with what the market is showing. Right now, they are holding their uptrends and consolidating nicely in a lateral move, and thus that lower volume on the Thursday gains does not bother us that much because the indices are moving laterally in a consolidation. Low volume in a consolidation is not a bad thing. You like to see the up days show some volume spikes maybe, but that is more toward the point when the market is getting ready to make its move. Right now, it is still in a consolidation.
Near term, the indices have moved up to the top of this short, lateral move. They could easily come back down to the bottom and continue the up and down trade inside the range as they build a new base or shelf to make a break higher. NASDAQ closed at 2009. The bottom of its range is down at 1962, so it could drop almost 50 points and still be in the range. SP500 closed at 1012, above that 1006 level, but it could drop down to the bottom of its range at 992. We could still see them come back down, but the point is they are still in the range. They are hammering out a new range, and it remains to be seen whether it will hold, but for now the action looks solid. One of the reasons it looks very solid is because leadership continues to look good.
LEADERSHIP.
Thursday the semiconductors roared back. They had that 2% + gain while the rest of the market was up - though it did not show that kind of strength. It is good to see these early leaders back in the game. The metals and energy were also moving higher. Oil moved higher as well, and the dollar moved lower on the session. We are getting very good moves in the same leaders that started the move off of the low (or at least joined in soon thereafter). In addition to the commodities, the industrials are also moving well. A lot of the general world economic recovery stocks are moving up as well. They are the ones that will build out the infrastructure in the newly industrialized nations, and those such as China and India who are well on their way. It is the same group we have seen every time the market has moved taking the reins and leading again.
As long as there is good leadership in the market, it is hard to make a lot of case that the bears are going to win out for a major reversal or selloff. No one really knows what the market will do coming out of these kinds of almost unprecedented panics. We have not had a panic like this in 100 years. We had one in the fall and are coming out of it now. We are showing some of the same characteristics of that time with a good strong market rally, although if you look at the history books, we did not get out of the Great Depression for many years. Of course you have heard me say that we have adopted the wrong policies with regard to the economic and fiscal stimulus. They are the same policies of the 1930's that did not get the country out of the recession and actually prolonged it for years.
While we may not be able to get the economy out of the cellar, we can get great runs in the market as we are seeing now. We are seeing it with Germany and France showing positive GDP and the continuing upswing in the Chinese economy. You are getting leadership out of the industrials, the commodities, the materials, and those stocks that help in the development; that includes technology as well, and we are seeing the semiconductors rise accordingly.
THE ECONOMY
Retail sales cannot keep up the gains.
The retail sales were expected to rise 0.8%, but instead fell 0.1%. This after they rose 0.8% in the prior month - from strong to surprisingly weaker. If you take out automobiles, you get a 0.6% drop versus a 0.1% expected gain. That is down from 0.5%. There are big moves in these. You can see that auto sales (thanks to "Cash for Clunkers") helped push the retail sales higher, but in other areas the consumers were not consuming and this was reflected in the same store sales. What we are looking at with respect to retail sales is that we are still at recession level.
There are great buys out there. In many parts of the country you see outstanding sales. The people who have the money can make great buys, and that is the way it always is in a recession. If you have a big ticket item that you want to buy, then now is the time to do it. Take some of the money you have made in the stock market and buy that long-term asset that will appreciate in value as the market recovers; the deals are outstanding. The foreclosure sales were up again to a new record, which is a rather sobering thought as our economy tries to get out of this recession. That is a part of the healing process. There are great buys out there but the process of getting through it is rather painful.
Jobless claims still at crushing levels.
Jobless claims were 550K, down from 554K, but stronger than the 545K expected. These are bad numbers, and that is all you can say. We need 150K jobs on the positive side just to absorb the new people coming into the job market every month. We are better than the -750K that we had at the bottom of this panic, but we are hardly at a level that would indicate recovery in the jobs market. The irony of that is that you always hit the bottom in the economy and start back up before the job market gets better. Indeed, the economy starts to recover even as the jobs market tends to peak out on the upside. It looks like it has peaked because there were 750K job losses a month, and now we are only at the 550K level ("only," he says). Maybe there is a peak here, but we have the abnormal situation of a massive panic that only comes around once every 100 years which has skewed the numbers somewhat. All I can say at this point is that the economic numbers are looking a bit better and the jobs market is stabilizing. That is the same story we have heard for the last few months and it does not sound that promising.
There are some interesting fact points out there. One of them is AKS. After some big layoffs in the fall and spring, they have rehired everyone that they laid off. Indeed, AKS is working overtime. There are positives in the market, but pay attention to what it is related to. It is related to steel production which are the stocks that are moving higher based on a recovery in India, China, and the developing nations. That is a positive overall, but here in the US there is still a lot of work to be done.
Business inventories fall. The glass is half full.
The other report out Thursday was business inventories. Earlier in the week, wholesale inventories plunged 1.6%. Business inventories were down as well, falling 1.1% with an expected drop of 0.9%. That is not that much different, but the point is well taken. As with wholesale inventories, what this shows is that businesses are not making a lot of new product overall. The glass-half-full part of this report is that they are going to need to increase production in the future. This is the same thing that happened back in the 2001 recession and 2002 recovery - inventories fell and fell until there was no product left - then there was a snap back. Of course that snap back was helped by the "use it or lose it" stimulus, wherein you have to buy certain products for your business or home in order to get the benefit from the tax incentives. That helped supercharge the recovery from going negative GDP in 2002 and early 2003 to a 7.4% GDP growth in Q3 of 2003. That shows the kind of power those types of incentives have.
On the news this evening, there was one mayor of a city who received stimulus money but was bemoaning it. Though the city would use it to pave some roads and do things that they had already planned to do, he said it would not make any lasting investment of the kind that would create the jobs and new businesses needed to get his city moving. That is just the sad facts that we are facing now with this stimulus that we have in place versus what would truly supercharge our economy's recovery.
THE MARKET
MARKET SENTIMENT
VIX: 24.71; -0.74
VXN: 25.09; -0.59
VXO: 23.8; -0.43
Put/Call Ratio (CBOE): 0.78; -0.15
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: 42.2% versus 36.7%. More sharp rebounding as the market continues to improve. After falling to 35.6% the market bounce caught up with sentiment. Hit a high of 47.7% mid-June on the run from the March lows. Steady rise from 36.0% in late April. Barely over the 35% threshold, below which is considered bullish. Of course it will jump after this past week. 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: 31.1% versus 35.6%. Big drop after holding for two weeks at 35.6%. Surging from from 30.3% in early July and 23.3% in mid-June. Still well off the 37.2% and the 37.1% in mid-April as the rally continued higher. Cracking above the 35% threshold considered bullish. Still 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: +10.63 points (+0.53%) to close at 2009.35
Volume: 2.031B (-3.68%)
Up Volume: 1.512B (-292.327M)
Down Volume: 584.246M (+247.881M)
A/D and Hi/Lo: Advancers led 1.23 to 1
Previous Session: Advancers led 2.42 to 1
New Highs: 65 (+9)
New Lows: 7 (+2)
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: +6.92 points (+0.69%) to close at 1012.73
NYSE Volume: 913.417M (-30.13%)
Up Volume: 577.671M (-387.155M)
Down Volume: 194.996M (-52.44M)
A/D and Hi/Lo: Advancers led 2.01 to 1
Previous Session: Advancers led 2.8 to 1
New Highs: 92 (+21)
New Lows: 43 (-1)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Stats: +36.58 points (+0.39%) to close at 9398.19
Volume: 93.6M shares Thursday versus 197M shares Wednesday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
FRIDAY
I do not like to buy on Friday. There is a lot of position shuffling and some moves that are not very trustworthy. After an FOMC meeting, it takes time for the decision to ripple through the market, and thus Monday and Tuesday give a much better read on what direction the market will take. The market is in this narrow two-week range. It is at the top now and could easily come back down and test the bottom of the range, but the key will be whether or not it breaks through the bottom of that range. That is something that we will most likely not find out on Friday, but Monday will show us more of that picture.
There are some other reports coming out. There is the CPI which will give an inflation read, there is capacity utilization, industrial production, and Michigan Sentiment. We will get a pretty good insight into numbers that are more current with respect to how consumers are feeling and what the manufacturing businesses are doing. We are at a point now where the ISM numbers are coming back toward breaking even, and I will be curious to see how industrial production plays out in July and whether or not there is any increase there.
That is the general view, but there are still stocks that are in good position. Though I do not like to buy a lot on Fridays, we have stocks that are showing positive bases and we bought into those today because they bounced higher off of a very good test. We also see some that are in a position to fall. That is the way the market is right now; it is in a transitional lateral move, so we have stocks set up both ways. What I have been focusing on are the quality leaders that have led the market the entire way higher and those that have taken a pullback or made a new base and are starting to break higher. We will buy into those. That is the opportunity we have to move into those when they do show up. Therefore, we are going to continue to move into those and we are going to buy them when they show us the positive moves higher. When that happens, we are not going to take a whole position right now. We are going to take that position as they move higher and then see whether the market can make a breakout from this lateral range. The beauty of what we are doing now - whether it is upside or downside - is that they all have great risk/reward points. In other words, if the stocks are bouncing higher as the market breaks down, we have a good stop point right below there. If the stocks break lower and we buy into the downside and they reverse and the market breaks out, we have a very good risk/reward stop point where we can get out without many losses. We have coverage both ways, and as the market makes the break we let our winners run and we will cut off very quickly the ones that are not going the right way. That way we will seriously enhance our profit potential as the market makes its next break.
Although no one can tell which way the market will go, you have to respect the trend despite what the VIX is saying, and despite what the options on the indices are saying. Those are just bets on the market. We have to let the market show what it will do, we have to take what it gives, and that means taking advantage of those setups that are very solid in very solid stocks or very weak in very weak stocks and move in when we get the trigger. That way we position ourselves to take advantage of whatever the market gives.
Support and Resistance
NASDAQ: Closed at 2009.35
Resistance:
2010 from the Thursday peak
2015 is turning out to be near term resistance
2099 is the mid-September low
2169 is the March 2008 double bottom low
Support:
1984 from late September
The 18 day EMA at 1965
1947 is the October gap down point
1897 is the October post gap intraday high.
The 50 day EMA at 1884
1880 is the June peak
1862 is the July peak
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
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 1642
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 1012.73
Resistance:
The August intraday peak at 1018
1050
1106 is the September 2008 low
Support:
The November 2008 peak at 1006
The 10 day EMA at 999
The 18 day EMA at 986
956 is the June intraday peak
The 50 day EMA at 950
944 is the January 2009 high
935 is the January closing high
932 is the July peak
930 is the May peak
919 is the early December peak is bending
899 is the early October closing low
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
The 200 day SMA at 875
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 9398.19
Resistance:
9625 is the October closing high
10,365 is the late September low
Support:
9387 is the mid-October peak
The 10 day EMA at 9278
The 18 day EMA at 9156
9088 is the January 2009 peak
8985 is the closing low in the mid-2003 consolidation
8934 is the December closing high
8878 is the June peak
8829 is the late November 2008 peak
The 50 day EMA at 8824
8626 from December 2002
8588 is the May high
8581 is the July peak
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
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.
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
August 11 - Tuesday
Productivity-Prel, Q2 (08:30): 6.4% versus 5.5% expected, 0.3% prior (revised from 1.6%)
Unit Labor Costs, Q2 (08:30): -5.8% actual versus -2.5% expected, -2.7% prior (revised from +3.0%)
Wholesale Inventories, June (10:00): -1.7% actual versus -0.9% expected, -0.8% prior
August 12 - Wednesday
Trade Balance, June (08:30): -27.01B actual versus -$28.5B expected, -$26.0B prior
Crude Inventories, 08/07 (10:30): +2.5M actual versus 1.2M expected, +1.67M prior
Treasury Budget, July (14:00): -180.7B actual versus -$180.0B expected
FOMC Rate Decision, (14:15): 0.00%-0.25%
August 13 - Thursday
Export Prices ex-ag., July (08:30): -0.3% actual versus 0.8% prior
Import Prices ex-oil, July (08:30): -0.7% actual versus 0.2% prior
Initial Claims, 08/08 (08:30): 550K actual versus 545K expected, 554K prior (revised from 550K)
Retail Sales, July (08:30): -0.1% actual versus 0.8% expected, 0.8% prior (revised from 0.6%)
Retail Sales ex-auto, July (08:30): -0.6% actual versus 0.1% expected, 0.5% prior (revised from 0.3%)
Business Inventories, June (10:00): -1.1% actual versus -0.9% expected, -1.2% prior (revised from -1.0)
August 14 - Friday
Core CPI, July (08:30): 0.1% expected, 0.2% prior
CPI, July (08:30): 0.0% expected, 0.7% prior
Capacity Utilization, July (09:15): 68.4% expected, 68.0% prior
Industrial Production, July (09:15): 0.4% expected, -0.4% prior
Michigan Sentiment-Prel, August (09:55): 69.0 expected, 66.0 prior
End part 1 of 3
|
world stock market
us stock market
|
