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world stock market, us stock market
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11/30/09 Investment House Alerts
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IH Alert Subscribers:
MARKET ALERTS:
Targets hit alerts: None issued
Buy alerts: AEZ; IYT
Trailing stops: NTGR; TREX
Stop alerts: BWLD; HAL; JOSB; TROW
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VIDEO MARKET & TECHNICAL SUMMARY. Detailed chart-based analysis of the key index and leadership charts are covered.
TO VIEW THE VIDEO MARKET & TECHNICAL SUMMARY CLICK THE FOLLOWING LINK:
http://investmenthouse1.com/ihmedia/TechnicalSummary.wmv
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SUMMARY:
- Market weathers Dubai World debt issues . . . thus far
- Canada Q3 GDP up but expectations can be a pain.
- Black Friday sees more shoppers, not as much buying as hoped.
- Chicago PMI tops expectations, new orders continue their more positive ways.
- Bond market rallies further, still suggesting other issues beyond Dubai.
- SP500 holding its range, small caps bounce off support liquidity helps hold market gains despite heavy resistance, debt issues in unexpected places.
Stock market does a solid job holding gains in the face of issues.
Last Friday afternoon, the futures sold off hard late in the day and then moved laterally to close out. On Monday, they started up roughly the same. There was a bit of dip, but then they came up and were in roughly the same region when moving into the open.
There was decent news out. Canada's GDP was up 0.4%, though that was somewhat less than expected. The National Retailer Federation said there were more shoppers out on Black Friday but spending was not what they hoped. It was up 0.5% over 2008, but that was not what was expected given the supposed pent-up demand. GS upgraded the steel sector, and that had a positive impact on some of the commodities. The big story is always the dollar, of course. It was a little weaker ( 1.5 Euros versus 1.49 on Friday) with the scare regarding Dubai World. That was the problem on Friday with the selloff at the open and then the recovery that it was unable to hold.
The Chicago PMI came out on Monday (56.1, beating 54 expected). It beat October's 54.2, and that was the highest since August of 2008. It was the second month where new orders were greater than 60, and that was a jump up from the 40's only a couple of months ago. There may be hope for orders to start flowing in, which will lead to greater production and the need for more employees. The market got a pop on that news, came back, and then rallied up. It could not hold it, however, and it sold off. It kept coming around and worked its way back up to the highs. It even topped out and made a new high for the session toward the close, but this was an erroneous trade (I wished we could have traded it; we could have closed out our SPY puts for quite a nice gain).
The market had a nice gain into the close and then it trailed off after hours. If you go back to the prior highs, you can see that it is all within the same range. It was not able to break through even with fairly decent news. Remember, this is all in response to the Dubai World credit problems that surfaced on Thanksgiving and showed up in our market on Friday. There was an issue there, but the market performed very well, all things considered. It could have sold off, but it bounced back and ended the day with some modest gains, albeit quite small. Roughly, 0.3% on the indices was not that bad.
One of the interesting features is the bond market. The TIPS (Treasury Inflation Protected Securities ETF) is trending steadily higher; indeed, bonds closed on Monday with the 2 year at 0.66%. On Friday, it was 0.71%, and it was 1% not too long ago. The 10 year treasury closed at 3.19%, down from 3.25% on Friday, and up near 3.5% not long ago. While stocks continue to rise, bonds continue to rally. As they rally, of course their yields go down. Bonds are saying that something is not right in the future, but the question is just how far bonds are looking into the future versus the stock market. The market is in a liquidity rally, and bonds are saying when the money is gone and the party is over, what is going to happen? They show trouble ahead, but it is not specific right now. Dubai World posted an issue last week, and the bond traders are wondering what will be next to come down the pipe.
The dollar continued to struggle (closing 1.5015 Euros). It was down on the day, but he DXY0 was able to come up because the dollar performed better against other currencies. The dollar was acting as somewhat of a safe haven even with all of these issues. It was up on Friday, but then it was unable to hold the gains. It did hold gains against other currencies on Monday, but it is still struggling against the Euro. It was weaker versus the 1.49 that the dollar traded against the Euro on Friday when the scare from Dubai World came out. The dollar is still trending lower and has thus far been unable to make the double bottom and hold the key low area. That is going to be a problem for the market longer term. When you combine that with what the bonds are showing us, that is not a great scenario for the US economy and the financial markets in general, looking out past the liquidity binge that is ongoing right now.
The USO is a bit of a proxy for oil. You can see that oil had the big run in October and has been trailing off since, but it is not reversing and putting in a downtrend by any means; it is just consolidating after breaking resistance. It has now come back down to touch resistance, gapped below it Friday, but moved back above it. Then it moved higher on Monday. One of the reasons it moved up was the word that Iran has seized a British yacht. That caused oil to jump up ($77.30, +1.25) after it traded up fractionally for most of the session.
Gold continues its trend higher ($1,180.80, +5.30), but it got choppy. It gapped higher Wednesday, then it gapped lower on Friday and recovered while still maintaining its trend. It was not a big move in terms of what we have seen lately, but it is nonetheless maintaining a strong uptrend.
TECHNICAL
INTERNALS
The advance/decline line came back nicely. It closed flat on NASDAQ and was modestly positive on the SP500 thanks to the small caps. They bounced back after touching lower support and rebounding. Volume was up, but you cannot take too much from the figures (+103% on NASDAQ, + 105% on NYSE) because Friday was a half day and post-holiday, so volumes were low. We can still take some instruction from them and see that volume jumped above average on SP500 for the first time in almost four weeks. It did so as SP500 held the upper range from the September peaks. On NASDAQ, volume was up as well, and it climbed almost to average. That was not the best volume of the month, but it was a good hold and a good turn of volume as it bounced off its 50 day EMA.
There were some positives from volume on a day when the market could have sold off. It sold down and then it reversed and closed positive with some volume, and that is always a better scenario from a bulls perspective as it shows buyers stepping in and driving prices higher.
CHARTS
The SP500 sold off on Friday, but managed to hold the range from the September peaks. It tested that level again on Monday, rebounded, and closed positive. It was positive action, and note that SP500 has been the leader along with the Dow, and neither of them broke their range at all. They are still in good shape despite all of the issues confronting the market.
NASDAQ gapped lower on Friday and it was unable to fill that gap. It tried to fill some of it on Friday. It tested again on Monday, but it managed to hold the 50 day EMA, and that is in a long-term range of support (it is in the bottom part of it, it is still holding it). It is good to see it hold the 50 day EMA as well. Even they there was a gap and it is not looking great near term for NASDAQ, it is not breaking down. It is still in the testing phase and still consolidating.
The small caps are interesting because they came down to the 300 level intraday. This has formed something of a support level, and it is a recent development for this index. Going back, there is not a lot of support for this level, but you can see how crisply it tested and rebounded on Monday. There was a bit of a bump in the advance/decline line on the NYSE because the small caps finished positive on the day after being low all session long. That keeps it just barely in its range, but it does not make SP600 healthy. There is a lower high, and it is still trying to hang in there after the lower low. If it breaks the lower low, there will be serious issues for the small caps and for the economy, as the bond market and gold are trying to tell us. For now, the liquidity is keeping the market running, so the market bounces back when there are these kinds of dips.
An interesting play to look at is the SPY. It gapped below the March trendline on Friday, and it bounced back up to it on Monday. It, too, held in a range, holding above its September peak and bouncing. It is showing support, but it is interesting to note the break of the trendline, just as it broke it in early November and managed to recover with the gap. It has been gappy, so you cannot put too much emphasis on this gap. I want to note a gap up, a move across, and a gap down. How it responds over the next few days with this gap will be very important with respect to the SP500.
LEADERSHIP
AAPL has bumped up against its October high. It has failed, come back and bumped up against them, and then failed. It did so with a gap higher and a gap lower, and that is an island reversal. You look for them in extremes. You can say that AAPL has moved laterally for a month and a half, so it is not necessarily an extreme, but there has been a long run higher, a double bump (almost a triple bump) at the 200 level. Then there was a gap back down. Volume today was up, but it was unable to move, so I am very curious and somewhat cautious on AAPL right now, as it may want to come back down to the 190 level. We could sell some calls against that, but that is an interesting aspect to watch because AAPL is one of the stronger stocks in the market and has been the bell cow for this rally. It is showing the signs of wear and tear that you would expect after such a long run. There were no major moves and this does not portend a sell down to 160 C it will be more like a test down to the 50 day EMA.
Steel was upgraded. AKS gapped higher, but it was not able to do much with it, although it did show volume. That was the case across the steel sector. STLD gapped higher on volume, but could not do much with it either. The upgrade did not hurt it, however; steel has made a great recovery and it is still looking quite nice as it moves higher.
BTU is holding up quite nicely and consolidating just like SP500 (note the similarity in that pattern). APA is moving laterally and holding its range and support from September. That is very similar to SP500. APC is trying to hold its range, and it had a gap lower. Natural gas is under pressure right now.
Retail was somewhat off. BBY was down but hardly out, and its pattern is still solid. It is holding a range. URBN is moving laterally (like the SP500). TJX is moving laterally as well and consolidating. The point is that there were no breakdowns. If you look at restaurants like PNRA, you see it is holding up and consolidating after it gapped on good earnings and ran higher. PFCB had trouble. It gapped down, but it has recovered and filled the gap. That is an important point for PFCB as it comes back and tests this gap.
Healthcare has been showing some improvement. MDT was one of our plays and it gapped away from us, but we are watching its test. It is trying to be sticky at 42 with two days of testing that level. If it could come down near 41.50, that would be great. ESRX continues a long uptrend. CELG announced good news with a cancer drug C it is not showing much and is in a long consolidation after breaking its downtrend, moving higher, and gapping. It has been unable to break through a range with a lot of resistance, but it is a favorite and I am watching to see what it does. There is money moving to healthcare, but it is not showing a lot of opportunity just yet. I will keep my eye on it.
THE MARKET
MARKET SENTIMENT
VIX: 24.51; -0.23
VXN: 24.73; -0.67
VXO: 22.35; -1.72
Put/Call Ratio (CBOE): 1.03; -0.02
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: 44.4%. Finally cracking some from the recent spike (48.3% last week, 49.5% prior). Of course this is just in time for SP500 to break key resistance. Believers may have waned but the liquidity did not. Still well over the 35% level that is the threshold for what is considered a bullish climate. It does not mean things are necessarily bearish; that takes a reading in the 60% range. Hit a high of 47.7% mid-June on the run from the March lows. Again, to be seriously bearish it needs to get up to the 60% to 65% level. 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.
Bears: 26.7%. Bounced up on the selling in conjunction with the decline in bulls. Up from 24.7% and 22.5% before that. Rebounding from the big drop 31.1% and 35.6%. For reference, cracking above the 35% threshold considered bullish. Hit a 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: +6.16 points (+0.29%) to close at 2144.6
Volume: 1.945B (+103.45%)
Up Volume: 1.124B (+1.009B)
Down Volume: 842.988M (-18.486M)
A/D and Hi/Lo: Advancers led 1.05 to 1
Previous Session: Decliners led 4.46 to 1
New Highs: 45 (+8)
New Lows: 44 (+4)
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: +4.14 points (+0.38%) to close at 1095.63
NYSE Volume: 1.348B (+105.89%)
Up Volume: 775.187M (+752.989M)
Down Volume: 564.433M (-67.052M)
A/D and Hi/Lo: Advancers led 1.37 to 1
Previous Session: Decliners led 4.94 to 1
New Highs: 105 (+32)
New Lows: 51 (+5)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Stats: +34.92 points (+0.34%) to close at 10344.84
Volume DJ30: 130M shares Wednesday versus 163M shares Tuesday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
TUESDAY
There is still a lot of indecision by investors with respect to the market. The small caps made a lower high, but then buyers stepped in and bounced them off of support at 300. I will be watching the small caps to see how they perform as they move to 310 (a critical range) and up to 320. That is quite a range to watch, but you have to pay attention to them because they are the harbingers of the market to come. There is somewhat of a double top and then a lower peak following that lower low. That is a very critical level over the next couple of weeks for the SP600.
The SP500 are the ones holding the range. As long as they can hold the range and continue to consolidate, you can expect energy, industrials, and commodities (such as metals) to move higher. As long as SP500 holds up, those are holding up well with respect to the dollar trade. That means that you have to watch how the dollar performs after it undercut its prior lows and did not make the bounce we hoped for. It is now back up and testing the level that it broke. All of these are going to dovetail as market plays out over the next week. I will also be watching the SPY with the gap lower C it is now testing that gap. This is a very important region at 110 because it was a peak in October. Ever since it got there, it has been very gappy; the buyers and sellers are fighting it out at this level. It has not broken down, so that is a positive for the trend continuing, but gaps are a sign of the change in weather. It could get more volatile. There could be an issue with SP500 and the SPYders as they test the old highs. This is where the 2007 downtrend and the 2004 year-long lateral consolidation comes in, so it is understandable that there is a lot of gappy action at this point.
NASDAQ had the gap similar to the SPY. I will be watching what NASDAQ does with the September peak. It is still keeping its uptrends, and it is still the same as SP500: in its range and making higher highs. It is still in positive position, but with stocks like AAPL showing wear and tear, this rally is long in the tooth. You have to be aware of what is going on and act accordingly. We can sell some calls on our AAPL position, and we are still going to continue to let our downside run because the bulls and the bears are fighting it out at this level. We will see how they fight it out over the next few days. I will keep looking for more upside because there are stocks that have pullback with this Dubai World issue. They might present an opportunity to move higher because many stocks, even though they were hit by the news, did not break their patterns. They are still in upside plays and, if they present themselves, we will take advantage of it.
Support and Resistance
NASDAQ: Closed at 2144.60
Resistance:
The 18 day EMA at 2152
2155 is the March 2008 intraday low
2167 from the July 2008 intraday low
2168 is the September 2009, intraday peak
2169 is the March 2008 closing low (double bottom)
2177 is a low from March 2008
2191 is the October 2009 peak
2210 (from September 2008) to 2212 (the July 2009 closing low)
2275 C 2278 from the February 2008 and April 2008 lows
Support:
2143 is the October 2009 range low
The 50 day EMA at 2119
2099 is the mid-September 2008 closing low
2070 is the September 2008 intraday low
2060 is the August peak
2048 is the early October 2009 closing low
2016 is the early August peak
1984 from late September
1962 is the bottom of the August 2009 range.
1947 is the October gap down point
1897 is the October post gap intraday high.
1880 is the June peak
1862 is the July peak
The 200 day SM A at 1850
S&P 500: Closed at 1095.63
Resistance:
1095 is the 2007 down trendline
1101 is the October high
1106 is the September 2008 low
The March/July up trendline at 1112 is right there
1114 is the October 2009 peak
1133 from a September 2008 intraday low
1185 from late September 2008
1200 from the July 2008 low
Support:
The 18 day EMA at 1093
1080 is the September 2009 peak
1078 is the October range low
The 50 day EMA at 1072
1070 is the late September 2009 peak
1044 is the October 2008 intraday high
The August peak at 1040
The early October 2009 closing low at 1025
The early August intraday peak at 1018
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low
956 is the June intraday peak
944 is the January 2009 high
The 200 day SMA at 944
935 is the January closing high
Dow: Closed at 10,344.84
Resistance:
10,365 is the late September 2008 low
10,609 from the Mid-September 2008 interim low
10,963 is the July 2008 low
Support:
The 18 day EMA at 10,273
10,120 is the October 2009 peak
The 50 day EMA at 10,004
9918 is the September 2008 peak
9855 is the early September peak in its lateral range
9835 is the late September 2009 peak
9654 is the November 2008 high
9625 is the October 2008 closing high
9620 is the August 2009 peak
9430 is the early October low
9387 is the mid-October peak
9116 is the August low
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 200 day SMA at 8808
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the Economy section.
November 30 - Monday
Chicago PMI, November (09:45): 56.1 actual versus 53.3 expected, 54.2 prior
December 01 - Tuesday
Construction Spending, October (10:00): -0.5% expected, 0.8% prior
ISM Index, November (10:00): 55.0 expected, 55.7 prior
Pending Home Sales, October (10:00): -1.0% expected, 6.1% prior
Auto Sales, November (14:00)
Truck Sales, November (14:00)
December 02 - Wednesday
Challenger Job Cuts, November (07:30): -50.7% prior
ADP Employment Report, November (08:15): -150K expected, -203K prior
Crude Inventories, 11/27 (10:30): 1.02M prior
Fed Beige Book, November (14:00)
December 03 - Thursday
Initial Claims, 11/28 (08:30): 480K expected, 466K prior
Continuing Claims, 11/21 (08:30): 5400K expected, 5423K prior
Productivity-Rev., Q3 (08:30): 8.5% expected, 9.5% prior
Employment Cost Index, Q3 (08:30): 0.4% prior
ISM Services, November (10:00): 51.5 expected, 50.6 prior
December 04 - Friday
Nonfarm Payrolls, November (08:30): -120K expected, -190K prior
Unemployment Rate, November (08:30): 10.2% expected, 10.2% prior
Average Workweek, November (08:30): 33.1 expected, 33.0 prior
Hourly Earnings, November (08:30): 0.2% expected, 0.3% prior
Factory Orders, October (10:00): 0.0% expected, 0.9% prior
End part 1 of 3
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world stock market
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