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world stock market, us stock market
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12/01/09 Investment House Alerts
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IH Alert Subscribers:
MARKET ALERTS:
Targets hit alerts: IOC
Buy alerts: FDS; FLR; GLW; MDT
Trailing stops: None issued
Stop alerts: JNPR; OMN
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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:
- Dubai World debt issues less than feared, dollar weaker, so stocks rally.
- Chinese manufacturing expands at a faster pace
- US manufacturing weaker but still expanding as new orders show strength.
- October Pending home sales rise versus expectations of a slump.
- Indices maintain their trends but the action is getting very gappy.
Dubai World issues fade, dollar weakens further, stocks rally.
Futures were up significantly, gapping higher in the early-morning hours and much higher than anything had on Monday. There was a gap through the prior peaks of the prior session, and that is a very bullish gap. It came back, tested the gap mid-morning, and then continued higher for the rest of the day. There was no threat that the market would give back any of the gains it scored early in the session.
What caused this positive move was that Dubai World's debt was only 26M, or about 1/3 of what it was thought to be. Dubai World was also able to obtain emergency refunding, and that helped calm world markets tremendously, particularly in the US. It also dropped the dollar. After trying to bottom, the dollar had another tough day (1.5082 Euros, down from 1.5015 Monday). It was lower than where it closed on Friday when there was the slight rush to the dollar as a form of safekeeping during the struggles Dubai World was facing. The dollar going down also aided the move higher. News out of China that its manufacturing the past month was at the fastest pace in the last five years. Some US stocks had positive news as well. GES reported much better-than-expected earnings and raised its outlook. In the semiconductor sector, ALTR raised its Q4 guidance above consensus. There was plenty of impetus for stocks to run higher.
The ISM manufacturing report came out (53.6 with 55 expected; 55.7 reported in October). It was enough to show expansion even though at a somewhat slower pace. New orders were solid (60.3 versus 58.5 in October). New orders are picking up again, and that has to be the hope for manufacturing because orders have not come in yet in order for companies to build up their inventories. The problem has been the lag between the production that is ongoing now versus new orders that were not appearing. If they did not appear, that meant a slow down. Maybe the case will be that they will pick back up, and we will see expansion in 2010 continue.
Pending home sales came in (3.7%, versus -1% anticipated, +6% gain month prior). The market sold off a bit even though the news was positive, but it took its profit taking. It held the gap and continued higher the rest of the session, waffling a bit at the end of the day. Overall, there were excellent gains of over 1% on all of the indices with the SOX posting a 3% gain. That is a very solid move as the confidence was restored. That wiped away last Friday's losses that saw all of the indices gap lower and struggle on worries about Dubai World.
With the dollar lower, you can bet that energy was higher. The USO was up ($77.85, + 0.57), and that was on top of a decent day on Monday. Bonds have been rallying higher even as the stock market rallies indicate that something is not right. The 10 year closed at 3.28%, much weaker than 3.19% yield at Monday's close. There is a pullback, but one within a trend. Stronger bond prices mean lower yields. Today it took a respite, albeit a significant one, moving nearly 10BP in a single session that is nothing to ignore. Again, it is still within an uptrend.
Gold had another banner day ($1,197.50, +$17.20). It gapped higher and hit over $1,200 an ounce before closing slightly lower. Oil was decent, and gold was strong. Bonds are backing off a bit, but still in their trend. The dollar waxed again, and you could say it is still in its trend as it has been unable to double bottom and put in a meaningful bounce.
TECHNICAL
INTERNALS
The volume was a flip from Monday (NASDAQ +7% to 2B shares, NYSE -16% to $1.13B). NASDAQ volume was able to move up to just about average as NASDAQ gapped and posted a gain. There was definitely a bid under NASDAQ. On Monday, the NYSE volume moved above average, but slid back to below average on Tuesday. It was still stronger than most of the November trade, so the NYSE indices SP500, Dow, SP600 all moved higher. Volume was not great, but it was still elevated. Breadth was not bad (2.2:1 on NASDAQ, 3.8:1 on NYSE). With the small caps and mid caps moving, there is always better breadth.
CHARTS
SP500 is back at its November peak. It came within a point of breaking over that level, so it tested it and faded back a bit at the end of the day. It is now in the top of its lateral range, holding over the October peaks, and trying to move above the November peak. Is the not making the break because the liquidity is holding it up, but it is also struggling against the 2007 downtrend and the 2004 lateral range. That is significant resistance after such a tremendous run higher. There is a series of pyramids stacked one on top of the other, so it still has plenty of upside. What you could see easily, given all the resistance, is another dip down before another bounce. It has not yielded, and indeed, it has stretched out longer than it has in September or October, moving laterally. That does not necessarily mean up or down either way, but even though it is not tipping its hand, the liquidity is still there as we come to the end of the year.
There is much positive news hitting in individual stocks, even though there were problems with the world markets on Friday. Even with that bad news, SP500 is holding up very well, and that is continued bullish action. It is not breaking over the highs, and it is almost a straight line where it is bumping into the same rinse and stalling. Maybe it will falter out and not make that break. If it does stumble back down, we will make money on our SPYs that we have as a hedge against our upside. If the market is running higher, we will make more money on the upside and will have to close out the downside positions. There is still a lot of strength on SP500 even in the face of bad news, and NASDAQ is doing the same thing. It gapped lower, and then gapped back up. If there is a gappy index, stock, or market, you have issues with the buyers and sellers fighting it out. NASDAQ is struggling. Although it is still moving into the top of its range, it is showing that continued bid that SP500 is having. It does not have the same stocks that are benefiting from the dollar that the large cap index has, but it is being dragged along with it. The general trend remains upside. It will try to challenge the November peak. Even though NASDAQ is struggling and is gappy, it is maintaining its trend. That is the power of liquidity.
It is a big week for the small caps. They gapped higher as well, but notice how they had the door slammed in their face at the late-August peaks (that is also the 50 day EMA). It made it to that level, stalled, and faded back. It has not shown what it will do. It had an impressive bounce on Monday, but it was running into the same trouble on Tuesday. That is very important to watch as we move forward because it is a harbinger of economic growth (or lack thereof).
There is a basic uptrend in the mid caps, but interestingly, there is not only an uptrend but also a triangle forming. There are constant tops, rising lows, and pressure building from beneath as buyers move in earlier and earlier. Maybe there will be a breakout. It is still early, and it still needs to pinch off more in the 700 range, but it is showing some positives that may help break the rest of the market higher if the SP500 can go hand in hand with the mid caps. Maybe they will drag the small caps along with them.
The SOX is very gappy and is running into a serious level of resistance. It has traded below it, and it is gapping around. It filled the gap from mid-November. This is a mess like the small caps. It is struggling mightily, but it has not decided anything yet and it is having trouble maintaining its prior trends. It is approaching an older trendline and that may prove to be resistance for it. It is nothing you would want to put your money on unless you felt they were a value or they were oversold. That would be a gamble as the chart is saying nothing other than there is (as with NASDAQ) a real ongoing struggle with the gaps back and forth. Investors are evenly matched and equally uncertain as to the future of the semiconductors.
LEADERSHIP
The RTH (the retail ETF) is continuing a beautiful uptrend but, as with SP500, it is moving laterally the last few weeks. It cannot decide whether it wants to go higher as it gaps up and down. There are stocks in the retail ETF that are heading the both directions. BBY is still looking good. GES beat the street earlier today and looks good. Restaurants do not look that great it is very mixed within the sector. EAT, YUM, PFCB they are struggling. People are supposedly eating out and spending more, but the restaurants are struggling. On the other hand, there are many teen retailers doing just fine. URBN is doing great, and CHS is doing well.
Metals continue to look good with steel moving higher. STLD is moving up, and CLF is holding a very nice uptrend as well. Industrials continue to perform well as the dollar goes down. CMI received an upgrade, but it is range-bound. It is a range you can trade, but it is still somewhat sloppy. DE broke out of a consolidation range and continues to move higher. If CMI could do the same thing, it could be a very interesting play to the upside, similar to DE as it broke out and trended higher. Energy stocks are doing well, but they are also mixed. AEZ is a play we picked up on Monday, and it is performing well. APC sold down and then it gapped up on Tuesday, but it gapped on lower volume and is still below resistance. Many of the natural gas stocks are having trouble right now. Other stocks are moving back up, but are not necessarily performing well. SLB is still in its uptrend, but it gave back a lot today. There are not the same old great up trends that showed all the strength we saw earlier in the year were the stocks continued higher and higher without a lot of gapping. There is a fight between the bulls and the bears and whether they take their gains off the table and go out to the end of the year, or if they keep buying onto the end of the year with those that missed out on some of the gains, wanting to participant.
Will GS double bottom over some resistance from the summertime, or will it continue to sell and start to trend lower? Note the high volume on the gap and reversal on Tuesday after a higher-volume move on Monday. Again, there are a lot of gaps. There is a lot of indecision, but the trend is at a very important level. MS is another stock in the financial sector that is showing trouble. Financial services all of a sudden are not performing well. After trending higher, there is a break of the trend, and a lower low with a gap. Of course, this was on Friday and it has recovered, but it has recovered to resistance. MACD is trending lower. Financials are not rolling over by any means, but they are not great. WFC made its peak, has come down, and is moving laterally, but it is gapping around as well. I sound like a broken record, but the gaps are important to note because that indicates indecision among investors. No longer are the buyers in control.
Today AAPL showed similar action to GS. There was a gap higher and a reversal on rising volume, although it was not blow-out volume. It was coming close to average, but was rising volume nonetheless. It is still in its uptrend. This is one of those that could continue down and sell off at least to 190. If it goes lower, there will be issues for the rest of the market to deal with. GOOG is continuing to trend higher. There may be a change in the guard here with AAPL handing the baton over to GOOG. Tech is mixed. The semiconductors had a great day on Tuesday, but the semiconductor index chart is ambiguous (at best) overall. The index itself in this sector is divided among stocks that are not doing too well and stocks that are muddling through laterally. That is indicative of what is happening all over in leadership. They are not giving up gains, but are moving through laterally, gapping back and forth as investors are indecisive about where they want to take them.
THE MARKET
MARKET SENTIMENT
VIX: 21.92; -2.59
VXN: 23.28; -1.45
VXO: 20.48; -1.87
Put/Call Ratio (CBOE): 0.84; -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: 44.4%. 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: +31.21 points (+1.46%) to close at 2175.81
Volume: 2.084B (+7.16%)
Up Volume: 1.694B (+570.575M)
Down Volume: 433.369M (-409.619M)
A/D and Hi/Lo: Advancers led 2.18 to 1
Previous Session: Advancers led 1.05 to 1
New Highs: 99 (+54)
New Lows: 27 (-17)
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: +13.23 points (+1.21%) to close at 1108.86
NYSE Volume: 1.131B (-16.09%)
Up Volume: 928.945M (+153.758M)
Down Volume: 193.41M (-371.023M)
A/D and Hi/Lo: Advancers led 3.84 to 1
Previous Session: Advancers led 1.37 to 1
New Highs: 314 (+209)
New Lows: 52 (+1)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Stats: +126.74 points (+1.23%) to close at 10471.58
Volume DJ30: 190M shares Tuesday versus 223M shares Monday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
WEDNESDAY
With liquidity still in the driver's seat, and the SP500 still holding up well and dragging the rest of the indices higher with it, the liquidity trade is one we still want to look at. I will continue to look at good plays that are moving up. I also have to note that the liquidity move, while it is holding the market up, has not won out and taken SP500 definitively through this resistance. That is to be expected; when you are dealing with such long term, heavy resistance, it will not break right through and keep running. It may break through, come back, probe, and test, then set up its foundation. That is what it is trying to do with this lateral trading rage it is trying to make the move higher. It may come back down into this narrow range and bounce around some more, but that is not negative action. It has not broken out, but is trying to set a base to move higher. You would expect it to come back toward the rising 50 day EMA, bounce higher again, and then try to make a new peak.
It has refused to sell off toward the end of the year, showing there are buyers wanting to come in and continue trying to run the market to the end of the year. I will continue to look for those liquidity trades, and I have seen several nice upside plays setting up once more. If they can show us the moves, we will move in. I am also seeing other interesting trades like in the financials with GS and MS they are struggling and in trouble, so we can also look for some downside. You can see those every day as some parts of some sectors break down. We do not want to overload to the downside because, thus far, it has been hard to fight the liquidity bid and the weak dollar. It is hard, however, to ignore stocks such as GS, FLR, MS, and others that are struggling even as the rest of the market moves higher. We will hedge some of our positions with the downside plays while letting the upside run and looking for other potential upside plays to break higher.
The market is moving into the last three to four weeks of the year. There may be an attempt to run it, but many key stocks are in trouble. You cannot ignore AAPL and GS. There are also many sectors that have performed well but are very gappy. All is not well in the liquidity trade and the run higher, but nothing has been able to take it down thus far. We will continue to play that trade as we keep our eyes open toward the end of the year.
Support and Resistance
NASDAQ: Closed at 2175.81
Resistance:
2177 is a low from March 2008
2191 is the October 2009 peak
2205 is the November 2009 peak
2210 (from September 2008) to 2212 (the July 2009 closing low)
2275 - 2278 from the February 2008 and April 2008 lows
Support:
2169 is the March 2008 closing low (double bottom)
2168 is the September 2009, intraday peak
2167 from the July 2008 intraday low
2155 is the March 2008 intraday low
The 18 day EMA at 2154
2143 is the October 2009 range low
The 50 day EMA at 2121
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 1854
S&P 500: Closed at 1108.86
Resistance:
The March/July up trendline at 1113
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:
1106 is the September 2008 low
1101 is the October high
1095 is the 2007 down trendline
The 18 day EMA at 1094
1080 is the September 2009 peak
1078 is the October range low
The 50 day EMA at 1073
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
The 200 day SMA at 945
Dow: Closed at 10,471.58
Resistance:
10,496 is the November 2009 high
10,609 from the Mid-September 2008 interim low
10,963 is the July 2008 low
Support:
10,365 is the late September 2008 low
The 18 day EMA at 10,293
10,120 is the October 2009 peak
The 50 day EMA at 10,022
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 8822
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): 0.0% actual versus -0.5% expected, -1.6% prior (revised from 0.8%)
ISM Index, November (10:00): 53.6 actual versus 55.0 expected, 55.7 prior
Pending Home Sales, October (10:00): 3.7% actual versus -1.0% expected, 6.0% prior (revised from 6.1%)
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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