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world stock market, us stock market
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1/27/10 Stock Split Report Update
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Stock Split Report Subscribers:
MARKET ALERTS:
Targets hit alerts: None issued
Buy alerts: BWLD; CMG; PNRA
Trailing stops: None issued
Stop alerts: UCTT
The market alert service is a premium level service where we issue intraday alerts relating to the general market conditions, when stocks hit action points (buy, stop, target, etc.), and when we see other information impacting the market or our stocks. To subscribe to the SSR alert service you can sign up at the following link:
http://www.investmenthouse.com/alertssr.html
SUMMARY:
- Stocks sell further, but then find buyers after the FOMC rate decision.
- Earnings still failing to push stocks, at least push them higher
- December New home sales follow the existing sales . . . down
- Dollar breaks to a rally high.
- Greek bonds plunge, but Roubini says Spain is the real EU problem.
- Reversal off of lows suggests stocks may rebound before any further selling, but they have dug a pretty deep hole for themselves.
Stocks come back from weakness, trying a rebound from support.
It was more of the same at the start: earnings were decent but just not good enough to turn the tide. CAT beat but its guidance was weak. Boeing reported the same story. Mortgage applications fell 10.8% last week. Geithner and Paulson were up on the Hill, defending to Congress what they did and why they did it. At 10ET December new home sales reportedly declined 7.6% on top of a 9.6% November loss and much worse than expectations.
On the other side of the pond the economic elite were in Davos, Switzerland fighting for camera time in order to push their book of business in front of the investment world. How many times have you seen those people talking down one currency or another or one country or another and it turns out they have a vested interest called an investment in that currency or country? There was also Mr. Roubini, the housing crisis seer, talking about Spain as Europe's really big problem, not Greece. Not that Greece is pass . Greek bonds were crushed Wednesday; no one wants to own them and they are selling lower and lower. Quite the opposite from the US when people run to US bonds in times of trouble. Of course, if the US is the one having the trouble . . . well we will put that off for another time.
Stocks sold into lunch and then made the obligatory bounce into the FOMC result. They were still not positive but they bounce when there has been selling as some shorts are covered. SOP up to the meeting. Then the result came out and the Fed said it would end some facilities (nothing new there) and it did see some 'gradual' improvement in some areas (e.g. business buying software and machinery, but no land or buildings). Importantly to most investors it continued the mantra of keeping interest rates low for an 'extended period.'
That was enough. Stocks sold, hesitated, bounced, hesitated again, and then rallied pretty much to the close. There was a pullback just ahead of the last hour, but the techs took control (aided by Apple's iPad pricing?) and rallied stocks into the close, or at least close enough to make it look good. Techs were strong enough to even pull the beaten up industrials and 'over there' stocks up from their early session selling. Nice candlestick doji with long shadows or tails on those stocks, and that can indicate they are ready to at least put in a relief bounce from the selling.
In the end all indices closed positive though only the growth indices pushed toward 1% gains (NASDAQ 0.8%, SOX 1.18%, SP600 1.04%). Volume was solid as well after the decidedly negative price/volume action it was good to see volume run back in as stocks tested lower and then reversed for gains. That is another indication that the selling for now is a bit overdone. After this harsh selloff, however, the question is whether stocks just bounce a bit in relief to make it interesting or if they can really put a motor on it and continue the rally. Lots of near term damage was done, but as we have seen in the prior selloffs when it looked as if the market was dead, liquidity can quickly turn things around, even bad patterns.
OTHER MARKETS
The dollar is making its next run following that quick 1-2-3 pullback last week. It bounced upside for the second session, cutting the distance between it and the euro (1.4019 Wednesday versus 1.4076 Tuesday). Strong action that took it through the falling 200 day SMA, its first time above that level since early May 2009.
http://investmenthouse.com/ihmedia/dxy0.jpeg
Oil again struggled (73.69, -1.02) despite an unexpected 3.9M bbl inventory draw. It did manage to close off its low, but it looks to have another $4 to $5 on the downside before it finds significant support around 69-70. Even then it can still drop to another support level at 65. All depends upon demand and the outlook for world economic activity.
http://investmenthouse.com/ihmedia/xoil.jpeg
Gold moved laterally the prior three sessions, trying to hold over the late December bottom. It is doing that but it did sag on Wednesday, closing near the bottom of this lateral range marked by the late December low. It can still hold and form a double bottom, but there has to be some catalyst that is not there just yet. It ran wild on speculation in late 2009 and it has yet to recover from that speculative binge. It will recover, however, and it will be ready to move higher when it does.
http://investmenthouse.com/ihmedia/xgld.jpeg
Bonds rallied early on the weaker economic news but then reversed and sold, pushing yields modestly higher (3.64% 10 year versus 3.61% Tuesday). With stocks reversing course some the bonds took a breather after fighting their way back up. Their story is not done just yet, but with the Fed keeping rates low there was not a big push into treasuries on the session.
http://investmenthouse.com/ihmedia/tip.jpeg
TECHNICAL
INTERNALS
Anemic breadth at 1.5:1 NASDAQ and -1.12:1 on NYSE. It was of course a reversal session so breadth lagged as usual. Still, negative breadth on an upside move on NYSE is not a cheery thought. Still, SP600 and SP400 turned smartly positive so it was not a total washout in terms of strength. Just not a barnburner.
Volume rose once again on NASDAQ (5.6%) and NYSE (15%), easily pushing further above average. After several distribution sessions, i.e. high volume selling, it was good to see volume spike as the indices reversed and rallied back to positive. That shows some buyers ready to move in once more. It is just one day after several distribution sessions, but it beat the heck out of a low volume bounce.
CHARTS
SP500 sold down to support, hitting 1083 on the low. After a short sideways move that test of support was enough to bring in some buyers and the large cap index turned on its heels and rallied for a 0.5% gain. Didn't take it out of the trouble at all, but it is showing a big of life as its industrial and energy components try to bounce some from their kicking. Still a near term bearish pattern and the key ahead is whether SP500 rallies with authority or simply bounces up toward the bottom of that lateral move in early January and stalls. If the latter occurs that suggests it is coming back down more significantly.
NASDAQ has moved laterally as well and it also found the legs to bounce at support near 2200. Undercut it early but then the buyers shoved it back up off that key support level. Now it has moved laterally for a couple of sessions as well and is trying to bounce. It has held a key level for now but it has to take out the 50 day EMA (2228) and then the bottom of that January top, same as SP500. That will tell most of the tale.
SP600 (1.04%) pushed back up through its 50 day EMA in a first step toward recovery. It also managed to retake the October peak on the move. As with the other indices, it has some serious work ahead to recover given that it fell sharply, but it did not dig quite as deep a hole as the other indices so its task could be a bit easier.
SOX (1.18%) bounced, but it still looks pretty bad. Held where it had to, i.e. over the September and October peaks, but this bounce looks much like a bear flag and it is ready to hit the 50 day EMA as well as a consolidation level from earlier in the month. It held where it had to but it is not the picture of health.
LEADERSHIP
Interesting action in the leaders Wednesday. They were in selloff mode again before the FOMC meeting. Afterwards they did not surge up immediately, but when tech took a big lead eventually most stocks received bids and recovered. That left many of these stocks showing doji on the candlestick charts and after a selloff that can indicate a bounce is coming. BUCY, TEX, CMI, SID, DE, etc.
Other areas did not snap back the same way. As noted, oil traded lower and energy stocks in general did not recover well. SLB bounced but it still banged its head against the 50 day EMA as it moves laterally. OII is showing a bear flag; similar on RIG. Some issues still in this sector.
Tech improved as well, indeed it led the charge. Okay, fine. But the patterns are also still less than encouraging. AAPL held up but it is all over the place. MSFT bounced again, but it is at the 50 day EMA on a third day of bouncing, showing a bear flag of its own. It led the move but it is still in trouble itself.
In sum, leadership bounced but it is still in deep itself, very similar to the indices. It has bounced back to some resistance, not bouncing with a lot of power. Some look ready to recover, but their upside is limited by what the indices do as well as the dollar and its rally. May just get a bounce up that leads to more selling unless the market gets a catalyst.
THE MARKET
MARKET SENTIMENT
After spurting higher over its 200 day SMA, VIX has backed down the past three sessions as the market has tried to bounce against that harsh selloff. VIX is now at a key level it held several times during the summer and fall 2009. After bouncing up for a few days it could very well be that the market is preparing to sell back down.
VIX: 23.14; -1.41
VXN: 24.21; -1.26
VXO: 22.32; -0.92
Put/Call Ratio (CBOE): 0.95; +0.1
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: 48.3%. Once again bulls have peaked out near the 50% level. Bulls have bumped at 50ish since late August 2009, falling to 45ish and then rebounding. Thus for now this is more of the same as bulls get a bit pessimistic as the indices rise again and VIX falls. Hit 52.2% three weeks back, the highest level on this run. 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: 16.9%. Virtually in a flat line the past 6 weeks, down from 28% in mid-November. No sign of real worry based on this reading. This is the lowest level of the entire rally and is at a bearish level. Peaked near 28% on this round, falling short of the 35.6% hit in July 2009. 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: +17.68 points (+0.8%) to close at 2221.41
Volume: 2.421B (+5.62%)
Up Volume: 1.597B (+550.92M)
Down Volume: 866.156M (-428.314M)
A/D and Hi/Lo: Advancers led 1.48 to 1
Previous Session: Decliners led 2.04 to 1
New Highs: 37 (-4)
New Lows: 23 (+3)
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: +5.33 points (+0.49%) to close at 1097.5
NYSE Volume: 1.3B (+15.61%)
Up Volume: 733.473M (+389.626M)
Down Volume: 552.598M (-216.343M)
A/D and Hi/Lo: Decliners led 1.12 to 1
Previous Session: Decliners led 1.86 to 1
New Highs: 91 (-29)
New Lows: 63 (+7)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Stats: +41.87 points (+0.41%) to close at 10236.16
Volume DJ30: 262M shares Wednesday versus 217M shares Tuesday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
THURSDAY
The market has bounced back modestly from the harsh selling, or at least it stopped bleeding a gallon a minute, but it has been unable to make much upside headway. The late Wednesday recovery over key support levels was nice and some upside momentum to carry it to a higher resistance level would set up a great downside opportunity. It may even lead to a continued rally; the market has extricated itself more than once form a sticky situation, the last being in late October. Of course it could also turn and roll back over here after this 3-day move, and that would indicate quite a bit of weakness and some significant downside still.
We are going to continue looking both ways simply because the market has been unable to really bounce, yet it is also being stubborn at support. There are downside plays as indicated above, and there are potential upside plays as well from stocks that held up during the selling and are well-positioned and others that have sold off and are ready to make a relief bounce.
The sellers have not relinquished just yet but neither have the buyers. After a strong trend higher it takes more than one leg down to turn the tide. The buyers want to try to move in and that is what often pushes stocks back up after the initial selling; the buyers refuse to give up at first. If that push fails at a key resistance point that is what sets up some good downside.
We may not get that luxury; as noted, the market could roll over here given the bounce thus far is very meager. Thus we will be ready both ways and take what the market gives us.
Support and Resistance
NASDAQ: Closed at 2221.41
Resistance:
The 50 day EMA at 2228
2245 from July 2008 through 2260 from late 2005.
2275 - 2278 from the February 2008 and April 2008 lows
The July/November/December 2009 up trendline at 2278
2292 is a low from January 2008
2319 from the September 2008 peak
2326.28 is the January high
2324-2370 is a range of resistance from early 2008
2382-2395 from 2008
2412-2415 represents a series of peaks and lows in 2007, 2008
2453 is the August 2008 peak
Support:
2218 is the August 2005 peak
2210 (from September 2008) to 2212 (the July 2009 closing low)
2205 is the November 2009 peak
2191 is the October 2009 peak
2177 is a low from March 2008
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
2143 is the October 2009 range low
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
S&P 500: Closed at 1097.50
Resistance:
1101 is the October high
1106 is the September 2008 low
The 50 day EMA at 1111
1114 is the November 2009 peak
1119 is the early December intraday high
1133 from a September 2008 intraday low
1150 is the January 2010 peak
1156 is the Sept 2008 low
1185 from late September 2008
1200 from the July 2008 low
Support:
1084 to 1080 (September 2009 peak)
1078 is the October range low
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 200 day SMA at 1011
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low
Dow: Closed at 10,236.16
Resistance:
10,365 is the late September 2008 low
The 50 day EMA at 10,373
10,496 is the November 2009 high
10,609 from the Mid-September 2008 interim low
10,963 is the July 2008 low
Support:
10,120 is the October 2009 peak
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
The 200 day SMA at 9406
9387 is the mid-October peak
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
January 25 - Monday
Existing Home Sales, December (10:00): 5.45M actual versus 5.90M expected, 6.54M prior
January 26 - Tuesday
Case-Shiller 20-city, November (09:00): -5.32% actual versus -5.00% expected, -7.27% prior (revised from -7.28%)
Consumer Confidence, January (10:00): 55.9 actual versus 53.5 expected, 53.6 prior (revised from 52.9)
FHFA Home Price Inde, November (10:00): 0.7% actual versus 0.2% expected, 0.4% prior (revised from 0.6%)
January 27 - Wednesday
New Home Sales, December (10:00): 342K actual versus 366K expected, 370K prior (revised from 355K)
Crude Inventories, 1/22 (10:30): -3.89M actual versus -0.471M prior
FOMC Rate Decision, 1/27 (14:15): 0.25% actual versus 0.25% expected, 0.25% prior
January 28 - Thursday
Initial Claims, 01/23 (08:30): 450K expected, 482K prior
Continuing Claims, 01/16 (08:30): 4600K expected, 4599K prior
Durable Orders, December (08:30): 2.0% expected, 0.2% prior
January 29 - Friday
GDP-Adv., Q4 (08:30): 4.6% expected, 2.2% prior
Chain Deflator-Adv., Q4 (08:30): 1.3% expected, 0.4% prior
Employment Cost Index, Q4 (08:30): 0.4% expected, 0.4% prior
Chicago PMI, January (09:45): 57.4 expected, 58.7 prior
University of Michigan, January (09:55): 73.0 expected, 72.8 prior
End part 1 of 3
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