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world stock market, us stock market
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2/03/10 Stock Split Report Update
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Stock Split Report Subscribers:
MARKET ALERTS:
Targets hit alerts: None issued
Buy alerts: BTU; XTEX
Trailing stops: None issued
Stop alerts: CMI; FLIR; MTL
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:
- Jobs warm-up reports not bad, but dollar is stronger and stocks pause.
- ISM services misses expectations, but notches a gain and turns back above 50
- Spend or not spend? President takes on Las Vegas, boats once again.
- Indices start to pause ahead of Friday jobs report.
After lagging, NASDAQ takes the lead, but it is not much of a lead.
As the market rallied Monday and Tuesday, tech stocks lagged in the gains. Thus on Wednesday when NASDAQ took the point it looked as if the market's fortunes would improve even more. After all, NASDAQ is a key index and if it came to play the market should run.
It would have except that the NYSE indices stopped their advance. For that matter, NASDAQ was not exactly lighting up the ticker in the early action as it and the other indices all traded down. No major selloff, just an inability to move higher and through some important resistance. NASDAQ did recover and moved positive in the morning, but it could not drag the NYSE indices with it. By the close even NASDAQ gave away most of its gain, posting an advance of just a fraction of a point while SP500 carved off -0.55% and the small caps lost 0.74%.
News was decent. Challenger layoffs fell 70.4% in January, another solid showing on top of the 72.9% December drop. ADP's private jobs survey fell 22K, better than the -30K expected and the -61K prior (revised lower from -84K). That was the lowest in 2 years and set a decent stage for Friday's jobs report.
Earnings had little 'wow' factor. PFE beat but there was nothing special. Walgreen's saw its same store sales fall. Black & Decker saw its sales and thus revenues decline. If the jobs data had any cache, earnings blunted it.
The dollar was up (1.3896 vs 1.3961), and that may have made the difference . . . along with the indices bumping resistance after a two-day bounce from a sharp round of higher volume selling. Important pause for the market as it tries to catch its breath and continue the bounce through this particular resistance point.
OTHER MARKETS
Dollar. As noted, the dollar rebounded from its 2 days of testing back, tapping the 10 day EMA on the Wednesday low and reversing nicely. It is still below the prior peak, but just fractionally so. The dollar acts with continued briskness in its step, testing two and one-half sessions and then continuing the move. Still has to take out the recent peak (that is also the late July and early August peak), but it acts as if it has every intention of doing so.
http://investmenthouse.com/ihmedia/dxy0.jpeg
Oil. Oil surged again, but then it ran out of gas so to speak. Tuesday oil continued its nice surge, moving into the resistance range from 76 to 80. It continued right into the heart of that resistance Wednesday and put in a new rebound high. Then it stalled and closed flat. It is over the 50 day EMA, a positive, but it is also showing a candlestick evening star doji after this bounce, and that can indicate a stall in a move.
http://investmenthouse.com/ihmedia/xoil.jpeg
Gold. Similar story with gold as it lost ground on a stronger dollar. Gold jumped out to a gain intraday the same as oil, but stalled as the dollar strengthened in the session. It managed to snug up to the 50 day EMA on the close and it could bounce further from there, riding that double bottom attempt higher, but as with every upside move right now in stocks, oil, metals, etc. (except, it seems, the dollar), the move has to be proved. That said, technically gold has set up an ABCD pattern (if by just a couple of points), and that is a positive for a continued move higher.
http://investmenthouse.com/ihmedia/xgld.jpeg
Bonds. Stocks were not strong, but bonds sold as well. Something of an incongruity as bonds typically rally as stocks sell and vice versa. The 10 year yield rose to 3.70% from 3.63% Tuesday. the 2 year rose to 0.88% from 0.85%. Why the move? Because the Treasury announced it is going to sell $81B of 3-, 10-, and 30-year securities next week. Selling drives yields up, so bondholders were selling on the news, getting out ahead of next week's auctions. Thus the fall in bond prices and the rise in rates. Significant? Not the magnitude of the move as bonds remain in an uptrend after the late December low, but they are stalling at the mid-December and mid-November peaks that are at the 61% Fibonacci retracement level. Key resistance point for bonds and their bounce.
http://investmenthouse.com/ihmedia/tip.jpeg
TECHNICAL
INTERNALS
Breadth was modest (-1.4:1 NASDAQ, -1.7:1 NYSE) and volume was lower (-6.5% NASDAQ, -10% NYSE) as the indices basically paused after a two-day bounce. When the indices stall a bit on a move higher, it is a positive to see modest breadth and lower volume; that shows there are no real forces pushing the move one way or the other, and when you look at the price moves they are in line with the internals.
CHARTS
NASDAQ gapped lower but then rebounded to positive. Could not hold the move, closing basically flat at the October peak (2190). As noted Tuesday, that keeps NASDAQ at resistance at that peak as well as in the November/December triangle consolidation that led to the mid-December breakout and rally. That breakout is in the trash can now and NASDAQ is fighting to recapture that breakout at 2205 (closed at 2191). That is always a tougher position to be in, i.e. having to recapture a breakout. Something caused the big money to throw back the a good breakout and rally, and they tossed it out on high volume. If you look at the peak it looks like a short umbrella rollover top and selloff, and now NASDAQ is bouncing up in something of a bear flag. Very important bounce to test. If it fails here it heads down toward 2100 and possibly 2050. A higher bounce would set things up better, but it can easily fall from this level. The Wednesday candlestick chart shows a spinning top, something of an indecisive signal except when it occurs at support or resistance after a relief move; at that point it can indicate a turn back from the support or resistance.
SP500 gapped lower and never made it back to positive. Made a run at it, but came up a bit short. That said, no real selloff and the internals, as noted above, were modest, i.e. lower, below average volume on modest selling. As with NASDAQ, SP500 is struggling at the October peak and in the middle of the November/December lateral consolidation. SP500 also gave up its breakout from that consolidation and is trying to recover that breakout. That is a tougher hand to play. As for the candlestick, it shows a Harami. If SP500 breaks ABOVE the top of the Wednesday high (1102.72) that indicates further upside. If it breaks below the low on the session (1093.37), that indicates the bounce is over and a test down to 1075 again and perhaps 1050.
SP600 (-0.74%) faded the most after the 2 day bounce, stalling at the 50 day EMA and the October peak once more. It continues to hold above support at 320 as well; indeed the Wednesday range basically covered the entire recent trading range. The doji shown on the candlestick chart leaves this next move wide open. A break over the 50 day EMA and the Wednesday top sends it back up toward those highs near 340. A move below it sends it to 310 on the low (closed at 324.34).
SOX (-0.29%) is in a classic bear flag. Pummeled last Thursday and Friday, it managed to bounce off a minor support level. It has rebounded, showing a tombstone doji, something of an evening star, and that is not a positive indication for the bullish side. SOX was the first to start selling and the rest of the market followed. If it leads again then the market heads lower as well.
LEADERSHIP
Technology. Techs led the action with the concentration of gains in the NASDAQ 100 as it posted a market leading (by a long way) 0.44% gain. AAPL bounced, but so did GOOG, recovering some after its China challenge sent it lower to start the year. CSCO reported earnings after hours that beat the street and was up some. Its pattern is not strong, having crashed out of a triangle the third week of January. RIMM, on the other hand, was really solid Wednesday, rallying through some resistance on strong volume. Another reason NASDAQ 100 was up while NASDAQ overall was basically flat. Tech was up, but it was not making new wake.
Industrials. Signs of a rollover in progress again for these stocks that sold hard in January thanks to a rising dollar. BTU shows a tombstone doji. BUCY as well. Ditto TEX. Modest rebounds from sharp selling followed by these topping signals. CMI bounced sharply on earnings and it rallied again Wednesday, but turned off its peak and resistance just over 52.50. After the bounce it was running out of some gas as well.
Metals. All kinds of metals continued to struggle though not showing the same decidedly negative patterns as industrials. BHP in industrial metals closed lower after tapping the 50 day EMA on Wednesday. FCX in copper gapped lower from the 10 day EMA hit on Wednesday. MTL, the recent leader in steel, had bounced Monday to Wednesday, but it reversed off its peak Wednesday and showed a tombstone doji of its own. We closed out our position after that decent bounce even though it managed to hold over the October/November peaks on the close. If it holds and bounces we can look at new positions if warranted.
Energy. Still holding on with respect to independent explorers and producers. Some service companies are still struggling at resistance. Majors continue to languish. Drillers are weak but ambiguous right now. In sum, not tanking as a group but struggling as well.
Retail. Still solid with stocks such as PNRA still moving higher. Restaurants, apparel retailers (ANN, CHS), home furnishings (e.g. BBBY), department stores (TGT), and even home improvement (LOW yes we are watching this as well for those writing in!) are all in varying degrees of decent shape.
Money is still holding and moving into some sectors, particularly consumer consumption and healthcare/drugs. The 'over there' industrial/commodities/energy sectors are struggling as the rest of the world struggles (more on that below). Tech is also struggling as well. Thus money is looking for new leaders and cautiously looking elsewhere.
THE ECONOMY
ISM Services cracks back to expansion.
After a two-month dip below 50, the service sector broke back above 50 with a 50.5 reading. That was less than the 51.0 anticipated, but back above 50 is a positive. New orders increased to 54.7 from 52.0, continuing their expansion. Employment remained in contraction at 44.6 though that was up from 43.6. Inventories fell back below 50 after just one month above that level.
Meaning? Steady improvement though this larger part of the economy is well behind the smaller manufacturing sector.
New Zealand adds to worries in 'over there' economies.
China remains off the charts in growth, but its success encourages government meddling, and that has investors worried. Just look what the market has done since the new GDP figures and the Chinese government's response (bank lending crackdowns) came out in early January. Dive, dive, dive.
Add to that worries in Europe and other western economies. Greece is in serious trouble and Mr. Roubini suggests the EU will HAVE to bail it out despite Trichet's admonitions to the opposite. There is Spain. There is Italy. The UK has less prestige as a financial center thanks to its economic woes.
Wednesday night New Zealand announced its unemployment rate and it is at an 11-year high (7.3%). It blames immigration pumping it up as they new would be workers cannot find employment. New Zealand was a stalwart in the initial recovery. Not great news.
Friday JOBS report may show a HUGE revision.
Tonight the government is warning that the Friday jobs report may show another 824K jobs were lost during the recession than initially figured. Almost a million more job losses is a tough pill to swallow, but with this release the market will be prepped for it.
THE MARKET
MARKET SENTIMENT
VIX: 21.6; +0.12
VXN: 22.34; -0.67
VXO: 20.63; +0.45
Put/Call Ratio (CBOE): 0.83; -0.04
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: 40.0%. After peaking at 53 on this move the bulls are running again . . . to the downside for now. This is a low since July 2009. Once again bulls peaked out near the 50% level. Bulls have bumped at 50ish since late August 2009, falling to 45ish and then rebounding. 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: 23.3%. Rising as briskly as bulls are falling, up from 16%ish on the lows this leg where it held for several weeks. Peaked near 28% in November, 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: +0.85 points (+0.04%) to close at 2190.91
Volume: 2.271B (-6.57%)
Up Volume: 1.145B (-661.142M)
Down Volume: 1.17B (+497.897M)
A/D and Hi/Lo: Decliners led 1.41 to 1
Previous Session: Advancers led 1.29 to 1
New Highs: 46 (-4)
New Lows: 24 (+6)
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: -6.04 points (-0.55%) to close at 1097.28
NYSE Volume: 1.061B (-10.09%)
Up Volume: 268.395M (-710.66M)
Down Volume: 781.35M (+588.142M)
A/D and Hi/Lo: Decliners led 1.68 to 1
Previous Session: Advancers led 3.35 to 1
New Highs: 127 (+20)
New Lows: 31 (-6)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Stats: -26.3 points (-0.26%) to close at 10270.55
Volume DJ30: 198M shares Wednesday versus 237M shares Tuesday. Volume fell here as on the overall NYSE, so no major damage.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
THURSDAY
CSCO earnings popped it a bit higher after hours but it did not have a lot of impact on the rest of the market given what the QQQQ shows after hours. Up, but not surging.
Initial jobless claims are out pre-market, the next piece of the warm-up puzzle for the Friday jobs report. The -824K revision news is hitting as well, but again, at least it is out and gives the market time to absorb it ahead of Friday. If it came out Friday morning that would be a whack over the head.
As noted in the Technical section, the indices are at some resistance after a two-day bounce to the upside in response to some serious selling the prior week. Important test and how they break from the Harami on SP500 will tell much of the tale about the next move higher. There are many stocks in questionable patterns, e.g. the industrials noted above, and they are weighing on the market. At the same time money continues to move into other areas: rotation is the lifeblood of the market overall, and if it is willing to move around that keeps moves alive though it is hot and cold for different sectors right now as noted in the Leadership section.
As for the action Thursday, again we look at how SP500 and the indices break from this indecisive day. Maybe there is another indecisive day given the jobs report is Friday and most will be waiting for that number. A modest gain is expected; if it hits that will release a sigh of relief. If it misses, that could be some trouble. The government was definitely playing damage control tonight by releasing the potential revisions ahead of time.
Support and Resistance
NASDAQ: Closed at 2190.91
Resistance:
2191 is the October 2009 peak
2205 is the November 2009 peak
2210 (from September 2008) to 2212 (the July 2009 closing low)
2218 is the August 2005 peak
The 50 day EMA at 2219
2245 from July 2008 through 2260 from late 2005.
2275 - 2278 from the February 2008 and April 2008 lows
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:
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 1097.28
Resistance:
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:
The 50 day EMA at 1107
1106 is the September 2008 low
1101 is the October 2009 high
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 1017
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low
Dow: Closed at 10,270.55
Resistance:
10,285 is the late December consolidation peak
The 50 day EMA at 10,340
10,365 is the late September 2008 low
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
The 200 day SMA at 9460
9430 is the early October low
9387 is the mid-October peak
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
February 01 - Monday
Personal Income, December (08:30): 0.4% actual versus 0.3% expected, 0.5% prior (revised from 0.4%)
Personal Spending, December (08:30): 0.2% actual versus 0.3% expected, 0.7% prior (revised from 0.5%)
Construction Spending, December (10:00): -1.2% actual versus -0.5% expected, -1.2% prior (revised from -0.6%)
ISM Index, January (10:00): 58.4 actual versus 55.5 expected, 54.9 prior
February 02 - Tuesday
Pending Home Sales, December (10:00): 1.0% actual versus 1.0% expected, -16.4% prior (revised from -16.0%)
Auto Sales, January (14:00): 4.14M prior
Truck Sales, January (14:00): 4.49M prior
February 03 - Wednesday
Challenger Job Cuts, January (07:30): -70.4% actual versus -72.9% prior
ADP Employment Chang, January (08:15): -22K actual versus -30K expected, -61K prior (revised from -84K)
ISM Services, January (10:00): 50.5 actual versus 51.0 expected, 49.8 prior
Crude Inventories, 1/29 (10:30): 2.32M actual versus -3.89M prior
February 04 - Thursday
Initial Claims, 01/30 (08:30): 455K expected, 470K prior
Continuing Claims, 01/15 (08:30): 4581K expected, 4602K prior
Productivity-Prel, Q4 (08:30): 6.5% expected, 8.1% prior
Unit Labor Costs - P, Q4 (08:30): -3.4% expected, -2.5% prior
Factory Orders, December (10:00): 0.5% expected, 1.1% prior
February 05 - Friday
Nonfarm Payrolls, January (08:30): 15K expected, -85K prior
Unemployment Rate, January (08:30): 10.0% expected, 10.0% prior
Average Workweek, January (08:30): 33.2 expected, 33.2 prior
Hourly Earnings, January (08:30): 0.2% expected, 0.2% prior
Consumer Credit, December (15:00): -$10.0B expected, -$17.5B prior
End part 1 of 3
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