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world stock market, us stock market
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2/04/10 Stock Split Report
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Stock Split Report Subscribers:
MARKET ALERTS:
Targets hit alerts: BTU
Buy alerts: None issued
Trailing stops: None issued
Stop alerts: None issued
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
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We have DIVIDED the video into component parts: Market Overview, Technical Summary, Economy, and the Next Session. This allows you to choose the segments you are interested in without having to find the spot in a longer video. Click on the link to the portion you wish to view.
MARKET OVERVIEW
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http://investmenthouse1.com/ihmedia/MarketOverview.wmv
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
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TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
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SUMMARY:
- Jobs report trumped by European PIIGS economic crisis in the making.
- Same store sales rise 3%, but jobless claims rise as well, pushing 500K once more.
- Dollar surges on euro decline
- Gold sells hard on European issues: economic uncertainty and gold price declines indicate a worry of deflation rising.
- Indices sell hard with no bounce, suggesting a more significant correction.
- Friday we might finally see some short covering in the afternoon we can use for a possible Monday/Tuesday selloff.
Jobs are important, but the PIIGS show up ahead of time.
Jobs are important, but the PIIGS show up ahead of time.
The weekly jobs claims jumped up on Thursday to 480K. That was versus 455K expected and 472K the week prior. Emergency claims were up again, rising 281K. It seems there is no limit to new jobless claims. After a few weeks near 430K, they have bounced back up and put the market in a dour mood. There were also good reports out. Same store sales were solid. M was up 3.4% versus expectations of a flat month. TGT was down, growing 0.5% when it was expected to grow almost 1.5%. Same store sales improved almost 3%, and that was much better than expected. Productivity was solid, coming in at 6.2%. It was not the 6.5 expected, but it was not bad. It was revised from 8.1% to 7.2%. I have a feeling we will see many of these initial readings in the Q4 GDP report coming down as the new quarter wears on. Factory orders doubled expectations at 1%, matching the November 1% gain. Factory orders are solid.
A bigger problem than jobs reared its head again on Thursday: the PIIGS (Portugal, Italy, Ireland, Greece, and Spain). The credit default swaps jumped massively overnight. We have not seen anything like this since the fall of 2008. These countries have massive debts and are trying to do what the US has been doing, which is to sell a lot of bonds to raise money. The problem is they cannot sell them all. Portugal tried and fell well short of the amount it wanted to raise. Even when they do sell, they have to offer tremendously high interest rates. This is a dangerous situation now. If the jobless claims put the market in a dour mood, then the European news made the market downright ill. Indeed, stocks gapped sharply lower on the SP500. The futures opened down and sold further into the open before collapsing. There was no real rebound attempt. This gap took care of all of the downside plays we wanted to get into. You cannot chase them when that happens. There may be other opportunities, but this Thursday you did not want to chase them into a Friday with the jobs report. It was an ugly session. The DJ30 is at 10K. Volume undercut and went down into the 9's for a bit toward the end of the day. Volume surged, showing the dumping of shares. There was no rebound attempt as all of the indices broke to new lows on this selloff. In the end, they were posting 3%-or-better losses. That is a serious butt kicking.
OTHER MARKETS
Dollar. The Euro was crushed, and that sent the dollar shooting higher (1.3734 Euros versus 1.3896 Wednesday). It was up against the Euro as well as many other currencies. It broke the important resistance level at 79.5. There is a lot of power in the dollar given the worries in the rest of the world. New Zealand is having issues of its own, and its dollar is weakening; that fuels more strength in the US dollar.
Oil. After a two-day bounce, oil showed a doji on Wednesday before coming back down. It did hold the support level it bounced off of early in the week. It may hold there again once the news filters through market (if it does so quickly). Oil was slammed down almost $4.00 on the session.
Gold. Gold was not acting as a safety position on Thursday. It rolled over, making a lower high. It broke below the December low where it tried to post up with a double bottom. That was a big surge lower, and it is already coming into the October consolidation range. There will be an important test at 1050, but it failed to engender any buyers even though the world was worried over Europe. That is a telling figure. It says there will not be any inflation things will be so bad that they will be worried about deflation. That is discouraging (to put it in the milder tones we like to use in order to be politically correct).
Bonds. Bonds were not surging higher, but the 10 year rallied (3.7% down to 3.6%). The 2 year rallied and pushed the yield down as well (0.88% down to 0.80%). These are large moves, just as we saw large moves in currencies. Of course, a $46-48 dollar loss in gold is not a modest loss either. Stocks and commodities were down across the board. The only things up were bonds and the US dollar.
TECHNICAL
INTERNALS
The internals were impressive. NASDAQ showed -6:1, decliners over advancers, from 1.4:1 on Wednesday. NYSE was -7.6:1 versus -1.7:1 on Wednesday. Things took a turn for the worse. Volume was up 20% on NASDAQ to 2.7B. Volume was up 40% on the NYSE to 1.48B shares. There was impressive volume on impressive price losses. It was not the highest volume of the selloff, but it is in the league of the prior Thursday and Friday pairs that sold the heck out of all the indices.
CHARTS
NASDAQ. The indices could have used this bounce that cut to a new low to move up and test the bottom of the prior high in January. That would be a normal test that you would expect in a normal correction after a 70% run off the lows. The normal correction is not happening, however; we are getting a sharp downturn after failing to make any significant recovery. The rebound earlier in the week only came up to the 38% Fibonacci on NASDAQ. It has now broken lower, undercut, and made a new lower low. There is a downtrend setting up. NASDAQ is under pressure; volume is higher and it is coming to a critical level at 2100 already. 2100 might hold, but a better support point is 2050-2000 with the rising 200 day EMA. There is support range from August. Two lows from October and November define that range.
SP500. SP500 is more of the same. Particularly with the strong dollar, there was a lot of selling of commodities and industrials with the worry about overseas countries not having a strong recovery. Anything tied to that trade was in trouble. At -7:1 volume, however, everything was in trouble. I am looking at 1025 as the real support. Remember, it is always a range. From 1025 it could come down to 1012 and the rising 200 day EMA. It never goes in a straight line, either there will be stair steps. The question is what kind of big day we will get tomorrow.
SP600. The small caps were gutted as well. There was a sharp move down, and it is already close to the 310 support level. There is support there, but it is a range of 310-300. Supports are not typically at a single point. There are places where it starts to slow its move, and it can undercut and fool people, sucking them into further downside only to rebound. There is a not too much fooling here this was out-and-out selling. Since the small caps were getting ripped, they were part of the reason the breadth was so negative on the NYSE. They were not much worse than any of the other indices as they sold off 3.1% on their own. This is a rounded looking top. It failed to make any significant test higher, and now it is being gutted to the downside.
SOX. The SOX bounced up, gapped lower, and it undercut the prior low as well. It was already in deep trouble leading lower. It may find support earlier, come down to 305-295, and try to make a stand there. It sold earlier, it rallied earlier, and it sold off earlier than the rest of the indices. It was the Punxsutawney Phil of the stock market, and it was apparently saying we would have six more weeks of bad weather. The good news is we already have four weeks under our belt. In a couple of weeks, maybe we will start to see a few robins in the yard.
LEADERSHIP
Industrials. The slaughter was indiscriminate, but you can look at certain sectors that were set up to fall. We took a position in BTU on Wednesday off the evening star doji, and it gapped down for us. We took some gain off the table, but just a small position because it was showing so much downside momentum. Unfortunately, we could not get into all of them because they gapped away from us. BUCY was one we were trying to play down as well. They were selling hard across the industry (e.g., DE and JOYG), and some of them had already been selling. They bounced a bit, showed the evening star doji, and gapped lower.
Technology. AAPL has turned over on higher volume after forming something of a bear flag. There is important support at 190. GOOG lost ground, but is holding as best it can at 525. That is a good indication for NASDAQ because GOOG is waiting on that index, and it did not break through that key level. CSCO announced earnings, but it did not do it much good. It gapped higher, it rallied up to the trendline in the heart of this resistance from November and December, but then it rolled over and closed flat. That was not great action for such a great earnings report. It broke down from an ascending triangle, rallied up to test it, tapping the lower line on the high Thursday and fading back. MSFT had formed a bear flag of its own, and it broke down to a new closing high on this selling leg. There is the gap up in October, and it looks like MSFT may have a date with the fill of that gap before all of this is over.
Financials. Financials were beat about the head and shoulders as well. GS gapped lower it took the play away from us, and that was a shame. You have to make the decision whether to chase or not, and they gapped and fell so quickly in the first ten minutes that the moves were essentially done at that point. I was looking to see if there would be a rebound for the rest of the session, but it never got one that was worthwhile. We were also trying to get JPM. We were thinking of issuing a bonus alert on it, but it also gapped lower and was very difficult to get into. The financials were under pressure, but there were no new lows on JPM or GS. How they perform over the next few days will be important for the market overall. Unlike the indices in many tech and industrial stocks, they did not break down to new lows. If they hold, that tells a different story.
Retail. Retail was not that bad of a session. BJRI was down, but it was not being pounded. PNRA has been a recent leader. It was down but was not led to slaughter, so there were positives in the market. Some of the other retailers that announced same store sales. JWN was at 14%, which was much better than expected. It was down, but was not being slaughtered. KSS sold but managed to hold a key support level. It has been trying to put in something of a rounded bottom. We will be watching these stocks over the next few days to see if they will hold and set up a bounce. That is what to look for in selloffs: the stocks that hold the line while everything else craters. They have satisfied owners who are not selling. When things turn back up, everyone will see that they held up and will buy some of them, and there will be a move to the upside. Drugs were another area that was not hit. NKTR pulled back, but it is holding at the 18 day EMA and keeping the pennant alive.
It was not a collapse across the board, although the movement is obviously negative in its bias. The path is still easiest to the downside with respect to what could happen over the next few weeks. There are pockets of strength. Many areas that were set up to fall fell further. They had been under distribution and they continued that on Thursday. You can see there is high-volume selling in a stock such as BTU. After a low-volume bounce, that higher-volume selling begets more high-volume selling. They are not done with the distribution or the liquidation of those positions. The negative economic data overseas only reinforced the correction that they are in. Note that the correction is bigger than the others have been along the way. You can therefore expect more selling down to a key support level before things slow down and try to base out once more.
THE MARKET
MARKET SENTIMENT
The VIX made a higher low as it tested, gapping higher on Thursday. It is at its highest closing. If there is another selloff, it looks like it will top this level and move into the 29-32 range. That is key for volatility. If it breaks through that, we will be in a major selloff.
VIX: 26.08; +4.48
VXN: 25.99; +3.65
VXO: 26.53; +5.9
Put/Call Ratio (CBOE): 1.06; +0.23
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: -65.48 points (-2.99%) to close at 2125.43
Volume: 2.739B (+20.6%)
Up Volume: 297.348M (-847.387M)
Down Volume: 2.533B (+1.363B)
A/D and Hi/Lo: Decliners led 6.03 to 1
Previous Session: Decliners led 1.41 to 1
New Highs: 20 (-26)
New Lows: 53 (+29)
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: -34.17 points (-3.11%) to close at 1063.11
NYSE Volume: 1.484B (+39.89%)
Up Volume: 40.344M (-228.051M)
Down Volume: 1.44B (+658.38M)
A/D and Hi/Lo: Decliners led 7.64 to 1
Previous Session: Decliners led 1.68 to 1
New Highs: 78 (-49)
New Lows: 64 (+33)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Stats: -268.37 points (-2.61%) to close at 10002.18
Volume DJ30: 304M shares Thursday versus 198M shares Wednesday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
FRIDAY
The jobs report comes out on Friday. Before Thursday, that was going to be the biggest report of the week. It still has some cache to it even though the European news stole its thunder. It is still an important report and people will be looking at it. The jobs report could have anywhere from another 750K to 1M extra jobs lost in revisions because they are changing the way they calculate these prior losses to more accurately reflect what the labor market is showing. The market has been warned about this, but it is in a sour mood after the European economic news; it may overlook that there were several days of advance notice that this could happen.
The question is what will happen on Friday when there has been an ugly Thursday. Look back at the other weeks, they did not bounce that well. On Friday three weeks ago, there was no bounce. Last Friday it tried to rally, but it could not hold the move and ended up going down. This time, there is another break to a new low. There is room to the downside on both SP500 and the NASDAQ to the next support level. The indices could have another down Friday as they had on the prior two and find that support level. If there is no good news in the jobs report and no better news out of Europe and other foreign nations, it could be another ugly Friday. Unfortunately, that holds the door open for an ugly Monday as well.
I will go out on a limb for the third week in a row, however, and say there may be some short covering after this move. There was no short covering on the initial move, and that is understandable. It tried to cover somewhat last Friday, but it was not able to hold. Now it has broken to a new low and is already 8% down from the peak on NASDAQ. If there is another selloff early that pushes NASDAQ or SP500 down to the next support level and puts the losses near 10%, that may in turn get the shorts to cover and get us a bump higher in the afternoon. I would love to see that. I would like too see a selloff, take some of our downside gain off the table, and then let the market set back up. If there is a rip-roaring bounce into the close as the shorts cover, we could get good downside setups to enter into late in the day ahead of next week. I would do that because the past two weeks have been sharp selloffs on Thursday and Friday, followed by no selloff on Monday or Tuesday. That may be different this time. As the selling intensifies, the odds of a more cathartic selloff over a Monday and Tuesday increases. That is often how harsh selloffs crescendo to a finish, exhaust themselves and reverse. What if we get a pullback down to 1050 and then a rebound into 1075 or the 1080-1085 range? That would be a tremendous reversal, but those are often followed by sharp downside the next Monday and Tuesday that flush the system out. That would take SP500 and NASDAQ down to the 200 day EMA and other support levels that are coincident with those EMAs. That could flush out the system near term for the sellers and provide a relief bounce to the upside. This time, it would be a better relief rally one that would last more than two and a half days and give the market some upside to sink our teeth into.
That is why we look for that on Friday. We would be stepping into some downside plays for a Monday and Tuesday crescendo selloff. We would let them sell down and sell big, and then take our money off the table when things try to turn back up on Tuesday. At the same time, we swap out and look at some upside plays as these stocks rebound from sharp selling and we can make some trades. When you have this kind of selloff in progress, you are looking to trade these moves. You should trade the surges lower, and then after they run themselves out, you turn and play the moves back to the upside and let them exhaust themselves. That is how you have to trade your way through these periods of market transition. You anticipate the moves ahead of time and move in. We were anticipating this move, and we thought we would get more upside and not this gap because we did not think the market would do anything ahead of the jobs report. It got some bad news from Europe however, and that trumped any waiting on the Friday US jobs report. That was unfortunate because there were great plays, but you cannot always get into them. Now we will anticipate the next move. We get some upside and watch tomorrow. If they rebound, we can start stepping into downside positions and see if we can get the Monday and Tuesday selloff that is more cathartic and strong. That would give us a great move to the downside in a short period before we can play back to the upside.
The market is in transition. There is the jobs report on Friday, and it is going to be more wild action. We just have to have a plan and play it. If we get another sharp surge to the downside, we can look at taking some of the gain off the table on our downside positions, and then let the market bounce into the Friday close. Then we can try to step into more downside plays on some of the stocks that are recovering and see if there is a more cathartic selloff on Monday or Tuesday that could make quick money. Have a great night. This Friday we might be more active than usual given that situation. We will keep on our toes and see what the market gives.
Support and Resistance
NASDAQ: Closed at 2125.43
Resistance:
2143 is the October 2009 range low
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
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:
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
The 200 day SMA at 2018
2015 from an early August 2008 peak
S&P 500: Closed at 1063.11
Resistance:
1070 is the late September 2009 peak
1078 is the October range low
1084 to 1080 (September 2009 peak)
1101 is the October 2009 high
1106 is the September 2008 low
The 50 day EMA at 1105
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:
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 10,002.18
Resistance:
10,120 is the October 2009 peak
10,285 is the late December consolidation peak
The 50 day EMA at 10,327
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:
9829 IS THE September 2008 closing high
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 9470
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): 480K actual versus 455K expected, 472K prior (revised from 470K)
Continuing Claims, 01/15 (08:30): 4602K actual versus 4581K expected, 4600K prior (revised from 4602K)
Productivity-Prel, Q4 (08:30): 6.2% actual versus 6.5% expected, 7.2% prior (revised from 8.1%)
Unit Labor Costs - P, Q4 (08:30): -4.4% actual versus -3.5% expected, -1.5% prior (revised from -2.5%)
Factory Orders, December (10:00): 1.0% actual versus 0.5% expected, 1.0% prior (revised from 1.1%)
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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