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us stock market, trade stock
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2/09/10 Stock Split Report
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Stock Split Report Subscribers:
MARKET ALERTS:
Targets hit alerts: None issued
Buy alerts: ANN; EAT; GOOG; HUM; NVDA
Trailing stops: None issued
Stop alerts: CTSH
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
TO VIEW THE MARKET OVERVIEW CLICK THE FOLLOWING LINK:
http://investmenthouse1.com/ihmedia/MarketOverview.wmv
TO VIEW THE TECHNICAL SUMMARY VIDEO CLICK THE FOLLOWING LINK:
http://investmenthouse1.com/ihmedia/TechnicalSummary.wmv
TO VIEW THE ECONOMY VIDEO CLICK THE FOLLOWING LINK:
http://investmenthouse1.com/ihmedia/Economy.wmv
TO VIEW THE NEXT SESSION VIDEO CLICK THE FOLLOWING LINK:
http://investmenthouse1.com/ihmedia/NextSession.wmv
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SUMMARY:
- Rumors of Greece bailout become 'fact,' help spur stock rebound
- Wholesale inventories fall instead of rise. That can boost Q4 GDP, but by virtue on more inventory liquidation.
- Stocks post higher volume gains but the indices remain in their near term downtrends, bumping an important level.
- Leadership ranks remain rather thin for now.
- Path of least resistance still lower, but with support and a near term downtrend converging, a break is coming.
Bailout 'announcement' spurs some buying/short covering in stocks.
Futures were up on Tuesday, reversing the Monday high-to-low slump to start the week. The news was that ECB chairman Trichet was cutting his trip to Australia short and heading back to the continent to participate personally in the discussions to resolve the Greek economic crisis (as well as the other PIIGS debt situations in the EU). The market was happy about that. Futures were up, gapping higher on a chart of the SPY. They held their gains to the open, rallied a bit, but started to give back gains after the initial start. They still held above the close on Monday but were well off their highs. Then the EU "announced" there would be some form of rescue for Greece, and it was official kind of. Germany was supposed to lead the group of countries that would rescue Greece. The Greek credit default swaps (the CDS) came in considerably. The spreads narrowed, and that means there is more certainty and investors feel more comfortable.
That was great news. The market was selling off, but then it shot higher to new session highs. That was excellent, but after hitting the peak, stocks fell sharply because Germany mitigated the report that said it would be a key player in bailing out Greece. That does not mean it will not happen, but how it will happen is the question. That threw a wet blanket on the market's gains, but even though they traded off their highs, the indices easily held large gains in excess of 1% into the close. It was a solid session with respect to prices, even though the market was not able to hold the session highs. There is still nothing definitive on what the EU will do, but it was enough to keep the dollar down. That helped stocks, and they bounced across the board. There was good breadth and volume an all the indices. The SP500 had an above-average day, and its breadth was better than 3:1. NASDAQ posted a gain in excess of 1%, and it gapped higher on rising volume. The small caps also bounced higher with over a 1% gain. It is hard to argue with those kinds of moves. After the indices have been beaten up over the past couple of weeks, it is good to see gains to the upside. 1% gain in any market helps ease the pain of the downside.
The gains, breadth, and volume were good enough for us to take upside positions in stocks that were in good position to begin with. We have several upside plays that pulled back to support and held without breaking down, while the rest of the market broke through support levels. They were in good risk/reward points, and we will not lose much if it does not work out. There is the potential for nice gains if more news is announced on the EU bailout plan that helps bounce the indices higher. They are in position to make a nice, quick run. It is still uncertain whether the market will be able to hold a move or continue to sell off. It is in a transition and is trending lower right now. Even though there are good stocks moving higher, the path to the downside still seems to be the easiest because the sellers are still out there. The buyers, while present on Monday, could not hold the move at the peaks of the session.
OTHER MARKETS
Dollar. The dollar had a tough session, as one would expect with the bailout. The dollar was benefiting greatly against the Euro because of the problems with its deficit crisis. As the Euro sold, the dollar spiked higher. It spiked lower on Tuesday (1.3786 Euros versus 1.3650 Monday). The dollar was even down a bit on Monday because of rumors of the bailout. The dollar is still in a strong uptrend, but it had a tough day. It came back and tapped a support point that runs through several peaks and lows back through 2008. It is holding support, it made a test on Tuesday, and we will see if it can rebound from here.
Gold. Gold had a decent day after falling through the December low and being boxed pretty hard. It has bounced back up and is now above the 1075 level where it bottomed in December and late January. Gold had a strong day ($1,077 at the close). It was trading up and down after hours, but was roughly putting in a $10.00-12.00 gain on the session.
Oil. Gasoline usage fell in the US last week by 3.7% as the average cost of gasoline fell to $2.65 per gallon. Despite that, it bounced nicely off the 200 day EMA where it has been try to hold for the prior two sessions. That is above the December low. It made a new low on the selloff, but it has held and bounced back up. 72 is a support level there have been peaks and valleys with many peaks at 72. That is where it held and bounced, and that shows there is a support level there. It did put in a nice move off that. Typically, the sellers tried to take it down in that kind of reversal. They were bounced back on Thursday, it was the same on Monday and Tuesday, and then there was a move back through on a strong day. The buyers defeated the sellers. Oil could bounce higher from here. If there will be a rescue of Greece, there will likely be a rescue of Portugal, Italy, Ireland and Spain. That means there would be more demand for oil because, in theory, the rescue/bailout would create better economic conditions, and that means more demand for crude.
Bonds. Bonds are being roughed up a bit. Like the dollar, they rallied on the uncertainty with respect to the EU. Now that there is a bit of certainty with respect to the bailout, there may be a recovery and thus less desire to run to bonds. That makes stocks more appealing.
TECHNICAL
INTERNALS
Breadth was at a solid 2.5:1 advancers on the NASDAQ, easily topping the -1.8:1 from Monday when the index lost ground. The NYSE had a respectable 3.2:1 to the upside versus 1.7:1 to the downside on Monday. The downside was a bit weaker than the upside in terms of breadth.
Volume was up 8% to 2.1B on NASDAQ, and it was up 14% to 1.2B on the NYSE. There is stronger breadth and volume on an upside session. Stronger breadth typically means it is not short covering. If the entire market has been sold off very hard, however, then a rebound on stronger breadth does not necessarily mean it was not short covering. Often the large cap stocks or indices will sell off, and breadth will be narrow if they rebound. That is likely a short covering rally because it is typically a particular sector of the market that leads to the downside. If everything is going down, then there is the issue of a rebound not being clear-cut, across-the-board buying because the shorts would be covering many different positions from various sectors of the market.
CHARTS
SP500. The SP500 posted an upside 1.3% gain, but it gave back 9 points from the peak. That is almost a third of what it had on the session. Volume was up, so there was upside buying, but the sellers came back and were able to push it down. This happened on NASDAQ as well. There were nice gains, good volume, and good breadth, but there was a common theme in addition to the internals on all of the indices. SP500 surged higher and broke above the January low, but hit the 10 day EMA and reversed. It closed below both the 10 day EMA and the January low.
NASDAQ. The NASDAQ gapped higher, moved up to the 10 day EMA, and sold back as well. It closed just above the January low, so maybe there is a positive there since it hung on. Maybe. Volume was higher, so there was upside impetus and the breadth was good.
SOX. The SOX bounced up, hit the 10 day EMA (as it did on Monday), and fell back. The 10 day EMA is an important resistance level in a downtrend.
If the 10 day EMA is holding, that is a sign of a fairly well-entrenched downtrend. SP500 sold off and bounced back to that level, broke through it only one day, and then sold back down. It has now come back up to it again. It has not had as many turns down as the SOX yet because the SOX led to the downside. The SOX has more tests of that level than the SP500. NASDAQ broke below the 10 day EMA and it has now made the third test of it. It has not tried to break through, and it came up short of course, it was also dealing with the 50 day EMA in late January. It sold off and rebounded in early February, and it sold off and rebounded over the past three sessions. None of them have touched the 10 day EMA. It is an important resistance point in a downtrend. If it does not yield, then the downtrend is strong. The bias is to the downside given that NASDAQ, SOX, and the SP500 have not attempted to break through the 10 day EMA. They also have support at the levels where they are trading. NASDAQ came down to 2100, where there is support, and it bounced. It has bounced into the teeth of some resistance at the September peak and the mid-range of the November-December consolidation. It is showing a doji on the candlestick chart. There is the bounce up to resistance, it is showing a doji (this can be an evening star doji), and then turning down. If it gaps lower from here, that is a near-term bear signal and it will come down to test 2100 again (perhaps 2050).
The SP500, while there is not the same doji, there is a sharp move higher and it is closing well off the peak. It is stalling at the 10 day EMA as well as the range of resistance, starting with the September peak that moves up through the November and December consolidation lows. That is where it tested into the heart of that range and fell back. It is not necessarily an indication that it will not be able to move higher and break through, but the point of least resistance is still to the downside. The support is piling up below it, and if it gets down to the 1050-1025 range, it will be in a good resistance point. Even 1050 has some support. 1050 down to 1025 will be a level you would start looking for it to shallow out and start to bottom and set up for a new move to the upside. I am still not convinced that this move today means anything given the patterns on the candlestick, the inability to break near resistance, and given the continuing downtrends that look to be forming.
If the deal falls through in the EU, it could be a major selloff, but we have steadily improving economic data in the US that can mitigate that issue in Europe. There are also good growth rates in India and China that there help mitigate that as well, since that props up US companies that deal in that trade. If the dollar continues to weaken, that will only bolster those plays. We are not looking for a major selloff, but we are not looking for an immediate recovery either. There are plenty of stocks in position to make the bounce higher, but a lot of those that have bounced look a lot like the indices. They have come back up to near resistance and are struggling again. We have plays on the QID and SDS to look at. There are others as well, such as the IIT, which is an ETF on the transportation index. It has the same action. It has moved up to the 10 day EMA, closed well off that point, and it has support down near the 66 level where the 200 day EMA is. The QID is setting up for a move higher. It is making a higher low with a doji because the QQQQ made that high with the doji at the 10 day EMA, and the QID is the inverse of the QQQQ.
LEADERSHIP
Industrials. BUCY has a same type of pattern as the indices. It has recovered, gapped higher, but closed well off the high. If it heads lower from here, it has serious support at 50, but there is almost a $4.00 move from where it closed to 50; indeed, it could break below that level. That could yield a play for us. TEX is not in as bad of shape. It already sold down to the 200 day EMA and support. It is trying to hold this line. There was no real breakdown here, but it is not in a great position either.
Metals. Metals were up, but they closed off their highs. FCX rallied again, but it closed off its high as it did on Monday. It had a double bottom at the 200 day EMA, but it is having a lot of trouble even with a good dollar. We have a position on it and we will keep that stop (you might want to fudge on it a bit in case it breaks lower). If the dollar continues to weaken, we should see it move higher, but it is not blowing right back up to 80 as we wanted to see. BHP gapped higher as well. It is showing more strength, but it was not able to close above the 10 day EMA. That is a common theme in many of the industrials and the "over there" stocks. STLD gapped higher, and it stalled at the 10 day EMA and the 200 day EMA. It is an ugly pattern right now.
Technology. AAPL is not in terrible shape, but it is in the process of potentially making a lower high, although there is good support at 190. It is not in a great buy position at all. MSFT is moving laterally and unable to bounce. It says a lot that it could not bounce in the market move. There are possibilities here. They are not selling off, but we would not buy them right now. There may be strength in software. CTSX is bouncing higher on good volume, but it is very range-bound. It is not a great place to buy because of the ground it has already covered toward the top of that range.
Healthcare. HUM is coming off the 50 day EMA with an ABCD pattern. It has good volume on the upside and a nice move. HGR had an ABCD pattern and bounced up on better volume. There are gains here. CELG is one of the leading biotechs, but it is not leading that well right now. Even in healthcare, things are not definitively better.
Retail. Retail continues to be one of the stronger areas. EAT gapped higher on good volume after the strong gap higher in mid-January. It tested it and gapped higher again above the downtrend line in the gap test. That was a very strong move, and it was one worth getting into on Tuesday. ANN gapped higher on good results. It broke the flag pattern and is moving up on rising (though not huge) volume. There was a nice break in early January. It has tested that and is now moving back up. Retail continues to look solid. NFLX has started back up after testing the gap-up point as well. There are some positives here, and we were moving into some of these. They are not overrunning the market now by any means, and that makes this entire move (along with the technical patterns in the indices themselves) a little bit suspect.
Energy. Energy was up on the day, but had a hard time holding the gains. Its patterns are not appealing. The weaker dollar helped, but stocks such as APC rallied through resistance but could not make any serious headway that changed the pattern or character. SLB had the same kind of action. It had a big move upside, but stalled at the 50 day EMA and gave up most of the gain. RIG had a gap higher, an evening star doji it has support and it has resistance. It is a mess right now, and that sums up where many of the energy stocks are.
THE ECONOMY
See the ECONOMY VIDEO for the Economic discussion using the following link:
http://investmenthouse1.com/ihmedia/Economy.wmv
THE MARKET
MARKET SENTIMENT
VIX: 26; -0.51
VXN: 25.58; -1.34
VXO: 24.49; -0.94
Put/Call Ratio (CBOE): 0.98; -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: 38.9%. The selling took further toll on bulls, dropping them from 40.0%. After peaking at 53 on this move the bulls continue to run, falling to a new low post- 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. Getting close to the 35% level that is the threshold for what is considered a bullish climate. 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: 22.2%. Surprisingly bears fell for the week, down from 23.3% after a brisk rise 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: +24.82 points (+1.17%) to close at 2150.87
Volume: 2.151B (+8.05%)
Up Volume: 1.75B (+1.192B)
Down Volume: 468.772M (-991.66M)
A/D and Hi/Lo: Advancers led 2.53 to 1
Previous Session: Decliners led 1.82 to 1
New Highs: 37 (+10)
New Lows: 28 (-2)
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: +13.78 points (+1.3%) to close at 1070.52
NYSE Volume: 1.239B (+14.14%)
Up Volume: 1.021B (+783.035M)
Down Volume: 181.355M (-656.274M)
A/D and Hi/Lo: Advancers led 3.32 to 1
Previous Session: Decliners led 1.72 to 1
New Highs: 68 (+10)
New Lows: 46 (+5)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Stats: +150.25 points (+1.52%) to close at 10058.64
Volume DJ30: 236M shares Tuesday versus 216M shares Monday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
WEDNESDAY
The trade balance comes out before the market opens, and that is typically not a big mover. It will have an impact on dollar and bonds, but it will probably not be an impact that would alter the trade in stocks. Crude inventories are out at 10:30, and the treasury budget comes in the afternoon. Those will affect bonds and the dollar, but we will have to see what kind of results we have versus expectations. I am not expecting it to impact trade. The big factor will be the dollar. The reason the dollar would move would be what the EU does with respect to bailing out some of the troubled countries. The spreads were widening on the credit default swaps, but the action today helped bring them in somewhat and restore calm to those markets. That is a positive across the board. Stocks recovered and bonds pulled back, and the US dollar pulled back as well. Any more good news out of the EU should help ease the fears and keep stocks bouncing. That will be important because the indices are at a critical point. They do have support below them that they bounced off of, but now they are back up to the 200 day EMA.
We will be looking both ways again. In this type of market, the downside is the path of least resistance, but the market has been down for almost four weeks now. Some sharp selling has brought the indices down to significant support levels. You never know in a selloff. If the sellers stay aggressive, they can keep bouncing an index lower and lower, breaking through support levels. That is what they have done thus far. Three weeks down and heavy selling at the end of the week after modest buying Monday through Wednesday. We will see if they can break through the 10 day EMA or if they are stalled again and pushed back down on Thursday and Friday. We will be looking for index plays to the downside, and will be ready for them. We will have individual stock plays to the downside because some of those stocks are in position to head back down after bouncing up to resistance on lighter trade. Those give you the opportunities to move in and play a continuing downtrend. You can buy puts, sell calls either way you can play that downtrend. We have good upside plays in good risk/reward position. They have performed well even as the market sold off. If we get more upside, we might break higher on those and post a very nice run, particularly if there is good news out of the EU. If you look both ways in this type of market, then you are ready for whatever happens. If they do not work out, then cut them and move on. There are setups both ways, and you take advantage of what the market gives. We will see what the EU has to say on Wednesday and how that influences the rest of the market. You have to love the geopolitical aspects when they have an overlay on everything the market does. We all have to play the cards that the market and the geopolitical climate deal us. Have a great evening.
Support and Resistance
NASDAQ: Closed at 2150.87
Resistance:
2155 is the March 2008 intraday low
The 10 day EMA at 2167
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
The 50 day EMA at 2207
2210 (from September 2008) to 2212 (the July 2009 closing low)
2218 is the August 2005 peak
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:
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
The 200 day SMA at 2025
2015 from an early August 2008 peak
S&P 500: Closed at 1070.52
Resistance:
1070 is the late September 2009 peak
1078 is the October range low
1080 is the 10 day EMA
1084 to 1080 (September 2009 peak)
The 50 day EMA at 1100
1101 is the October 2009 high
1106 is the September 2008 low
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 200 day SMA at 1021
The early August intraday peak at 1018
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low
Dow: Closed at 10,058.64
Resistance:
10,120 is the October 2009 peak
The 10 day EMA at 10,120
10,285 is the late December consolidation peak
The 50 day EMA at 10,289
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 9501
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 09 - Tuesday
Wholesale Inventories, December (10:00): -0.8% actual versus 0.5% expected, 1.6% prior (revised from 1.5%)
February 10 - Wednesday
Trade Balance, December (08:30): -$35.5B expected, -$36.4B prior
Crude Inventories, 2/5 (10:30): 2.32M prior
Treasury Budget, January (14:00): -$46.0B expected, -$91.9B prior
February 11 - Thursday
Initial Claims, 02/06 (08:30): 465k expected, 480k prior
Continuing Claims, 1/30 (08:30): 4590k expected, 4602k prior
Retail Sales, January (08:30): 0.5% expected, -0.3% prior
Retail Sales ex-auto, January (08:30): 0.5% expected, -0.2% prior
Business Inventories, December (10:00): 0.3% expected, 0.4% prior
February 12 - Friday
Michigan Sentiment, February (09:55): 75.0 expected, 74.4 prior
End part 1 of 3
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