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2/22/10 Stock Split Report Update
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Stock Split Report Subscribers:
MARKET ALERTS:
Targets hit alerts: DNDN
Buy alerts: MA; OSIS; SHLD
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
SUMMARY:
- Slow start as stocks pause after two week rally.
- Financials take the 'lead,' a dubious honor Monday.
- Stocks try to reload the buyers as SP500 remains below a second key level.
Honey, that was one boring session.
And you thought things were quiet Friday when the two week upside move slowed a bit. Monday it was almost painful to watch. Stocks traded in a very narrow range: 7 points on SP500, 16 on NASDAQ, 64 on the Dow. No major moves made, just chopping up and down in that narrow range with SP500 above 1105 but still below the November/December 2008 consolidation, its next main resistance level before the January 2010 peak.
Not much in the headlines to drive stocks. After two weeks of upside and with SP500 at resistance they were looking for something extra to send them higher. Futures were up so all they needed was a story. Instead they got rehashes of last week's headlines. SLB made it official that it would buy SSI. Old news. Greece reported it had arranged swap contracts with fifteen securities firms. A bailout is assumed; give us something really interesting. LOW announced earnings that were a bit in line, a bit better, but it threw in some upbeat comments about consumers 'picking up' and comp store sales rising to the best levels in over a year. Encouraging but just not enough to get things rolling.
Thus after a modestly higher open stocks had a hard time keeping it up. Sure they rallied to highs to start the last hour, but as the ranges above indicate, modest highs at best, and even then they could not hold them. SP500 didn't even scare the November/December highs as it failed to match the Friday peak. Okay, so it was a boring day. It happens. No real harm done either way.
OTHER MARKETS
Dollar. Monday the dollar took a different tack. Instead of early strength it opted to start a bit weaker (1.3614 versus 1.3606 euro). No doubt that helped stocks with their early boost. Then the dollar strengthened, and by the close it was below 1.36 euro (1.3596). It pulled this off a couple of weeks ago but could not hold it. Now we see if it can hold it this time. Interestingly, the dollar index closed down somewhat as the dollar, while up versus the euro, was down against a group of other currencies. Still easily in its uptrend though well off the Friday gap higher on the Fed raising the discount rate.
http://investmenthouse.com/ihmedia/dxy0.jpeg
Gold. Gold continues its lateral move over the 50 day EMA and on top of the down trendline. It is in position to make the break higher, just needs to do it.
http://investmenthouse.com/ihmedia/xgld.jpeg
Oil. Oil edged higher but hardly a gain, showing a doji on the candlestick chart. Oil is right at the lower high made in November. Oil is in the range of its prior high on up to 82-83. As with the indices, it is reaching an inflection point. The range has held it in check for now but at some point the range breaks. Before it tries that move, if it does, it will likely need some kind of test or rest before heading back up.
http://investmenthouse.com/ihmedia/xoil.jpeg
Bonds. Bonds continued to fade, modestly but fading nonetheless (3.80 10 year versus 3.78% Friday). The Fed is in the early stages of signaling it is ready to turn the ship and slowly tighten rates. Bonds are going to necessarily fall. Thus the 10 year is heading lower the past two weeks as stocks rallied and is now at the late December low, its first test area where we see what kind of strength the sellers have.
http://investmenthouse.com/ihmedia/tip.jpeg
TECHNICAL
INTERNALS
Breadth. Almost pancake flat on both NASDAQ (1.1:1) and NYSE (1:1).
Volume. Substantial drops in volume on both NASDAQ and NYSE. Trade only hit average once last week and that was on expiration Friday. Monday it was back to those sub-average levels. No real selling pressure as stocks slid a bit to close. After two weeks to the upside they just ran out of bids for nw.
CHARTS
SP500. Really a nothing day for the large caps. There was a lot of talk about the financials 'leading' the market, and yes many were up, but SP500, the haven for financials, managed a loss with the financials taking the point. With leadership like that, the SP500 better not give up on its other components. SP500 remains above the 2005 level marking the October peak but below the top of the November/December lateral consolidation peak at 1114 closing, 1117-1118 on the intraday highs. Normal point to take a breather after two weeks of upside.
NASDAQ. Gapped higher to 2251 but could not hold it. Really not a big deal at this juncture as NASDAQ broke its resistance over the November/December consolidation and is pausing to test below the January lateral consolidation peak. Time for a bit of rest before it makes a run at that peak. Of course that is assuming it does. For now it has all appearances of doing so, but at this juncture it is time to be watching for how those prior highs influence NASDAQ's ability to rise further.
SP600. The small caps are already at the bottom of the January lateral consolidation range, gapping up Monday and, unlike the other indices it managed to hold that gain . . . though it did not break the resistance. Like the staying power the small caps are showing.
SOX. Gapped and then faded for a modest loss. Not bad given the chips have lagged the upside of late. Still holding over some support at 340. The move upside slowed a bit last week from Wednesday on as the chips are in no man's land as NASDAQ moves toward the bottom of its January peak.
LEADERSHIP
As noted, financials were called the leaders on the financial stations, and it is true that JPM, MS, and WFC posted gains from 1% to 2.4%. If they can keep up the pressure and the industrials can continue their trends, SP500 will have to follow them up to its next key level.
Outside of the financials, many of the recent leaders peeled back some. Industrials lost some ground but it was no rout; they enjoyed good runs and are testing back.
Semiconductors. Not in bad shape but we are watching BRCM, XLNX, MRVL and others that are at points where they could turn over in their ranges and test back.
Energy. After gaps and rallies higher all last week, energy stocks were down and pretty aggressively on Monday. Not any particular sector, but across the board: service companies (HAL), natural gas (CHK), multinational integrated (CVX).
THE MARKET
MARKET SENTIMENT
VIX: 19.94; -0.08
VXN: 20.43; -0.38
VXO: 18.73; -0.46
Put/Call Ratio (CBOE): 0.84; 0
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: 35.6%. Moved back over the 35% threshold level below which suggests bullishness. Bulls fell even as the market rallied for two weeks. Bounced up from 34.1% last week. After peaking at 53 on this move the bulls lost some nerve, 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: 27.8%. As bulls rose bears did as well, indicating more bearishness in the market still despite a modest tick higher in the bulls. Up from 26.1% the prior week and 22.2% before that. Over 35% is considered bullish for the market, so still a ways off even though bulls are falling to a bullish level. Continuing the rise 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: -1.84 points (-0.08%) to close at 2242.03
Volume: 1.815B (-12.34%)
Up Volume: 921.791M (-136.544M)
Down Volume: 942.156M (-111.989M)
A/D and Hi/Lo: Advancers led 1.12 to 1
Previous Session: Advancers led 1.13 to 1
New Highs: 145 (-2)
New Lows: 10 (-1)
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: -1.16 points (-0.1%) to close at 1108.01
NYSE Volume: 944.432M (-15.77%)
Up Volume: 465.597M (-155.443M)
Down Volume: 470.117M (+31.789M)
A/D and Hi/Lo: Advancers led 1.01 to 1
Previous Session: Advancers led 1.4 to 1
New Highs: 227 (+80)
New Lows: 19 (+5)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Stats: -18.97 points (-0.18%) to close at 10383.38
Volume DJ30: 158M shares Monday versus 241M shares Friday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
TUESDAY
The economic data comes back into play Tuesday (Case/Shiller home price index, February Consumer Confidence) along with some more earnings (e.g. SHLD). At this juncture the market is testing some though one off day does not make a test. Given the run higher a test is normal, but when liquidity is in the market runs can last as long as a Tootsie Roll.
Still time for a bit of patience. The market has rallied nicely and is in between resistance levels. Despite slowing some to end last week and trading off Monday, NASDAQ appears to have a date with the January lateral peak. SP500 may try to get close as well, as it takes on its next resistance, and if it breaks it will have some momentum toward its January range.
That is the point we are really looking for, i.e. a try at that level and then we see if there is a failure. That brings on some more downside to take advantage of. What we watch for in that event are rollovers as stocks test or even break through prior highs and reverse. An example may turn out to be XLNX: it just rallied to a new high and Monday was testing on rising trade. If the market is going to turn lower off of those prior highs, vulnerable stocks, e.g. stocks such as XLNX, stocks that sold off hard and made lukewarm rebounds to resistance, represent downside opportunity. At the same time you don't give up on the upside: the market is still trending higher despite the more significant selloff in January. Giving up on the upside would be a bit premature. If the market tests back just a couple of sessions or so then there will be some good upside plays to take advantage of as the indices really give that next resistance a run.
Support and Resistance
NASDAQ: Closed at 2242.03
Resistance:
2245 from July 2008 through 2260 from late 2005.
2273 to 2282 marks bottom of January 2010 lateral peak
2275 - 2278 from the February 2008 and April 2008 lows
2292 is a low from January 2008
2319 from the September 2008 peak
2320 to 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:
2210 (from September 2008) to 2212 (the July 2009 closing low)
The 50 day EMA at 2208
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
The 200 day SMA at 2048
2015 from an early August 2008 peak
S&P 500: Closed at 1108.01
Resistance:
1114 is the November 2009 peak
1119 is the early December intraday high
Bottom of the January 2010 consolidation 1131 to 1136
1133 from a September 2008 intraday low
1151 is the January 2010 peak
1156 is the Sept 2008 low
1185 from late September 2008
1200 from the July 2008 low
Support:
1106 is the September 2008 low
1101 is the October 2009 high
The 50 day EMA at 1099
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 200 day SMA at 1029
The early October 2009 closing low at 1025
The early August intraday peak at 1018
The November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low
Dow: Closed at 10,383.38
Resistance:
10,496 is the November 2009 high
10,609 from the Mid-September 2008 interim low
10,963 is the July 2008 low
Support:
10,365 is the late September 2008 low
10,285 is the late December consolidation peak
The 50 day EMA at 10,283
10,120 is the October 2009 peak
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 9581
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 23 - Tuesday
Case-Shiller 20-city, December (09:00): -3.1% expected, -5.3% prior
Consumer Confidence, February (10:00): 55.0 expected, 55.9 prior
February 24 - Wednesday
New Home Sales, January (10:00): 355K expected, 342K prior
Crude Inventories, 2/19 (10:30): 3.08M prior
February 25 - Thursday
Initial Jobless Claims, 02/20 (08:30): 458K expected, 473K prior
Continuing Claims, 02/13 (08:30): 4570K expected, 4563K prior
Durable Orders, January (08:30): 1.5% expected, 0.3% prior
FHFA Housing Price I, December (10:00): 0.7%; prior
February 26 - Friday
GDP - Second Iteration, Q4 (08:30): 5.7% expected, 5.7% prior
GDP Deflator - 2nd, Q4 (08:30): 0.6% expected, 0.6% prior
Chicago PMI, February (09:45): 59.0 expected, 61.5 prior
Michigan Consumer Sentiment, February (09:55): 74.0 expected, 73.7 prior
Existing Home Sales, January (10:00): 5.50M expected, 5.45M prior
End part 1 of 3
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