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us stock market, trend trading stock
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2/25/10 Stock Split Report
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Stock Split Report Subscribers:
MARKET ALERTS:
Targets hit alerts: None issued
Buy alerts: AET; TEN
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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The Market Video is DIVIDED 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 segment 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:
- Bad news rocks the market early, but once more stocks overcome the news.
- NASDAQ, SP600 hold support and rebound nicely.
- Jobless claims push 500K again, but the unadjusted numbers are actually improving.
- Durable goods orders should be called Boeing Orders for January.
- 7 year bond auction goes well though foreign governments are buying less.
- A foul wind blowing from DC. Oh, that is just the Healthcare Summit hot air.
- Leaders holding up but not a lot of great patterns.
- Rebound keeps the ball in the buyers' court but still dicey for the SP500.
Stocks overcome bad news again, reverse off a very negative open.
The market was volatile today for a number of reasons. There was hot air blowing out of Washington, DC from the healthcare summit, some less-than-helpful economic news, and there was the rumored AAPL 4-for-1 split. Stocks were ready to gap lower early on. The futures were well off pace, and they were trading sharply negative by the time the market opened. The market opened sharply negative as well, with well over 1% losses on all of the indices, and it floundered throughout the morning. It moved up in the afternoon maybe it was just a coincidence that the healthcare summit went to lunch during that time. There was also the rumor of an AAPL 4-for-1 split at its shareholder meeting, although that did not pan out. Steve Jobs said that even if they did a share buyback or paid a dividend, it still would not make the shares more affordable to investors. Some at the meeting implied that there might be a 4-for-1 split. AAPL shot higher and so did the market. Even if that did not pan out, the market managed to hold these gains and then build on them into the close. What was an ugly start and an ugly selloff turned out to be not so bad. Jobless claims were bad at almost 500K, but there were mitigating factors. The numbers that were unadjusted for seasonal changes were better than expected. They showed declines on both continuing claims and jobless claims. They also showed that the emergency claims were down over 300K. Even though the headline number was bad, the unadjusted numbers were okay. That had a lot to do with the fact that the weather has been terrible, and the seasonal adjustments fail to take that into account when things are bad.
There was also news out of Europe with the downgraded Greek bonds. It was lower, and the dollar was up sharply early on. That turned, and the dollar started to fade in the afternoon, which was an aid to the upside in the market. In the end, there were impressive turnarounds. The SP500 tested down to the September peak on the low. It then reversed and almost scored a gain on the session, closing above 1100. A mere 17-point swing from low to close. NASDAQ had a nice session as well. It opened with a sharp gap lower and sold below 2200, but it reversed as well. It closed almost with a gain on rising volume. It had a nice move testing the November and December peaks and then turned 35 points to close just off positive. This kind of reversal on no substantive news is not a bad thing. The market had every reason to sell off with the jobless claims, the Greek downgrade, and with durable goods that were not so durable. If you take out Boeing aircraft orders, they were down 0.6% versus the expected rise of 1%. There were issues confronting the market yet again, not the least of which was healthcare not being taken off the table. The Democrats and the President made it clear that if they do not get their way with this first step in nationalizing healthcare, then they will do it through reconciliation. Even with that hanging over its head, the market still managed to rally back almost to positive on the close. It once more overcame ugly news and holding the two-week rally that put it back this striking position with respect to the January peak.
OTHER MARKETS
Dollar. The dollar started stronger, but then it weakened as the session went on. That helped stocks recover. Premarket, it was trading at 1.3472 Euros. That was versus 1.3534 on Wednesday. It was a very solid gain for the dollar, but it weakened as the session wore on and closed down for the day (1.3554 Euros versus 1.3534 Wednesday). That was enough to turn the market. It does not do much with respect to the trend the dollar is in. It is still in a very solid uptrend after breaking the downtrend, testing it, and blasting higher. It may need to consolidate, although it did that at the beginning of February. It is having a hard time getting over 81. It got over there once, bumped it, came back, and tried it again on Thursday but could not hold the move. It is having a bit of a struggle, but the trend remains to the upside overall.
http://investmenthouse.com/ihmedia/dxy0.jpeg
Oil. Oil was hit hard on Thursday. Even though the dollar reversed and closed lower on the session, oil could not do the same. It did reverse off its lows, but it again found resistance at 80 as it has over the past week. There is a resistance range from November, and that is hemming oil in right now. Not to mention the news out of Europe with Germany and other countries showing slowing confidence and consumption. There is also lower consumption in the US, so there is reason for oil to pause and contemplate whether it wants to run to the top of its range again. It is definitely in the upper part of its range, but struggling to get past the last resistance point in it.
http://investmenthouse.com/ihmedia/xoil.jpeg
Gold. Gold enjoyed an up day. After slipping below its lateral consolidation on Wednesday, it rebounded ($1,107, +10). This moved it back off its trendline and over 1,100, and that puts it in position to continue to try to move up after the trendline break. It is not giving up. That is a little incongruous with Bernanke stating that interest rates will remain low. You would think that would push gold higher on inflation worries. Gold is struggling here, and that is likely due to slowing economic activity in Europe that may impact the US and not cause inflationary pressures. Although, that is the Phillips curve reading of inflation. As you typically find out when things slow down, you actually get inflation versus when things speed up and supply increases and there are less inflationary pressures. I am not the only one who believes that you can talk to Mr. McTeer, the former Dallas Federal Reserve President. Gold is hanging in there, trying to continue the trend break from mid-February.
http://investmenthouse.com/ihmedia/xgld.jpeg
Bonds. Bonds closed at 3.68% on the 10 year and were trading pre-market at 3.64%. They closed at that level, so there was a rally in the 10 year, and that pushed yields lower. One of the reasons there was a rally was that the 7 year auction went fairly well today. The Treasury did not have to pay as much on the interest rate to get people to fund the auction. Bonds rallied overall and enjoyed the move up with lower interest rates in the end. Bonds are somewhat range-bound but yields are teetering on breaking to the downside. Yields have been falling while bonds have been rallying of late, trying to get back down below 3.6%. They are in a range roughly from 3.6% to 3.8%. That is where they have traded for a few months now, as the bond traders size up what the economies in Europe and the Americas are going to do for the remainder of 2010.
http://investmenthouse.com/ihmedia/tip.jpeg
TECHNICAL
INTERNALS
Breadth. -1.3:1 on NASDAQ and roughly -1.1:1 on NYSE. While breadth was still negative, it was vastly improved over earlier in the session when the indices were down close to 2% on the session. That big reversal helped drag the breadth back to more of a flatline. If there had been more time, I am sure it would have tried to swing positive, but it matched the close.
Volume. Volume was up, rising almost 7% on NASDAQ to 2.2B and rising almost 14% on the NYSE to 1.14B. On NASDAQ, that is above-average volume. On the NYSE, that is just below average. It still was not a big reversal in terms of volume, but the fact that volume rose on the session was important because stocks reached down, reversed, and almost closed to positive. There was a rejection of the selling on the day. That is a positive for the upside, particularly when you look at NASDAQ. NASDAQ reversed and closed over 2205. It reached down below 2200, reversed, and closed easily above that level at 2234. A strong move indeed.
CHARTS
NASDAQ. NASDAQ did make a gap lower, turned, and rallied back. It is holding this range it has been consolidating in these past three sessions after the two-week rally. It dumped lower on Tuesday, but has held at the key support level at the November and December peaks. Remember, this was an ascending triangle we were looking at back at that point, anticipating a break to the upside. Sure enough, that is what it did. It has given it all away, but after hitting a low, there was some support at 2100, it reversed, and now it is retaking the level and trying to hold it. It does not seem like it wants to give it up.
SP500. SP500 was more dramatic although it was no more dramatic than NASDAQ, it just did not gap as low and then reversed. It sold off and reversed, and that makes a long shadow on the candlestick chart. That is always a clear indication that the sellers tried but failed, and the buyers won out. Note that it did that back at 1045 in the early February test. On the lows, SP500 did hold some support at around 1085, which marks several lows from November as well as the bottom of the October peak consolidation. It did have some real support there, reversed, and closed over 1100. The big news is up at the November and December peaks, but we will take it one day at a time. It was selling off, it has reversed nicely, and now it is in position to make a run at those peaks and try to take them out.
SP600. SP600 had similar action. It sold off and hit near some support right at 330 at the October peak. It then reversed and closed almost positive, right in the range it has been trading at for the past week. It is working on the lateral consolidation of that two-week rally in February; this is a good lateral consolidation. It is not giving up any ground, and the small caps are looking like leaders.
SOX. The SOX reached down to 330 again, just like it did on Tuesday. There is support there, and it reversed and almost closed positive itself. It is try to hold up and deliver upside as well. All in all, it was a positive day for the indices. They sold off and there was bad news, but they reversed and almost closed positive. That is a positive that you do not want to ignore.
LEADERSHIP
Industrials. CMI gapped lower, but it held support at the January peak and 18 day EMA and bounced back to positive. That was very positive action on the session and still something we may look to buy as it bounces higher. DE had the same action. It gapped lower, held support, and reversed to close positive on rising volume. JOYG is trying to hold support and make a new bounce. BUCY may not make the downside move, though it looked like it would try. It was selling off nicely, but it found support at the 50 day EMA and reversed to positive on the session. We might have to flip this one over.
Financials. Financials were not as big a mover as you might think. JPM was down. It recovered after a gap lower and is holding its range, but it is still not that impressive. MS was in the same situation. WFC is holding the 200 day EMA and trying to set up, but is not doing a lot. That has been the story of the financials. They are trying to hold up, bouncing back and forth inside a range, but are not able to make the breakout.
Technology. The big news on the day was whether AAPL would announce a 4-for-1 split. After gapping lower, that helped it, and it rallied on above-average volume to close positive. It set up a nice pullback but gave it away on Tuesday. Lo and behold, it is back again. We may have to take another look at AAPL. If someone gets an idea in their mind that it will go up, it might be buy city. HPQ is moving laterally in a consolidation range and is relatively unfazed by the action of the week. Contrast that with DELL, another PC maker. It looks like DELL does right now way down at the bottom of a trading range. MSFT is moving laterally, continuing to hold the support at 28, and trying to get something going, but it is still a bearish-looking pattern.
Electronics. BRCM still has not told us what it is going to do. It is below that January peak, but it is trying to hold up. It is testing lower and bouncing back. You can see the buyers are tipping their hand a bit here, holding it up as 30.5. MRVL is still problematic, but it also held support where it needed to. We were looking at XLNX as a possible downside play, and it has rallied. It has moved up the past two sessions, and it broke to a new rally high. It is not out of the woods yet, but it is interesting to see if it will turn to an upside play or if it will turn to a downside play. MCHP is not in bad shape. It is moving laterally, coming off one bottom, and trying to make another one and break higher. None of these are patterns to write home about. They are just trying to improve. That is what we are seeing across the market. There are good patterns here and there, but none are outstanding. The market took a big hit, rebounded, and it is still working on trying to put together a decent recovery (and, more importantly, one that holds).
Healthcare. With the healthcare summit ongoing, AET started to break higher on volume. HUM has been looking great for a while, but it just has not gotten off the dime. It looked like it would do it this week, and it may still. It is holding above support and getting some upside volume right now. CELG reached down and bounced back on the session. It may be ready to move higher out of a lateral consolidation. TEVA broke to a new rally high as well. As you can see, there are some areas that are doing fine and moving higher, but there are not a plethora of great patterns and positions to move into as far as upside plays. There are many trades out there, but decent swing trades are harder to find. We can definitely make money on upside and downside plays using options, and, indeed, on stocks. We just have to pick the ones that can move the best for us and give the best percentage return given a volatile back-and-forth market. If you do not think it is volatile, you were not watching today. It was as slow as tears earlier in the week and last week, but the volatility is definitely picking up as the news hits and the market swings back and forth.
THE ECONOMY
Please see Economy Video at the following link:
http://investmenthouse1.com/ihmedia/Economy.wmv
THE MARKET
MARKET SENTIMENT
VIX: 20.1; -0.17
VXN: 20.52; -0.11
VXO: 19.51; +0.02
Put/Call Ratio (CBOE): 1.03; +0.19
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: -1.68 points (-0.08%) to close at 2234.22
Volume: 2.196B (+6.69%)
Up Volume: 814.217M (-679.735M)
Down Volume: 1.483B (+904.009M)
A/D and Hi/Lo: Decliners led 1.32 to 1
Previous Session: Advancers led 1.66 to 1
New Highs: 81 (-16)
New Lows: 16 (+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: -2.31 points (-0.21%) to close at 1102.93
NYSE Volume: 1.146B (+13.68%)
Up Volume: 545.356M (-215.084M)
Down Volume: 584.383M (+345.751M)
A/D and Hi/Lo: Decliners led 1.06 to 1
Previous Session: Advancers led 2.67 to 1
New Highs: 146 (-10)
New Lows: 23 (+5)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Stats: -53.13 points (-0.51%) to close at 10321.03
Volume DJ30: 242M shares Thursday versus 181M shares Wednesday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
FRIDAY
On Friday, there will be the second iteration of the GDP for Q4. There will also be the Chicago PMI for February, the Michigan consumer sentiment for February, and January existing home sales. Remember, new home sales fell over 11%. That was a gut punch, but it has been the case where the new homes have been down and existing home sales have been up. We may see improvement that could lighten the mood in the market tomorrow. There will be interesting data, but we will also see how the afternoon reversal in the stock market holds up.
It was a volatile week. The market was down sharply on Tuesday, down sharply on Thursday, and then back up intraday. The ball is back in the buyers' court, as I said Wednesday night, although you would not have known that given the futures on Thursday. Once more, the buyers wrested control from some bad news and an early selloff and brought the market back up. That also put NASDAQ holding important support and, for now, that is the trump card. As long as NASDAQ and the SP600 can hold support, that is good for the rest of the market because they are the growth industries. These are not great patterns, they are just consolidating the two-week move from February. As long as they are consolidating over this support, that is a positive for the upside.
As far as our plays, we saw the gap lower, so we did not move into any downside on the day and watched for a rebound. Eventually we got the rebound, but it was powerful, so we did not move in at all; we just let the stock market run back up. We will be watching on Friday to see if these moves stall out and if the stocks we are looking to play on the downside start to roll over again. If they do, we may get entry points on Friday. The question then is whether we want to take those entry points. We will not take full positions, just a few partial positions, and then see what happens on Monday if the market sells back down. Right now, the market is in a difficult position. While NASDAQ and SP600 are decent, the large caps are struggling just to hang onto this near support level. They have not crossed over the November and December peaks. They tested them, kissed them last week, and faded back. Maybe this reversal is the catalyst to send them back up. We will also be watching some upside plays. There are a few that are interesting, such as DE or MTL, but we will have to look hard at whether we want to move into any more upside ahead of the weekend.
Fridays are always problematic with respect to buys. If we get one that we think is a really good buy in a good position, then we will not shy away from it. We just usually do not go to the bank and load up on positions on a Friday. We prefer to do that earlier in the week when there is more time to work with and do not have to deal with the weekend particularly after this Healthcare summit. Who knows what will come out over the weekend with respect to reconciliation. I do not think there will be an agreement reached. I think there will be a reconciliation attempt, and the big news will be whether that is successful. That is going to have a lot of bearing on what the market does. Given the volatility and the relative position of the indices, we will look for plays upside and downside and try to position ourselves with a few here and there. We will not take huge positions. As the market breaks, we will break that way with more positions and, if necessary, close out the ones that are counter to the way the market moves. Have a great evening.
Support and Resistance
NASDAQ: Closed at 2234.22
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 2210
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
The 200 day SMA at 2052
2048 is the early October 2009 closing low
2015 from an early August 2008 peak
S&P 500: Closed at 1102.94
Resistance:
1106 is the September 2008 low
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:
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 1032
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 10,321.03
Resistance:
10,365 is the late September 2008 low
10,496 is the November 2009 high
10,609 from the Mid-September 2008 interim low
10,730 is the January 2010 peak
10,963 is the July 2008 low
Support:
The 50 day EMA at 10,288
10,285 is the late December consolidation peak
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 9609
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): -3.08% actual versus -3.1% expected, -5.34% prior (revised from -5.32%)
Consumer Confidence, February (10:00): 46.0 actual versus 55.0 expected, 56.5 prior (revised from 55.9)
February 24 - Wednesday
New Home Sales, January (10:00): 309K actual versus 354K expected, 348K prior (revised from 342K)
Crude Inventories, 2/19 (10:30): 3.03M actual versus 3.08M prior
February 25 - Thursday
Initial Claims, 02/20 (08:30): 496K actual versus 460K expected, 474K prior (revised from 473K)
Continuing Claims, 02/13 (08:30): 4617K actual versus 4570K expected, 4611K prior (revised from 4563K)
Durable Orders, January (08:30): 3.0% actual versus 1.5% expected, 1.9% prior (revised from 1.0%)
Durable Goods - Ex T, January (08:30): -0.6% actual versus 1.0% expected, 2.0% prior (revised from 1.4%)
FHFA Housing Price I, December (10:00): -1.6% actual versus 0.4% expected, 0.4% prior (revised from 0.7%)
February 26 - Friday
GDP - Second Estimate, Q4 (08:30): 5.7% expected, 5.7% prior
GDP Deflator - Second iteration, Q4 (08:30): 0.6% expected, 0.6% prior
Chicago PMI, February (09:45): 59.7 expected, 61.5 prior
Michigan Consumer Sentiment, February (09:55): 73.9 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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