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us stock market, trade stock
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3/15/10 Stock Split Report Update
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Stock Split Report Subscribers:
MARKET ALERTS:
Targets hit alerts: F
Buy alerts: BBBY; CNQ; DUG; JCP; KOL
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:
- Market starts to test but buyers come in and bounce stocks back.
- The usual story hampers stocks: worries over the scope of the EU bailout, China growth curbs, US 'substantially' closer to losing its AAA rating (Moody's).
- NY PMI, industrial production, capacity show US economy continues to recover.
- Oil struggles again at the top of its range.
- Stocks recover from the initial selling but still likely need more of a test before a new rally leg.
Market tests but buyers are still eager.
Stocks were sluggish Friday, stalling after the most recent leg higher in the rally. They didn't lose any ground to speak of, but couldn't make headway as investors cashed in some gains.
Monday the sluggishness turned to selling early on. More concerns over the EU bailout as the EU powers hold secret meetings on Greece, all the while hoping Greece's own austerity programs will do the trick, along, of course, with rioting in the streets. There is also the worry that China will either succeed in slowing its economy with its renewed (once again) credit curbs or burst the bubbles in its economy; both are not good for western companies and thus their stocks. The icing: a Moody's report telling us the US is "substantially" closer to losing its AAA credit rating. No issue with that other than costing the US millions upon millions more dollars in order to float its massive debt and spending plans. When each man, woman, and child has $125K attached to his name as his share of the debt, what is a few thousand more dollars?
That was enough to put investors on the defensive. Futures were lower, though modestly. The dollar was stronger after a tough close to last week. Oil was down as well given the stronger dollar. Stocks traded lower across the board with energy, financials, and techs weighing the most on the indices. Stocks tailed off all morning but hit a low, as is often the case, midmorning. Moreover, they never threatened any significant level downside. That started a modest rise through lunch, followed by a brief early afternoon test that made a higher low, and then, once again, a drift higher into the close. Financials recovered, and that pushed SP500 and DJ30 modestly positive. NASDAQ, SP600 and company closed lower, but they closed well off their session lows with losses less than 0.25% to basically flat. Buyers could not stay away, even for a full session.
OTHER MARKETS
Dollar. The past two weeks the dollar has undergone a consolidation following its second upside leg in this move that saw it break the downtrend. This is very similar to its consolidation of the first leg, but on Friday the selling turned sharp and threatened harder selling. Monday the dollar was on the rebound, and it took back most of the Friday loss (1.3675 euro versus 1.3758 Friday). That keeps it in a 'comfortable' consolidation, i.e. one that is angling lower but not falling off a cliff. That it ignored the Moody's story (that is something of an ongoing story) and rebounded shows, at least us, that the dollar is trading in a technical manner, i.e. that it is simply consolidating the last leg higher in an ongoing rally.
http://investmenthouse.com/ihmedia/dxy0.jpeg
Oil. Oil struggled Friday, tapping the top of its range intraday and then falling to close. It did not break its lateral consolidation, however. Monday oil sold again, breaking below the late February peak. The dollar no doubt played a role, but as with the dollar, oil is trading in a technical manner as it is in a well-defined range and is falling back from the top of that range as it has done before. It has room to fall further and we opted to take a couple of downside plays that play off of this turn back down in oil. A deep test is not a foregone conclusion, but with US oil demand at 1991 levels, worries China is going to curb its economy one way or another, and the continuing EU issues, there is reason for oil to trade back in its range.
http://investmenthouse.com/ihmedia/xoil.jpeg
Gold. Gold continues holding support at 1100 after failing to extend its trendline break. It looked solid to start March, but lost its bid and has faded to 1100. Important point for gold to hold the line if it is going to try and extend to the upside after breaking the December/February down trendline.
http://investmenthouse.com/ihmedia/xgld.jpeg
Bonds. Bonds bounced back Friday, rallying and pushing the 10 year yield to 3.70%. Monday it looked as if bonds were going to resume selling, and they did. The rebounded, however, with the yield closing flat at 3.70%. Bonds sold through mid-February and then found support and have moved basically sideways since. The Friday rally was surprising and the ability to make the move stick Monday in a rebound move was surprising as well. Watching bonds closely; if they break higher here that suggests something else is brewing economy though we remind everyone that the yield curve is steeply sloped, and it goes against history to say a new recession is coming with a properly sloped curve.
http://investmenthouse.com/ihmedia/tip.jpeg
TECHNICAL
INTERNALS
Breadth. Even with SP500 and DJ30 scratching out gains, breadth could not recover to positive by the close with decliners leading advancers -1.4:1 on both NYSE, NASDAQ.
Volume. Trade was already below average Friday and it fell further Monday. That shows no real selling pressure when the market was in selling mode through lunch. Not a lot of buyers when it recovered either, but NASDAQ has shown plenty of buy-side strength on its upside moves so the lower trade on a mixed session is an overall positive.
CHARTS
SP500. After cracking the January high on Friday but then giving it up, SP500 gapped lower Monday and sold further. Never got into trouble, however, holding well above the 10 day EMA and then rebounding to eke out a gain. No volume so no reason to over-read the session. SP500 made it to the January peak last, and it is struggling to move through. If NASDAQ and SP600 test, SP500 is going to test as well.
NASDAQ. Gapped lower as well, sold as well, but it too never came close to any danger, holding well above the January peaks even though it lost 21 points on its low. NASDAQ rebounded as well though it did not make it back to positive. With lower volume, however, the third straight session of lower trade, there was no real selling pressure, just the profit taking the index was due. It is still due some more downside for a decent test with the January closing high at 2320.
SP600. The small caps exhibited the same action as the larger cap indices, but the downside was even more muted and of course the index bounced back up in the afternoon to sport a very modest decline. Hardly a test, hardly a hitch in its overall move, just slowing down the past few sessions as it pauses similar to its lateral move in late February.
SOX. The chips are testing as well, and they rebounded off the lows along with the other indices. SOX is not in bad shape as it held the 18 day EMA on the low, but it is definitely lagging the other indices, trading nowhere near its January peak. Chips are lagging but the market has advanced without the need for semiconductors to take the point as they did in the move off the bear market lows.
LEADERSHIP
No real change in leadership though it looked as if that could be the case early as financials sold off pretty hard. They along with other areas recovered in the afternoon and kept their positions.
Financial. Financials sold off sharply but as with the indices they were never really in trouble. They rebounded with the indices, and indeed helped lead the SP500 rebound to positive by the close. Indeed, WFC and some others turned positive on the session. With financials holding their gains, SP500 keeps its bid.
Technology. Similar story as AAPL sold off hard to the 10 day EMA but then recovered much of the intraday loss. GOOG was knocked back at by its China position; last week it appeared an agreement was in the offing, then Monday that was scuttled. Sold but also rebounded, keeping the leadership status intact.
Energy. Tough session for energy. Yes many stocks rebounded from the selling, but many did not. Energy was one of the last to the table during the recent upside leg and it lost its bid more than other sectors on the session.
Healthcare. Biotechnology fared well, posting modest gains. Medical appliances/equipment bounced nicely. Healthcare plans struggled again as investors worry over passage of the national healthcare plan by any method possible.
Retail. Retail enjoyed another upside session though it was somewhat mixed. TJX surged, BBBY continued its breakout, ANN was up again. WMT was upgraded and broke out from 4 month flat base, leading a new push into retail, both discounters and higher end.
THE ECONOMY
New York PMI posts its eighth consecutive gain.
The New York PMI had its issues a few months back as it missed expectations badly but did post a gain. That appears to be behind it now as it reported a 22.86 reading for March, topping the 22.86 expected though below February's 24.91. Not stellar, not explosive, but a steady and sustained move higher.
Production and Capacity continue their gains.
Production gained for the eighth straight month (note the coincidence with the NY PMI), positing a 0.1% tick higher (0.9% January). The big leader, however, was a 2% gain in mining and that is typically volatile, meaning you cannot count on it next month, and with such a low reading overall without the mines you get a negative production number. Gasoline demand was up and that pushed up gasoline production 2.2%, reversing four months of decline.
Capacity rose to 72.7% from 72.5% and as you would expect, gains were pushed by mining increases. Looking at manufacturing capacity alone, well it fell to 69.0% from 69.1%.
These numbers, while inflated due to petroleum demand and production, are still able to maintain their gains month in and month out, and that shows overall activity continues. Right now that is gratis the very loose money from the Fed, and everyone is waiting, rather anxiously, for when the Fed removes the easy money stimulus and whether the economy can hold its gains and indeed continue this modest expansion.
THE MARKET
MARKET SENTIMENT
VIX: 18; +0.42
VXN: 19.05; -0.09
VXO: 17.48; -0.22
Put/Call Ratio (CBOE): 0.8; -0.06
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: 44.9%. Continues higher and understandably so as the market continues higher, up from 42.1% and 41.1% prior. Rising from 35.6% and over the 35% threshold level below which suggests bullishness. 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. 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.
Bears: 23.6%. Bears are not as convinced as bulls, rising even as the market rises, up from 22.7%. Bears have been more skeptical on this move though they are down sharply falling from 27.8%. 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: -5.45 points (-0.23%) to close at 2362.21
Volume: 1.869B (-6.44%)
Up Volume: 850.991M (-43.115M)
Down Volume: 1.007B (-110.676M)
A/D and Hi/Lo: Decliners led 1.39 to 1
Previous Session: Decliners led 1.21 to 1
New Highs: 163 (-54)
New Lows: 8 (+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: +0.52 points (+0.05%) to close at 1150.51
NYSE Volume: 926.068M (-11.69%)
Up Volume: 361.671M (-86.747M)
Down Volume: 534.568M (-54.314M)
A/D and Hi/Lo: Decliners led 1.42 to 1
Previous Session: Advancers led 1.31 to 1
New Highs: 313 (-279)
New Lows: 20 (-36)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Stats: +17.46 points (+0.16%) to close at 10642.15
Volume DJ30: 160M shares Monday versus 166M shares Friday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
TUESDAY
The FOMC issues its next decision on interest rates Tuesday at 2:15ET. Rates will remain the same but the 'extended period' language, left in the last statement, will again receive the most scrutiny. Is it left in, is it taken out, is it left in but mitigated or altered? With so much money at play right now and so much of the market and economic activity based upon that easy money, even modest variations have large impacts. After the Fed acknowledged it would have to start raising rates at some point in the undefined future, bonds starts to lose their bid as the early adopters started to reposition. This will increase as the Fed broaches the subject more and more down the road.
The market will play something of a waiting game ahead of the FOMC though typically there is a rise into the announcement. With the indices already sporting solid gains the past two weeks and indeed the past 5 weeks, we don't anticipate any significant upside move ahead of the announcement. After all, the Fed has broached the subject of higher rates in its talk, and though it won't say anything clearly in the statement, the next step and the form of the statement has to be re-established.
Perfect scenario for the market to consolidate the gains a bit more, and indeed there is not a whole lot the Fed can say regarding rates that give complete comfort. The Fed indicates it does not want to make the mistakes of Japan and hike at the first signs of recovery, but it has to lay the groundwork for hikes down the road. Still walking the tightrope and thus far Bernanke and company have shown a knack for doing just that.
That said, the market is still in position to test its last move and waiting on the FOMC decision gives it a reason, once again, to take some gains. Even the Fed statement can provide a reason, kind of a sell on the news move.
Thus we are going to watch for good stocks in good uptrends to pullback and test their last moves. We are watching for the next entry points on these leaders. We will also continue watching for downside plays that can make us a nice chunk on a market pullback. There are also stocks still in or close to buy position for the upside even after the last run higher; we will watch those to see if they present buys though we would prefer to pick up all upside after a further test.
After all, the market, even though overbought near term, remains in a solid uptrend. NASDAQ, SP600, SP400 all broke to new rally highs, besting the January peak. They are testing from a position of strength. SP500 is a laggard, but it is not a dog. A bit of a pullback puts it in good position to rally again and make the break over that resistance. That is why we overall continue to look to the upside right now though we also will take advantage of some good downside setups that can make us money even if any selling is just a pullback to test the last upside run.
Support and Resistance
NASDAQ: Closed at 2362.21
Resistance:
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:
The 10 day EMA at 2332
2320 to 2326.28 is the January high
2319 from the September 2008 peak
2292 is a low from January 2008
2273 to 2282 marks bottom of January 2010 lateral peak
2275 - 2278 from the February 2008 and April 2008 lows
The 50 day EMA at 2254
2245 from July 2008 through 2260 from late 2005.
2210 (from September 2008) to 2212 (the July 2009 closing low)
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
The 200 day SMA at 2088
2070 is the September 2008 intraday low
2060 is the August peak
2048 is the early October 2009 closing low
2015 from an early August 2008 peak
S&P 500: Closed at 1150.51
Resistance:
1151 is the January 2010 peak
1156 is the Sept 2008 low
1185 from late September 2008
1200 from the July 2008 low
Support:
The 10 day EMA at 1138
1133 from a September 2008 intraday low
Bottom of the January 2010 consolidation 1131 to 1136
1119 is the early December intraday high
1114 is the November 2009 peak is breaking
The 50 day EMA at 1113
1106 is the September 2008 low
1101 is the October 2009 high
1084 to 1080 (September 2009 peak)
1078 is the October range low
1070 is the late September 2009 peak
The 200 day SMA at 1046
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 November 2008 peak at 1006 closing 1007.53 intraday
992 is the August 2009 consolidation low
Dow: Closed at 10,642.15
Resistance:
10,730 is the January 2010 peak
10,963 is the July 2008 low
Support:
10,609 from the Mid-September 2008 interim low
10,496 is the November 2009 high
The 50 day EMA at 10,377
10,365 is the late September 2008 low
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
The 200 day SMA at 9737
9654 is the November 2008 high
9625 is the October 2008 closing high
9620 is the August 2009 peak
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.
March 15 - Monday
Empire Manufacturing, March (08:30): 22.86 actual versus 22.0 expected, 24.91 prior
Net Long-Term TIC Fl, December (09:00): $19.1B actual versus $47.5B expected, $63.3B prior
Capacity Utilization, February (09:15): 72.7% actual versus 72.5% expected, 72.5% prior
Industrial Production, February (09:15): 0.1% actual versus 0.0% expected, 0.9% prior
March 16 - Tuesday
Building Permits, February (08:30): 601K expected, 622K prior
Housing Starts, February (08:30): 570K expected, 591K prior
Import Prices ex-oil, February (08:30): 0.4% prior
Export Prices ex-ag., February (08:30): 0.7% prior
FOMC Rate Decision, March 16 (14:15): 0.25% expected, 0.25% prior
March 17 - Wednesday
Core PPI, February (08:30): 0.1% expected, 0.3% prior
PPI, February (08:30): -0.2% expected, 1.4% prior
Crude Inventories, 03/13 (10:30): 1.43M prior
March 18 - Thursday
Core CPI, February (08:30): 0.1% expected, -0.1% prior
CPI, February (08:30): 0.1% expected, 0.2% prior
Initial Claims, 03/13 (08:30): 450K expected, 462K prior
Continuing Claims, 03/6 (08:30): 4500K expected, 4558K prior
Current Account Balance, Q4 (08:30): -$120.0B expected, -$108.0B prior
Leading Indicators, February (10:00): 0.1% expected, 0.3% prior
Philadelphia Fed, March (10:00): 18.0 expected, 17.6 prior
End part 1 of 3
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