|
|
world stock market, us stock market
* * * *
12/10/03 Technical Traders Report
* * *
Technical Traders Report Subscribers:
MARKET ALERTS
Targets hit alerts issued Wednesday: None issued
Buy alerts issued: MTMD
Trailing stops issued: NANO; TEO
Stop alerts issued: JNPR; ZOOM
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 Daily alert service you can sign up at the following link:
http://www.investmenthouse.com/alertttr.htm
SUMMARY:
- Early downside follow through, late rally starts the test of the 50 day MVA breach.
- Can the small and mid-caps help hold the Nasdaq up?
Late rally leading up to the test.
Further downside follow through to the Tuesday selling as expected, then with 45 minutes left the shorts entered to cover positions after a 60 point drop on Nasdaq in just two sessions. That helped cut the losses to minimal levels and pump up the volume, but it did not get Nasdaq or SOX back over the 50 day MVA. Meanwhile SP500 managed to rally back over the 18 day MVA after undercutting that level intraday, and the small and mid-cap indexes held their 50 day MVA. They look to be in a normal test inside their ranges.
The indexes are straining somewhat against each other. The primary leader has broken its trend while the other leaders are dropping, but are well within their uptrends. It seems logical that money could move from one market sector to another and that would prop things up. While that rotation from techs to cyclical and other defensive areas of late does help keep the market up, even those sectors will sell if Nasdaq breaks sharply lower on a failed 50 day MVA test and the smaller caps follow. Those cyclical areas are more like waiting rooms while the growth sectors consolidate and prepare for the next move. They don't lead the market substantially higher or for long stretches because they just don't have the growth potential. If the growth areas cannot hold up, money will flow out of the market overall, defensive areas included, waiting for the next opportunity. In other words, Nasdaq could fail here and go into a more prolonged consolidation and the other large cap indexes would not make a whole lot of headway. If Nasdaq continued to fall over an extended period of time, even the 'defensive' stocks would start to suffer as well. A house divided cannot stand, etc.
The key point is that if Nasdaq goes into hibernation for a few months, something that it will need to do at some point over the next quarter, the major index of growth stocks will not provide growth for the market. It will be up to the so-called defensive sectors to lead, and their version of leading is basically not to lose a lot of ground. That is why we are watching how Nasdaq responds to the breach of the 50 day MVA and its uptrend. If the tech growth engine has to go into the shop for an overhaul, the market goes into slumber and we start looking at smaller chemical, energy, and other specialized sectors that are performing well compared to the overall market.
THE ECONOMY
No help for the dollar.
Treasury secretary Snow was on Kudlow & Cramer Wednesday night and was asked whether the administration had any views on possible short, lightening interventions in support of the dollar to let the rest of the currency trading world that is making a living off of running the dollar down know that there is a floor and that the United States of America was going to build that floor. Expectedly Snow begged off from answering that question and then chided the hosts for talking intervention as opposed to their usual free market bias.
Expecting a good retort, we were disappointed when Cramer said he just wanted the currency traders to know that the US was there to back up the currency. What we were hoping they would say was that the free market, despite the administration's claim it wants the free market to set the dollar's price, was not currently setting the dollar exchange rates. The administration in its wink and nod shell game regarding the definition of a strong dollar set off the tumble. The administration's own manipulation of perceptions has started the selling and is allowing it, even encouraging it, to snowball. The 'definition game' as to what a strong dollar policy is reminds us of Clinton parsing words to extremes when he claimed to have had no 'sexual relations' with 'that woman' when basic biology books would make it clear to sixth graders that is exactly what happened. Clinton was impeached in part for these word games though he managed to hold the presidency and complete his term. The dollar has been thrashed significantly as a result of semantics and hollow statements. What would happen if the dollar was really hammered again to such an extent it started major outflows from the US? Would Snow stick to this 'let the market reign' mantra? Of course not. The administration would abandon its so-called free market principals in about 2 minutes and intervene. We can only hope that the dollar can hold and rebound some to inject a new round of confidence in foreign investors without the Treasury needing to step in.
THE MARKET
There is not a whole lot more to say about the market. Nasdaq has broken the 50 day MVA and is now ready to test the 50 day MVA breach, and the rest of the market is looking on eagerly. The other indexes are holding the line, even looking solid in their pullbacks to support. The small and mid-caps are making what look to be routine tests of their uptrends while SP500 looks ready to move up off an 18 day MVA test as the SP100, the largest large caps, reversed Wednesday and turned positive. Can they force Nasdaq's hand? More accurate, can they hold up and post gains if Nasdaq fails to recover the 50 day MVA?
As discussed above, if Nasdaq falls but then starts to consolidate in a lateral base, the other indexes can hold up quite well though they may not advance very far. The small and mid-caps would see specific stocks perform quite well for the typical reasons, e.g., earnings and sales growth. They would not hold the Nasdaq up; instead they would try to continue without it. Their success would be limited, again mostly a stock specific rate of success. With the main growth index taking a breather, the rest of the market would find it difficult to grow substantially.
We don't want to sound bearish, but breaks of the 50 day MVA late in a rally (this is the seventh major test of the uptrend since it started) are very hard to recapture. The Wednesday reversal on volume gives some life to the prospect of reclaiming the trend, but typically three-fourths of the attempts fail. The fact that the rest of the market is holding up well is an indication that investors are sticking to equities (rotation), but that does not necessarily translate into Nasdaq merrily bouncing back into the trend. Nasdaq could slip into a three month consolidation while the other indexes hold up well, trading in a higher range. That is not unhealthy action, just an environment where we play the range as we wait for tech and other growth stocks to base and set up for the next breakouts. As long as you recognize the pattern for what it is you can act accordingly. That is one reason we have taken a lot of option positions off the table; the underlying stocks could hold up well, but then fail to make any move and thus they would expire worthless. If Nasdaq slips into a range we will look at selling near term options to let them grind away and expire worthless or buy them back at a low price.
Market Sentiment
VIX: 17.87; +0.24
VXN: 27.84; -0.48
VXO: 17.33; +0.25
Put/Call Ratio (CBOE): 0.81; +0.08
NASDAQ
Continued the selling early then rallied late to cut the loss and prepare to test the 50 day MVA.
Stats: -3.67 points (-0.19%) to close at 1904.65
Volume: 1.956B (+7.58%). Volume ran higher as Nasdaq sold but hen reversed. Short covering played a roll in the volume as shorts covered some after a 60 point drop in 2 sessions.
Up Volume: 851M (+456M)
Down Volume: 1.096B (-311M)
A/D and Hi/Lo: Decliners led 1.96 to 1. Improved late after stinking once again as the last hour opened.
Previous Session: Decliners led 2.28 to 1
New Highs: 96 (-72)
New Lows: 21 (+4)
The Chart: http://www.investmenthouse.com/cd/^ixq.html
Ran down to 1887 on the low late in the session in a rather violent shakeout that reversed the index and recouped almost all of the 20 point loss. All that we have written above and this week comes to a boil over the next two sessions as Nasdaq tests the 50 day MVA (1914) and the up trendline (1958). With the trendline running away, the 50 day MVA is the focus. Nasdaq can still claim a higher low at this point and continue to rise in a renewed holiday rally, and the Wednesday reversal provided some evidence of an attempt to do just that as the index reversed and rallied back to basically flat on rising trade. Very similar action has hallmarked the other bounces in the uptrend. It is a hard road after the trend break, but we will let the index show us its direction. One thing we do note: there are few big techs in patterns ready to breakout and provide sustained runs. Nasdaq has run far and many of its stocks are still extended. Whether we get a continuation of the holiday rally, the index will still have to correct and consolidate at some point over the next few months.
S&P 500/NYSE
Held on rather nicely with a big rebound late to hold the 18 day MVA.
Stats: -1.13 points (-0.11%) to close at 1059.05
NYSE Volume: 1.402B (-0.41%). Volume was corrected after hours to show a slight dip from Tuesday. Thus the rebound was not as impressive. Still solid above average trade.
Up Volume: 516M (+106M)
Down Volume: 880M (-119M)
A/D and Hi/Lo: Decliners led 1.59 to 1. Another modest downside session, rescued by the late rally.
Previous Session: Decliners led 1.55 to 1
New Highs: 147 (-195)
New Lows: 11 (+4)
The Chart: http://www.investmenthouse.com/cd/^spx.html
Still below the November high (1061 - 1064) and the 10 day MVA (1061), but as with Tuesday, held over the 18 day MVA (1057) with that nice rally late session. The large caps continue to hold the line as money rotates still to more defensive big names in tobacco, chemicals, energy, etc. The same places they have been moving to. If Nasdaq recovers, SP500 will move well. If it does not, SP500 will continue to struggle along as it has. Trying to make a higher low here at the 18 day and avoid a 50 day MVA (1045) test, but to do so it will need the rest of the market to help.
DJ30
Stats: -1.56 points (-0.02%) to close at 9921.86
Volume: 220M versus 231M
Tapped the 10 day MVA (9877) on the low and rebounded with the rest of the market to close right at the up trendline. It is still working up the 10 day MVA, holding over the November highs (9903) in a continuation of the same action. It is holding up but only posting modest gains as Nasdaq struggles.
THURSDAY
A return to economic data (jobless claims, retail sales), but those will not be the ultimate drivers of the move. The market has enjoyed a wealth of good economic news but has continued just to struggle on, Nasdaq even losing ground. It is simply top heavy on Nasdaq, and with that growth engine struggling the market continues to scrap and fight for every gain.
After such a strong move it is finding it difficult to capture any seasonal momentum to coast it gently higher into Christmas. Indeed, that rise, if it can continue, is about all we expect out of the market before Nasdaq undergoes a more significant consolidation. If buyers do not once again feel that Nasdaq is a bargain at this point it will have a difficult time retaking the uptrend and continuing the rally into the end of the year.
That keeps us watching what Nasdaq will do at the 50 day MVA. Many techs have dropped hard and can rebound. At the same time they are not in great patterns or are very extended. Thus any move would have to be viewed as a rebound play, trying to capture the momentum move on any continuation of a holiday rally. There are stocks out there in good buying position, and those few are what we are concentrating on to the upside. We are also looking at some rebounds for short term upside trades as some can run rapidly when the market rebounds. Now we are also looking at downside plays if this 50 day MVA test craps out. Several stocks are recovering and setting up for a failed test of the breakout. Even QQQ is there, showing a doji below the 50 day MVA Wednesday.
Support and Resistance
Nasdaq: Closed at 1904.65
Resistance: The 50 day MVA (1914). The 18 day MVA (1938). The 10 day MVA (1936). The March/August up trendline (1955). November high (1992), December high (2000). The January 2002 double top (2044 to 2099).
Support: 1875 to 1880 is the bottom of the November range.
S&P 500: Closed at 1059.05
Resistance: November high (1061.40-1064). 1080 from February 2002 lows. 1074.30, the December intraday high. The December to June upper channel line at 1085. 1100 represents some early 2001 lows. 1150 to 1175, the early 2002 double top.
Support: The 18 day MVA (1057). The exponential 50 day MVA (1045). 1030 to 1032 (early September highs).
Dow: Closed at 9921.86
Resistance: The March/September up trendline (9988). 10,000. 10,259 (January 2002 high).
Support: The November high (9903). The 10 and 18 day MVA (9877 and 9838). The October high (9850). The exponential 50 day MVA (9729). 9686 (September high; 9659 intraday). 9588 the early September highs. 9500 (June 2002 lows) is the top of the summer range.
Economic Calendar
12-09-03
Wholesale inventories, October (10:00): 0.5% actual, 0.3% expected, 0.3% September (revised from 0.3%).
FOMC meeting results (2:15): No change in rates. Output expanding, employment improving. Risks between lack of inflation and inflation balanced. Maintaining accomodative policy for "considerable period" of time.
12-11-03
Business inventories, October (8:30): 0.2% expected, 0.3% September.
Retail sales, November (8:30): 0.7% expected, -0.3% October.
Retail sales ex-autos (8:30): 0.3% expected, 0.2% October.
Initial jobless claims (8:30): 359K expected, 365K prior.
FOMC minutes (2:00)
12-12-03
PPI, November (8:30): 0.1% expected, 0.8% October.
Core PPI (8:30): 0.0% expected, 0.5% October.
Trade balance, October (8:30): -$41.8B expected, -$41.3B September.
Preliminary Michigan Sentiment, December (9:45): 96.0 expected, 93.7 November.
SEMINARS ON CD
http://www.stockseminarsonline.com
This is Jon Johnson's own site devoted exclusively to seminars designed to teach you what you need to know about the stock market and stock movement and how to take advantage of those moves without incurring the usual high costs of travel and related expenses usually associated with seminars.
End part 1 of 3
|
world stock market
us stock market
|
