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yahoo stock, us stock market
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7/10/01 Investment House Daily
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Investment House Daily Subscribers:
The Alert service is up and running! Subscribers to the current reports can sign up at the following link:
http://www.investmenthouse.com/alertdaily.htm
Despite the bad day on the major indexes, we had many solid moves in our plays. We had a number of early alerts on stocks such as BJ, BRO, HKF, and ACF that were making strong moves. We then issued some alerts on MVSN (two on that one) and some other stocks that we were looking to get into at the close based on the day's moves. We also had a late put play that we issued an alert on as it tested resistance and failed. We like to use our alerts that way: get in on the strong moves early with a partial position if we like what we see, and then add to that position as the stock performs as we want it to. Today was a great day for that and our Market Alert service was really helpful in getting into good positions with good stocks even on a 'bad' day in the market.
Seminars: Second series starting August 1!
We had a great response to the first round of seminars, and we have now set up the second series starting August 1. We cover the basics, to technical analysis, to options, splits and covered calls, and we do it all from the convenience of your own home via the internet. Put technology to work as you learn why stocks and the market move up and down, and then how to use the tools to implement that understanding. It will change how you think about the stock market and make you a better investor so you can get where you want to be: doing what you want when you want.
Sign up at:
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TONIGHT:
- Earnings are the focus and the fear, and there is a lot of the latter. Not many want to be in the market, but it is the same stocks that are getting hammered.
- Many plays rise on a 'bad' day in the market. Patience and selectivity.
- Reflex bounce fizzles and the major indexes fall on rising volume in another distribution day.
- Economic numbers mixed, but all we see reported is the negative side today.
- Team Trades
Earnings fears continue to grip the market.
The market has gone from attempting to move higher on stronger volume to popping support levels on rising volume. The sellers are now reasserting themselves as fear rises ahead of earnings, and the major indexes that house the large caps are taking it square on the chin. It has not been a total bloodletting, but the body count is getting high among the big names as they get hammered once again.
That is one thing we have been very cautious about, and that is getting into the big names while there is still so much confusion about the future of these companies. Look at JNPR. The stock announces earnings on Thursday, and ahead of that number it is trading lower and lower, making yet another new low today at 25. It was over 240 last October. Almost 90% off of its high and not showing any signs of life. It could generate a lot of returns once things turn around for networkers, but every time the stock tries to mount a move, it gets slapped back by the overhead supply.
It is very, very tough investing in these stocks at this point in time. There is just no indication as to when they might recover, i.e., start to factor in better earnings as a result of increased business activity. That is the underlying key to it all. The stocks have sold off because earnings growth was falling and then reversing into earnings contraction. Until investors believe that the sectors are going to start growing 3 months or 6 months or so down the road, these stocks will not enjoy sustained gains; instead, they will be jerked back and forth on news stories as we have seen. As we noted a couple of weeks ago, some are starting to look better, but they are not at a point we are necessarily looking at long term positions. Some will make good trades before then, but they need to get some accumulation going, not distribution.
Look for the best sectors and good patterns to invest and weather the storm.
We have been preaching it a lot of late, but even with the negative views on the past quarter and its earnings and worries about the future, the economic news is starting to turn for the better. It is simply that most investors are in a 'show me' mentality as of now and their only focus is on the major indexes. The mentality is that if the indexes are down, you cannot make money in the market. Well, we saw that mentality all in 2000 when energy, healthcare, retail, utilities and others climbed to new highs. (Actually, that is good for the market as investors believe things are just going down the drain. That reverse sentiment at work.)
Indeed, on CNBC today one of the reporters wrapping up the session said at least there was 'one' bright spot for the day, that being Triton Energy that was a takeout target. Hate to disagree, but there were a lot of 'bright spots' out there today if you were following the leading sectors. BRO, PDCO, BJ, PATH, ACF and others enjoyed strong days even as the big indexes suffered. That is the way it always works. Insurance, building, drugs, health services, education, certain retail - - they are all performing well. Again, patience and selectivity.
Gap higher and sell off on higher volume. More distribution and bearish tendencies pushing to the forefront again.
We still cannot ignore the big indexes and how they move as most stocks follow the overall market, and that is the problem with investing with the old names that used to lead. Everyone follows those and push them up and down with the news of the day; not real investment going on, just chasing them around. This is pretty indicative of a market that does not want to do anything until it gets some information out about earnings. At that point, will there be any catalyst? If nothing definitive comes out of earnings, it will be up to the economy to continue to pull higher as the market tries to gather for another move higher.
Today was a weak summer session. After a mild reflex bounce on Monday, stocks gapped higher and then started to sell afterwards. We said to be wary of a low volume move higher, and the market did not disappoint as it closed on its session lows. This is a return to bearish intraday action. It also was another distribution day on the Nasdaq (2 in the last three sessions on the Nasdaq) and on the Dow and S&P as well (3 in the last seven sessions). Another day on the Dow and a couple more on the Nasdaq, and we have a test of the lows coming.
Right now all indexes are sliding down below potential support levels on higher volume. Each major index today closed below support: the Dow dropped below 10,200 on above average volume, and that makes 10,000 to 9992 a real possibility (the 'hump' in the double bottom pattern of April); the Nasdaq fell below 1973, the low if its test until today, and it now can drop to just about anywhere in its previous range; the S&P 500 continued its move lower, as it closed below the 'hump' or the breakout point in its 9-da double bottom pattern in March and April. These indexes are apparently going to give a much deeper test of the previous lows, and each day they fall on higher volume, they find it harder to make a turn without a much closer test of the prior lows.
At this point no one knows where it will turn back up. The most recent confirmation is dead, and some more high volume selling will kill the rally off of the bottom in April. That will require another rally and confirmation, etc., but if it is a true double bottom, that will occur. Right now we are in a waiting game: waiting on further economic improvement and the market to find bottom ahead of the old lows. The market is supposed to bottom before the economy. If April was the bottom, it is on schedule. We believe that to be the case, but we cannot rush out and buy any stock. We still want to make near term money on our stocks, even if we are investing long term. We don't want to park money in stocks and sit a year before they move. We want to catch the stocks making good moves out of solid patterns and ride them until they signal it is time to get off. At that point we are putting our money in the next good sector that has come up.
THE ECONOMY
Weekly retail sales higher.
Redbook reported over 1% gain in weekly retail sales while the Mitsubishi report indicated a 0.6% rise. Not bad at all as retail continues to be one of the areas that has resumed its strength despite renewed warnings form analysts that consumers are losing confidence, etc. Yes, confidence may be down some on Friday as the stock market has hit the skids once again. We will have to see how that plays out.
Wholesale inventories rise.
Wholesale inventories crept up 0.2% when they were expected to be flat, and that was the negative news seized upon. Durable goods inventories, however, fell by 0.9%, the largest monthly decline in these since July 1997. The gains were in non-durables such as food and apparel. So, it was mixed within the number itself.
Remember, economic numbers will be up and down, but the trend should remain with improvement. The big name stocks get jerked up and down on the news stories, something typical in times of change and confusion. The stocks in good patterns with good growth in earnings and revenues will be more buffered from the news because those investing in them are looking to the future and are picking up the stocks that will do well in an improving economy. They tend to stay the course more and thus the ownership in those stocks is more stable and they are not knocked around as much on each news item that hits the market.
What about the Fed?
Some are saying the Fed will step in soon. We are not so sure of that. The Fed has acted, and there are a lot of FOMC members that do not want to lower rates anymore. Taking into consideration the recent economic news, the Fed is not going to lower inter-meeting unless the economic news really tanks. Also, the tax cut is starting to hit in July, and that may provide some economic stimulus. The Fed does not want to get too far ahead (at least in its mind) with rate cuts.
THE MARKET
Low volume bounce died quickly today on further distribution in the major indexes. Not healthy and could mean further downside action as the indexes again fell through support. Pessimism is about as high as you can get in the summertime. We will see how far it takes it down, but we still think the lows have been set already despite all of the gloom.
Overall market stats:
VIX: 26.53; +1.98. Edging into the higher side of the 20 to 30 scale, but it takes a lot more than this to show real market-turning fear.
VXN: 56.20; +5.06. Nasdaq volatility jumped, clearing the prior lows from May and June. Good to see it rising on the selling, but it is well off of its 83 reading when the market bottomed in April.
Put/Call ratio (CBOE): 0.94; +0.16. That little reflex bounce on Monday took the wind out of the put buyers for a day as we had feared. We wanted to see another strong session of fear and a close over 1.0. May get it tomorrow as there is no economic news and just more earnings fear. The importance of this: option players on the aggregate tend to be wrong when the market turns. When they buy more puts than calls, the bottom is usually here.
NASDAQ:
Stats: Down 63.92 (-3.2%) to close at 1962.79.
Volume: 1.661 billion (+18.8%). Another day of distribution on the Nasdaq. If it gets another one or two this week, the whole process will have to start over as the Nasdaq will be testing its low again. 1.396 billion to the downside versus just 249 million to the upside. A selling rout, though still on below average volume.
A/D and Hi/Lo: Declining issues jumped back out in front 1.72 to 1. Much stronger than Monday's 1.18 to 1 advance. New highs actually rose to 83 (+12) as new lows jumped to 115 (+24).
The Chart: http://www.investmenthouse.com/cd/$compq.html
The Nasdaq slipped below 1973 on the close on stronger volume, and it is trying to hold above the 1961 level where it started this move on the 4-18 breakaway gap. That has been pretty much shot at this point; that momentum is gone and the index has to generate some new reason to buy. the continued talk is that the Fed has failed, but the reason stocks move higher is not because the Fed cuts rates, but because rate cuts lead to a better economy. That is working through the system right now, but the woes of the telecom and networking sectors is the dominant news, and those are holding investment back. The belief is apparently that these sectors control the economy. They don't. However, we will have to see further economic improvement for the catalyst. For now, the Nasdaq can find support at any point, or it could keep falling. Again, as we noted last night, the path of least resistance right now is down as no one wants to get into these large cap tech stocks before the earnings come out.
Dow/NYSE: The Dow slid below 10,200 on above average volume. It looks like 10,000 is not far away as the next level to test.
Stats: Down 123.76 points (-1.2%) to close at 10,175.64.
NYSE Volume: 1.245 billion shares (+19.3%). Third day of distribution in the last 7. Another day and it is easily at 10,000. Down volume led 838 million to 391 million. Distribution means more sellers than buyers; it means institutions are selling chunks of stock, not accumulating. We have to see the price/volume action return to the positive action, but we will see a lower test first.
A/D and Hi/Lo: NYSE decliners moved back in front 1.53 to 1. Declines have been the stronger of late. New highs rose to 86 (+19) as new lows climbed to 70 (+18).
The Chart: http://www.investmenthouse.com/cd/$dja.html
The Dow cracked below the lows of its former trading range and now appears ready to test 10,000 where it hit in October and where it formed the middle of its 9-day double bottom pattern back in March and April. The Dow has retraced over 1100 points from its May high, and today's action was not what we wanted to see. This was an important level and now it is free to head lower as profit worries shoot higher. Today it was IBM, tomorrow it will be another company. The market has to get sold out, realize that earnings are not pretty but are not worse than anticipated, and then look to the future. Not there yet.
S&P 500: The big caps continued their slide, moving below the middle of its March and April double bottom pattern (1182.17) on rising, above average volume. This opens the door for a full-fledged test of the previous lows. Will it necessarily go there? No, but it does break through that last level of support before the lows. This is not the move we wanted to see, but the market is not ready to start discounting the future economic times just yet. The market still sees something it does not like; it may just need to get past earnings, but as we said before, the key is in the economic numbers. They have to continue to improve.
Stats: Down 17.26 points (-1.4%) to close at 1181.52.
Volume: NYSE volume climbed sharply to 1.245 billion shares (+19.3%).
The Chart: http://www.investmenthouse.com/cd/$spx.html
Summary: The short life expectancy we talked about last night ended with the gap higher this morning. It appears the market wants to get a bead on what the earnings will be and the next batch of economic numbers before it moves higher.
TOMORROW
No economic news out tomorrow. Yahoo announces after the close. Today DCLK failed to inspire anyone with its earnings after the close, and Compaq warned on revenues. They will continue to come; the question continues to be at what point is everything priced into the stocks? Hard to tell, but most of these stocks are so far off of their highs and thus have so much overhead supply, they are a long way from getting up off of the mat. Now many are building their own double base patterns, and that is a positive that is nearer term than some are willing to admit. Many are already at the previous lows, so they will have to find bottom pretty quick or the pattern breaks down.
There is just not any good news being reported. It is all bad. Good news is glossed over or dismissed. That is a very negative climate that is subject to change. We see the put/call ratio spiking higher, another signal of the high pessimism. To us it is all setting up for a test of the lows that will be the final test before the move up. We continue to be patient, to take positions in those stocks that provide opportunity even in a 'bad' market. Today we had numerous plays on the split report hit solid buy points and turn in solid days as they moved out of strong patterns. Same with the Daily, and same with the TTR. We are trolling in waters that are not made up of JNPR, CPQ, and the like, and it pays off much better in times such as these. Too many people have jumped on board the big techs each rally of the year and then did not get out. Many big names gave great moves in April and May, but if you hung on, you were hung out.
We like to buy stocks that we can hold for years; right now, however, we are realistic and set profit targets that we take profit at if the stock starts to top. Some may just continue to work for us and we can leave them alone. For now investors are not in the accumulation mode; that means we have to be willing to bank at 15% or 20% gain if it is there and the stock turns on us. We will get back in again if it recovers and then let it run for us longer term. We believe investors are close to getting back to the business of investing as opposed to jumping in and out. Until then we will be patient, take advantage of good moves and bank profit and cut losses short.
Support and Resistance Levels
Nasdaq: Closed at 1962.79.
Resistance: 1990 to 2000. 2160 to 2200. Then 2250.
Support: 1961 perhaps. Nothing clear at this point. The low is 1619.58.
S&P 500: Closed at 1181.52.
Resistance: 1200. Then 1240 to 1250.
Support: 1150 has tried to hold in the past, but as with the Nasdaq, there is no clear cut level. The low is 1081.19.
Dow: Closed at 10,175.64.
Resistance: 10,200. Then 10,400.
Support: 10,000 to 9992, the middle of its double bottom pattern. After that is a jumble. The low is 9106.54.
Weekly Economic Calendar (All times Eastern). The figures are the consensus expectations, not ours.
7-9-01
Consumer Credit, May (15:00): $9.4B versus $13.9B prior.
7-10-01
Wholesale Inventories, May (10:00): +0.2% actual versus 0.0% expected and 0.3% prior.
7-12-01
Initial Claims, 7/7 (8:30): 391K versus 399K prior.
Export Prices ex-ag., June (8:30): -0.3% versus -0.3% prior.
Import Prices ex-oil, June (8:30): -0.2% versus -0.2% prior.
7-13-01
PPI, June (8:30): -0.1% versus 0.1% prior.
Core PPI, June (8:30): 0.1% versus 0.2% prior.
Retail Sales, June (8:30): 0.2% versus 0.1% prior.
Retail Sales ex-auto, June (8:30): 0.2% versus 0.3% prior.
Michigan Sentiment-Prel., July (9:45): 93.0 versus 92.6 prior.
End Part 1 of 2
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yahoo stock
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