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money investment, day trading
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1/26/04 Investment House Daily
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Investment House Daily Subscribers:
Jon Johnson made an unexpected appearance on CNBC this evening, so the report is a bit abbreviated. We ask for your understanding this evening.
MARKET ALERTS:
Target hit alerts issued Monday: OHI
Buy alerts issued: ADAT; ABGX; BRCM
Trailing stop alerts: AIR; JMAR
Stop alerts: RTI; SSPX
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/alertdly.htm
SUMMARY:
- Stocks surge ahead though volume continues to lag.
- Slow start yields solid price gains as indices surge past near resistance.
Soft start, big run, less volume.
NASDAQ tested the 10 day MVA Friday and posted a small rebound off the 10 day MVA. As noted over the weekend that can portend a bounce back, and after a slow start that is exactly what stocks did. SP500 danced with 1150 for 4 hours, but when the move came it plowed through 1150 resistance with little trouble. Stocks spent the last 2 hours surging higher.
Volume, running light all morning, started to increase on the buying, indicating some accumulation, but overall volume tracked much lower for the session. It was not the lone negative for the session, but it is the most important. Declining volume on gains shows fewer upside participants, and is an indication of slowing momentum. Hard to imagine given the gains, but when you see a new break higher or a move through resistance you want to see volume rise. That shows you the buyers are in control and really want to push it higher.
Other notable indications the move was not quite up to par with the price gains were the advance/decline line and the new highs list. NASDAQ was respectable at 1.8:1, advancers over decliners. NYSE was meager at 1.3:1 as small caps lagged the market. Buying was not across the board. New highs were still solid on NYSE (426), but they declined overall. When the indices surge to new highs you would like to see a lot of the individual stocks making up the market doing the same. Neither of these is a death kiss, but they show that the move was not gangbusters.
What do you take from this? You recall that a market can run indefinitely even if overextended and breadth narrows. That was the action in 1998 and 1999, and when it happens it is a matter of looking for stocks as opposed to the entire market. That is why we continue to look at stocks in good patterns and still showing good accumulation and volume on the breakouts. Those are the stocks getting the money and the backing even as overall volume and momentum falls off.
THE MARKET
Resistance falls as market melts higher.
Even though prices surged in the afternoon, with declining trade is hard to call the overall move a solid surge. The intraday action was truly bullish, however. Stocks started soft, tested lower toward near support, support held, buyers started to edge in, and stocks soared in the afternoon. The intraday action was solid. Indeed, NASDAQ even formed a cup w/handle intraday, breaking out in a big way.
Lighter volume is always a concern late into a session where extended stocks move higher, but that was no problem Monday. When SP500 broke 1150, no shorts wanted to step in the way. Stocks just melted higher and higher. Volume was expanding some, but it was not surge, just a melt up.
Market Sentiment
VIX: 14.55; -0.29
VXN: 20.99; -0.28
VXO: 14.32; -0.55
Put/Call Ratio (CBOE): 0.58; -0.19
NASDAQ
Cleared last week's highs in the short lateral move with an impressive surge, but volume was noticeably off, the first sub 2 billion share day since the first trading day of the year.
Stats: +29.96 points (+1.41%) to close at 2153.83
Volume: 1.96B (-13.59%). Sub-2 billion session as stocks surged. The volume was not commensurate with the price move and was thus disappointing.
Up Volume: 1.422B (+299M)
Down Volume: 521M (-580M)
A/D and Hi/Lo: Advancers led 1.81 to 1. Very decent breadth, improving markedly in the last hour.
Previous Session: Advancers led 1.33 to 1
New Highs: 357 (+107)
New Lows: 4 (-3)
The Chart: http://www.investmenthouse.com/cd/^ixq.html
Tech stocks found their footing after another test of the 10 day MVA early on. That set the stage for the afternoon rally and NASDAQ did not disappoint. It cleared the recent highs at 2150, closing at the session high. Buyers were cool at first but were running over each other to get in late in the day. It was not enough to push volume higher. Lower volume is something you don't like to see, but one session is not spell the end of a move. The key will be how NASDAQ leaders, not just the big names, continue to rally. We saw some good volume but it certainly was not across the board. The first upper channel line is at 2172, giving NASDAQ more room to run as it is also 20% over the 200 day MVA (1783). At 24% to 25% it has started to correct in this run. If volume continues to fade it will have some trouble at that resistance.
S&P 500/NYSE
Cleared 1150, an early peak in the double top with a late surge though on that lower trade.
Stats: +13.82 points (+1.21%) to close at 1155.37
NYSE Volume: 1.437B (-6.59%). Down but not as much as NASDAQ, managing to hold above average as did NASDAQ. Second lowest volume of the month. Not fatal but a low volume break over resistance does not instill a lot of confidence.
Up Volume: 1.018B (+295M)
Down Volume: 409M (-358M)
A/D and Hi/Lo: Advancers led 1.27 to 1. Pretty meager.
Previous Session: Advancers led 1.1 to 1
New Highs: 426 (-5). Not a bad number, but lower and below the levels seen on other big upside breaks.
New Lows: 2 (-2)
The Chart: http://www.investmenthouse.com/cd/^spx.html
After tapping at 1150 for three sessions it got down to business and plowed through it with a solid price surge. 1150 is the first peak in a top that started in late 2001 and set the stage for the last nasty downtrend in the long slide lower. This is significant resistance, but we saw NASDAQ make cheese dip out of its double top. If SP500 can break through and plow ahead another 40 points, we could be in the enviable position of having broke key resistance and then coming back to test it and make it support on the next correction/consolidation. The volume on the move is a concern, but we will see if it is a trend or just a short phenomena.
DJ30
Stats: +134.22 points (+1.27%) to close at 10702.51
Volume: 186 million versus 234 million
Surged through the upper channel line (now 10,632) with relative ease after spending a month playing footsy with that level. It also cleared the price resistance at 10,620. Volume fell below average on the strong price move, taking a lot of the luster off a triple digit move. It has made strong surges through this upper channel before, and it is hard to move far past and sustain the move past this resistance without more trade. It is 13% over the 200 day MVA, and it starts to struggle a lot when it is 15%. It is making a run at it; we will see if the volume follows the blue chips. Even with money moving their way, however, volume was not there.
The chart: http://www.investmenthouse.com/cd/^dji.html
TUESDAY
Consumer confidence is the big economic report, and of course the Fed starts its 2-day FOMC meeting. Earnings news after the close was mixed and resulted in divergent responses. Agilent (A) upped its guidance and was off like a rocket. NVLS reported decent earnings but guided lower. It and other chip equipment makers were getting slapped around pretty hard after the close (NVLS -3). QQQ was also getting punched around as well though not the same magnitude.
That has raised the bar for the action Tuesday and puts the Monday move in some jeopardy, but NVLS, AMAT and some other chip equipment stocks were already showing some dangerous patterns. The SOX and SMH look ready to test their 50 day MVA and coincident up trendlines in the morning. If they manage to hold that could be very positive; SMH is working on a 3 month reverse head and shoulders, trying to put together the right shoulder. If it holds the 50 day MVA and rebounds it will then be ready to try the breakout. We will see. SMH is selling on more volume than it is rising on of late; you can see good looking patterns but have to look inside to see if big money is buying or selling. SMH will have to show the breakout.
The move was on lower volume and it further extended the indices, though NASDAQ has some consolidation to back up the Monday move. There is still room to run upside; we can look at potential resistance points, but we have to move with the market. We are wary, but we are also looking at particular stocks, not the entire market. There are still stocks that have broken out, tested, and are ready to move again as well as stocks ready to make new breakouts. We will continue to focus on those for additional plays as the market moves higher, but also take care to protect existing positions.
Support and Resistance
NASDAQ: Closed at 2153.83
Resistance: First upper channel line at 2172. 2200 then 2300 represent tops from Q2 2001.
Support: The 10 day MVA and the 18 day MVA (2120, 2091). The second peak in the December 2001/January 2002 double top (2100). The lower peak in the January 2002 double top (2044). The March/August up trendline (2070).
S&P 500: Closed at 1155.37
Resistance: 1150, the first top in early 2002, was broken on low volume. Next is 1175, the high in that double top that spanned late 2001, early 2002.
Support: The 10 day MVA and the 18 day MVA (1138, 1128). 1106 is a May 2002 top. 1100 represents some early 2001 lows. The 50 day MVA (1097).
Dow: Closed at 10,702.51
Resistance: 11,000. 11,300. 10,622 (upper channel line) is keeping the index more or less in check. 10,620 (March 2002 peak) starts the swath of overhead supply that runs up to 11,000.
Support: Upper channel line at 10,632. The 10 and 18 day MVA (10,579 and 10,510). 10,370 the March 2003 up trendline. 10,353 from May 2002 high. The exponential 50 day MVA (10,242).
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
1-26-04
Existing home sales, December (10:00): +6.9% (6.47M) actual, 6.10M expected, 6.06M November.
1-27-04
Consumer confidence, January (10:00): 95.1 expected, 91.3 December
1-28-04
Durable goods orders, December (8:30): 2.0% expected, -2.5% November.
FOMC (2:15): NO change expected.
1-29-04
Employment cost index, Q4 (8:30): 0.95 expected, 1.0% Q3.
Initial jobless claims (8:30): 355K expected, 341K prior.
Help wanted index, December (10:00): 40 expected, 39 November.
1-30-04
GDP (1st), Q4 (8:30): 4.7% expected, 8.2% Q3
GDP chain deflator, Q4 (8:30): 1.3% expected, 1.6% Q3
Michigan sentiment (revised), January (9:45): 102.5 expected, 103.2
Chicago PMI, January (10:00): 61.7 expected, 59.2 December
End part 1 of 3
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money investment
day trading
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