|
|
money investment, day trading
* * * *
4/07/04 Investment House Alerts Report
* * *
IH Alert Subscribers:
MARKET ALERTS:
Target hit alerts issued Wednesday: None issued
Buy alerts issued: MTIC; NGAS
Trailing stops issued: SUMT
Stop alerts issued: MER; OMNI
MARKET SUMMARY
Nice pullback, late bounce, after hours rocking.
Investors were nervous ahead of earnings after a two week rally pushed SP500 and DJ30 near 52 week highs. With increased violence in Iraq, an election question mark putting future economic policy in the air, and just some fatigue after a good relief bounce, investors opted to take some money off the table and dropped their bids.
That gave the market two good sessions where it eased back on continued low volume. NASDAQ started working on a nice shakeout or handle to its 11 week base. SP500 and DJ30 eased back as they should, but as noted Tuesday, their patterns do not show the same solid consolidation and base-building as on NASDAQ. Still, the action even on those indexes was in line with an improving market. SOX mimicked NASDAQ with a nice 50 day MVA test intraday and a solid rebound to the close. Those two indexes are key for a continued market advance, and up to the close Wednesday they were working on good bases.
The intraday action was again positive as well. Stocks were soft early, found bottom, and then worked laterally for 3 hours. We noted in a midday alert that things were starting to look interesting as this was solid intraday base building activity. You see, intraday moves are the same as moves that occur over days, weeks or months. They are microcosms of the macro action. Anyway, the market moved laterally for 3 hours, volume dried up. It was waiting for a trigger, and when it was announced that Defense secretary Rumsfeld was going to make a statement, the rumor spread that a major capture had taken place. As usual Bin Laden was the hint in the rumor. Volume moved back in and the market surged in the afternoon. It is easier to do that when volume is overall low, and that is what happened Wednesday. Overall it was good intraday action though it was not able to hold the move to the close ahead of the real start of earnings and the capture rumor turning out false. The indexes had turned positive but then gave it back for some modest losses on continued low volume. Again, the overall action was very good, setting up the next move.
We wanted the market to take a bit more time. It looks as if it might not get it. After hours YHOO reported a strong quarter and indicates it is just now hitting stride. DNA beat the street, reporting huge sales of its new cancer drug. Those stocks shot higher after hours with YHOO up $4.50, DNA up $5. DELL helped out by upping its guidance. Stocks were rocking after hours. YHOO and DNA are going to make the breakouts from cup with handle patterns come Thursday morning. These leaders are going to lead. The market may just have to follow, ready or not. Again, NASDAQ and SOX have pretty solid bases already, and they could mount a credible run. SP500 and DJ30? They never really corrected, so they are a question mark.
THE MARKET
Again, the action on NASDAQ and SOX was very good. SOX Tapped the 50 day MVA on the low and rebounded, almost closing positive. Similar to NASDAQ, it rallied up off the 200 day MVA the past two weeks and has eased back the past two sessions, holding over the exponential 50 day MVA on this test. A few more sessions of lateral and slightly lower movement to retest the 50 day MVA would be excellent action, shaking out the last sellers. From the looks of the treatment of after hours earnings reports, it is not going to get another few sessions.
The timing has been just off on this base. It needed more time to develop and then have the catalyst break it out. It is being rushed through the base, and now it appears ready to make the breakout in a holiday week where volume is historically light. As we know, light volume breakouts are always a question mark because you don't know if the move has the backing of most institutional investors. The action looks good and there are solid stocks moving well and others that will do so as noted re YHOO and DNA. On a week when many big money investors are taking holiday, these leading stocks act as a very good surrogate to divining the direction of the market. If they take off on high volume even as the overall market slumbers, we have an insight that something very positive is developing.
Market Sentiment
VIX: 15.76; +0.44
VXN: 21.99; -0.24
VXO: 15.42; +0.93
Put/Call Ratio (CBOE): 0.7; -0.12
NASDAQ
A nice lower volume pullback and late rebound, testing the run off the 200 day MVA. Nice test underway that looks to be cut short.
Stats: -9.66 points (-0.47%) to close at 2050.24
Volume: 1.793B (-1.64%). Continued below average volume trade as the index pulled back to test the two week rally. This continues the overall solid transition from distribution to accumulation during the 11 week base, and that is the most important element of any base.
Up Volume: 904M (+350M)
Down Volume: 813M (-381M)
A/D and Hi/Lo: Advancers led 1 to 1. Advancers led by 2.
Previous Session: Decliners led 2.03 to 1
New Highs: 141 (-39)
New Lows: 14 (0)
The Chart: http://www.investmenthouse.com/cd/^ixq.html
Very solid action in the 11 week base, easing back on continued below average volume to test the two week rally off of the 200 day MVA (1907). It reached down to 2038 on the low, still well above near support at the 2020 and 2000 level, and then rallied back to cut its losses. It even turned positive in the last hour, but when the Bin Laden rumor was dashed and investors realized earnings were starting in earnest after the close, stocks eased back down to the close. It could use another 3 to 4 days of this action, easing back to the 50 day MVA (2008), but as noted, with the after hours earnings and the reaction to them, it does not look as if it is going to get them.
S&P 500/NYSE
Large caps continued their pullback, but volume started rising as they sold. Not only is the pattern shorter than NASDAQ, it has not shown the degree of improvement in the price/volume action.
Stats: -7.63 points (-0.66%) to close at 1140.53
NYSE Volume: 1.456B (+4.15%). Volume moved up toward average as the large caps fell toward near support. There have been 3 accumulation sessions to just 1 distribution session in the past six trading days. It has been transitioning to more positive action but again, is not as far along as NASDAQ. Definitely do not want to see any more distribution sessions, particularly in a week where volumes are lower overall. In other words, if the selling volume runs relatively higher in a low volume week, you have to be concerned as to what it would be if all the players were involved. As it is, the session was a distribution session, and the index needs to snap back from it. Thursday it will have the chance to do so.
Up Volume: 490M (-46M)
Down Volume: 948M (+98M)
A/D and Hi/Lo: Decliners led 1.05 to 1
Previous Session: Decliners led 1.73 to 1
New Highs: 123 (-66)
New Lows: 19 (-25)
The Chart: http://www.investmenthouse.com/cd/^spx.html
1150 stalled out the move, just 8 points from a new high. Tuesday's pullback was modest but picked up speed Wednesday as volume rose to near average levels. But for the after hours earnings we would anticipate a further shakeout down to the simple 50 day MVA (1133) or the exponential 50 day MVA (1126). Now it looks as if they will try a rally based on the solid DNA et al earnings after the Wednesday close. Whether the index can make a new breakout past the closing high at 1158 and then sustain the move given such a short consolidation of the 2003 rally is problematical.
DJ30
Tuesday we discussed the Dow's short pullback and how it hardly seemed enough to support a sustained breakout. Wednesday DJ30 gave up its mantle of appearing as the most stable, selling down to the simple 50 day MVA (10,455) on a strong volume shot. Alcoa sold on strong volume, but many are still forming up decent patterns despite the selling. Instead of a lower volume pullback to test, it is selling on stronger trade. Again, DJ30 is in a short pattern that historically is not enough to seriously consolidate the long run in 2003.
Stats: -90.66 points (-0.86%) to close at 10480.15
Volume: 218 million versus 175 million shares Tuesday.
The chart: http://www.investmenthouse.com/cd/^dji.html
THURSDAY
The light economic data week picks up a bit Thursday with jobless claims and wholesale inventories. At this point they are not real market movers; that remains the purview of the jobless report, confidence, and consumer and business spending. Thus we don't expect these to sway the market.
The main force Thursday will be earnings and the last session of a shortened holiday week. YHOO and friends reported solid results and enjoyed strong trade after hours. The strength of their moves along with upward guidance by DELL has the potential to gap the market higher at the open. Being the last day of a shortened week, the question is whether volume will validate the move. Most likely it will not.
We have to be careful of a gap and rollover if no volume comes in. As noted above, we will continue to look at strong stocks in good patterns moving on volume for our investments. Even if volume does not flow in overall Thursday, leading stocks moving on volume and breaking out will be the litmus test in a light volume week. NASDAQ and SOX look solid in their patterns, and we want to see stocks step up and breakout on this news to validate it. After that initial surge we will see if there is a good test that holds and starts back up.
Support and Resistance
NASDAQ: Closed at 2050.24
Resistance: Breakout from the pattern is 2080. 2089 is the February closing high. 2112 is the early January high. 2154 is the January high.
Support: The simple 50 day MVA (2018) is possible with the 10 day MVA (2023) bolstering that level. The exponential 50 day MVA (2008) along with the 18 day MVA (2008). Then a jumble of support merges near 2000. 2000, the top of the late 2003 base. Some prices from the recent March consolidation attempt (1943). Mixed tops and bottoms at 1900. The 200 day MVA (1903).
S&P 500: Closed at 1140.53
Resistance: The January high (1155). Next is 1159 (February highs) and 1160 to 1175 the highs in that double top that spanned late 2001, early 2002.
Support: The simple 50 day MVA (1133) and the 10 day MVA (1133) have merged. 1125, still a key level. The exponential 50 day MVA (1126). 1106 is a May 2002 top and represents some early 2001 lows. 1096 to 1100. 1075 to 1070 from the December consolidation.
Dow: Closed at 10,480.15
Resistance: September/November up trendline (10,595). 10,600. 10,747 is the February high.
Support: The simple 50 day MVA (10,383) is holding. Then the 10 day MVA (10,416). The exponential 50 day MVA (10,383). The 18 day MVA (10,379). 10,000 to 9900-9850. 9859-9855 is the next real support.
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
4-05-04
ISM Services, March (10:00): 65.8 actual, 61.5 expected, 60.8 February.
4-7-04
Consumer credit, February (2:00): $4.2B actual, $7.7B expected, $15.8B January (revised from $14.3B).
4-08-04
Initial jobless claims (8:30): 340K expected, 342K prior.
Wholesale inventories, February (10:00): 0.3% expected, 0.1% January.
End part 1 of 3
|
money investment
day trading
|
