|
|
us stock market, trade stock
* * * *
1/09/06 Stock Split Report Update
* * *
Stock Split Report Subscribers:
Full report issues Tuesday.
MARKET ALERTS
Targets hit alerts: None issued
Buy alerts: WIRE; CTSH; INFY
Trailing stops: None issued
Stop alerts issued: 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.htm
SUMMARY:
- Week picks up where it left off with small caps rotating to top spot
- Consumer credit falls for second month, first time in 13 years.
- Alcoa starts earnings season with miss, shows the impact of the storms. Higher energy impacts will play a big factor.
Stocks make it five in a row, Dow clears 11,000.
Futures were flat and stocks started the same. A slight dip in the first hour and then a rebound turned all indices positive by mid-morning. That upside continued into the afternoon when the move received another test. NASDAQ slid 10 points off its high and SP500 fell 5 points as the sellers tried to take it down. That lasted just over an hour, long enough to set up an intraday double bottom that broke out and sent the indices higher, closing near session highs.
Biotech, technology and semiconductors were in the lead with small caps the biggest gainer of the indices (1.11%). Once more we see the rotation that started with the first of the year where money ran into energy and metals, then technology and chips, then all of the above. Monday it left energy and looked smaller, sending the small and mid-cap indices jumping to new all-time highs. Rotation is a healthy characteristic for a market as money does not leave, it just seeks new buying opportunities as new money comes in.
Of course, before the FOMC minutes last Tuesday, money was rotating out of the market from all sectors. This rally was born on a post-Fed mentality and it remains to be seen how long that can last. Five sessions in a row have sent all indices to new 52-week highs, some to new all-time highs, some to new post 2002 highs. Indeed, DJ30 cleared 11K and held it on the close. There was the usual trumpeting about the move, but it has followed the entire market up and down, refusing or unable to don the leadership mantel. Thus this move does not have a whole lot of meaning other than the Dow providing some overall support.
Technically the move was a bit weaker as volume declined, particularly on NYSE (1.665B), but NASDAQ volume remained very strong and index volume was still above average. NYSE breadth was still better than 2:1 but was lower; NASDAQ remained mediocre. New highs rose but they also were mediocre. No real change there, and after five straight upside sessions the market still shows excellent strength. With earnings starting, however, the post-FOMC minutes surge gets a dose of reality with respect to what the companies say about the future, Fed or no Fed action. That along with the distance covered in the rally thus far have us anticipating a breather or test this week, but this far the market is showing only positives.
THE ECONOMY
Consumer credit dips for second straight month.
Consumer credit declined $600M in November, well below the $5B gain expected. With the $8.4B decline in October (revised even lower from -7.2B) this was the first back-to-back decline since 1992 and puts annual credit growth at 2.8%, the lowest since 1993.
The new bankruptcy laws had a hand in the consecutive declines. October dove lower because minimum payment amounts are now required. That cut into a hefty bit of outstanding debt that did not come roaring back in November because of the same reason. Revolving credit (credit cards) still climbed $300M higher while non-revolving credit (e.g. auto loans) fell for the third month (-$1B) as auto sales remain weak.
Many call this a sign the consumer is in trouble with credit, and the consumer has spent a lot of late, but it always does. The new bankruptcy laws are acting in a paternalistic manner, trying to indirectly limit the amount of debt a household incurs or more accurately attempts to make them pay it back more responsibly. The ramifications remain to be seen but those complaining of consumer overspending are still not happy: they see the drop in credit as a sign the consumer is failing at the same time they claim the more stringent minimum payment requirements help manage debts better. If auto dealers start offering low financing again in the summer, you can bet credit levels will start back up.
THE MARKET
MARKET SENTIMENT
VIX: 11.13; +0.13
VXN: 15.66; +0.71
VXO: 10.74; -0.25
Put/Call Ratio (CBOE): 0.69; +0.01. Edging back up after falling to some of the lower levels in the past month on the rally.
Bulls versus Bears:
Bulls: 55.7%. A sharp drop from the 60.4% the prior week, reversing a steady climb through 55%. Well, not reversing it, but putting a big dent in it. Still above the 55% level considered the threshold into excess. It won't stay there, however, given the strong surge this week. Hit 44.8% on the low on this leg, just above the 43.5% low in May.
Bears: 23.7%, up from 20.88%. That was basically the low point on this move and bulls got a bit more skittish last week as the major indices sold to the 50 day EMA. Good surge, taking it out of the danger zone, but likely to fade after this week's rally. It hit 29.2% on the high this cycle, just below the 30% level hit in May when the market bottomed at that time as well.
NASDAQ
Stats: +13.07 points (+0.57%) to close at 2318.69
Volume: 2.031B (-13.75%). Volume was lower, but it was also huge on Friday. Thus the 2B shares is very solid, particularly when juxtaposed with the pre-Friday volume. It basically matched the Tuesday trade and topped Wednesday and Thursday. No shrinking violet at all as NASDAQ posted yet another solid gain.
Up Volume: 1.336B (-462M)
Down Volume: 669M (+144M)
A/D and Hi/Lo: Advancers led 1.57 to 1. Breadth never made it over 2:1 on the close during this run. Semiconductors, wireless gear and software makers, and some smaller financials helped spur the move. That kept the breadth mediocre to decent but never great. Not a fatal flaw but investors, despite the volume, are being picky about where the money goes.
Previous Session: Advancers led 1.95 to 1
New Highs: 263 (+31). Hardly surging on a session that saw NASDAQ post another post-2002 high. Just not a tremendously broad move though it is not a large cap move (NASDAQ 100 rose just 0.40%).
New Lows: 24 (+4)
The Chart: The Chart: http://www.investmenthouse.com/cd/^ixq.html
NASDAQ continued to lead the market higher, with the help of SOX, scoring its fifth straight gain after the intraday reversal last Tuesday following the FOMC minutes release. Monday was no slackening in the strength; breadth and new highs were still rather mediocre, but again, that is no change. NASDAQ furthered its move to a new post-2002 high, and while we expect a rest and a pullback to test the break through resistance, right now NASDAQ is showing few signs it is ready to slow. It did not reclaim the session high on the late rebound as did SP500, a chink (a small one) in the session. Hard to find fault as NASDAQ has been the clear leader along with SOX on this new year move.
SOX (0.92%) was again out in front, leading the techs higher. SOX is approaching some resistance at 532-536 from Q4 2003, an interim peak on the way to more serious resistance at 561. That still give is some upside from here, but when it reaches that interim level we expect it will take a breather and consolidate some gains before trying to move higher. As earnings season is here that looks even more likely.
SP500/NYSE
Stats: +4.7 points (+0.37%) to close at 1290.15
NYSE Volume: 1.665B (-5.92%). Volume was the lowest since the rally started, but as with NASDAQ it was still stronger than most volume the prior two months.
A/D and Hi/Lo: Advancers led 2.03 to 1. Not that the level from late last week, but solid yet again as the small caps led the way higher.
Previous Session: Advancers led 2.91 to 1
New Highs: 356 (+19). Still not showing the kind of strength you want to see as the small caps join the party. We wanted to see in excess of 400, but has that really changed the move? No, but it does speak to the continuation.
New Lows: 24 (+4)
The Chart: http://www.investmenthouse.com/cd/^gspc.html
Another solid session with SP500 shaking off some afternoon selling to close just off the session high. Solid above average volume though lighter trade overall, but this is still a strong move. Relatively weaker but still strong. The size of the move backed off and that can indicate a peak in the move ahead, but the gains were equal or greater to Thursday and Friday, so, as with NASDAQ, it was not much of a loss in strength. 1275 was a key level, and we expect a pause to test at some point this week after such a good move.
SP600 (1.11%) was the outright leader Monday. It lagged the entire move, but once it made the breakout, it shot higher to a new all-time high. Once more we saw rotation into new sectors, this time the small caps, as the market shows healthy action that keeps the gains rolling in. A rotating market is the healthiest market you can have, and this is showing very nice action as money is not leaving any sector. Instead money moves, leaving a sector to consolidate and prepare for the next run higher.
DJ30
DJ30 finally cleared last March's highs at 10,985, moving above that level and holding it on the close. That was a key move; the 11,000 sideshow was just that. Volume was lower, however, falling below average on the move and with overall lower NYSE volume. About all you can say is that it is good to see DJ30 join in the overall breakout activity as that gives the breakouts by the other indices some support or at least not the drag of an index acting as an anchor chain.
Stats: +52.59 points (+0.48%) to close at 11011.90
Volume: 248M shares Monday versus 291M shares Friday.
The chart: http://www.investmenthouse.com/cd/^dji.html
TUESDAY
The economic news remains on the light side with only wholesale inventories as far as official reports. Earnings will start to garner more attention with AA starting things off after the Monday close and coming in light on earnings and revenues. Hurricane related refinery slowdowns and restructuring costs.
What will be key for the market ahead is what companies say about energy costs impacting their results. Oil has climbed back to $64/bbl under the shadow of this FOMC rally. If companies show results impacted by energy in Q4, well, we know prices are already back up close to Katrina levels. That is not going to help the bottom lines ahead, particularly as the economy moves back into the driving season. We said it last week: if prices remain this high heading into the summer we are going to see some high gasoline prices once more. Throw in another major storm or two and, well, you don't want to think about what that will do to the economy.
Nearer at hand we see a strong 5 day rally with stocks showing little signs of slowing. Gravity will start to take effect, however, and if we get a strong open Tuesday we are going to be watching for the start of a pause or test. It tried to start Monday afternoon, but it was pushed aside as buyers rushed in, eager to buy on a dip. We are likely to get a real dip and not just the intraday type this week.
Thus we passed on some plays that were moving higher Monday but were not showing great volume. We will still be looking for plays Tuesday, however, because the rotation the market is showing is driving different sectors at different times. Overall the market is rising, but each day certain sectors are leading. Of late that has been chips and certain techs, but with these oil prices so high we expect to see energy, a sleeper Monday, start to gather in more money as well.
Support and Resistance
NASDAQ: Closed at 2318.69
Resistance:
2328 from the May 2001 peak
3015 is the December 2000 peak and the October 2000 low
Support:
2288 from December 2000 low.
2278 is December 2005 intraday high.
The 10 day EMA at 2267
The 18 day EMA at 2256
2251 is the January 2001 low
The 50 day EMA at 2223
2220 (2218 intraday) is the August high
S&P 500: Closed at 1290.15
Resistance:
1315 is the May and May 2001 peaks
1324 to 1329 from the October 2000 lows.
Support:
The recent highs at 1275
The 10 day EMA at 1272
The 18 day EMA at 1267
1264 from the December 2000 lows
The 50 day EMA at 1252
The August 2005 high at 1246
The September 2005 high at 1243
March 2005 closing high at 1225 and intraday high at 1229.11
Dow: Closed at 11,011.90
Resistance:
11,176 - 11,186 from April 2000
Support:
10,985 is the March intraday high
10,965 from Q4 2000 and late November 2005
The 10 day EMA at 10,885
10,868 is the December 2004 high
The 18 day EMA at 10,857
10,754 is the February high
The 50 day EMA at 10,759
10,720 is the high in the recent lateral move
The June highs at 10,646 to 10,656
Price consolidation at 10,600
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
January 09
Consumer Credit, November (3:00): -$600M actual versus $5.0B expected and -$8.4B prior (revised from -7.2B)
January 10
Wholesale Inventories, November (10:00): 0.5% expected and 0.2% prior
January 11
Crude Inventories, 01/06 (10:30): -1.013M prior
January 12
Export Prices ex-ag., December (08:30): -0.9% prior
Import Prices ex-oil, December (08:30): -0.2% prior
Trade Balance, November (08:30): -$66B expected and -$68.9 prior
Initial Jobless Claims, 01/07 (08:30): 320K expected versus 291K prior
Treasury Budget, December (2:00): $4.2B expected versus -$2.9B prior
January 13
Retail Sales, December (08:30): 1.0% expected and 0.3% prior
Retail Sales ex-auto, December (08:30): 0.4% expected and -0.3% prior
Business Inventories, November (08:30): 0.4% expected and 0.3% prior
PPI, December (08:30): 0.4% expected and -0.7% prior
Core PPI, December (08:30): 0.2% expected and 0.1% prior
End part 1 of 2
|
us stock market
trade stock
|
