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world stock market, us stock market
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4/25/06 Stock Split Report
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Stock Split Report Subscribers:
MARKET ALERTS
Targets hit alerts: None issued
Buy alerts: None issued
Trailing stops: BRO; HAL; AH; RIG
Stop alerts issued: BER
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:
- Solid economic data sparks another sluggish session.
- Consumer sentiment continues its rise, but oil prices likely to change that.
- Bush trying to head off further gas pains.
- Existing home sales rise unexpectedly though inventory hitting long-term highs
- Stocks try to reload at near support, yet again looking for a reason to rally.
Fear of Fed keeps market simmering for now.
Futures tried to rally the market, posting solid pre-market gains. The market started stronger, trying to carry through on the morning rise. Oil was still trading off its recent high at $75, for what that was worth. In any event, one half hour into the session, consumer confidence posted a 4 year high and existing home sales posted a surprise gain.
The futures set up the bowling pins, the stronger economic data knocked them over. Earnings reported Tuesday were surprisingly positive as well, but with the market on 'data watch' thanks to the Fed, the stronger economic data kicked out the legs of the modest bounce attempt. Gains were given back and the market slid to near support where it started a session long lateral move.
The President appeared and gave a shotgun energy speech that covered the waterfront of issues: investigating for price gouging, ending energy company subsidies, promoting more ethanol and hybrid car usage, suspending ethanol requirements if needed, and ceasing SPR purchases for the summer. The only thing he did not tout was a windfall profits tax; as with Doc Holiday, his hypocrisy goes only so far.
That barrage of talking points helped soften oil prices (72.88, -0.45), but that was not enough to offset the fear of the Fed roused once more by the strong economic data. It was enough, however, to get the energy stocks selling. In most instances that was not bad; they simply continued their basing process. Without this leadership, however, and with the rest of the sectors losing their bids thanks to the economic data/Fed link, the market rally attempt waffled and failed.
Stocks sold all session, but not down. After the early drop the market moved laterally after the indices once more sold to near support. NASDAQ basically pulled off another Monday though volume jumped. SP600 tapped the 18 day EMA on the low and SP500 fell to that level on the close. SOX even managed a gain, holding at the 50 day EMA, trying to make a higher low.
That was not bad action, just another pause, another day of rest to set up the next move higher. That is definitely the case on SP600; SP500 is not bad, and SOX is trying to bounce. NASDAQ as well, though as with this entire move this year, it basically gave up most of last week's rally before trying to find support and start the next move higher.
What was not good action was the volume. It rose across the board as the indices finished lower. That suggests some distribution, i.e. where the big money sells shares in quantity. It follows some churn on SP500 to end last week when it tried to move to new post-2002 highs but faded back each session. SP500 is struggling to hold near support under that burden. NASDAQ suffered distribution Tuesday as well, but it tapped near its up trendline and rebounded to recoup most of its losses. Once again that is not bad action with the mid-session test lower toward support and the late rebound as buyers moved back in to pick up some 'bargains.'
Thus despite some distribution creeping in the indices still remain in solid shape for a rebound to continue the move higher. Moreover, this is the same action seen all year. The only new variables are the indices are a bit higher and oil hit $75 and gas hit $3. The distribution bears watching given these latter developments. For now leaders are holding support along with the market, the best antidote to market weakness. The market is once again, however, getting to the point where it needs to move to keep the rally going. NASDAQ has given up most of last week's rally, SOX is at the 50 day EMA, and SP500 is ready to head to that level . . . unless once more the market can rebound. 1.5 steps forward and 1 step back.
THE ECONOMY
Consumer sentiment hits 4 year high in April.
109.6 was more than the 106.0 expected ant the 107.57 in March. Seems the jobless recovery has produced enough jobs to keep consumers confident enough to continue their buying. Of course, as we have often noted, confidence is important at the extremes; until it gets down into the 50's you don't really have to worry about consumption falling off to a point where a recession develops.
Of course, gasoline prices are not typically at $3/gallon. Prices surged in the last week, and the vast majority of the responses to the survey were already on file. Thus the 4 year high in sentiment is dated even as it is released. The news stories of pissed consumers at the pump continue all day long; jobs or no jobs $3/gallon gasoline is the point where many consumers by necessity have to stop buying discretionary items in favor of gasoline. At the same time the items they can still purchase may also suffer from high prices, i.e. price increases due to these high energy costs. Thus the consumer gets it both ways: once at the pump and again buying other goods.
Hard for the consumer to stay happy when that starts. We are already hearing anecdotal stories about consumers changing habits, e.g. grouping trips into one, forgoing some trips to the store, etc. In my own case I am pitching in by not mowing my yard. As noted before, the $3/gallon level is where consumers said 'no mas' after the Gulf storms. There is some evidence of changing behavior now, and we will likely hear more as the week progresses.
Existing home sales post an unexpected March rise.
The March wind apparently blew a bunch of buyers into homes. Sales rose 0.3% versus the 3% expected decline. As noted, that got the Fed hawks out once more and splashed cold water on the early rally. Recall that last month existing homes sales surged past expectations as well, much more significantly than in March. That also sent the market into a Fed fearing fall, and it took some Fed-speak and the FOMC minutes to bring investors back around to the idea the Fed was closer to done than not. A little bit of history repeating.
You also have to put everything into perspective. The housing market is doing a great job of gently settling lower. We said last year we did not believe housing was going to collapse. It continues its top, slowing its moves, showing upside months and downside months. New home sales continue to fall more than existing home sales. Mortgage applications are down and up, up and down. Any market changing a long trend will continue to show moves with the trend even as it also throws out contra-trend moves.
Further, the data show a slowing sector, but not a sharp decline. The median price is still rising, coming in at $218K; that, however, is typical as prices rise even as the market makes its top. They tend to fall fairly rapidly immediately after the peak, stabilizing somewhat afterwards. Inventory growth was key. It jumped 7% to 5.5 months, the highest level since 1998. Supply is reaching the point where it is ready to outstrip buyers. Prices fall when that happens.
That was not enough on Tuesday, however. The headline number carried the weight because the market knows the Fed likes to see its target markets broken before it can bring itself to stop hiking rates. Sure it can talk about going too far all it wants. I can talk a good game of pool. Can't play it worth diddly, but I can tell you all of the theory, your approach to shots, etc. Until the Fed shows us something more, you have to think it is looking for breakage before it really considers a complete cessation.
Even with all the hubbub over homes and confidence, the Fed is almost done . . . for now.
That said, the Fed is getting close to getting what it wants. New home sales plunged in February and they are likely to be low in March. Consumer confidence is strong but it is likely not to last in the face of $3/gallon gasoline. We anticipate seeing continued softening of consumer related data, and the Fed will be looking at that as well as the price of gasoline itself and weighing the potential inflationary effects versus the demand destruction it causes.
The end result is that the Fed is close to pausing in May or June, at 5% or 5.25%. Bernanke will have raised rates twice, maybe three times, and will have proved to the market well enough he is serous about inflation. He wants to back off; he just needs to make a good faith showing at the rate hiking game. The question we have is whether it will resume the hikes in the fall after driving season ends. A lot depends upon summer storms, etc., but while the Fed is likely to stop shortly, there is still a lot of liquidity in the world markets, and there is a real inflation issue that could spark up. The Fed may stop soon to let the economy try and fend off high energy prices without worrying about the Fed and tight money. If energy fades after the current event driven price increases, then the Fed will have to look at potential inflation once we get past the summer energy issues.
THE MARKET
MARKET SENTIMENT
VIX: 11.75; 0
VXN: 15.59; -0.02
VXO: 10.52; +0.09
Put/Call Ratio (CBOE): 0.95; +0.11
Bulls versus Bears:
Bulls: 48%. Sharp drop from 53.2% the prior week and reversing a steady climb the past month. Sentiment was approaching the 55% level that is bearish; that makes the pullback welcome. It rose from 42.3% on the low this cycle, a level below the prior lows in May and October 2005. The market moved higher after that but it did not show us a strong surge.
Bears: 26%. As with bulls, bears are moving in the right direction, reversing a month of declines. A good jump from 24.5% last week but still well off its high at 33% for this cycle, a level that topped the prior two highs that gave way to strong rallies. The 20% level and below is considered bearish. It started this move just above 20%, the threshold level. Bears surpassed the readings from the two prior market bottoms in May and October 2005 (30% and 29.2%, respectively).
NASDAQ
Stats: -3.08 points (-0.13%) to close at 2330.3
Volume: 2.37B (+14.9%). Volume jumped higher, almost matching Friday's expiration volume. You have to classify this as distribution given that NASDAQ has closed lower the past four sessions, but we also note that NASDAQ tapped near the Monday low and rebounded once more to cut most of its losses. That shows some buying pushed it back up.
Up Volume: 1.348B (+610M). Up volume topped down volume on a down session, more evidence that the action was not all downside selling.
Down Volume: 912M (-357M)
A/D and Hi/Lo: Decliners led 1.06 to 1. Basically flat breadth. No hidden skeletons in the session.
Previous Session: Decliners led 1.79 to 1
New Highs: 188 (+27)
New Lows: 57 (+9)
The Chart: http://www.investmenthouse.com/cd/^ixic.html
Another reach down toward the 50 day EMA (2312) and the October/March up trendline (2318) and a rebound to recoup most of the losses. Monday volume was lower, Tuesday it jumped sharply. The jury is out on this one still; higher volume selling, but higher volume when NASDAQ rallied back from the lows. NASDAQ is trying to nurse through a potential double top this month, but note that the second top enjoyed strong volume, and in a real double top volume abandons the move. NASDAQ is holding support, trying to make a higher low and continue its climb. It is still trending higher in its jerky move higher. Frustrating up and back action, fostered by the uncertainty with the Fed and now more so with oil and gasoline prices. Despite that, it is holding its trend, testing lower the second session and rebounding. Now that it is back to the lick log we see if it can deliver once again.
SOX (+0.28%) was not bad, testing down to and just through the 50 day EMA (513) once more and rebounding, this time to post a gain. SOX looks ready to make a higher low at this key level and help NASDAQ lead back up.
SP500/NYSE
Stats: -6.37 points (-0.49%) to close at 1301.74
NYSE Volume: 1.679B (+11.21%). Volume jumped back above average as the NYSE indices gave up some ground. As with NASDAQ, however, no real breakdowns. SP500 did not rebound as neatly as NASDAQ but SP600 and DJ30 look very orderly and in control still.
A/D and Hi/Lo: Decliners led 1.64 to 1. A big more lopsided to the downside than NASDAQ, but the large caps were in deeper than the other indices that were the leaders last week. That is another indication the market is ready to deliver a bounce from this pullback.
Previous Session: Decliners led 1.49 to 1
New Highs: 153 (+18)
New Lows: 121 (+21)
The Chart: http://investmenthouse.com/cd/^gspc.html
SP500 faded to close at the 18 day EMA, falling on rising volume. Once more it has fallen through its October/March trendline (1305) but it is still at some near support at the 18 day (1301) and above the 50 day EMA (1293). It is also holding its breakout over the January and February highs (1295); it gave those up last week and looked dead. Now it is trying to use them as support again. SP500 is not the strongest looking of the major indices right now, but it is also not in the toilet. It failed to advance through the March and early April highs last week and faded because of that. This test, however, is thus far holding well and setting up a higher low to give it a better launch point for the next try at new post-2002 highs.
SP600 looks quite delectable, tapping at the 18 day EMA (393.20) on the session low and rebounding to close at the 10 day EMA. That keeps it right on top of its channel, perfectly poised to rebound and continue its move higher. You think it has gone as far as this trend can take it, but then it sets up well once more, ready to lead the market again.
DJ30
DJ30 sold back on stronger, above average volume as well, but its decline is also quite orderly, tapping at the 10 day EMA (11,260) on the low and rebounding modestly. Still holding at the March highs (11,335) more or less right in the middle of that range. Nice test of near support, ready to rebound if it can get the catalyst that all the market had last week.
Stats: -53.07 points (-0.47%) to close at 11283.25
Volume: 289M shares Tuesday versus 232M shares Monday.
The chart: http://www.investmenthouse.com/cd/^dji.html
WEDNESDAY
As discussed in the Market section, NASDAQ, SP600, DJ30, SOX and even SP500 are set up after this pullback for another rebound in the continue uptrend. As with last week, they are seeking a catalyst to send them higher once more. Last week it was the FOMC minutes. Wednesday you have durable goods orders, new home sales, crude inventories and the Fed Beige Book. Not highly likely those provide the kind of catalyst the market seeks, at least not the caliber of the FOMC minutes.
Instead there is oil still too close to $75 for comfort and gasoline that is still going higher even as oil backs off. Maybe the President's proposed ethanol waivers will help ease gas prices, but even that will take time to implement. That leaves consumers doing battle with the pump in the near term, and that means less discretionary dollars to spend outside of gasoline.
High energy prices and distribution versus a rather orderly pullback in a continuing uptrend. Trends can change, and there is definitely reason to do so with the world tensions, oil, gasoline, the Fed. As of yet that has not happened. Don't like the distribution, but we do like the pullback to support and rebound and the continued performance of leadership. In the final analysis that is what wins out. We continue to watch for the trend to break as we continue to look for opportunity in strong stocks setting up moves just as the market is doing.
Support and Resistance
NASDAQ: Closed at 2330.30
Resistance:
The January high at 2333
The 18 day EMA at 2335 is not entirely broken
The February closing high at 2361.
2477 is the January 1999 peak
2493 is the February 1999 peak
2523 from the December 2000 low
3015 is the December 2000 peak and the October 2000 low
Support:
2328 from the May 2001 peak
The recent high at 2325
2318 is the October/March up trendline.
The 50 day EMA at 2312
2288 from December 2000 low.
2278 is December 2005 intraday high.
2273 is December 2005 closing high.
A minor peak at 2249
2240 is closing low in recent range.
S&P 500: Closed at 1301.74
Resistance:
The January high at 1303
The October/March up trendline at 1304.
1311 is the March intraday resistance on this move.
1315 is the May and May 2001 peaks
1324 to 1329 from the October 2000 lows.
1358 to 1362 mark a series of peaks from April 1999 to August 1999 high and the February 2002 low at 1360.
1371 to 1373 is the December 2000 peak and the January 2001 peak
Support:
The 18 day EMA at 1301
1297.57 is the recent February high.
The 50 day EMA at 1293
The late January peak at 1285
The December highs at 1275 (intraday) and 1273 (closing)
1264 from the December 2000 lows
1254 is the February low
1248 to 1250 is the bottom of the November/December 2005 range
Dow: Closed at 11,283.25
Resistance:
The recent March highs at 11,329 to 11,335
11,350 from the May 2001 peak.
11,401 from the September 2000 peak and the recent intraday highs
11,425 from April 2000 peak
Support:
The 10 day EMA at 11,260
The 18 day EMA at 11,228
11,159 is the February high.
11,140 is the October/January/February up trendline.
11,137 is the last peak from the February top.
The 50 day EMA at 11,135
11,044 is the January high.
10,985 is the March 2005 intraday high
10,965 from Q4 2000 and November/December 2005
10,931 is the November 2005 high
10,890 is the December 2005 closing high.
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
April 25
Consumer Confidence, April (10:00): 109.6 actual versus 106.4 expected, 107.5 prior
Existing home sales, March (10:00): +0.3% versus -3.0% expected; 6.92M actual versus 6.65M expected, 6.91M prior
April 26
Durable goods orders, March (8:30): 1.8% expected, 2.7% prior
New home sales, March (10:00): 1.10M expected, 1.08M prior
Crude oil inventories (10:30): -806K prior
Fed Beige Book (2:00)
April 27
Initial jobless claims (8:30): 305K expected, 303K prior
April 28
GDP advanced, Q1 (8:30): 4.9% expected, 1.7% Q4
Chain deflator, Q1 (8:30): 2.7% expected, 3.5% prior
Employment Cost Index (8:30): 0.9% expected, 0.8% prior
Michigan sentiment (final), April (9:45): 89.0 expected, 89.2 prior
Chicago PMI, April (10:00): 58.0 expected, 60.4 prior
End part 1 of 3
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world stock market
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