|
|
world stock market, us stock market
* * * *
9/12/06 Stock Split Report
* * *
Stock Split Report Subscribers:
MARKET ALERTS
Targets hit alerts: AEOS
Buy alerts: DIOD; LVS; ASMI; WEBX; CWTR
Trailing stops: None issued
Stop alerts issued: CRI; XPRSA
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:
- September of a different feather thus far
- Market ignores the trade gap, as it should
- We can get the trade gap and energy independence under control in one move.
- September starting to show a trend, but success breeds more tests of resistance.
Another soft start and strong finish.
The pre-market was soft once more as investors mulled a flurry of events and news. Gunmen attacked the US embassy in Syria. The attack was repelled without serious incident, but it was yet another act of terrorism on the world stage. The trade gap jumped to $68B (-65.5B expected). TXN narrowed its range but it did not move the midpoint. That did not seem to inflame the market much, however. McDonald's sales rose 6% (3.6% expected), Best Buy sales were strong, and oil was lower once more (closed at $63.76, -1.85). That was more to investors' liking, or at least what investors focused on.
The open looked weak, but stocks took it positively, particularly when the Fed's Yellen merely repeated here 'lack of comfort, the Fed stands ready' comments from last week. With no new missives from the Fed, the lower oil prices and the solid word from those consumer stocks a soft open quickly turned into gains. Thos gains increased steadily through the morning, consolidated at lunch, and then jumped in the afternoon. The momentum died in the last hour, but stocks managed to hold their gains, moving laterally into the close.
It was a day led by the more economically sensitive issues. Technology and semiconductors enjoyed big sessions, but the retailers were putting on the dog as well. Energy was knocked around a bit more, but after two ugly downside sessions the losses moderated some. Defense was down as well. The market was definitely focusing on areas of economic growth as if the economy was going to surge in the future versus slip into recession. Gold started higher on the Syrian issues, but it turned and closed lower again. Oil fell hard once more. Commdities tanked again. Bond yields fell as well. That seems more a shift away from inflation worries to a more disinflationary framework. Stocks are enjoying that turn.
Technically there were some stellar moves in leaders with price coupled with volume. Other stocks moved well but had no volume. The indices were similar. NASDAQ and SOX jumped on strong volume, with NASDAQ starting to knock at the 200 day SMA door. NYSE volume reports are in conflict tonight; some show an increase in trade to 1.7B while others show a decline to 1.3B. The NYSE site has experienced problems this week, but thus far it looks as if volume was lower. That is the flip from Monday and the indices are having a hard time rowing in sync. Breadth was strong, however, on both NYSE and NASDAQ, fitting the strength of the price moves.
Once more the intraday action was bullish: soft start, strong finish at the session highs. NASDAQ, SOX and DJ30 powered through next resistance on rising volume as shares were accumulated, a nice change from the modest distribution last week. That puts NASDAQ just 6 points from its 200 day SMA with SOX closing in on next resistance as well. DJ30 cleared the September high and now just has the May high to beat for a new post-2002 high. SP500 fought back to the early September highs and is right at the top of its March and April trading range, the last stop before it too tries the May high and a post-2002 high. You could see the shorts covering as the SP500 moved higher and higher. If it moves through the September high it will gain more momentum from more covering. The small caps are back at the 200 day SMA; that is where its move was squelched early this month and is a potential hole in the boat for the rest of the market.
All in all this move is stronger than expected as stocks seem to be pricing in better economic times. There is accumulation in economically sensitive stocks, no doubt spurred on by the lower oil prices that continue to fall, giving hope that the consumer will have more discretionary income and will, in his or her discretion, spend it as usual. This is more the move you see the first week of September when new money is put to work, and with the indices approaching next resistance, you have to be aware of that. Yes there was definite strength, but if it is just new money, then once it is all put to work old themes could take over. Moreover it is expiration week, and the move higher is forcing hedge funds to roll out positions now, and that is pumping up the volume and the upside move as well.
To this point you have to like the strength of the move, the leadership, and the patterns the indices are showing, but the fall can be a strange time and the market can change as fast as the weather when a blue norther blows into town. There is definitely expiration and short covering related activity that is skewing the action. There is also, however, strong leadership making good moves, and that means real accumulation. Thus we participate in the move, but we continue to do so with some caution.
THE ECONOMY
The July trade gap hit a record. Many fret and wring their hands over this, but as with the weather, nothing does anything about it. Indeed, there is not much that can be done about it given that the bulk of the rise and indeed the bulk of the gap is due to that black liquid we bring over in supertankers every day. In July oil had climbed sharply above $70 once more and as usage continues to grow and we are not growing our own domestic reserves (though that could change if we find more fields such as the Jack field in the older formations) our trade deficit grows.
GM trotted out a new SUV that is powered by hydrogen fuel cells. Less than 10 seconds to 60 mph, all electronically controlled, and gets 300 miles between fill ups. Of course right now it would have to go a lot further between fill ups given there are only a couple dozen hydrogen stations in the entire nation. If we were serious about bringing the trade deficit down and serious about getting off foreign oil we would provide incentives to the auto makers, the service stations, and the consumers to adopt this technology now and not later.
We could do it in 5 years, maybe less if we wanted to. We went to the moon in less than a decade when we did not have a rocket that worked. We cannot switch to this technology in 5 years when we have a vehicle, and not a subcompact but an SUV, that works and works well? Again, if we are serious about fixing several issues, not to mention burning hydrocarbons (and autos are the largest source of greenhouse emissions), then we can do it. It is all a matter of priorities, but it seems our leaders would rather fight about their political futures than really get serious and provide market based reasons to move into the twenty-first century with respect to transportation. We can do it without giving up our freedom as is the case with mass transit. We need to do it.
THE MARKET
MARKET SENTIMENT
VIX: 11.92; -1.07. Back down to the August lows with a couple of big drops this week. That still keeps it above the lows in Q3 and Q4 2005, and the lows in Q2 2006. VIX can stay low for a long time during an advance. It then typically starts to rise as the advance winds down and the future becomes more problematical. With that in mind the current reading is not a bad thing as many would have you believe.
VXN: 18.26; -1.51
VXO: 11.16; -1.39
Put/Call Ratio (CBOE): 0.96; -0.07. Three closes above 1.0 and then backing off just a bit on a strong upside move. More
Bulls versus Bears:
Bulls: 43.2%. Bulls continue to rise, up from 42.1% last week and 40.0% the week before, a post-June high (bulls and bears kissed in June. That is still, however, well below the peaks from January and April, and well below the 55% level considered bearish.
Bears: 33.7%. Bears held steady, stalling the steady decline from the 37.1% hit in July. The 37.1% was the highest level in this entire cycle, easily clearing the 34.4% hit in late June back when bulls and bears kissed, just missing a crossover. Hit a new post-2002 high in that late June move, eclipsing the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005).
NASDAQ
Stats: +42.57 points (+1.96%) to close at 2215.82
Volume: 2.062B (+17.66%). Volume jumped well above average, the strongest trade since the mid-August second leg of the rally got underway. Good to see the volume as NASDAQ moved through the early September high and heads toward the 200 day SMA. There was real accumulation given the strong moves by leaders that are not heavily shorted.
Up Volume: 1.879B (+903M)
Down Volume: 165M (-540M)
A/D and Hi/Lo: Advancers led 2.76 to 1. Solid.
Previous Session: Decliners led 1.17 to 1
New Highs: 112 (+47)
New Lows: 56 (-7)
The Chart: http://www.investmenthouse.com/cd/^ixic.html
NASDAQ picked up on the Monday move, rallying through the old 2004/2005 trendline at 2204 and past the early September high (2208). Strong volume as it heads to the 200 day SMA (2223) and the June high (2234) where it folded in early June, adding another 3+ months to the base. Strong leadership is helping drive the move as the breadth and the solid moves in the leaders show. It may not get much past the 200 day SMA before needing a rest; it may try the June high or waive at it and then come back some to test and take a breather. We see accumulation but we also have to recognize it is expiration week and we see volume ramp up due to that.
SOX (+3.77%), NASDAQ's partner in crime on this move, blew through 450 and the late August high (454.50) and is taking aim at the June high (479.38) as well, and of course, the 200 day SMA (481.26). Very strong action off of the reverse head and shoulders pattern, and a run at the 200 day SMA is a good target for this leg higher. Like how the chips overlooked the TXN update. Heck, even TXN overlooked its update after gapping lower on the news.
SP500/NYSE
Stats: +13.57 points (+1.04%) to close at 1313.11
NYSE Volume: 1.399B (-14.67%). NYSE showed some above average volume Monday on the intraday reversal and then it looks like it faded on the Tuesday gain. The NYSE has put out several volume readings today. We have to go with the lower one for now but we suspect the volume will be revised higher.
A/D and Hi/Lo: Advancers led 3.07 to 1. Excellent breadth as all NYSE indices moved higher together.
Previous Session: Decliners led 1.21 to 1
New Highs: 184 (+94)
New Lows: 47 (-13)
The Chart: http://investmenthouse.com/cd/^gspc.html
SP500 continued the Monday reversal, rallying up to the early September high (1314.67) and right to the top of the March and April trading range. This is, of course, where it stalled in early September. This is the last level before the May high (1326.70) and of course we would like to see stronger trade as it makes the move. So far the pattern has held, posting a nice recovery from the below average volume distribution last week.
SP600 (+2.21%) surged as well, making it back to the 200 day SMA (371.88). It just topped that level in early September (372.95) before thumping back down. Made a higher low once more, and now it needs to make a higher high again to keep building its base, i.e., building the right side of its base where it comes off of the lows and makes some serious moves. Good to see the quick recovery from the last failure at the 200 day SMA. Now it needs to show us that move won't be repeated.
DJ30
DJ30 broke through its early September high (11,488) on rising, above average volume, the first above average trade since one session in the second leg of the summer rally (and now early fall rally?). DJ30 cleared all of the resistance between it and the May high (11,670.19). Volume has rallied the past two sessions as DJ30 tested near support at the 18 day EMA and broke that near resistance. It has held its pattern and is making higher highs. That is what you want to see.
Stats: +101.25 points (+0.89%) to close at 11498.09
Volume: 237M shares Tuesday versus 216M shares Monday. Good to see that volume move above average as the Dow broke that former resistance.
The chart: http://www.investmenthouse.com/cd/^dji.html
WEDNESDAY
Crude oil inventories are out at 10:30ET and then the Treasury Budget at 2ET. Not real heavy hitters though after a strong drop in oil, inventories could cause a rebound in price. A rebound in price could blunt the stock rally that has, in part, been predicated on a nice, sharp drop in oil and gasoline prices.
September started out mixed, with the distribution getting the upper hand last week. This week volume is up as the indices rebound and break through resistance. Not the typical September; it usually has its last hurrah to the upside and then the selling sets in. Sure there was new money put to work, and it is also expiration. That is contributing to the volume. There was also a lot of shorting technology and chips as well as the SP500 as well. As they found footing and rallied the shorts are covering and that creates the snowball effect as stocks gain even more strength as they gain strength and shorts are forced to cover. Those forces along with some real ongoing accumulation in leading stocks is driving the action. The latter tends to be longer term; the former shoots its ammunition and then it is gone. After that is up to the long buyers to take the torch and keep it going.
Thus far the September trend is upside as those indices break some resistance. That, of course, puts them at next resistance, another level they can fail if the sellers enter once more. Success begets more tests of resistance when you are digging out of a base. Given the effects of expiration (it is early this month as the first was on a Friday), money being put to work, some short covering, and the time of the year, you still have to approach with caution. When we see the moves in stocks such as WEBX and a plethora of other strong leaders on the report, however, you cannot sit back and let the move pass you by for fear it might end.
All moves will end. What we have to be wary of is that quick reversal that can come on fast and you expect it to turn back upside given the strong volume on the break higher. Again, this is a strange time of the year for stocks and forces can whipsaw the action. What do you do? You play the strong move given the volume and the leadership. At the same time you watch for a reversal session where stocks rally and then reverse on volume or a sudden bout of selling accompanied by strong volume. Any move can suffer such a reversal, but at this time of year you take a bit more heed. For now the move has some good looks. We will continue to look for solid plays in line with the move we are seeing. With the strong stocks showing strong patterns and moves we want to participate as the move progresses.
Support and Resistance
NASDAQ: Closed at 2215.82
Resistance:
The 200 day SMA at 2223
2230 is the June 2006 peak (2234 intraday)
2250 is the March 2006 closing low.
Support:
2204 is the August 2004/April 2005 up trendline
2190 is the July 2006 high
2185 to 2182 is the September 2005 peak and interim high from November 2005.
The 10 day EMA at 2177
2177 is the December 2004 high.
2168 is the August intraday high.
2158 from the May 2005 low.
The 18 day EMA at 2163
The 50 day EMA at 2142
2100 from the early and mid-2005 peaks
2072 is the June closing low
2050 from the summer 2005 lateral range lows
S&P 500: Closed at 1313.11
Resistance:
1315 is the May and May 2001 peaks
1324 to 1329 from the October 2000 lows.
1326.70 is the May 2006 high
1334 is an October 1999 peak
Support:
1311 is the April closing high.
1302 the recent August highs
The 10 day EMA at 1302
The 18 day EMA at 1298
1294 is the January 2006 high and 1297.57 is the February 2006 high.
The early June high at 1288
The late January peak at 1285
1280.37 is the recent July peak.
The 50 day EMA at 1285
The 200 day EMA at 1279
1265 is an old trendline from the August 2003/August 2004/October 2005 lows.
Dow: Closed at 11,498.09
Resistance:
11,642 is the May 2006 closing high
11,670 is the May intraday high
Support:
The 10 day EMA at 11,402
11,401 from the September 2000 peak and April 2001 highs
11,384 is the August intraday high.
11,350 from the May 2001 peak
The 18 day EMA at 11,361
The March 2006 highs at 11,329 to 11,335
11,279 is the late May closing high
The 50 day EMA at 11,248
11,243 is the early August peak closing high.
11,228 is the July closing high.
11,097 to 11,137 is the last peak from the February top.
The 200 day SMA at 11,087
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
September 12
Trade balance, July (8:30): -$68.0B actual versus -$65.5B expected, -$64.8B prior
September 13
Crude oil inventories (10:30)
Treasury budget, August (2:00): -$67.0B expected, -$51.3B prior
September 14
Initial jobless claims (8:30): 315K expected, 310K prior
Retail sales, August (8:30): -0.2% expected, 1.4% prior
Retail sales ex-autos (8:30): 0.3% expected, 1.0% prior
Business inventories, July (10:00): 0.5% expected, 0.8% prior
September 15
CPI, August (8:30): 0.2% expected, 0.4% prior
Core CPI, August (8:30): 0.2% expected, 0.2% prior
New York Empire Index, September (8:30): 14.0 expected, 10.3 prior
Capacity utilization, August (9:15): 82.5% expected, 82.4% prior
Industrial production, August (9:15): 0.2% expected, 0.4% prior
Michigan sentiment, preliminary for September (9:45): 83.5 expected, 82.0 prior
End part 1 of 3
|
world stock market
us stock market
|
