|
|
investment help, day trading
* * * *
11/07/06 Investment House Daily
* * *
Investment House Daily Subscribers:
MARKET ALERTS:
Target hit alerts: None issued
Buy alerts: CRM; PMTI
Trailing stop alerts: None issued
Stop alerts: IAAC
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 sprint higher to new breakouts but give them back, closing nervously off the highs.
- Consumer credit tanks in September but August revised much stronger: revisions are the only constant in the data of late.
- Leaders hold gains into close as NASDAQ on the edge of a breakout, but on the edge is still no breakout.
The breakout that couldn't hold.
Unlike Monday there were no deals, no international intrigue, and few earnings to drive stocks. There was still the election in the background, but with all of the polls the past month, unless there is a major surprise in the outcome such as a clean sweep in Congress, the market has priced it in.
That said, it was an 'almost' day. Stocks started mixed but wasted no time in turning positive and shooting higher in the first hour. NASDAQ cleared the April and October highs with ease, cruising to a new post-2002 high. The Dow also moved to a new high and SOX challenged the 200 day SMA again. Not bad at all with NASDAQ trolling 11 points above its October high that was a post-2002 high. Then the afternoon came and the market got jittery.
Whether it was the election and concerns the Congress might be one color as opposed to split, worries over the economy and thus earnings down the road, or something else, the market started losing ground. NASDAQ closed 15 points off the high, and wouldn't you know it, just a fraction below the April high. DJ30 gave up its new high as well, SOX backed off the 200 day SMA, closing almost 5 points off the high. SP500 faltered at its October high, and SP600 did likewise. In other words, there was 'almost' a breakout. One step further, there was a breakout by NASDAQ, but it couldn't hold. The inability to hold a move is always a key event.
Technically it was a very mixed day. Breadth was good early but turned to mush by the close (1.3:1 NYSE, 1.1:1 NASD). Volume was up, a good sign on an up session, but when coupled with the close off the highs that volume is not such a positive as the buyers were ahead on the day but the sellers managed to come in and take away the breakouts. They could not turn the session negative, but importantly they thwarted some breakouts, snatching defeat from the jaws of breakout victory. The story was something of a rerun from late August when NASDAQ broke out then gave the move back, but this one occurred intraday.
There was leadership that did hold their moves, however, and that is always an important ingredient to market moves. Thus though the indices may have had some pre-election jitters that led to the give back of the breakout, if the leaders can hold their gains the market likely gets over its cold feet and follows.
THE ECONOMY
Consumer Credit dives below expectations but August revised through the roof.
It is getting to the point that only revisions to the government data should be reported. Thus far this year 800K additional jobs have been created over and above what was originally reported. That is a huge underreporting.
Consumer credit is the measure of all credit, revolving (credit card), non-revolving (tuition, auto loans), and other. It basically covers the waterfront. In September it was -$1.2B versus $5.5B expected. That was way down from the $9.1B reported in August. But . . . August was revised way up from the $2.6B originally reported. Huge swings, so much so it is hard to make anything out of this in the short term.
The bigger picture: credit was up 5% in 2005 and sported double digit growth in the recession years. Consumer credit is on a pullback the past six months. Not a negative trend, just a pullback as we have seen savings pick up, taking some of the cash from savings. With all of the worry over savings you would think this would get some positive play. Of course, that is not the spirit of reporting; you have to find the negative angle to any story in order to be 'incisive' or 'serious.' Used to be being right was the primary goal. Which brings us back to the government data this past year: it appears to stray further from the truth in the early returns. Perhaps we are getting too cute with the sampling techniques and the adjustments. One thing we are noticing, the market takes it with ore of a grain of salt these days.
THE MARKET
MARKET SENTIMENT
VIX: 11.09; -0.07
VXN: 17.51; +0.12
VXO: 10.9; +0.43
Put/Call Ratio (CBOE): 0.78; +0.02
Bulls versus Bears:
Bulls: 53.7%. Ticking higher again, up from 52.7% and closing in on the 55% level considered bearish. Had hoped from some softening after the struggles in the market the past week, but no go. Up from 49.5% and 47.4% before that. This has caught the April high and is moving closer to the January peak at just over 60%. 55% is considered a bearish indication.
Bears: 28.4%. Starting to fade with a sharp drop from 30.1%. Down from the 37.1% hit in July (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). It remains well above the 20% level considered bearish but is back to heading that way with more speed. 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: +9.93 points (+0.42%) to close at 2375.88
Volume: 2.13B (+10.67%). Nice surge in volume, moving back above average as NASDAQ made the break higher but then could not hold it. A good break but then the sellers caught it and drove it back on that stronger volume. NASDAQ still closed positive and technically an accumulation session, but the uncanny close just below the April high is telling as the sellers came back and drove it back to the consolidation range.
Up Volume: 1.452B (-140.695M)
Down Volume: 656.3M (+339.105M)
A/D and Hi/Lo: Advancers led 1.13 to 1. Breadth was solid early on but then faded to flat as NASDAQ gave back most of its gains.
Previous Session: Advancers led 2.24 to 1
New Highs: 171 (+20)
New Lows: 42 (-8)
The Chart: http://www.investmenthouse.com/cd/^ixic.html
NASDAQ was strutting early on, hitting 2391.34 on the high, easily a post-2002 high but a 10+ point margin. A lateral move all session and then the happy feet ahead of the close that melted away 14 points and pushed NASDAQ just back into the lateral trading range. Never like to see a breakout give it back in the same session and on volume. There was selling that came in and actively pushed it back. A nice rebound off the breakdown last week after NASDAQ tested lower and managed to hang on. Then another run right back up to try the move again, and once more it could not hold on, this time intraday. There are tech stocks that are in good position that held their gains, and we will see if they are indeed providing the leadership and whether NASDAQ just got some happy feet ahead of the actual election results even though the die is pretty much cast as far as the market is concerned.
SOX (+1.91%) had help from the likes of BRCM that came to life ahead of the CSCO earnings on Wednesday. MRVL broke through its 9 month downtrend on rising volume. XLNX broke higher from its range. There were many good moves. That said, SOX neared the 200 day SMA (472) again on the high (470.50) but then faded into the close. Got into that range and was repulsed similar to mid-October when it rallied well, looked solid, then collapsed back to the bottom of the range. Now we see if this was just the pre-election cold feet and if SOX can make a real challenge from this last test.
SP500/NYSE
Stats: +3.06 points (+0.22%) to close at 1382.84
NYSE Volume: 1.602B (+5.12%). Volume was up as well on NYSE as these indices jumped higher as well but then reversed for modest gains. They did not clear the hold highs before getting pushed back. A positive close as well, but clearly resistance at those levels still hangs over them.
Up Volume: 845.242M (-412.557M)
Down Volume: 716.613M (+464.619M)
A/D and Hi/Lo: Advancers led 1.3 to 1. Positive but anemic, well off the intraday levels when SP500 was pushing toward the October high and SP600 as doing the same.
Previous Session: Advancers led 3.12 to 1
New Highs: 292 (+94)
New Lows: 13 (-5)
The Chart: http://investmenthouse.com/cd/^gspc.html
SP500 rallied right up to the October high on the Tuesday high (1388) and then gave back 5 points to close with a tarnished gain. Volume rose to just crack average but as noted, hard to call it an accumulation session given the index lost more off the high than it gained on the close. The large caps received some leadership from the financials, but there was no killer instinct to drive a breakout.
SP600 (+0.24%) roughly matched the large caps as the weakest of the indices, driving higher to 393, but well short of the 395.5 from the late October high. A good rebound off the 50 day EMA this week, but lost three-quarters of its gain on the session. With that kind of close off the high we need to be wary of the next move. Still in good shape, but also still struggling.
DJ30
The blue chips reached into new high territory on the high (12,196) but they too gave back a chunk of the gains (40 points) and inside the prior highs. Seems stocks did not like the air up there when they hit the new highs, particularly with an election to be tabulated. Worth watching here as the Dow has rallied well and this it its deepest test since September. Now it has rebounded to test the October high, and the first attempt was shoved back. It is extended, so definitely worth keeping an eye on.
Stats: +51.22 points (+0.42%) to close at 12156.77
Volume: 222M shares Tuesday versus 211M shares Monday. Volume growing but still below average as the blue chips tried the break through the October high but were repulsed.
The chart: http://www.investmenthouse.com/cd/^dji.html
WEDNESDAY
The election will be over and we will know if the predictions were correct (split Congress) or if a sweep occurred. The market showed the usual late inning jitters following 1.5 days of rallying into the election. We expected a rise into the election, just not the strength we saw in the moves. Indeed, prior to the afternoon give back this was a very strong move that had leadership, volume and some breadth. Those are not the attributes of just a short covering rally, and many brokers we talked to said big clients were buying stocks.
The action late Tuesday indicates either there is a wall of resistance at the prior highs ready to sell stocks, or there was simply some typical repositioning flat ahead of an event with an expected outcome but one that can always swing given public sentiment. There are predictions all over the map what the market will do if the Dems sweep or the Reps are successful in holding onto both houses. As you likely deduce, the former had many warning direly to expect a massive selloff, the latter extolling a massive rally.
Surprises always push the market hard short term because the market doesn't like surprises. It factors in the most likely outcome ahead of time, and if that is rocked it has to figure out what the new situation means and re-price to account for it. In elections the market usually gets things right, though as with the government data, one senses that the polls done on top of polls don't necessarily get the story right.
If it is a surprise then we can expect a bit of rockiness short term, but the market has even factored in some surprises, to wit the Tuesday pullback form the breakouts. What we are going to focus on is what we saw and liked Tuesday, i.e. the leadership that rallied and held onto good gains on strong volume. We also saw some nice action in semiconductors as well. Their ability to hang onto gains shows underlying strength in many leaders, and that is where the rest of the market grows its backbone. If they hold we will likely see the Tuesday pullback as just some cold feet.
That said we may see some follow through comeback to start Wednesday as the market digests the election (if it comes in as anticipated with the split Congress). After some early softness we will watch for the leaders to once more assert themselves. They will have to do that at some point over the next few sessions after NASDAQ's second attempt to take out the April high. It can continue to bang around in its consolidation, but, of course, we would rather see this quick response to last week's selling win out and deliver th ebrekaout from the 4 week lateral range.
Support and Resistance
NASDAQ: Closed at 2375.88
Resistance:
2368 is the early October handle high.
2376 is the April high, the post-2002 high. Just cracked through this level.
2379 is the October high.
2384 is an interim peak from January 1999
2493 is an interim peak from February 1999
Support:
The 10 day EMA at 2353
The 18 day EMA at 2343
2333 is the top of the Q1 2006 trading range (the January and mid-March 2006 highs)
2316 from interim tops in January and March 2006 trading range
2300 represents some price support
The 50 day EMA at 2287
2273 is the recent September peak
2250 is the March 2006 closing low.
2234 is the June 2006 peak (intraday)
2235 is the August 2004/April 2005 up trendline
The 200 day SMA at 2231
S&P 500: Closed at 1382.84
Resistance:
1389 is a low from November 1999
1390 is the October high.
1398 is a low from January 2000
1401 is a low from April 2000
Support:
1378 is a low from May 2000
The 10 day EMA at 1374
1371 to 1373 is the December 2000 peak and the January 2001 peak
The 18 day EMA at 1370
1358 to 1362 mark a series of peaks from April 1999 to August 1999 high and the February 2002 low at 1360.
1354 from the early October consolidation
The 50 day EMA at 1346
1339 is the late September closing high
1334 is an October 1999 peak
1326.70 is the May 2006 high
1324 to 1329 from the October 2000 lows.
Dow: Closed at 12,156.77
Resistance:
October high is 12,167
Support:
The 10 day EMA at 12,071
The 18 day EMA at 12,026
11,865 from the early October consolidation
The 50 day EMA at 11,801
11,750.28 is the prior all-time high
11,723 is the January 2000 closing high
11,670 is the May intraday high
11,642 is the May 2006 closing high
11,488 is the early September high.
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
November 7
Consumer credit, September (3:00): -$1.2B actual versus $5.0B expected, $9.1B prior (revised from $2.6B)
November 8
Crude oil inventories (10:30): +1.9M prior
November 9
Export prices, October (8:30): -0.5% prior
Import prices (8:30): 0.1% prior
Initial jobless claims (8:30): 310K expected, 327K prior
Trade balance, September (8:30): -$66.0B expected, -$69.9B prior
Michigan Sentiment, prelim for November (9:45): 93.5 expected, 93.6 prior
Wholesale inventories, September (10:00): 0.6% expected, 1.1% prior
End part 1 of 3
|
investment help
day trading
|
