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trend trading stock, trading system
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11/16/06 Technical Traders Report Update
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Technical Traders Report Subscribers:
MARKET ALERTS
Target hit alerts: CEPH; COH
Buy alerts: None issued
Trailing stops: None issued
Stop alerts: NUE
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/alertttr.htm
SUMMARY:
- A bit better CPI leaves stocks a bit better as well.
- CPI shows signs of peaking, but FOMC not convinced by one data point.
- Expiration Friday, tech earnings will try to spice things up, but a pre-holiday Friday could leave things rather flat.
CPI helps stocks keep their end up for a fifth session.
Stocks posted a week of gains, helped by a tamer CPI that saw overall consumer prices fall 0.5% versus the -0.3% expected (+1.3% year/year) and the core rise 0.1% (0.2% expected), dropping the year/year core to 2.7% from 2.9% last month. That pushed stock futures higher and helped stocks to another upside session along with some more merger news and a 4% decline in oil prices (follow the bouncing ball as oil trades up and down in its range).
Stocks were up early, then the growth sectors faded, threatening to give back some of the gains. Then once more that late upside bias kicked in and the indices managed a positive close, at least all but the small caps. The latter were the victim of an overall decline in the energy sector when the natural gas inventories showed their first build in three weeks and oil turned and made that thud lower. Overall, however, the action was upside.
It wasn't really a strong day, though. Volume was solid, still above average, but it did dip some. The moves, however, were even smaller than Wednesday, and once more the indices closed well off their intraday highs. After a week of gains that is not too unusual. Leadership was sporadic with some excellent moves but they were scattered with most stocks just holding position more or less, taking a breather after a strong move. Breadth was flat, pretty much what you would expect. NYSE new highs held near 350, however, a good showing as the indices rested, and continuing the recent improvement.
Friday is expiration and that can jack up the volume; trade jumped Wednesday as it often does midweek of expiration. There were also some earnings after hours that could stir things up a bit Friday with HPQ posting some good results but then giving back gains after hours a bit. SBUX disappointed and will need a double espresso in the morning just to hang on; it was getting hit pretty hard after hours. After five upside sessions, expiration, so-so earnings, and a holiday ahead may have traders a bit anxious to get the week over after they get their final shuffling done before lunch.
THE ECONOMY
CPI may be starting to follow the PPI but Fed and bond market not expecting cuts.
The decline in the growth rates for the monthly and year over year core were some good news, indicating that consumer prices were finally starting to show the decline ECRI has been showing the past year and the PPI is starting to show the past two months with its negative rates.
Of course, it is just one data point, and the Fed's Moskow was quick to hit the microphone Thursday and tell everyone that it was indeed just one data point, and he hinted rather clearly that it would take some serious declines in the price growth rate to get the Fed in the mode to actually cut rates. Makes since given the Fed has its inflation growth comfort levels and to get back to those levels anytime soon the rate has to turn negative.
The problem is that inflation has been slow to fall this time, but as the late Milton Friedman so clearly pointed out, money supply controls the rate of inflation. The Fed is actually doing the right thing by curtailing money supply since the start of the year, but at the same time leaving a nominal growth rate for money supply to keep from choking off the economy. It is that tightrope walk we discussed in the spring, and despite the Fed's protestations, it has helped engineer a slower fall in inflation because it is keeping money supply growing, afraid to pull a Greenspan and totally drain the pool for fear of a vapor lock in the economy.
Thus we have to live through the Fed's angst as it walks the tightrope. Thus far the market seems to think it is doing a pretty good job judging by the nice rally, and the bond market is reflecting the Fed's position of no cuts coming, just status quo in hopes the inflation rate continues to soften. There is that continued yield inversion that is approaching 20BP, and that is the cloud over the entire economic cycle. The Fed doesn't see it as an issue, so perhaps we should.
THE MARKET
MARKET SENTIMENT
VIX: 10.31; -0.19
VXN: 15.4; +0.04
VXO: 10.35; -0.54
Put/Call Ratio (CBOE): 0.83; +0.02
Bulls versus Bears: Bulls have moved above the key 55% but this is not the best timing indicator. It is a warning to watch for distribution, failing leadership and the like.
Bulls: 56.4%. Bullish advisors have finally topped 55%, the level where the yee ha view of the market is overdone and some corrective activity can enter. A sharp jump from 52.1% the week before and closing in on the January peak at just above 60%.
Bears: 22.3%. Sharp drop from 26.0% and flirting with the 20% level considered bearish. Well off the 37.1% hit in July (the highest level in this entire cycle). 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: +6.31 points (+0.26%) to close at 2449.06
Volume: 2.122B (-1.2%). Volume was lower but remained above average as NASDAQ showed a doji after a week of gains. A bit tired.
Up Volume: 1.101B (-277.622M)
Down Volume: 871M (+121.337M)
A/D and Hi/Lo: Decliners led 1.01 to 1. Matched the session though it was down as NASDAQ overall was up.
Previous Session: Advancers led 1.62 to 1
New Highs: 224 (-96)
New Lows: 39 (-11)
The Chart: http://www.investmenthouse.com/cd/^ixic.html
NASDAQ gapped higher and could go no farther Thursday even with some good volume to push it. AMAT warned re its future, and that always puts a damper on tech trade, and the entire session had a wet blanket draped over it. The candlestick doji indicates this leg of the move is a bit tired, but after five upside sessions that is nothing out of the norm. Price/volume action was good during the move, breadth was strong when it needed to be, and new highs improved. Good work and a test would be normal action.
SOX (+0.44%) was under pressure early but managed to post a solid advance, continuing the strong Tuesday break higher. It showed some of the same indications as NASDAQ, however, the slower gain and closing off the high, but its move is fresher and it still has some momentum. It has not tried to step out and be a leader, however, even with the breakout move.
SP500/NYSE
Stats: +3.19 points (+0.23%) to close at 1399.76
NYSE Volume: 1.68B (-1.01%). Lower but still above average as with NASDAQ. Solid trade would indicate more accumulation but some of that volume was driven by the struggle in the energy sector. All in all good trade levels continue as the indices mostly post gains.
A/D and Hi/Lo: Advancers led 1.14 to 1. Flat as a pancake. At least it was positive.
Previous Session: Advancers led 1.64 to 1
New Highs: 348 (-14). Still some good levels even with the small cap energy stocks waffling some.
New Lows: 15 (-1)
The Chart: http://investmenthouse.com/cd/^gspc.html
SP500 posted another gain, its fifth as well, but as with NASDAQ it was a smaller gain and once more the large caps closed off the intraday high. Finding it harder to get the buyers to drive the move higher to the close; the upside is met with some selling that the buyers are not willing to step into and shove higher after a week of gains. Again, this is normal action and with the break higher, hard to get twisted up over it.
SP600 (-0.33%) faded modestly and the lower volume was good given that action. It suffered when the energy stocks ran into trouble on the nat gas inventories and decline in oil. Still holding that solid breakout so not too upset about this move.
DJ30
Volume was lower but the blue chips pushed higher again as BA once more provided some upside along with a strong move by MO. Continued solid move after the bounce from the 18 day EMA.
Stats: +54.11 points (+0.44%) to close at 12305.82
Volume: 223M shares Thursday versus 258M shares Wednesday. Lower volume but you can tell it is expiration week with the spikes above average Tuesday and Wednesday.
The chart: http://www.investmenthouse.com/cd/^dji.html
FRIDAY
Friday has an interesting mix. Expiration Friday, some so-so after hours earnings from HPQ and SBUX, and the Friday before a holiday shortened week. Expiration can drive some volatility and volume while the holiday tends to get the traders out the door at lunch.
Competing forces when the market is showing signs of tiring after a solid move often leads to a dead heat. That would be a good finish for the week overall and set it up for the typical rise during the Thanksgiving week.
You have to keep in mind the bullishness getting a bit high as we watch the price/volume action and leadership and how they act. Thus far they are holding up nicely, showing what you would expect in a rally, and we also had new leadership come into play as NASDAQ made its breakout with SOX and the small caps joining. That is healthy action, and thus any testing here is normal. Just want to see volume stay in control and leadership avoid a meltdown on volume.
Support and Resistance
NASDAQ: Closed at 2449.06
Resistance:
2477 from January 1999
2493 is an interim peak from February 1999
Support:
2412 from June 1999 low
The 10 day EMA at 2405
2384 is an interim peak from January 1999
The 18 day EMA at 2383
2379 is the October high.
2376 is the April high, the former post-2002 high
2368 is the early October handle high.
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
The 50 day EMA at 2318
2300 represents some price support
S&P 500: Closed at 1399.76
Resistance:
1398 is a low from January 2000
1401 is a low from April 2000
Support:
1390 is the October high.
1389 is a low from November 1999
The 10 day EMA at 1387
1378 is a low from May 2000
The 18 day EMA at 1380
1371 to 1373 is the December 2000 peak and the January 2001 peak
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 1354
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 12,305.82
Resistance:
8% above its 200 day SMA. Has been struggling since it hit near 8% above that level previously in late October. Tends to start about 10%, so this is a bit early but it has been a long run.
Support:
The 10 day EMA at 12,175
October high is 12,167
The 18 day EMA at 12,119
The 50 day EMA at 11,896
11,865 from the early October consolidation
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 13
Treasury Budget, October (2:00): -$49.3 actual versus -$47.0B expected, -$47.3B prior (revised from -$47.4B)
November 14
Retail sales, October (8:30): -0.2% actual versus -0.4% expected, -0.8% prior (revised from -0.4%)
Retail ex-autos (8:30): -0.4% actual versus -0.3% expected, -1.2% prior (revised from -0.5%)
PPI, October (8:30): -1.6% actual versus -0.5% expected, -1.3% prior
Core PPI (8:30): -0.9% actual versus 0.1% expected, 0.6% prior
Business inventories, September (10:00): 0.4% actual versus 0.5% expected, 0.6% prior
November 15
NY Empire PMI, November (8:30): 26.7 actual versus 14.0 expected, 22.9 prior
Crude oil inventories (10:30): 1.28M actual, 435K prior
FOMC minutes, Oct. 25 (2:00)
November 16
CPI, October (8:30): -0.5% actual -0.3% expected, -0.5% prior
Core CPI (8:30): 0.1% actual versus 0.2% expected, 0.2% prior
Initial jobless claims (8:30): 308K actual versus 310K expected, 308K prior
Net foreign purchases, September (9:00): $65.1B actual versus $71.0B expected, $114.4B prior
Industrial production, October (9:15): 0.2% actual versus 0.3% expected, -0.6% prior
Capacity utilization, October (9:15): 82.2% actual versus 82.0% expected, 81.9% prior
Philly Fed, November (12:00): 5.1% actual versus 5.0 expected, -0.7% prior
November 17
Housing starts, October (8:30): 1.680M expected, 1.772M prior
Permits, October (8:30): 1.625M expected, 1.638M prior
CONTINUING PLAY TABLE:
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LEGEND
DATE: date play first appeared on report.
PLAY: Denotes the type of pattern or play.
Upside play types: Asc Tri=Ascending triangle/wedge; BO=Breakout; Cup=Cup base; Cup hdl=Cup w/handle; DB hdl=Double bottom w/handle; Dbl btm=Double bottom; Flat=Flat base; FlyPlat=Flying Plateau; Pennant=Pennant; Rv H&S=Reverse head & shoulders; Saucer=Saucer base; Test 18=Testing 18 day MVA; Test 50=Testing 50 day MVA; Test BO=Testing the breakout (could be 10 day MVA test, etc.)
Downside play types: CCall=Covered Call; Dsc Tri=Descending triangle/wedge; Dbl Top=Double top; H&S=Head & shoulders; Put (generic downside);
PIVOT=Buy point
Tgt=Target stock price for the play. Applies to stock and options.
Vol=Volume for the most recent session.
TgtV=Target volume to enter the play.
Stop=Stop advisory point. This is advisory and we may or may not exit a play if it hits this level depending upon market conditions.
PLAY STATUS: Buy not hit (stock has not hit buy point); Buy not issued (stock has hit buy point but did not enter due to weak volume, poor intraday action, poor market action); Current (ongoing play already entered); Entered today (entered the play that session); Exited (closed the position); Target hit (play hit initial target; will note if took all or partial gain or let run further); Trailing stop (exited using a trailing stop loss).
Upside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
Upside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
ACTU 11/15 Test BO 5.65 -0.06 5.78 6.97 297K 300K 5.38
Buy Not Hit. Took a lower volume breather after that strong Wednesday session.
ADS 10/26 Test BO 64.20 +0.34 61.17 69.95 766K 1.3M 61.55
Current. An advance but on lower volume and a doji. After a strong run it can fade back to the 10 day EMA (62.20) and still be in great shape.
AKAM 11/11 DB hdl 49.20 +1.10 50.75 60.95 5.4M 7.5M 48.21
Buy Not Hit.
AKAM 10/21 Test 50 49.20 +1.10 47.20 55.95 5.4M 7M 48.04
Current. Nice hold at the 50 day SMA. Still set to make the break higher.
AMAG 11/04 Test BO 43.90 +0.76 40.95 48.98 524K 350K 40.97
Current. Strong volume as it tried to extend the move and it did, but gave back most of the gain on the session.
ATHR 10/24 Test 20 23.40 -0.28 21.97 27.95 3.1M 4M 23.94
Current. Lower volume as it tapped the 10 day EMA on the low and held up fine.
BAMM 10/23 Test BO 21.57 -0.43 20.68 24.94 154K 150K 19.78
Gave back a hair of the strong Wednesday move. May come back a bit more and give a good entry point after the test.
BIDU 11/07 Asc Bse 107.40 +4.14 91.15 101.95 3.5M 2M 103.75
Current. Gapped higher on volume, extending its super move.
BMRN 10/11 DB hdl 17.55 -0.01 16.62 19.95 663K 1.2M 16.69
Current. Doji after a decent move. Working up the 10 day EMA still, trying to get some upside breakaway momentum.
BRCM 09/25 Test 50 35.05 +0.59 30.96 35.68 14M 17M 33.75
Current. Pushed on up through the 200 day SMA, but volume was below average. No complaints; if it can hold over here it has plenty of upside ahead of it.
CEO 11/15 Cup hdl 85.44 -1.32 88.22 99.90 333K 375K 85.74
Buy Not Hit. Struggled with the energy sector. Will drop for now but keep watching it.
CEPH 10/30 DB hdl 77.20 +2.23 71.85 81.95 2M 3M 75.11
Target Hit. Solid break higher on rising, average trade. Took some gain, letting the rest move on higher.
CMG 11/04 Cup hdl 58.77 -0.07 58.12 66.98 538K 1.4M 55.95
Buy Not Issued. Still looking for some volume to send it higher.
COH 09/25 Test BO 42.34 +0.14 35.05 40.48 4.3M 5M 40.75
Target Hit. Gapped higher and took some of the nice gain off the table after two strong upside sessions.
CRM 11/06 Cup hdl 41.97 -0.42 42.40 49.95 3.1M 3M 41.95
Current. Gapped lower but rebounded to recover the 18 day EMA so let it ride.
CTRP 10/28 Test 50 56.00 -3.50 51.00 61.45 741K 577K 57.32
Current. Pretty nasty drop toward the 10 day EMA (55.16) but volatile is its middle name so letting it make this test.
CXW 10/18 Test 18 46.55 +0.16 47.60 55.75 322K 600K 45.95
Current. Still flat lining along the 18 day EMA on low volume. Looks to be setting up the next move higher. Just have to let it work thru this consolidation.
DJO 11/01 Asc Tri 44.69 +0.06 41.65 48.95 132K 280K 43.95
DRIV 09/09 Test BO 60.26 +0.27 50.34 57.50 706K 1.4M 57.55
Current. Edging higher up the 10 day EMA, maintaining its uptrend.
ERTS 11/11 Test BO 58.56 -0.10 59.02 67.95 2.9M 3.8M 56.95
Current.
EZPW 10/21 Test BO 44.70 -1.05 44.12 51.95 302K 750K 46.55
Current. Back to the 18 day EMA on the close but on very low volume as EZPW holds support and tries to set up the upside once more.
FFIV 10/13 DB hdl 72.01 -0.67 58.00 69.95 1.2M 1.5M 70.55
Current. Gave back a bit with a doji on lower volume. Still trending nicely, so letting it do its work.
GLDN 11/10 Test BO 39.61 +0.13 39.30 46.32 164K 245K 37.35
Current. Also working laterally in a very tight, narrow range. Nice consolidation.
GME 10/21 Test BO 52.27 -0.46 53.00 60.45 1.2M 1.7M 50.55
Current. Still working laterally along the 18 day EMA, holding the last move. Still constructive action.
GME 10/11 Cup hdl 52.27 -0.46 49.84 58.95 1.2M 2.1M 50.45
Current.
HMSY 11/09 Test BO 14.10 +0.01 14.55 17.65 85K 331K 13.53
Buy Not Hit. Another nice tight doji at the 18 day EMA. Looks good, just needs to show the move.
HOC 10/10 Dbl btm 51.36 -0.93 46.82 54.50 997K 1.2M 50.32
Current. Gave back the Wednesday gain as oil and energy stocks struggled. Still easily above the 10 day EMA but don't want it below that level on the close.
ICE 10/18 Test 18 94.65 -1.05 83.64 94.95 3.6M 2.4M 94.45
Current. Another day of rest as ICE tests some of that strong move.
IIG 10/25 Asc Bse 24.70 +0.80 16.49 19.95 573K 200K 23.68
Current. Extending its breakout run on lower but still strong, above average volume.
IM 10/25 DB hdl 21.00 0.00 20.84 24.95 692K 1.5M 20.45
Current. Still bumping against 21, trying to generate a breakout.
IO 11/01 Test BO 11.21 -0.11 11.80 13.98 589K 750K 11.12
Current. Hanging on at the 18 day EMA as it tries to iron out its ragged pattern.
LAZ 11/09 Cup hdl 45.04 +0.24 44.75 51.95 585K 555K 42.38
Current. Strong volume but just a modest gain as LAZ extended the Wednesday breakout.
LH 10/28 Cup hdl 69.89 +0.74 68.80 78.75 656K 1.5M 67.22
Buy Not Issued.
MA 11/11 Test BO 94.52 -0.78 94.25 104.95 3.6M 3M 93.75
Current. Took the day off on low volume.
MRVC 11/14 Cup hdl 3.35 +0.05 3.49 4.48 892K 1.9M 3.22
Buy Not Hit. Still waiting for the break higher. Looks ripe.
MTW 11/02 Test BO 55.15 -1.36 55.50 66.48 528K 1.3M 53.95
Current. Faded right back after that solid Wednesday move. Lower trade so we will see if it can bounce off the 10 day EMA.
NTGR 11/04 Test BO 27.01 -0.27 26.68 31.89 353K 750K 26.24
Current. Still not able to make any headway yet after two weeks of a lateral consolidation. Still holding the gains, so just have to be patient.
NUE 10/30 Test BO 55.19 -2.96 58.30 67.95 5.2M 4.5M 57.45
Exited.
NVEC 11/11 Test BO 41.20 -1.62 42.75 51.95 564K 1.1M 39.43
Current. Faded but held the lateral range on some very low volume, indicating no real sellers, just under pressure with the AMAT news, etc.
NVEC 10/14 Test 50 41.20 -1.62 33.75 40.00 564K 580K 42.45
Current.
NVLS 11/13 Cup hdl 31.01 -0.01 31.12 37.25 6.7M 3.9M 29.95
Current. Strong volume as it showed a doji, resting after the strong move.
NYX 11/02 Cup hdl 93.78 -1.92 77.10 87.95 8.5M 2.4M 92.35
Current. Lower volume pause as it continues to work laterally and ponder the lack of merger with the London exchange.
OPLK 11/11 Test 50 20.56 -0.08 20.38 24.65 337K 368K 18.72
Buy Not Issued.
PFWD 11/08 Test BO 15.22 +0.15 15.03 17.94 177K 252K 14.45
Current. Low volume but holding its gains and its trend higher above the 10 day EMA.
PLCE 10/11 Cup hdl 67.59 -1.19 66.56 76.75 652K 922K 68.31
Current. Continues its struggles below the 18 day EMA as volume moved up to average. This is where it needs to make a stand.
PLCE 09/14 Test 20 67.59 -1.19 59.85 68.00 652K 800K 67.45
Current.
QLGC 10/30 Test BO 21.80 -0.21 20.65 24.65 3.8M 3M 20.97
Current. Volume was up again, this time as QLGC faded back some from that strong Tuesday break higher.
SAY 11/13 Cup hdl 22.86 +0.16 22.84 27.45 1M 1.1M 21.54
Buy Not Issued. Gapped higher but volume was lower and it couldn't do anything with the move.
SCHW 11/06 Cup hdl 18.52 +0.13 18.55 22.45 6.6M 6.5M 17.68
Buy Not Issued. Gapped up but volume was lower and it was up and down on the session. Want to see more of a clean break.
SEIC 11/04 Test 50 59.23 +0.43 56.88 64.95 315K 850K 57.74
Current. No volume but still moving higher as it has the past week, taking some baby steps.
SKX 11/02 Test BO 29.34 +0.41 29.41 34.95 726K 500K 28.48
Buy Not Issued. Volume jumped as it tested the waters off the 10 day EMA. Looks ready to make the move.
SMSC 10/03 Cup hdl 32.44 -0.54 29.21 34.75 332K 504K 31.89
Current. Gave back a bit of the strong move the prior two sessions.
SMSC 09/16 Cup hdl 32.44 -0.54 30.05 34.75 332K 504K 31.89
Current.
SMSI 11/15 Test 50 16.95 +0.10 17.11 20.55 543K 165K 15.91
Buy Not Issued. Gapped higher but could not give the breakaway move and faded.
STLD 10/31 Cup hdl 57.30 -3.79 61.68 72.45 1.5M 2.1M 59.95
Buy Not Issued. Dropping. Tanked as the metals had a rusty session.
TNB 11/13 Rev HS 53.78 +1.02 52.55 60.45 673K 700K 50.65
Buy Not Issued. Gapped higher on strong volume but did not go anywhere afterwards. Decided to see if it would test instead of entering. Will watch to see what it does.
TSRA 11/08 Test BO 37.85 +0.19 37.48 44.95 925K 1M 35.95
Buy Not Issued.
TYL 11/15 Test 50 14.33 -0.02 14.52 17.48 663K 265K 13.65
Buy Not Issued. Surging volume but could not go much of anywhere.
UCTT 11/08 FlyPlat 13.95 +0.17 13.88 16.95 358K 600K 12.98
Current. Modest gain as it holds the Tuesday break higher and set the stage for the continued move.
VCLK 11/01 Rev HS 22.11 -0.02 19.86 23.98 1.8M 2.4M 21.94
Current. Working laterally and trending slightly higher still above the 10 day EMA.
WBSN 11/13 Cup hdl 27.74 -0.31 28.22 33.95 372K 1M 26.78
Buy Not Hit. Still primed to move.
WMI 11/08 Cup hdl 38.46 +0.26 38.55 44.45 1.3M 2M 37.61
Current.
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