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world stock market, us stock market
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1/02/07 Technical Traders Report Update
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Technical Traders Report Subscribers:
MARKET ALERTS
Target hit alerts: None issued
Buy alerts: HCP; DTX
Trailing stops: AKAM; CVD; CELG
Stop alerts: Cleared out some positions ahead of year end as planned: ICON; NTGR; OPLK; SINA; TRMB
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:
- Market ends 2006 with caution.
After a solid second half, 2006 went out cautiously. A solid run off the summer lows in July just about held to the end of the year. It actually did hold, but as the run gained a bit of age some volatility moved in. It managed to survive that, but in the last two weeks of the year some sellers got the early start on 2007. Not many wanted to lock in gains in 2006 so the indices managed to hold their gains right up to the end. Nonetheless there was some selling of laggard positions as well as some 'beat the Christmas rush' profit taking. Again, not enough to derail the gains, but an indication that the start of 2007 could be a bit bumpy.
Often after a good year or at least a good finish to a year there is a bit of profit taking to start things off. At this stage of the economic expansion (now at roughly 4 years) you have to start wondering just how much is left in the tank for the economy and thus the stock market. After a slowdown in the second half of 2006, however, leading indicators (the good ones such as ECRI) are showing a moderate expansion after 2007 gets underway. With the Fed still on hold and bond yields still relatively low, that typically bodes well for the stock market. The other 'x' factor, inflation, remains under control despite Federal Reserve protestations; the leading inflation indicators actually peaked in late 2005 and the last three inflation readings (CPI, PCE) are finally showing an actual decline in the inflation itself. That third key factor, low inflation, also bodes well for equities.
There is a new Congress to start 2007, and there are several 'bold' measures to be taken up right away. The minimum wage will be addressed and likely hiked; it is a symbolic 'we feel your pain' gesture from the new democratic House, though with a four year economic expansion you have to wonder what pain is being referenced. History shows that the minimum wage hike will only hurt those it is designed to help, but the economy will likely handle it. The more important actions are down the road, i.e. when the Congress gets to the real business of taking on spending reductions and how that impacts the tax cuts. There was a lot of posturing pre-election about no tax hikes unless as a 'last resort,' but you wonder how short a road it is to that last resort. No one on either side of the aisle has the stones to cut any spending, evidenced by the republicans passing Medicare Part D that would never have passed a republican Congress if a democrat was president (it would have been labeled 'tax and spend' politics). The asinine view that $1 in tax cuts equals $1 in revenue reduction still holds sway in Congress (similar to how the Phillips Curve, though completely disproved, still pervades everyday economic attitudes), and thus we face the prospects of the new Congress either expressly trying to raise taxes and undo their beneficial growth effects or punts and will let them start expiring down the road. Social security and Medicare are two huge issues, but if the democrats won't consider fundamental change there won't be any other than in the tax code; a 20% gross tax hike in 10 or 15 years will be the answer, but that will also be the line where the young say 'no mas' and refuse to pay for all us old folks.
As you can see there are economic issues facing Congress in addition to Iraq, oil dependency (we need to get off the pipe dream that ethanol will save us), and even who will represent us at the U.N. Any of those could be a battleground, but you get the feeling that President Bush is throwing in the towel after the last elections. Last time we checked he was still the President, but a lot of strange things happen in the last two years of a 2-term president; they get more interested in legacies than real accomplishments. That can lead to a lot of damage we have to live with for decades. If we would amend the Constitution back to the way it was regarding presidential terms (no limit) or amend it to limit congressional terms as well (to keep it parallel), then we would have more constructive compromise because both sides would know the other could be back yet again. If you know you have to deal with someone to get something done, you go ahead and do it versus waiting out a president you don't like.
Even with all of this (and is it really different from any other years past?), the market starts the year off in good position, still riding an upside rally based on a solid economy. With the economy still looking good overall, there is room for more upside. The transports remain an issue as they break lower, not confirming the latest DJ30 new high. Bond yields remain inverted as well in a combination of world liquidity and concern re the future given the Fed's continued 'tough love' language. Those counter what look to be positives. Indeed, some would say things are viewed too positive as evidenced by the generally positive economic assessments from most of the big think tanks, brokerages, and central banks, not to mention rather high bullishness and low bearishness regarding equity markets.
We will have to see how that pans out. There could be some early bumps on profit taking after the run off the July low. The market could really use a consolidation here that sets up a run into May. By that point we will see the political landscape much better, but outside of major overhauls in Social Security, taxation, and the like (and with a divided White House and Congress that isn't going to happen) the impact will be limited. Thus it is a question of how long the economy can continue throwing off growth. Through the end of the year the market viewed growth prospects favorably. We still see good stocks in good position to move higher. It remains extended an a bit ruffled with the pre-year end shuffling, but overall there is no distribution underway. We will let the new year profit taking run its course, protect what we have, and as always be ready to take what the market gives.
We currently have some positions on the report in good position that we are looking at to move. There are others, upside and downside, we are looking at for the week. Those are listed in the 'Plays' section, and as the week unfolds we will put those on the report as warranted.
THE MARKET
MARKET SENTIMENT
VIX: 11.56; +0.57
VXN: 16.23; -0.09
VXO: 11.25; +0.84
Put/Call Ratio (CBOE): 0.88; -0.03
NASDAQ
Stats: -10.28 points (-0.43%) to close at 2415.29
Volume: 1.426B (+13.21%)
Up Volume: 447M (+299.368M)
Down Volume: 940M (-151.284M)
A/D and Hi/Lo: Decliners led 1.47 to 1
Previous Session: Decliners led 1.48 to 1
New Highs: 120 (-19)
New Lows: 37 (+14)
The Chart: http://www.investmenthouse.com/cd/^ixic.html
SP500/NYSE
Stats: -6.43 points (-0.45%) to close at 1418.3
NYSE Volume: 1.024B (+13.4%)
A/D and Hi/Lo: Decliners led 1.59 to 1
Previous Session: Decliners led 1.3 to 1
New Highs: 166 (-24)
New Lows: 18 (+9)
The Chart: http://investmenthouse.com/cd/^gspc.html
DJ30
Stats: -38.37 points (-0.31%) to close at 12463.15
Volume: 161M shares Friday versus 126M shares Thursday.
The chart: http://www.investmenthouse.com/cd/^dji.html
Support and Resistance
NASDAQ: Closed at 2415.29
Resistance:
The 18 day EMA at 2426
2457 is the July up trendline
2468.42 is the November 2006 high
2471 is the December 2006 high
2477 from January 1999
2493 is an interim peak from February 1999
Support:
2412 from June 1999 low
The 50 day EMA at 2396
2384 is an interim peak from January 1999
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
2300 represents some price support
S&P 500: Closed at 1418.30
Resistance:
1425 is an interim high from November 1999
1432 is the December 2006 high
1444 from February 2000
1475 from peaks in December 1999 and January 2000
Support:
The 18 day EMA at 1416
1408 is the November high
1408 is the July up trendline.
1401 is a low from April 2000
The 50 day EMA at 1396
1390 is the October high.
1389 is a low from November 1999
1378 is a low from May 2000
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.
Dow: Closed at 12,463.15
Resistance:
Back to 8.6% above the 200 day SMA, about the point where DJ30 started to struggle in late October.
Support:
12,499 is the December intraday high.
The 10 day EMA at 12,436
The 18 day EMA at 12,394
12,361 is the November 2006 high
The 50 day EMA at 12,245
October high is 12,167
11,986 is price support from mid-October and the early November low.
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.
January 3
Construction spending, November (10:00): -0.6% expected, -1.0 prior
ISM index, December (10:00): 50.0 expected, 49.5 prior
FOMC minutes, December (2:00)
January 4
Initial jobless claims (8:30): 318K expected, 317K prior
Factory orders, November (10:00): 1.4% expected, -4.7% prior
ISM Services, December (10:00): 57.0 expected, 58.9 prior
January 5
Non-farm payrolls, December (8:30): 110K expected, 132K prior
Unemployment rate (8:30): 4.5% expected, 4.5% prior
Hourly earnings (8:30): 0.3% expected, 0.2% prior
Average workweek (8:30): 33.9 expected, 33.9 prior
THE PLAYS
Looking at these current plays in good position to move this week:
GRMN
MRVC
NITE
RATE
SYK
USM
BBY (downside)
Looking at these plays as potential new plays this week and will put on the report as warranted:
BAMM
COGO
ICE
VCLK
CTCM
CHL
MA
PRFT (downside)
CLDN (downside)
EME (downside)
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
AKAM 11/11 DB hdl 53.12 -0.47 50.81 60.95 2.3M 7.5M 53.95
Trailing Stop. Slipped thru the 18 day EMA on the close. As the NASD
leader in 2006 we expect some more weakness to start
2007. Will let it test the 50 day EMA (50.93) & if
it holds & bounces we will look at new positions then.
AKAM 10/21 Test 50 53.12 -0.47 47.20 55.95 2.3M 7M 53.95
Trailing Stop.
AMAG 12/27 Test 18 59.72 -0.01 60.55 71.95 488K 425K 57.97
Current.
BMC 12/16 Flat 32.20 -0.37 33.10 39.75 1.1M 2.5M 31.89
Current.
BOBJ 12/16 Cup hdl 39.45 +0.28 40.65 48.88 885K 2.5M 38.65
Current.
CBG 12/28 FlyPlat 33.20 -0.63 34.11 40.95 833K 3.9M 32.72
Buy Not Hit.
CELG 11/30 Test 18 57.53 -0.12 57.38 65.65 2.3M 4.4M 57.65
Trailing Stop. Slid below the 18 day EMA intraday & we decided to take the $ off the table. A 2006 leader, we will see if the profit takers come in early Jan. If they do we will let it test toward 50 day MA (54.50) & see if it can hold & rebound for new buy points.
CMED 12/26 DB hdl 27.07 -0.40 27.45 32.98 345K 943K 26.31
Current.
COH 09/25 Test BO 42.96 -0.68 35.05 40.48 1.3M 5M 42.54
Current.
CRAY 12/20 Test 50 11.88 +0.02 11.21 13.65 273K 596K 10.98
Current.
CTRP 12/21 Test BO 62.37 -1.03 63.88 73.48 159K 475K 61.22
Buy Not Issued.
CTRP 12/09 Test BO 62.37 -1.03 58.50 69.95 159K 525K 61.45
Current.
GPRO 12/13 Cup 52.37 +0.28 53.85 61.55 274K 400K 51.68
Current.
GRMN 12/28 Asc Tri 55.66 -0.59 56.55 66.45 1.8M 4.5M 54.48
Buy Not Issued.
HCP 12/20 Test BO 36.82 +0.52 36.80 4395.0 723K 1.4M 35.74
Entered today.
HLTH 12/12 Saucer 12.39 -0.11 12.38 14.85 6M 5M 12.15
Current.
HMSY 12/14 Asc Bse 15.15 -0.07 14.98 18.31 38K 331K 15.28
Current.
IBM 12/12 Test 18 97.15 +0.18 95.05 104.95 4.4M 8M 95.45
Current.
ICON 12/13 Test BO 19.39 +0.33 19.89 23.89 2M 944K 19.04
Exited. Managed to bounce back off the 18 day EMA, but it is
retail & was on the bubble, wanting to see how it responds
to the new year. If it holds up we will look at a new play.
IIVI 12/18 Asc Bse 27.94 -0.59 27.64 32.98 130K 270K 27.11
Current.
INAP 12/28 FlyPlat 19.87 -0.05 20.32 24.45 353K 800K 19.31
Buy Not Hit.
INFY 12/19 Test 50 54.56 -0.45 54.37 65.45 549K 2.6M 53.33
Current.
ININ 12/13 Asc Bse 22.42 +0.87 19.48 23.35 857K 350K 21.11
Current.
LEH 12/20 DB hdl 78.12 +0.12 78.38 89.95 2.4M 5.5M 76.62
Current.
MRVC 12/27 Cup hdl 3.54 +0.05 3.72 4.78 1.3M 2M 3.46
Buy Not Hit.
MS 12/11 Asc Bse 81.43 -0.16 80.19 91.95 2.4M 5M 79.98
Current.
NITE 12/27 DB hdl 19.17 -0.40 20.05 24.00 672K 2M 18.95
Buy Not Hit.
NTAP 12/16 Test BO 39.28 -0.52 41.45 47.95 2.2M 5M 39.45
Buy Not Issued.
NTGR 12/06 Test BO 26.25 -0.49 26.53 31.89 323K 1M 26.24
Exited.
NVLS 11/13 Cup hdl 34.42 -0.21 31.12 37.25 2.3M 3.9M 33.57
Current.
OPLK 12/04 Dbl btm 20.56 -0.10 21.30 25.45 146K 395K 20.38
Exited. Tried to rally but faded & we took the money off the
table. Still in a decent set up but wanted to see how
semiconductors respond to start the year. Could give
us a new buy if it can hold on.
PCLN 12/20 Asc Bse 43.61 -0.19 43.05 50.95 437K 1.4M 41.98
Current.
PKTR 12/14 Test BO 13.60 -0.10 13.48 16.85 235K 683K 12.77
Buy Not Issued.
RATE 12/11 Test BO 37.95 -0.04 39.15 47.45 215K 495K 36.41
Buy Not Hit.
SINA 11/21 Test BO 28.70 +0.18 29.00 33.98 350K 950K 28.45
Exited.
SMG 12/20 Test BO 51.65 -0.42 52.20 59.95 194K 450K 51.08
Current.
SNDA 12/26 Test 18 21.67 -0.54 21.66 25.99 816K 750K 21.35
Current.
SYK 12/18 Test BO 55.11 -0.34 55.55 63.95 796K 1.4M 54.05
Buy Not Hit.
TALX 12/16 Asc Bse 27.45 +0.25 27.38 32.95 252K 325K 26.57
Current.
TRMB 12/19 PreAnn 50.73 -1.25 52.74 60.89 185K 500K 50.95
Exited.
TSRA 11/08 FlyPlat 40.34 -0.52 38.88 45.95 356K 1M 39.69
Current.
USM 12/26 Test 18 69.59 +0.49 69.32 79.75 48K 150K 67.94
Buy Not Issued.
VIP 12/27 Test 18 78.95 -1.30 81.25 96.96 477K 800K 77.15
Current.
VRNT 12/21 Rev HS 34.28 -0.54 34.78 40.68 58K 200K 32.98
Buy Not Issued.
VSEA 12/09 Asc Bse 45.52 -0.49 42.22 48.95 462K 1.4M 44.11
Downside Plays
Stock Date Play Close +/- Pivot Tgt Vol TgtV Stop
BBY 12/26 Put 49.19 -0.18 49.21 46.88 3.1M 5.5M 50.09
Buy Not Issued.
CNX 12/18 Dbl Top 32.13 -0.43 33.30 31.05 1.7M 2.4M 32.57
Current.
CVD 12/12 Put 58.91 -0.51 59.84 58.00 150K 550K 59.04
Trailing Stop.
DTX 12/28 Put 458.62 -0.57 457.31 443.15 0 0 460.65
Entered today.
PPS 12/21 Put 45.70 +0.22 45.50 43.25 529K 290K 46.05
Current.
TSCO 12/16 Put 44.71 -0.29 45.40 42.50 330K 520K 45.38
Current.
Good Investing!
Jon L. Johnson and your Technical Traders Report Team
All of the foregoing is commentary for informational purposes only. All statements and expressions are the opinion of Online Investment Services, LP. or its paid consultants and are not meant to be a solicitation or recommendation to buy, sell, or hold securities. We are not licensed or registered in the securities industry. The information presented herein and on our related web site has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolio of Partners in Online Investment Services, LP. or its paid consultants may, in some instances, include securities mentioned herein and on our web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors.
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