|
|
money investment, investment help
* * * *
3/12/07 Investment House Alerts Report
* * *
IH Alert Subscribers:
MARKET ALERTS:
Target hit alerts: None issued
Buy alerts: CSE; GS; WMS
Trailing stops: None issued
Stop alerts: None issued
SUMMARY:
- Stocks start low, close high, but not much volume.
- Retail sales, TXN update, and financial earnings on tap.
- Letting stocks rise as much as they will on this rebound.
Market continues higher, pushes rebound to a week of gains.
There was no scheduled economic news, but there was certainly a lot of news. On the continuing mortgage drama NEW said its financing was cut off by its lenders and in kind of a retaliatory move it released a list of those financial institutions with ties to its business. As the mortgage world turns. M&A activity continued with NUH buying SIE while KKR is taking DG (discount retail) private. Interesting development given, as noted last week, we are watching those stocks as something of an economic indicator. They perform best when the economy is worse off. Some private money apparently thinks these are going to start picking up their business in the future, presumptively based upon a weakening economy.
The analysts were at work as well, upgrading AKAM and XLNX, downgrading AMGN. Oil was backsliding some (closed at $58.91, -1.14/bbl) and OPEC's president said the cartel would remain 'flexible' at this weeks meeting. Flexible in cutting inventories or raising them? Only OPEC knows. It must be cool being a monopoly or a cartel. You make grandiose statements about helping everyone and then just go do whatever you want to do. Gee, I have heard that before but it wasn't a cartel; sounds a lot like Congress, the UN, etc. Japan reported 5.4% GDP growth, and that means it will likely hike rates in the future and that will bolster the yen. As we have seen of late that means pressure on the carry trade as the yen rises versus those countries whose debt instruments are used as the other half of the trade.
The market had a hard time making much of all of this news, but the predominant movement early on was basically nowhere. Stocks started a bit soft and then traded up and down in a range around the flat line for 3.5 hours. Made a higher low in the early afternoon, however, and that set up an afternoon climb solidly into positive territory. That move was tested in the last hour and stocks came close to giving up the green, but a late bounce cemented the upside. Low on the open to high on the close, almost like the old times eh?
Chips were in the lead ahead of the TXN mid-quarter update. As we noted midday it is hard to call that move short covering ahead of TXN's numbers given chips have moved in a lateral range for more than four months. That was part of it but there was also some actual good faith long side buying. They held their gains and that bought the rest of the market time, even allowing financials to recover after their weak session. Again, that helped the market turn from low to high on the close.
Technically that low to high action is always good to see as it shows buyers building into the session. NYSE breadth was not bad at 1.8:1. Moreover, the market did not rally hard, but, after looking top-heavy to end last week, it did not turn tail and sell off.
On the other side of the ledger volume was low on the upside once more; no one was in the market other than those few buyers. Sure it was higher on NYSE, but it was higher from rather pathetic, below average volume levels. That is like saying the Texans don't stink as bad as they used to or that drafting Mario Williams was not the worst choice the team could have made. It is all relative . . . say to choosing a defensive player who had the best year he could have and your team still reeked versus picking the offensive rookie of the year who almost led a formerly crappy team into the playoffs. See how it works?
The main indices crossed over their 10 day EMA, but without that volume there was not much upside strength. SP500 and NASDAQ showed inside days or 'hiramis' on their candlestick patterns. All that really tells us is there was no real change in the indices and the direction they break from this signal typically is where the next leg goes. With the indices making low volume rebounds the likelihood of the next move is a break lower.
With that in mind we are letting upside positions ride higher as long as they will on this rebound while ready for a potentially quick reversal that are often the hallmark of corrections. TXN's mid-quarter update did not help the upside much as it closed in both sides of the expectations range; likely a leader in the Monday bounce (chips) will not be as strong Tuesday.
THE MARKET
MARKET SENTIMENT
VIX: 13.99; -0.1. Bounced on the early selling but faded right back to 114. Again, it may go a bit lower but it is just about bottomed on this move. That means the indices have likely done so as well.
VXN: 18.52; -0.42
VXO: 13.56; -0.69
Put/Call Ratio (CBOE): 1.06; -0.1. Fourteen straight sessions above 1.0 on the close.
Bulls versus Bears:
Bulls: 46.2%, down nicely from 50.5% and 53.3% just over a month ago. When it bottomed last summer it was about 10 points lower near 36%. Still a ways to go, but when it cracks it can tumble quickly. A 4.3 point drop is pretty salty.
Bears: 26.9%. Solid jump from 24.2% last week and a good move up from the 20%ish the first two months of 2007. The angst is rising, and as with bulls, it is not all that far from levels that sparked prior rallies. It hit a post-2002 high in that late June 2006 move (hit near 36%), 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). It is not far from those 2005 levels.
NASDAQ
Stats: +14.74 points (+0.62%) to close at 2402.29
Volume: 1.638B (-16.48%). Lower volume, even farther below average, as the techs tried the 10 day EMA once again. Closed spot on that level on weak volume. It could still get a jolt of volume that sends it sharply higher with some news from techs, but the TXN update was less than inspiring.
Up Volume: 1.161B (+235M)
Down Volume: 454M (-561M)
A/D and Hi/Lo: Advancers led 1.38 to 1. Remains pretty lukewarm.
Previous Session: Advancers led 1.24 to 1
New Highs: 83 (+8)
New Lows: 65 (-10)
NASDAQ CHART: http://www.investmenthouse.com/ihmedia/NASDAQ.jpeg
Started lower but reversed to close positive and matching the 10 day EMA on the high. That is the near resistance and the bottom of the November and December range and thus far NASDAQ has not shown the strength to make the move. At some point it will, but at this stage and with this pattern it is in the 'show me' state, i.e. it has to show us the move to make us believers.
SOX (+0.89%) put together another gain itself and led the market higher. It cleared 475 resistance but is still below the January and February highs as well as the November and December peaks. Part of the ongoing 5 month range from 450 to 493, and unless the sentiment turns regarding TXN's after hours mid-quarter update it looks as if it will be challenged to make a move to the highs of the range on this run.
SP500/NYSE
Stats: +3.75 points (+0.27%) to close at 1406.6
NYSE Volume: 1.469B (+2.36%). Volume was up on NYSE but was still well below average. That is not the kind of gain in volume that signals a follow through and a surge higher to come. It can always pull it off but that would take a change in character right now. Possible, but needs a catalyst.
Up Volume: 852.487M (+77.121M)
Down Volume: 596.496M (-14.637M)
A/D and Hi/Lo: Advancers led 1.85 to 1. Breadth was solid. Not good enough for any follow through (need at least 2:1), and with the modest point gains and volume, no nee dto get into detailed analysis of the move.
Previous Session: Advancers led 1.47 to 1
New Highs: 111 (+32)
New Lows: 32 (+4)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
The large caps again logged a gain, moving through the 10 day EMA (1405.53) on the close. As with NASDAQ, that keeps it at near resistance at the December and January range lows. Trying to pick up some strength as the volume tries a comeback, and SP500 could still bounce higher to the 90 day MA (1415) or the 50 day EMA (1420) if there is something to push it. Unless volume moves sharply higher with it, however, it is still just a relief move. History indicates that such violent selling is followed by another drop after a recovery rebound as we have seen the past week.
SP600 (0.42%) rallied as well, moving up through the 90 day MA and closing in on the 50 day EMA (405). It is still in the middle of the November and December range and we will see how it tests the 50 day as an indication of its near term strength. The pattern is still very heavily biased to the downside and it would really take a change of character to break out from this pattern.
DJ30
The blue chips continued their rebound, rising through the 10 day EMA and up to the 18 day EMA (12,367) on the high and closer to the 90 day MA (12,395) and the 50 day EMA (12,427), the next likely resistance. Volume was up on the session, but as with SP500, still below average overall. A solid rise, but mostly a low volume one for most of the climb. As with the other patterns it is more indicative of a downside move than upside though DJ30 has shown a better bottom on the test lower than the other indices.
Stats: +42.3 points (+0.34%) to close at 12318.62
Volume: 219M shares Monday versus 211M shares Friday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
TUESDAY
Things should get a bit more interesting Tuesday with retail sales before the open, GS earnings (starting a three-day run of brokerage earnings), and the Monday after hours TXN mid-quarter update. TXN was lower but was not given the trap door treatment. Retail sales are not expected to blow anyone away given that 60+% of major retailers missed their same store sales estimates.
Thus far the relief bounce has slowed some with slower price gains on the upside and overall low trade levels. We continue to see solid upside moves and Monday was the same as new stocks broke higher and others continued their breakouts or their recoveries from the hard sell off. A week of upside on low volume has been logged. We are taking what the upside bounce is giving as always, but we have to understand this kind of move typically reverses and can do so rather rapidly.
TXN was not helping forge to new highs after hours but it was also not hurting things overall either. Kind of like Monday early on: the indices could not get through resistance, but they did not turn and dive lower either. Technical indications are that the relief bounce is weakening and we have to be ready for a reversal, but it has yet to give it up. That doesn't mean it won't; even the long rally from July gave it up and unless something changes the character this move is going to give it up as well.
All that means is we recognize where things stand, that history and the strength of the move to this point suggest another test lower, and that it would take a change of character to break the market sharply higher and make the recent selling the one and only bottom on this correction. Thus we expect another test as we let the upside run its course. There continue to be solid stocks in great position to move and that are moving well. We jumped on several of those last week and they continue higher this week. Good stocks with a lot of backing tend to hold up better in selling, but you have to decide ahead of time if you want to hang onto good stocks on the decline or get out faster on the turn and see how things shake out. We prefer the latter; we can always get back in at some point as there is more than one entry point for any run. At the same time we watch how this upside move fares we have to be ready to take advantage of the downside that presents itself when this move reverses and the market heads to test the prior low.
Support and Resistance
NASDAQ: Closed at 2402.29
Resistance:
2400ish from the late November and late December 2006 lows.
The July/August trendline at 2436
The 90 day MA at 2435
The 50 day EMA at 2435
2468.42 is the November 2006 high
2471 is the December 2006 high
2509 is the January 2007 high
2523 is price resistance November 2000
Support:
2379 is the October high.
2376 is the April high, the former post-2002 high
2368 is the early October handle high.
2339 - 2334
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 1406.60
Resistance:
The 10 day EMA at 1405.53 is cracking
1408 is the November high
The 90 day MA at 1415
The 50 day EMA at 1420
1425 is an interim high from November 1999
1432 is the December 2006 high
1440 is the mid-January high
1444 from February 2000
1450 is the late November to February up trendline
1475 from peaks in December 1999 and January 2000
Support:
1400 is some price consolidation
1389 is the October peak.
1371 to 1373 is the December 2000 peak and the January 2001 peak
1369 from early October 2006
1358 to 1362 mark a series of peaks from April 1999 to August 1999 high and the February
1353 to 1350 is the early October consolidation range
Dow: Closed at 12,318.62
Resistance:
12,361 is the November 2006 high
The 90 day MA at 12,394
The 50 day EMA at 12,427
12,499 is the December intraday high.
12,708 is the up trendline connecting the November and January intraday lows.
Support:
11,986 is price support from mid-October and the early November low.
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 pre-2000 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.
March 12
Treasury Budget, February (2:00): -$120.0B actual versus -$123.0B expected, -$119.2b prior
March 13
Retail sales, February (8:30): 0.3% expected, 0.0% prior
Retail ex-auto (8:30): 0.3% expected, 0.3% prior
Business Inventories, January (10:00): 0.2% expected, 0.0% prior
March 14
Current Account, Q4 (8:30): -$203.5B expected, -$225.6B prior
Crude oil inventories (10:30): -4.848M prior
March 15
PPI, February (8:30): 0.5% actual, -0.6% prior
Core PPI (8:30): 0.2% expected, 0.2% prior
Initial jobless claims (8:30): 325K expected versus 328K prior
NY Empire State Index, March (8:30): 17.0 expected, 24.4 prior
Net foreign purchases, January (9:00): $60.0B expected, $15.6B prior
Philly Fed, March (12:00): 3.5 expected, 0.6 prior
March 16
CPI, February (8:30): 0.3% expected, 0.2% prior
Core CPI (8:30): 0.2% expected, 0.3% prior
Industrial production, February (9:15): 0.3% expected, -0.5% prior
Capacity utilization, February (9:15): 81.3% expected, 81.2% prior
Michigan sentiment, preliminary, March (10:00): 89.0 expected, 91.3 prior
End part 1 of 3
|
money investment
investment help
|
