|
|
trade stock, stock trading pick
* * * *
4/23/07 Investment House Daily
* * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit alerts: None issued. Letting some strong movers continue to run even though they have hit their targets.
Buy alerts: OIH; VMSI
Trailing stops: None issued
Stop alerts issued: None issued
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.html
SUMMARY:
- Indices take a breather as energy starts back and some leaders continue higher.
- Earnings still showing better than expected gains and thus far driving the market higher.
Market takes a moment even as some early leaders start higher once more.
After the new highs on just about everything non-tech last week, the market was primed for a pause, particularly after a positive end to expiration week. The market often tracks the other way from the expiration move, and it more or less did so Monday though the action makes it difficult to term it as a response to expiration. Stocks basically found it harder to push higher even with some strong earnings (e.g. ACI, CNH), more M&A activity (AZN buying MEDI, BCS buying some ABN assets), and an active analyst docket (IBM upgraded; JSDA, XOM, PFE downgraded on valuation).
Simply put, that news of the day could not overcome a market that was a bit winded after the run last week. If nothing else the continual 'Dow at a new high, Dow at a new high' reporting on the financial stations indicated a pause was merited. Thus the indices waltzed modestly higher and modestly lower around the market all session, closing on the modestly lower side. Breadth was a bit negative, volume was lower, and things were pretty quiet all over. A very nice, orderly consolidation session that refused to give up much ground won last week. Have to like that.
One reason it refused to give up ground, however, was the rebound in energy stocks after their pullback last week. Energy was an early leader as the market recovered from the February and March selling. After an impressive run that helped lead the market out of those lows they took last week off. Indeed, their pullback midweek almost upset the move in the rest of the market. Almost. There was enough money spreading out past energy to kept thinks moving higher. Energy showed signs Friday it was already kicking to get back to producing gains, and Monday there were some impressive moves once again.
Leadership was not limited to energy, however. Industrials were strong once more with heavy equipment-related stocks rumbling higher. CMI, DE, TEX, PCAR followed CAT's lead from last week and put in some impressive gain. Steel stocks showed their mettle as well as they continued their runs. Tech once again lagged, particularly semiconductors (at one point SOX was the only negative index), but even that can change with the TXN earnings after hours. In short, though the market took a breather on the session, there was still a lot of backbone support the market, and thus it held the line quite nicely for a moment of rest session.
Technically it was, as noted above, the kind of session you want to see after a solid run. Sure NASDAQ still has not made it past the February highs, and that is something the market still has to deal with, but the Monday session was a good start to any pause, consolidation or pullback right here following a strong run. Volume was lower on NASDAQ and NYSE, and while that is not unusual on the Monday following expiration, NYSE trade was considerable lower than any of the upside volume last week. NASDAQ trade did not see the same drop off as NASDAQ is still a question mark for investors; TXN will help chips, however, and that can translate into a better NASDAQ move. Remember, the chips have lagged everything else and were just following along as NASDAQ reached for that new high. If they join the upside NASDAQ gets a boost.
As for the other aspects, breadth was contained at -1.1:1 on NYSE and -1.3:1 on NASDAQ. Volume backed off. Leadership remained strong. The indices continued to show a strengthening spine as they did not want to give up any gains. Trade was sluggish overall, but quite orderly on the session. Love to see nice quiet days when the market is not moving higher as it shows the sellers are not barking on the other side of the door just waiting to grab the rally's ankle and chew it off.
In short, not a bad response at all to last week's gains. It was just one day off, and typically a market will pause or pullback more than a session, but it is always a plus when a pause starts quietly as opposed to a quick reversal. As noted over the weekend, bulls are forming a larger herd while the bears are looking for hibernation after coming out of their dens and seeing their shadow or something in the February and March selling. That is something to keep in mind as a contrary indicator as the market takes this pause.
THE ECONOMY
Not much economic action Monday to report on. Will pick up the discussion as more data hits this week.
THE MARKET
MARKET SENTIMENT
VIX: 13.04; +0.97
VXN: 16.38; +0.67
VXO: 12.49; +0.82
Put/Call Ratio (CBOE): 0.92; +0.17
Bulls versus Bears:
Bulls: 52.7%. Well this is hardly good news with the bulls spiking back up over 50 and well on the way to 55% that is considered bearish. Up from 49.5% and 45.5% just a month back. It hit 50.5% level a couple of months back though below 53.3% on the recent high. Bulls bottomed last summer near 36%. That is the lowest level since September 2006.
Bears: 25.3%. Heading the wrong direction as well, falling from 27.5%. Fairly volatile of late as it bounced from 25.8% the week before but down from 28.4% and 28.9% immediately before that. Still above the 20% where it held to start the year. 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).
NASDAQ
Stats: -2.72 points (-0.11%) to close at 2523.67
Volume: 2.013B (-6.85%). Volume dumped back to the lowest in 4 sessions. Volume was not the strongest suit for NASDAQ last week as it technically showed some churn and some distribution. Given expiration it was not that clear the sellers were out in front. In any event NASDAQ continued higher, finally on some decent Friday trade.
Up Volume: 943M (-575M)
Down Volume: 1.013B (+432M)
A/D and Hi/Lo: Decliners led 1.36 to 1. Solid upside breadth to end the week and very modest downside Monday. NASDAQ 100 closed positive (0.23%) so it was the broader tech market that was weak as worries about semiconductor earnings (TXN after the close) kept NASDAQ on its heels for the session.
Previous Session: Advancers led 2.21 to 1
New Highs: 168 (+2)
New Lows: 57 (+5)
NASDAQ CHART: http://www.investmenthouse.com/ihmedia/NASDAQ.jpeg
NASDAQ rallied higher once more though it could not take out the February high and then faded for a very modest lose. Lower volume, narrow breadth, modest loss. No one was in ready to sell the index despite its twin gaps higher on the last two Fridays. TXN's earnings after the close pushed SMH (semiconductor ETF) well past the high in its trading range; with the semiconductors' help NASDAQ may be able to make the breakout and join the rest of the indices.
SOX (-0.67%) tried to make the break from its 6 month trading range Friday but could not make the move stick. Monday it faded back from that resistance level (493), posting the larger of the downside moves. After hours TXN was up almost 3 sticks, leading the chip sector generally higher. Could provide some leadership that gives NASDAQ a boost.
SP500/NYSE
Stats: -3.42 points (-0.23%) to close at 1480.93
NYSE Volume: 1.439B (-26.4%). Volume plunged back below average, the lowest in a week, as the NYSE indices gave up some ground from last week's gains that pushed them to new highs.
Up Volume: 635.283M (-930.654M)
Down Volume: 787.006M (+411.169M)
A/D and Hi/Lo: Decliners led 1.06 to 1. Flat as a pancake after a strong surge on Friday as the energy stocks started to recover from their pullback.
Previous Session: Advancers led 3.45 to 1
New Highs: 306 (-35)
New Lows: 15 (+2)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP500 faded back on low volume, taking a breather after the strong Friday move that broke it to yet another new post-2002 high, that after a three day consolidation of the initial breakout. SP500 is in the old uptrend channel once more and the Monday fade still leaves it with some room to spare (1477 is the trendline) for an additional test of the solid breakout.
SP600 (-0.13%) continued its lateral move, stalling at the highs of the past week that market the high on its breakout move two Mondays back. The small caps struggled some last week as the energy sector tested. With the energy stocks starting to rebound once more after their test we will look for SP600 to make a new breakout move.
DJ30
The blue chips took the day off as well, fading back on very modest trade, still holding the breakout over the February high. As noted last week, they rallied up to the November/February up trendline (12,985), trying to get back into the old groove, the old channel it rode higher from November to late February when it crashed through it. It is hard to get back into these channels, and after the strong run and bumping into it last week, this lower volume pullback helps set up the next move.
Stats: -42.58 points (-0.33%) to close at 12919.4
Volume: 223M shares Monday versus 415M on Friday expiration.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
TUESDAY
Tuesday some economic news (consumer confidence, existing home sales) is stirred in with the steady stream of earnings. As noted earlier, the TXN sparked up the chip sector and indeed techs in general after hours. The question is how much strength the earnings can provide given the run to this point and the start of a pause on Monday. NASDAQ will also be somewhat challenged by earnings from the likes of JNPR, as NASDAQ 100 stock headed lower after hours on its earnings.
The end result may simply be more of an overall test that started Monday along with strong moves from strong sectors. Energy remains a sector worth watching as it rebounds from its recent pullback to test the strong run. Healthcare is also solid. We are not going to forget the techs; there are internets and also some semiconductors that are in position to move if the overall sector can finally make its break from the long lateral trading range. Buying into earnings season is always a harder proposition, and thus sticking with the leading sectors and stocks in good patterns that have tested back from good moves provide the better edge. Recovering sectors (those that have lagged the run higher, e.g. chips) are typically much more volatile even with good results, but we cannot ignore them because the market moves tend to spread out as they progress. Techs and chips have lagged, and there are some good bases out there that can provide the breakout. Thus we continue to look for those as well; thus far they have not wanted to lead, but we are watching if they do start to step out.
In sum, no complaints about the Monday action as the losses were modest after the solid NYSE moves last week and there was plenty of leadership still in the market (e.g. energy coming back, steel). We will continue to look for upside opportunity during this test given the market's ability to continue higher and build off the short double bottom in the February and March selling.
Support and Resistance
NASDAQ: Closed at 2523.67
Resistance:
2531 is the February high (post-2002 high)
2533 is the December/January up trendline
Support:
2523 is price resistance November 2000
2509 is the January 2007 high
The July/August trendline at 2506
The 10 day EMA at 2501
2471 is the December 2006 high
2468.42 is the November 2006 high
2460 is the March high
The 50 day EMA at 2455
2405 is the 'hump' high
2400ish from the late November and late December 2006 lows.
2379 is the October high.
2376 is the April high, the former post-2002 high.
2368 is the early October handle high.
2340 is the March low
2331 is the March intraday low
S&P 500: Closed at 1480.93
Resistance:
1496 is a peak from July 2000
1500 from April 2000 peak
1520 from the September 2000 peak
1528 close, 1553 intraday from March 2000 all-time index peak
Support:
1477 is the late November to February up trendline
1475 from peaks in December 1999 and January 2000
1461.57 is the February 2007 high.
The 10 day EMA at 1465
The 18 day EMA at 1454
1440 is the mid-January high
1439 is the March high
The 50 day EMA at 1436
1432 is the December 2006 high
1425 is an interim high from November 1999
1410 is the 'hump' high
1408 is the November high
Dow: Closed at 12,919.40
Resistance:
12,985 is the former up trendline that marks the channel.
Support:
12,796 at the February 2007 and all-time high
The 10 day EMA at 12,754
12,700 is the early February peak intraday high
12,623 is the mid-January high
The 50 day EMA at 12,514
12,511 is the March intraday high.
12,499 is the December intraday high.
12,361 is the November 2006 high
12,350 is the March 'hump' high
12,039 is the early March low.
October high is 12,167
11,986 is price support from mid-October and the early November low.
11,940 is the March low
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
April 24
Consumer Confidence, April (10:00): 105.0 expected, 107.2 prior
Existing home sales, March (10:00): 6.50M expected, 6.69M prior
April 25
Durable goods orders, March (8:30): 2.5% expected, 1.7% prior
New home sales, March (10:00): 885K expected, 848K prior
Crude oil inventories (10:30): -994K prior
Fed Beige Book (2:00)
April 27
GDP, Q1 advance (8:30): 2.0% expected, 2.5% prior
Chain deflator (8:30): 3.0% expected, 1.7% prior
Employment Cost Index, Q1 (8:30): 0.9% expected, 0.8% prior
Michigan sentiment, revised, April (10:00): 85.3 expected, 85.3 prior
End part 1 of 3
|
trade stock
stock trading pick
|
