|
|
us stock market, stock tip
* * * *
5/02/07 Investment House Alerts Report
* * *
IH Alert Subscribers:
MARKET ALERTS:
Targets hit alerts: MA; Took some interim gain in OII
Buy alerts: BDX (bonus); OO; VIVO
Trailing stops: MON
Stop alerts issued: ICE
SUMMARY:
- Stocks continue Tuesday afternoon rebound as earnings & some better economic data provide the gas once again
- Factory orders bounce, February revised higher, as economic data continues improvement.
- Market's gain has a lot of traders edgy about new positions.
Market wastes no time moving right back up from the test.
The pre-market was sluggish with respect to futures and volume, and many floor traders were pessimistic about the prospects of continuing the Tuesday reversal from the selling. ADP issued its monthly prognostication of jobs and its 64K reading, if it carried over to the actual jobs report, would be a 4 year low. Of course the ADP report has an Awfully Damn Poor track record at predicting the actual government number. Whether that is a function of the government report being grossly inaccurate or ADP just being wrong is an open question. As it is attempting to be used as a guide or predictor, however, that is a distinction without a difference.
In any event, earnings were really the news of the day once more. Whereas Tuesday the operative earnings word was 'miss,' Wednesday it was back to 'beat.' 'Guided higher' was also thrown in quite a bit. MA, NT, AG, TEVA, CI, YUM; the list was long and cut across many sectors. MA was the pulse of the morning earnings as it is so closely related to the consumer. Its results showed increasing activity, i.e. more use of the cards. Now some will say that means a tapped out consumer relying on credit cards to make ends meet (the bank account half empty crowd) while others say it means a confident consumer just doing what consumers do (the bank account half full crowd). What it means is MA is just another of the many companies whose results showed that while the economy has indeed slowed, it has not dropped anywhere near the amount some thought.
The bell rang and any sluggishness ahead of the open was gone. If the other earnings shoe dropped on Wednesday, someone quickly picked it up. Stocks rallied from the gate. At 10:00ET factory orders were much better than expected and February was revised higher. That goosed the early rally even further. It worked laterally for a half hour, then oil inventories goosed it higher again (oil closed down 0.72 at $63.68). After that it was a steady melt higher to mid-afternoon when the sellers tried their hand but gave up after a rather half-hearted effort. More profit taking than any concerted effort to turn things back down.
Good price moves, new high on DJ30, new post-2002 high for SP500, NASDAQ moved back into its channel, and solid breadth. On the flipside, volume was significantly lower than Tuesday, but on par with the prior sessions. We were looking for Wednesday to be the rubber match after the Monday selling and the Tuesday reversal, but it was something of a draw in itself given the volume.
Technically the market once more showed it did not need much of a rest before turning back up. NASDAQ just had one session while SP500 put in something more akin to a test with its two flat sessions, the drop, then the drop but intraday reversal. Despite whether or not they tested according to the politically correct book of the market, the fact is that once again when the money encircling the globe saw a pullback it moved to fill it.
That gave the market that familiar low to high action demonstrated through most of this run. As noted above, NASDAQ reclaimed its channel, joining DJ30 and SP500 after the latter did so earlier (and never gave them up), while SP500 moved to a new post-2002 high and DJ30 a new all-time high that also pushed the Dow through the upside of that very channel. Breadth was strong once more (2.9:1 NYSE, 2.2:1 NASD). Volume was lower, but if you look past the higher Tuesday reversal, it was not that weak. With that you have to tip the balance in favor of the positive.
THE ECONOMY
Factory orders take off with more aircraft orders, but business spending shows the renewed strength in economic data.
3.1% in March was more than the 2.1% expected and the 1.4% from February, rewritten from 1.0%. Aircraft rose 38%, acting as the swing category as usual. Ex-airplanes left a 1.9% gain and flat spending in February. Durable goods were better as well, up 3.7% versus 3.3% expected. Not bad, not great.
Business spending as measured by the rather long-winded title 'non-defense capital goods orders excluding aircraft' jumped 4.8%, the first gain in 3 months, and quite impressively, the largest jump in business spending since the 'go-go' days of September 2004. The 3-month decline in spending was (and still is) a worrisome trend, but the solid rebound jibes with the sentiment displayed in the April ISM reported Tuesday.
THE MARKET
MARKET SENTIMENT
VIX: 13.08; -0.43
VXN: 16.7; -0.24
VXO: 12.53; -0.33
Put/Call Ratio (CBOE): 0.81; -0.35
Bulls versus Bears:
Bulls: 51.1%. Down from 52.7% the prior week in somewhat of a surprise downturn given the market run higher. Of course that week saw the energy sector test and the market struggled as it did. Thus the decline. Up from 49.5% and 45.5% just a month back. It hit 50.5% level a couple of months ago though below 53.3% on the recent high. Bulls bottomed last summer near 36%. That is the lowest level since September 2006.
Bears: 26.1%. That fade in energy brought some bears in as well as they rose from 25.3%. That is still down from 27.5% three weeks back. 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 well 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: +26.31 points (+1.04%) to close at 2557.84
Volume: 2.169B (-11.81%). Volume was lower, but as noted above, it was also on par with the Friday and Monday volume, and that was on a stall session and the Monday sharp selling. Still above average, still showing mostly upside volume. That means more buyers are in the techs than sellers.
Up Volume: 1.751B (+769M)
Down Volume: 396M (-1.067B)
A/D and Hi/Lo: Advancers led 2.26 to 1. Solid volume. Interesting to note that despite the strong move from CSCO, overall NASDAQ outperformed NASDAQ 100 (+0.87%). Good to see NASDAQ spread the move out after the narrow leadership in the latter part of this move.
Previous Session: Decliners led 1.07 to 1
New Highs: 171 (+61)
New Lows: 53 (-56)
NASDAQ CHART: http://www.investmenthouse.com/ihmedia/NASDAQ.jpeg
NASDAQ followed the Tuesday bounce off of the 18 day EMA with a run to a new post-2002 closing high by all of 0.63 points! Intraday it stalled at 2563 again, the same level hit last Wednesday and Thursday. No great barrier there, just noting the stall given the somewhat lower trade. The move took NASDAQ back into its former channel as it cleared the November/February trendline (2551). Hard to find a lot of fault in this trend higher, particularly as the breadth spreads out and upside volume improves. Not as extended as the other indices as it was not a leader in the rally, but it is likely to go with the leaders if they should falter a bit after a good run.
SOX (+0.87%) bounced off the 10 day EMA and the Tuesday doji with tail at that level. That held right at the November and December highs, just where it should have held. Really worth looking at as an upside play as it comes off of this test of the breakout.
SP500/NYSE
Stats: +9.62 points (+0.65%) to close at 1495.92
NYSE Volume: 1.68B (-5.41%). Volume was lower but solidly above average and matching the levels the prior week as the NYSE indices bounced up off of the Monday and Tuesday test. Very nice price/volume action.
Up Volume: 1.373B (+394.008M)
Down Volume: 293.491M (-478.56M)
A/D and Hi/Lo: Advancers led 2.89 to 1. Very solid breadth as the small and large caps worked together with the small caps leading the entire market.
Previous Session: Advancers led 1.17 to 1
New Highs: 235 (+122)
New Lows: 171 (+130)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP500 edged out a new post-2002 closing high, just missing cracking 1500 on the high. Not too much more to say about this move. It did not violate its up trendline that it recaptured two weeks back (at least on the close) and as soon as some selling entered the buyers jumped all over it. It is comfortably back in the channel and has some room higher before it gets there (roughly 1512). If it follows the Dow's lead, that won't act as a deterrent on this run.
SP600 (+1.61%) led the market in percentage gain as it rebounded nicely from a rather weak Monday and Tuesday though it mostly managed to hold the 18 day EMA after undercutting it on Monday. Solid rebound to the recent highs. Needs to make the break over 431 to reassert its uptrend after that iffy start to the week.
DJ30
The Dow won't stop. Modest test with really only one day of selling, then a jump higher Tuesday off of the up trendline and breaking through the top of its former channel. Impressive run and that break above the channel indicates it is a bit overdone, but you cannot really get in its way right now until it shows some more palpable weakness. Each pullback has met serious buying in this April to May run.
Stats: +75.74 points (+0.58%) to close at 13211.88
Volume: 251M shares Wednesday versus 249M shares Tuesday. Volume improved as DJ30 moved to a new high, a much improved posture than Tuesday's low volume bounce.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
THURSDAY
Initial jobless claims are more important now than the jobs report, though most don't see it that way. The initial claims are about as leading an indictor for employment trends as there is. It clued us in as to when the overall jobs report would show improvement, and it can do the same on the other end of the spectrum. It weakened for a couple of weeks as it spiked up near 340K, but it has declined nicely the past couple of weeks. Indeed, the market is keying in on this the past few weeks.
ISM services and productivity are also out, both important factors with respect to the economic future (ISM) and inflation (productivity). ISM services waffled a bit last report, and not much more is expected this past month. That sets up some upside surprise here as services continue to improve outside of housing. Restaurants are sporting strong earnings gains; people are eating out in droves despite the housing weakness. Thus far housing and gasoline have not significantly impaired the consumer.
The rubber match for the rubber match is Thursday. Wednesday was a pretty darn good session despite the lower trade, but SP500, NASDAQ and SP600 are still dancing with the prior highs with no clear breaks such as on DJ30. That makes the next move much more significant as the market climbs each peak. The price/volume action and leadership outside of Monday is solid, and with the continued pressure from money seeking stocks, the path of least resistance remains upside. Thus you would anticipate a break higher to succeed whether Thursday or Friday. Conventional wisdom says not Thursday given the jobs report on Friday, but this market is not very conventional of late.
There is still some of the same old strength, there is still some rotation as early leaders falter a bit, and there is a continued advance of new stocks wanting to join in. The question as always is how long can this run move on after more than a month of upside. It is a bit extended and that has a lot of traders nervous and shorts moving in, but that nervousness only seems to fuel more upside. We looked at TSO as a possible short, but it announced a stock split and jumped higher so we beat a hasty retreat. There is good earnings news, acquisitions news, dividends, buybacks, stock splits . . . just when it looks as if it is ripe for a fall some good news hits and you can hear the shorts scream as if they just took one in the shorts.
So we take a bit of gain as good moves are made. We look for new moves from strong stocks in good position to buy. We use the bounce to cull some stocks that just are not showing the chutzpah we want given the overall rise in the market. That way we get a bit leaner as the market moves higher and higher, ready to weather the next downturn and after putting some nice coin in our pocket on the move higher.
Support and Resistance
NASDAQ: Closed at 2557.84
Resistance:
2576ish is the top of the November/February channel
2875 from a July 1999 peak
2887 from a September 1999 peak
2920 from an October 1999 peak
Support:
2552 is the November/February up trendline
The 10 day EMA at 2533
2531.42 is the February high (post-2002 high)
2523 is price resistance November 2000
The July/August trendline at 2524
The 18 day EMA at 2515 held the Tuesday low
2509 is the January 2007 high
The 50 day EMA at 2477
2471 is the December 2006 high
2468.42 is the November 2006 high
2460 is the March high
2405 is the 'hump' high
2400ish from the late November and late December 2006 lows.
S&P 500: Closed at 1495.92
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:
The 10 day EMA at 1484
1482 is the late November to February up trendline
1475 from peaks in December 1999 and January 2000
The 18 day EMA at 1474
1461.57 is the February 2007 high.
The 50 day EMA at 1449
1440 is the mid-January high
1439 is the March high
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 13,211.88
Resistance:
Again broke to a new high, surpassing resistance.
Support:
13,200 is the upper channel line in the November/February channel
13,045 is the former up trendline that marks the lower channel.
The 10 day EMA at 13,030
The 18 day EMA at 12,900
12,796 at the February 2007
12,700 is the early February peak intraday high
The 50 day EMA at 12,658
12,623 is the mid-January high
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 30
Personal Income, March (8:30): 0.7% actual versus 0.5% expected, 0.7% prior (revised from 0.6%)
Personal spending, March (8:30): 0.3% actual versus 0.5% expected, 0.7% prior (revised from 0.6%)
Core PCE, March (8:30): 0.0% actual 0.1% expected, 0.3% prior
Chicago PMI, April (9:45): 52.9 actual versus 55.0 expected, 61.7 prior
Construction Spending, March (10:00): 0.2% actual versus 0.3% expected, 1.5% prior (revised from 0.3%)
May 1
ISM Index, April (10:00): 54.7 actual versus 51.0 expected, 50.9 prior
Pending home sales, March (10:00): -4.9% actual versus 0.4% expected, 0.7% prior
May 2
Factory orders, March (10:00): 3.1% actual versus 2.1% expected, 1.4% prior (revised from 1.0%)
Crude oil inventories (10:30): 1.1M actual, 2.074M prior
May 3
Initial jobless claims (8:30): 325K expected, 321K prior
Productivity, Q1 (8:30): 0.8% expected, 1.6% prior
ISM services, April (10:00): 53.0 expected, 52.4 prior
May 4
Non-farm payrolls, April (8:30): 100K expected, 180K prior
Unemployment rate (8:30): 4.5% expected, 4.4% prior
Hourly earnings (8:30): 0.3% expected, 0.3% prior
Average workweek (8:30): 33.8 expected, 33.9 prior
End part 1 of 3
|
us stock market
stock tip
|
