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us stock market, stock trading information
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9/10/07 Stock Split Report Update
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Stock Split Report Subscribers:
Full report issues Tuesday.
MARKET ALERTS
Targets hit alerts: None issued
Buy alerts: BIDU; DE; DO; MON; SLB
Trailing stops: CSCO; ZUMZ
Stop alerts issued: VSEA; ZUMZ
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/alertssr.html
SUMMARY:
- Market on idle in vacuum of Friday jobs report.
- Fed-speak recognizes the problem but its nature indicates no immediate rate relief
- Consumer credit cards smoking for third straight month.
- Waiting to exhale: market expects a rate cut but is not sure of a rate cut.
Market tries the upside, fails, goes home flat, but leaders still in position.
After the Friday gut punch stocks tried to get their act back together, keeping a stiff upper lip after the surprise that shook the indices out of their consolidation attempt. There was some positive news facilitating the early strength: AAPL announced the sale of 1M iPhones, quelling the fears from last week after the price drop; BSC was the target of a large buy from an aggressive investor; INTC upped its guidance and told of plans to build a big factory in China. That offset the credit worries for the moment and the fact that the WSJ reported that $120B in commercial paper was coming due next week.
Stocks gapped higher and rallied nicely into the morning. With the higher start in the forecast after the Friday selling, and with no early morning gift from the Fed, we warned that the higher start would be tested. Sure enough after that higher start stocks started to whittle away the gains almost immediately. You kept watching as to when it might bite and try a rebound, but it just did not happen. NASDAQ swung roughly 50 points, DJ30 185 points high to low, and SP500 reversed 22 points of its own. Finally at midmorning there was some terra firma and the indices tried a bounce.
The Fed hits the stump.
About that time some word from the Fed conference came out. Lockhart's lines started hitting the wire and the one that stuck involved jobs: the jobs data must be taken "very seriously" in the Fed's assessment of the economic condition, and the Fed was watching consumer spending "carefully."
That helped the tide turn. They started a steady, rest of the session kind of move with the indices slogging steadily higher. Yellen came out with comments next, and she stated that the financial market turmoil was to intensify the housing downturn. That helped as well. Stocks continued higher into the last hour. That took them back to positive, but once more they lost there nerve and faded in the last 30 minutes to close mixed and basically flat. Similar to my dog when we go running: covers a lot more ground than I do, ends up where we started. Come to think of it, so do I.
In short, the market tried to move higher, then tried to sell, but neither were all that successful in the vacuum after Friday and the market waiting for the Fed or something else to give it momentum. The Fed was concerned, but 'watching closely' is not the same as being ready to step in and act. Indeed all of this Fed-speak rather pre-empts any near term action so it seems as the Fed is trying the role of soothsayer in order to stretch into the 9-18 meeting and maybe avoid having to cut before then. The market started hopeful of a cut, didn't get it, then took some solace in the kind Fed words. Not enough, however, to run back up to those session highs.
Technically the action was weak overall yet again, but leaders overall held up well yet again. Stocks started higher but could not hold the gain. Volatile intraday action as the indices traded up and down and then back up in a wide range. The indices tried near resistance, e.g. the SP500 at the 200 day SMA, but they could not hold the higher open. Volume did not run higher so there was no accumulation or dumping (as on Friday), just a lost bid after the higher open. Breadth was negative but nothing over 2:1 as typically seen of late either upside or downside. Basically there was no internal damage.
There was no breakthroughs either. While they did not do any damage to themselves, they were still left below resistance after giving up the consolidation effort on the jobs report selling. They tested the resistance, but could not do anything with it. That is not necessarily a washout. SP500 can make a higher low here and still keep its reverse head and shoulders pattern together. Same with NASDAQ. DJ30 held at the 2006/2007 trendline where it held two weeks back, showing a nice doji. Potential there.
The leaders continued acting well. Energy was under pressure early with an OPEC story that it would raise production levels at the Tuesday meeting, but by the afternoon oil was back up (77.99, +1.29) and so where the energy stocks. That was a larger part of the market recovery. Some was again saying techs, but techs struggled. A lot of energy, metals, and materials looked solid, yet again, Indeed the leaders were still acting quite well, using the session to test near support again and rebounding. Some were even moving higher after the test. The testing is good, so is the moving higher. Shows continued promise in this market move. We took some new positions with that action.
Question is whether it is all on the hope of a near term Fed rate cut. May be, but the leaders looked good before the jobs report, and they still look good now. The indices are not textbook pictures of strength while the leaders are showing textbook tests. Kind of a dichotomy, but if we see the leaders give us buy points we will continue to act on them.
THE ECONOMY
Consumer credit lower but still strong.
July's $7.5B was less than the $8.5B expected, down from the $11.9B but still very strong. That makes $34.5B the past three months. Non-revolving credit (cars, tuition, boats) rose $2.5B, a 3% year/year gain. Revolving credit (the plastic) rose $5B, a 7% annual gain. Overall the growth rate is 4.3% annually, well off the 3.4% low in the 2006 slowdown.
That was July. Now we see what August has to offer. The market selling started late July and that did not have a lot of impact on that month's numbers. How it held up in August will be more important what with all of the news about the housing and credit markets. The consumer overall does not understand what is going on with the commercial paper and mortgage packages, and not a lot of it has hit home so to speak other than housing prices. It is likely not a crap out but there will be ramifications; there always are. Next look we get are the August retail sales released on Friday.
THE MARKET
MARKET SENTIMENT
VIX: 27.38; +1.15
VXN: 29.94; +0.72
VXO: 27.53; +0.13
Put/Call Ratio (CBOE): 1.16; -0.03. Holding above 1.0 in a quiet market. Some shorting going on. There is an old saying, i.e. never short a dull market. That is occurring right now.
Bulls: 42.9%. Up again from 41.7% and 40.6% before that, the low on this last round of selling. Wanted to see it crack into the thirties on this leg to really show some negativity. Still a good drop from 53.9% 7 weeks back. Hit 56.7% hit in June. The 55% level is considered bearish, and it topped that level on this last run. 60% in December 2006. For reference it bottomed in the summer 2006 near 36%, and 35% is considered bullish.
Bears: 37.4%. Held flat for a third straight week. Bearishness is not falling as the market recovers; just pondering what it all means. Strong run from 18% just 7 weeks back. This tops the June 2006 peak. For reference, 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: -6.59 points (-0.26%) to close at 2559.11
Volume: 1.805B (-4.68%). Volume remained well below average and was lower than Friday. No accumulation, no heavy selling. As noted above, just not a lot of bids after the initial gap higher.
Up Volume: 728.049M (+520.789M)
Down Volume: 1.033B (-637.671M)
A/D and Hi/Lo: Decliners led 1.81 to 1. The large cap NASDAQ 100 rose (+0.09%); the smaller caps were the ones under pressure.
Previous Session: Decliners led 3.52 to 1
New Highs: 13 (+2)
New Lows: 74 (+23)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
Opened higher then rallied up to the 90 day SMA (2588). That was in the opening 5 minutes and NASDAQ lost 50 points from there before bottoming to rebound and close basically flat. The rebound kept it above some support at 2550 from the lower portion of the May and June trading range. Still in a reverse head and shoulders, hanging on after gapping higher to start the month but then giving it up with that Friday gap lower. Needs to hold in this range to keep the pattern going.
Chips (SOX +0.59%) bounced off some support at 490 and failed at the 50 day EMA. Managed to hang onto a small gain into the close despite the great news of INTC raising its guidance and AMD claiming PC business is robust. TXN gives its mid-quarter update after the Tuesday close. This 490 level is important for SOX to hold to keep its pattern going.
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: -1.85 points (-0.13%) to close at 1451.7
NYSE Volume: 1.343B (-8.03%). Lower trade, still well below average.
Up Volume: 418.839M (+276.601M)
Down Volume: 899.696M (-408.394M)
A/D and Hi/Lo: Decliners led 1.57 to 1
Previous Session: Decliners led 3.39 to 1
New Highs: 22 (+8)
New Lows: 64 (+20)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
Tapped the 200 day SMA on the early session high but there was no real buying and it faded. Held above the late August low at 1432 and rebounded to 1450 where there is some support. As with NASDAQ, this is where SP500 needs to hold to keep the reverse head and shoulders alive. Still a lot of ice ahead of it to break through, but a higher low gives it some momentum. Some help from the financials is critical, and they are only showing patchy improvement. SP500 is going to have a hard time breaking the ice without their help, and it will likely take some Fed action to lick them into gear.
The small cap SP600 (-0.71%) undercut the late August low (404) intraday but then recovered on the close, aided by some improvement in energy. Not the picture of health as worries of economic stagnation are, as is often the case, hampering the small caps.
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
The Dow was up, the Dow was down. It held modestly higher on the close. Bigger picture it held the July 2006/March 2007 up trendline again, the same one it held on the higher low in late August. It showed a nice tight doji on the candlestick chart. It is set up to make a higher low and make another run at the resistance from 13,250 on through 13,693. Tall order but it is setting up to make a play.
Stats: +14.47 points (+0.11%) to close at 13127.85
Volume: 221M shares Monday versus 238M shares Friday. Lower and still below average volume as the blue chips make a higher low at the trendline. Not a lot of buying stepped in, just enough.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
TUESDAY
Not a lot of scheduled news but TXN is set to give its mid-quarter update after the close and Bernanke is going to deliver the final round of Fed-speak with his speech that closes the Fed's public gathering. This all ahead of the September 18 policy meeting next week where the Fed is likely to act. Just how much is the question. Hopes are for a 50 BP cut but the speeches Monday made it look more like 25BP. Of course this Fed, similar to the consumer, tends to say one thing and then do what Bernanke feels like. Otherwise the Fed would have never gone on pause just over a year back when inflation was still rising.
Be that as it may, the Fed speeches quelled the possibility of an interim rate cut without things deteriorating further or so it would seem. Bernanke is a different sort from Greenspan, though what kind of sort is the question. Greenspan liked to keep the markets guessing. Right now Bernanke is doing the same only he does not seem to relish it as much. In reality he can't just come out and say it; why then even have a meeting? Just announce policy with whatever reporter is handy, kind of like he did with Maria B on CNBC when he was a new Fed chairman. Seems like a long time ago, doesn't it?
So the market is not a lot different from its situation a couple of weeks back. It gave up a breakout attempt but is still trying to hold the pattern together. At the same time energy and metals have formed up and are looking for a move higher. Biotechs are pretty salty, and techs are still setting up well. It is hard to get too glum if you look below the big indices and see many solid stocks in solid shape.
The rub is just what it is going to do from this point. Heck, that is always the catch. We like what we see in a lot of quality stocks, and though the indices have issues, they are trying to set up as well. We are going to continue to prepare for good moves from quality stocks in solid position for buys. They continue to set up so we will continue to prepare and be ready to partake in good moves from the most well-positioned.
Support and Resistance
NASDAQ: Closed at 2559.11
Resistance:
The 50 day EMA at 2574
The 90 day SMA at 2588
The 50 day SMA at 2595 gave way after trying to hold the consolidation
2634.60 is the June peak
2642 is the October/December trendline
2673 is the early July high
2685 is the November/December/February up trendline
2711 is the November/February up trendline
2725 is the July high
2778 from a July 1999 peak
2887 from a September 1999 peak
2920 from an October 1999 peak
Support:
2531.42 is the February high (post-2002 high); 2525 intraday
The 200 day SMA at 2513
2509 is the January 2007 high
2450 is some price support from November and December 2006
2411 is that old trendline from August 2004 to May 2005
2400 is price support
2386 is the August intraday low
S&P 500: Closed at 1451.70
Resistance:
The 200 day SMA at 1460
1461.57 is the February 2007 high.
1475 from peaks in December 1999 and January 2000
The 50 day EMA at 1475
The 50 day SMA at 1485
1490 is the July 2006/March 2007 up trendline
1490.72 is the early June closing low and early August peak.
1534 is the early July high
1539 is the mid-June intraday high
1541 is the early June high.
1553 intraday high from March 2000 is the all-time index peak
Support:
1440 is the mid-January high
1427 represents some interim peaks from December 2006 and the early August low
1406 - 1407 from March 2007 and November 2006 interim peaks
1389 from October 2006 interim peak
1375 - 70 from March 2007 low
1370 is the August intraday low
Dow: Closed at 13,127.85
Resistance:
The 50 day EMA at 13,328
The 90 day SMA at 13,443
The mid-May peak at 13,556
The early July peak at 13,671
The mid-June high at 13,689
The early June high at 13,676 (closing), 13,692 (intraday)
The August high at 13,696
The July high at 14,022
Support:
13,121 is minor support from the April peak
13,088 is the July 2006/March 2007 up trendline
The 200 day SMA at 12,923
12,845 is July closing low
12,796 at the February 2007 high
12,518 is the August intraday low
12,500 is the December 2006 peak
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
September 10
Consumer Credit, July (3:00): $7.5B actual versus $9.5B expected, $11.9B prior (revised from $13.2B)
September 11
Trade balance, July (8:30): -$59.0B expected, -$58.1B prior
September 12
Crude oil inventories (10:30): -3.97M prior
September 13
Initial Jobless claims (8:30): 325K expected, 318K prior
Treasury Budget, August (8:30): -$190.0B expected, -$192.6B prior
September 14
Export prices, August (8:30): 0.0% prior
Import Prices ex-Oil, August (8:30): 0.2% prior
Retail sales, August (8:30): 0.5% expected, 0.3% prior
Retail ex-autos (8:30): 0.2% expected, 0.4% prior
Industrial production, August (9:15): 0.3% expected, 0.3% prior
Capacity, August (9:15): 82.0% expected, 81.9% prior
Business inventories, July (10:00): 0.3% expected, 0.4% prior
Michigan sentiment, preliminary, September (10:00): 83.5 expected, 83.4 prior
End part 1 of 3
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