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world stock market, us stock market
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9/13/07 Stock Split Report
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Stock Split Report Subscribers:
MARKET ALERTS
Targets hit alerts: Took some interim gain: RIMM
Buy alerts: ENR; FTO; RIO; SU
Trailing stops: None issued
Stop alerts issued: ARTC
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:
- Stocks bounce right back, led by the same groups.
- Retail sales may prove interesting, but more light trade moves likely for Friday ahead of a potentially wild week with the FOMC and expiration.
More of the same: upside led by global stocks, low volume.
After the Wednesday session where stocks waffled after a solid Tuesday price move, futures were right back up Thursday and moving higher into the open. There was some more decent news with MCD upping its dividend and GM getting a 'buy' upgrade, jobless claims showing a nice decline from last month (319K), and again more inklings that the commercial paper market was in a bit better shape. All of that is nice and it worked for the session, but in the bigger picture it was just a diversion from the events ahead, mainly the Tuesday FOMC meeting.
That will be the watershed event for this move, but on Thursday the market was more focused on here and now. Oil was up again, closing at 80.09, up fractionally (0.18), but that did not slow the market much with fears of an energy-induced slowdown. When you consider that US citizens spend 6% of their after tax dollars on energy purchases (of all kinds, e.g. transportation, heating & cooling), you can see how the market is not that rattled just yet.
Stocks started higher but as is often the case, the move was tested almost immediately. They held positive, outside of the semiconductors, and rebounded after an hour, moving up through lunch and on into the early afternoon. The sellers took their shot but stocks bounced again. The indices could not take out that session high, however, and that opened the door to some more downside in the last hour. Stocks managed to hang on with some modest gains with the Dow leading thanks to the strong gains in MCD. Without a couple of news-related moves it would not have posted such a solid gain.
The same leaders were out in front again Thursday: energy, metals, materials, China, some tech, and once more, financials. The latter, as noted Wednesday, are providing some backbone for SP500 as it and DJ30 rallied up to test the early September closing highs.
Technically that was the key move of the session. It certainly wasn't the low volume (looked better intraday but fizzled) or the once again mediocre breadth. It could have been the leadership, and we will get to that.
On the high the large cap index hit 1490, the start of a key band of resistance that runs on up to 1512 or so. They fell back from that level to close, managing to hold most of the session gain. Good recovery from the selling on last week's jobs report, and now back to testing the level it was at when the report was issued. Made the same test, i.e. bumping up at the early September peak and then fading back from the 90 day SMA. Moves they both have to make, just not a lot to drive them. SP500 is getting a lot of help from the financials, and there are some big gains in those stocks, and the volume is not crappy as they move higher. A little Fed anticipation ongoing.
That takes us to leadership. Techs were leading the move but they have taken a back seat the past week. Now leadership resides in the same group(s) we are continually discussing, and indeed buying into: energy, metals, materials, some tech and some healthcare. Financials may be emerging, but as alluded to above, that may simply be due to the FOMC meeting ahead and some short covering and value hunting just in case. The thing is, SP500 needs the financials to make its break higher, and their gains are helping SP500 with its move up to test resistance. Once more the move higher is tied to the FOMC and whether it is going to do what is necessary to break open the credit markets AND give the economy an injection to get it going again as well.
THE ECONOMY
A quiet economic session ahead of retail sales, production, and Michigan sentiment. We will have more to say about many of these issues this weekend ahead of the FOMC on Tuesday.
THE MARKET
MARKET SENTIMENT
VIX: 24.76; -0.2
VXN: 27.44; -0.58
VXO: 24.84; -0.72
Put/Call Ratio (CBOE): 1.03; +0.17. After two sessions less than 1.0 on the close, back up on an upside session. Needless to say the put/call ratio has done its job with 20+ consecutive closes above 1.0.
Bulls: 48.3%. Major surge in bullishness, up from 42.9% and 40.6% as the low for this round. Wanted it in the thirties but did not make it. This is down from 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: 31.0%. Major drop in bears, plunging from 37.4% where it held for 3 weeks. It is still well up from the very low 18% hit 8 weeks back, and it topped the June 2006 peak (36%). That June peak eclipsed 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: +8.99 points (+0.35%) to close at 2601.06
Volume: 1.695B (-11.53%). Now that is a sizeable decline in volume as tech stocks didn't receive much of a bid Thursday. They index has taken a step back as far as leadership goes though it is not folding up by any means.
Up Volume: 946.35M (+132.09M)
Down Volume: 737.77M (-301.375M)
A/D and Hi/Lo: Advancers led 1.03 to 1
Previous Session: Decliners led 1.42 to 1
New Highs: 30 (0)
New Lows: 48 (-12)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
NASDAQ gapped higher and after that midmorning test it rallied higher, but it could not take out the Wednesday intraday high and unlike the other indices, it did not challenge the early September high. That is what we mean by stepping back in leadership. It tapped the 90 day SMA on the low and rebounded, managing to hold some support at 2600. Still in good shape to continue higher off of that higher low, but may slide into neutral here ahead of the FOMC and await that outcome.
SOX (-0.41%) continued its weak ways, falling to the 200 day SMA where it did manage something of a modest bounce. No real change in position from the Wednesday break lower that was another step in solidifying the head and shoulders base it has resumed.
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: +12.39 points (+0.84%) to close at 1483.95
NYSE Volume: 1.271B (-1.15%). Volume was a hair lower here without the drop-off NASDAQ showed, but then again, NYSE volume remained low while NASDAQ volume tried to kick up.
Up Volume: 909.219M (+327.361M)
Down Volume: 356.76M (-315.454M)
A/D and Hi/Lo: Advancers led 1.41 to 1
Previous Session: Decliners led 1.28 to 1
New Highs: 39 (+2)
New Lows: 39 (-13)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
The large caps received that boost from the financials once more and that pushed them through the 50 day EMA and SMA and on up to 1490 on the high. That is the start of the bad of resistance that runs through 1512ish, and is where it failed to start September. It failed at 1500 in early August. There is definitely plenty of resistance it has to fight through and it is going to need the continuing support of the financials to do it. This is a key test for the large cap index.
SP600 (+0.19%) just does not have the juice anymore. When there were prospects for growth still back in July it was right up there, punching out new highs. It made the double top in that month and it has struggled ever since as money runs out of the small caps. It has been a permanent resident below its 200 day SMA the past 1.5 months and it does not look as if anything is going to change that. Even a Fed rate cut of 50BP, more liquidity injections, etc. won't help until there are some strong indications the economy is running back up. Definitely not at that point yet.
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
DJ30 broke higher as well, but stalled at the 90 day SMA where it failed on the last August to early September run. Volume was up but that was thanks to MCD. As with SP500, this is a very important move for the Dow. It looks to be in better shape to make the move with its higher lows off the August low and its break above 13,250. It is at the put up or shut up time.
Stats: +133.23 points (+1%) to close at 13424.88
Volume: 209M shares Thursday versus 195M shares Wednesday. Getting some trade as it moves into key resistance areas, but the trade was on some specific news; there was no heavy buying in all Dow stocks.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
FRIDAY
Retail sales, production, Michigan sentiment can definitely have their impact on a light volume Friday. As we have seen, any piece of data can have an impact if it comes in 'right' or 'wrong.' Problem is, right now what is right or wrong is a gray area. Weak enough to make the Fed act is right, too weak such that fear of recession really rises is wrong. Moreover, too strong such that the Fed may not act as aggressively is wrong.
Just as the Fed is about to issue its most important edict under Bernanke the market has made it up to a key resistance point in its recovery. It has anticipated a cut in the Fed Funds rate. The 25BP is built in; you can tell that by looking at how the financials have recovered. The determinative factor is whether the Fed goes 50 BP. Those that really study economic history say a 50BP cut in the Fed Funds, 50% or more in the Discount Rate, and more liquidity injections are needed. The market wants 50 in the Fed funds. If it gets it, it continues higher. If it does not, it suffers a setback to start with and then we see what happens from there.
This is all tied to the US market and thus we have for the most part looked at stocks with global connections. Not exclusively; there are still many stocks with US customer bases that are working well. They can still work well after the Fed's decision, but they may also take a downward sojourn near term if the Fed, as it is likely to do, does not cut 50 BP.
The 'does she or doesn't she' argument about what the Fed will do and the opposite impacts it can have on the market is a rather ridiculous game we have to play. That one man can control the fate of some of the largest financial markets in the world is rather insane when you think about it. We go to such great pains to separate powers to allow us to live freely, yet we turn the keys to our wealth over to a single man who does what he thinks is best for all of us. Insane indeed. Thus we play this game and make wagers on what side it comes down on. Many are saying the Fed's ability to control rates has diminished and thus the decision is not that important. They miss the point. It may not be able to control rates as it once did, but its decisions still move the markets, and that is what we are concerned with.
Thus we pointed out some positions we are going to close down if they don't get a move on, and we are taking some gains as stocks move higher. We will continue to do the latter if we get another good move Friday. With the Fed coming up to a momentous meeting where it will likely not cut the 50 BP the market needs to move higher, putting some gain in the pocket on a rally up to that decision is a good idea. We can continue that on into Tuesday if the upside move continues. We don't want to bail out of strong stocks in strong trends just because of the FOMC, but we will bank some gain when it is there.
The question now is do we take on new positions from here. There are still many stocks in good position and moving higher. If they are moving higher perhaps the collective knowledge of the market sees the real picture and is saying it will move higher after the FOMC decision. Perhaps. We will close those positions that are not moving and don't look to move. We will take some gains as stocks move higher into the decision. We will also pick up some positions if we see excellent stocks making solid moves. There are some current positions we are looking to potentially add to and we already have some great plays on the report that can give us a good move. Again, those with ties to the global picture are better bets as they are not riding on the fate of the Fed decision.
Support and Resistance
NASDAQ: Closed at 2601.06
Resistance:
2634.60 is the June peak
2646 is the October/December trendline
2673 is the early July high
2686 is the November/December/February up trendline
2714 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:
The 50 day SMA at 2593
The 90 day SMA at 2589
The 50 day EMA at 2576
2531.42 is the February high (post-2002 high); 2525 intraday
The 200 day SMA at 2515
2509 is the January 2007 high
2450 is some price support from November and December 2006
2414 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 1483.95
Resistance:
1490.72 is the early June closing low and early August peak.
1491 is the July 2006/March 2007 up trendline
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:
The 50 day SMA at 1482
The 50 day EMA at 1475
1475 from peaks in December 1999 and January 2000
1461.57 is the February 2007 high.
The 200 day SMA at 1461
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 13,424.88
Resistance:
The 90 day SMA at 13,445
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:
The 50 day EMA at 13,329
13,128 is the July 2006/March 2007 up trendline
13,121 is minor support from the April peak
The 200 day SMA at 12,938
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): -$59.2B actual versus -$59.0B expected, -$59.4B prior (revised from -$58.1B)
September 12
Crude oil inventories (10:30): -7.1M actual versus -2.7M expected, -3.97M prior
September 13
Initial Jobless claims (8:30): 319K actual versus 325K expected, 315K 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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world stock market
us stock market
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