|
|
us stock market, trade stock
* * * *
2/14/08 Stock Split Report
* * *
Stock Split Report Subscribers:
MARKET ALERTS
Targets hit alerts: None issued
Buy alerts: ATW; DBC
Trailing stops: None issued
Stop alerts issued: HD; PFCB; JPM
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 suffers from information overload, starts to test the gains.
- Bernanke solemn about the economy.
- EU experiences some weakening growth forecasts, but ECB shows no wavering
- Jobless claims at expectations but still holding the higher level.
- Expiration Friday with no volume in the week prior. Expecting some volume and volatility.
Test from the rally begins and it is a bit more potent than the bulls want.
There was a lot of news Thursday. More earnings that were pretty much split down the middle between the beats and the misses. Jobless claims were pretty much in line at 348K (350K expected), but that is still a big jump from early in the year and shows those were skewed much too low by seasonal adjustments. UBS reported and also let on it had $26B in exposure to the US mortgage market. The EU cut its growth forecast from 0.8% to 0.4%. Not stellar to begin with by US standards, but no one can argue that 0.4% is anemic; certainly not the US based on our Q4 GDP showing. Then Bernanke and Paulson testified in front of Congress. The original release of the testimony was not bad for the market; it even rallied. When the Q&A transpired, however, Bernanke came across as more downbeat about the prospects for the economy, indicating that the US could very likely slip into recession near term but it would recover in the second half of 2008. He repeated the recent Fed position: the housing market and credit issues may worsen from their present condition, but the FOMC would act in a timely manner to support growth and mitigate downside risk.
Sounded good, but the general concern expressed regarding the economy was more than the market, after a week of light volume gains, could bear. The market sold through lunch and into the afternoon. That was just the warm-up. In the afternoon FGIC, one of the bond insurers, had its AAA rating cut. That was it. The market said to heck with it. Too much negatives to deal with after a series of gains. The market slid into the close, closing right at session lows. You could call it a test of the rally, and it was, but it was also a pretty hefty point loss for a first day of testing, basically taking back the Wednesday gain. Not the best action, but then again, not the worst.
TECHNICALLY the intraday action reversed from the upside gains on the rally, something you would expect when the upside bid runs dry. As Wednesday showed no downside weakness, Thursday showed no upside strength. Started higher, finished a lot lower, giving back most if not all of the Wednesday gain. Somewhat interesting.
INTERNALS: The mirror image of Wednesday. Breadth was pitiful at -3.4:1 on NYSE, -2.7 ON NASDAQ. Easy come, easy go apparently. So it seemed with volume. It was mixed again, up modestly on NASDAQ, down modestly on NYSE. Still below average all the way around. Peculiar expiration week with low volume all four sessions. That likely means Friday is going to be more of a walk on the wild side with a lot more volume as positions are rolled over after the gains on low volume that really had no backing outside of a few leading sectors. Interesting.
CHARTS: A day after breaking above near support at the 10 and 18 day EMA, the indices gave up it up, though just by a gnat's butt. It was just a test of the rally, but there are a few things to consider. The indices are making a lower high here if this test cannot hold. As for the test itself, as noted above, it was much deeper than you want on just a day of testing from a rally; 1.3% to 2.1% losses are not easy pullbacks. Volume was low but it was up on NASDAQ the session after it was low but up on the upside move. The sellers were a bit stronger. Almost need NASA instruments to measure it, but they were a bit stronger. This lower high potential and large point loss on the initial test session are warning flags. They are interesting as well.
LEADERSHIP: The recent leaders were still solid even if they gave back a little ground; their tests were more in line with what you expect from an easy pullback. Agriculture (though it was not down), energy (though it was quite mixed with ups and downs), and metals all were softer but showed no indication of trouble. Big tech was down as well, and it was not a slaughter as you might think. In short, recent leadership held up pretty darn well despite the rest of the market dropping like 2 inch hail stones around them.
In sum, the recent leadership held up very well while the rest of the market fell more than you want to see as a test of a rally starts. That leaves Friday wide open for volatility and volume, though that won't tell us much about the market unless it is an outright blast higher or a nasty gutting. It likely won't be either, so that leaves the market looking to next week to determine the outcome of this low volume rally and the lower high the indices are trying to make.
THE MARKET
MARKET SENTIMENT
VIX: 25.54; +0.66
VXN: 26.52; +1.17
VXO: 27.2; +0.53
Put/Call Ratio (CBOE): 1.01; +0.03. Back over 1.0, the threshold for bullish action (eventually) after a couple of sessions riding down below that level.
Bulls: 41.6%. Up from 40.2% as the rebound last week buoyed spirits some. Down from 56.5 seven weeks back. Fell below the 40.6% hit on the last significant round of selling but has bounced. A move into the lower 40's is a decline of significance, but it needs a bigger move is to 35% which is a big bullish indication. If bulls and bears kiss or better yet cross, that is very bullish. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.
Bears: 32.6%. Bears continued to rise, albeit modestly from 32.2%. Up from 31.5% three weeks back after the massive jump higher from 26.7% the prior week. It is over 30%, meaning it is in the range that means business. Big move after falling to a low of 19.6% on this round. Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. 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). Still a bit more work to do to really set a bottom, and that means more selling before it gets there.
NASDAQ
Stats: -41.39 points (-1.74%) to close at 2332.54
Volume: 2.28B (+1.9%). Volume edged higher as NASDAQ gave back most of the Wednesday gain though it remained below average. Some distribution as volume topped the Wednesday volume increase on an upside session. In other words, the sellers Thursday were a bit stronger than the buyers on Wednesday, but both days saw low volume.
Up Volume: 477.827M (-1.408B)
Down Volume: 1.78B (+1.538B)
A/D and Hi/Lo: Decliners led 2.73 to 1. One-upped the Wednesday upside breadth just as volume surpassed the Wednesday volume gain.
Previous Session: Advancers led 2.57 to 1
New Highs: 54 (+5)
New Lows: 111 (+19)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
Gapped slightly higher and then the sellers moved in. Not a massive dumping according to the volume, but the price decline was large as NASDAQ closed just below the 10 day EMA (2336). A day of distribution after the strongest upside session of the run; not good action. Potential lower high here, a technical negative, and after the low volume ascent NASDAQ needs to be very careful here.
NASDAQ 100 (-1.94%) suffered a bit more than NASDAQ in general as it too broke below the 10 day EMA, though its move had a bit more gusto. Failed at the 18 day EMA where it did on the last bounce higher, and not looking good for the large cap techs and thus the overall NASDAQ.
NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: -18.35 points (-1.34%) to close at 1348.86
NYSE Volume: 1.401B (-0.95%). Volume was lower and rather pathetic for an expiration week, but it was also not the distribution seen on NASDAQ. Volume is lame on this move, no other way to describe it.
Up Volume: 238.254M (-850.963M)
Down Volume: 1.158B (+842.869M)
A/D and Hi/Lo: Decliners led 3.45 to 1. So much for solid upside breadth. What a clubbing.
Previous Session: Advancers led 1.94 to 1
New Highs: 43 (+8)
New Lows: 92 (+8)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
Stalled at the late December/early January down trendline and closed just on the south side of the 10 day EMA (1351). No major breakdown as volume remained light, just a turn back lower at resistance, threatening a lower high as on NASDAQ. Unlike NASDAQ, the lower volume shows a rather innocuous turn lower for the large caps though the move gave back the exact amount it picked up on Wednesday. Try that again.
SP600 (-2.15%) was rocked the most as is often the case whether upside or downside. It turned back from the 50 day EMA just as it did in early February, though it did manage to hold at the 18 day EMA on the close after giving back the Wednesday move and a bit more. Key period for the small cap index as it stalled again at important resistance. Frankly we are betting on the downside for a test of the January lows.
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Disgorged nearly all the Wednesday gain, managing to close just below the 10 day EMA that it just broke this week. Lower trade so no sudden revulsion of blue chips, just the low volume upside bid that pushed them higher dissipating. Didn't come close to the 50 day EMA up near 12,700 and back below some resistance at 12,500. Threatening to make a lower high as well as it has done since the October peak.
Stats: -175.26 points (-1.4%) to close at 12376.98
Volume: 233M shares Thursday versus 236M shares Wednesday. No distribution, just the upside bid that carried it higher all week drying up.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
FRIDAY
Thursday was interesting in many respects. It was not a rout, not a vicious return to selling. The upside, low volume bid that carried the market higher for the week was pulled, and without that support the indices fell rather hard. NYSE didn't see any heavy selling, but NASDAQ gave a whiff of distribution. Very large point losses as the initial response to the end of the upside bid. That is what happens with low volume rises.
Big moves on low volume are symptomatic of a market still dealing with economic issues and trying to prove to itself if it has done enough selling. The low volume gains of the past week were not convincing that it is heading higher from here with no further downside. Indeed, that is highly, highly, highly unlikely. We noted two weeks back that the upside would get everyone feeling good about a bottom being set but that you had to watch the strength and leadership. Leadership is coming around with old time leaders such as ATW, DRYS, POT, MA, MM, etc. putting together nice patterns and moves that show real buying.
Those characteristics, however, are not very widespread in the market. The low volume is the telltale sign on this move; the trade simply is not strong enough to indicated that the big money players are buying into the market as a whole. They are buying certain sectors, but those few sectors are not enough to support a market wide rally. The buyers may indeed show up and take it higher from here, but again, without another test of the January lows, the likelihood of a move to a new high or even a sustained rally are rather slim. Truly, even with the Fed in the game and Congress shot-gunning $170B of cash at the economy we still cannot avoid a further economic downturn. The spreads in corporate bonds as discussed earlier in the week still tell that there is trouble in the credit market that aggressive Fed action has failed to remedy. Something is still percolating under the surface, and the fact that no big money has yet come in to rescue the bond and mortgage companies and insurers tells you that they think there is another skeleton or two to rattle out of the closet.
Thursday was down but of course that is not the only reason for the sentiment expressed above. Eventually it will all work, but as seen in the last recession it took two stimulus packages, one similar to this one that did nothing but throw money to the wind and the second with serious capital incentives that turned the trick. The recent euphoria about the Fed and economic stimulus helped propel this low volume bounce. When that wears off we suspect there will be another leg lower simply because the Fed was too late to the game and the stimulus is the wrong kind.
That said, Friday won't tell us much. We have a feeling that given the low volume and steady, one-sided action (at least up to Thursday) Friday will be an active session with a lot of volume and a lot of volatility as positions are rolled over. Then Tuesday (Monday is Washington's Birthday and the market is closed) the market gets back to the real deal. The Thursday turn back is likely foreshadowing the demise of the low volume rise, but if not then, it will come soon thereafter. Don't mean to sound negative, but low volume assents in a time of economic slowing where the market recovers from an initial wicked selloff are just not the stuff of lasting recoveries.
Given Friday is going to be sorting out expiration issues in front of a 3-day weekend we probably won't get a lot of opportunity for new positions. We will have some ready of course; of late there have been strong movers, upside and downside, despite the market's sluggish low volume moves. Entering new positions, however, is always problematic on expiration. If there are big moves that warrant action with existing positions then we will act, but we will also be patient as moves either way on expiration can be quickly reversed.
Support and Resistance
NASDAQ: Closed at 2332.54
Resistance:
The 10 day EMA at 2336
2340 from the March 2007 low
The 18 day EMA at 2356
2370 from the April 2006 peak
2379 from the October 2006 peak
2386 is the August intraday low
2119 is the January 2008 peak
2451 is the August closing low
The 50 day EMA at 2456
Some modest resistance at 2500 from interim August lows.
2540 is the November closing low
2550 to 2540 from May/June consolidation and the November lows
2557 is the August 2004/April 2005/October 2005/March 2007 up trendline
Support:
2315 to 2300 from old peaks
2280 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
2216 from August 2005 peak
2202 is the January intraday low
2175 from the December 2004 peak
S&P 500: Closed at 1348.86
Resistance:
1351 is the 10 day EMA
1358 is the 18 day EMA.
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
1396 is the January 2008 peak
The 50 day EMA at 1397
1406 is the August and November 2007 closing low
1412 is a longer term trendline from the August 2003/September 2004 lows
1430 from the August interim lows
1440 - 1437 from January and March peaks
1459 is the February peak
1468 is the June/July 2006 up trendline
1475 from peaks in December 1999 and January 2000
The 200 day SMA at 1478
Support:
1325 from May 2006 peak prior to the summer 2006 correction
1315 is an ancient trendline
1305 to 1302 from an August 2006 peak and matches a range of support from March and April 2006.
1294 from the January 2006 peak
1288 from June 2006
1280 from June and August 2006
1270 is the January intraday low
1255 from June 2006 lows
Dow: Closed at 12,376.98
Resistance:
The 10 day EMA at 12,379
12,518 is the August intraday low
The 50 day EMA at 12,718
12,743 is the November low
12,768 is the January 2008 peak
12,786 is the February 2007 peak
12,845 is the August closing low
13,050 to 13,000 range
13,092 is the December low
13,250 from price points from June through December 2007
13,332 is the 200 day SMA
Support:
12,250 from late March 2007 lows
12,050 from the March 2007 low is trying to hold.
11,670 is the May 2006 intraday high; 11,642 closing
11,634 is the January intraday low
11,317 is the March 2006 peak
11,228 from a July 2006 peak
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
February 12
Treasury Budget, January (2:00): $17.8B actual versus $20.0B expected, $38.2B prior
February 13
Retail sales, January (8:30): 0.3% actual versus -0.3% expected, -0.4% prior
Retail ex-Auto (8:30): 0.3% actual versus 0.2% expected, -0.3% prior (revised from -0.4%)
Business Inventories, December (10:00): 0.6% actual versus 0.5% expected, 0.4% prior
Crude inventories (10:30): 1.06M actual versus 7.05M prior
February 14
Weekly jobless claims (8:30): 348K actual versus 350K expected, 356K prior
Trade balance, December (8:30): -$58.8B actual versus -$61.5B expected, -$63.1B prior
February 15
New York PMI, February (8:30): 7.0 expected, 9.0 prior
Net foreign purchases, December (9:00): $90.0B
Industrial production, January (9:15): 0.1% expected, 0.0% prior
Capacity utilization, January (9:15): 81.4% expected, 81.4% prior
Michigan sentiment, preliminary, February (10:00): 76.5 expected, 78.4 prior.
End part 1 of 3
|
us stock market
trade stock
|
