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world stock market, us stock market
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3/31/08 Stock Split Report Update
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Stock Split Report Subscribers:
MARKET ALERTS
Targets hit alerts: None issued
Buy alerts: KSU; MA; NKE
Trailing stops: None issued
Stop alerts issued: ANSS; DIA; USO
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 bounces from the pullback, but it leaves a bit to be desired.
- Chicago PMI contracts slower than expected, but it is still contracting.
- Still set up to move higher, still needs to show it.
Up but rather anemic.
Futures were nicely nothing ahead of the open mostly overlooking a selloff overseas. There was not a lot to drive stocks overall but there were some interesting stories. SGP and MRK were lower after a medical panel said Vytorin may reduce cholesterol but didn't do anything to reduce plaque in the arteries. Zetia was basically a placebo according to these guys. MRK and SGP fell like stones, accounting for 240M shares on NYSE. That raises the age old question of whether cholesterol is the problem or something else such as inflammation. So we spend billions and is does not help? Great. It just goes to show: if you eat right you don't live longer, it just feels that way.
The real interesting news for he financial markets was regulatory. Yuck. Treasury was set to announce a financial system regulatory overhaul and that is always enough to make investors take pause. Fortunately SEC secretary Paulson said this would not take place this month or even this year. In reality the proposals were rather tame compared to what some feared and there were sighs of relief in the hedge fund world and of course calls the regulations proposed did not go far enough. Whenever the feds get geared up for regulation, however, the worries of unintended consequences are always there. Deferred consequences are good consequences as far as the market is concerned.
The market started a bit softer and then the Chicago PMI came out beating weak expectations, contracting for the second straight month. Contraction is contraction, and the market gave back its early recovery and more, putting in a session low. Once Paulson said his piece, however, stocks recovered and rallied to positive on into the afternoon. They could not hold the highs into the close, however, fading the last 2 hours but managing to hold onto some modest gains.
TECHNICALLY the intraday action was not bad. Flat to lower open, sold off, but then recovering into the afternoon for a solid though not impressive gain. It was nice but it could not hold onto all of it late. Could have been stronger as the indices all moved over near resistance on the rebound, but there also could have been some volume. There wasn't that either.
INTERNALS: Tepid breadth in the 1.5:1 range. Volume actually showed a nice a gain on NYSE though still below average. Of course it was attributable to MRK and SGP; take out that volume and it was even lower than Friday. NASDAQ was indeed lower than Friday; just another weak trade session. It was the end of the month and quarter, and there was not a lot of position shuffling. That will likely change Tuesday as new money is put to work. Market could use an injection of upside volume whether due to start of the month money or something else.
CHARTS: All indices cleared near resistance on the recovery from the mid-morning selling, looking somewhat solid. No volume and they could not hold the move in the afternoon fade. That left NASDAQ below its trendline, SP500 below the 18 day EMA, and DJ30 the same. Volume simply was not there, at least not the kind of buying volume you want to see on NYSE (MRK & SGP). All told it was disappointing in many aspects even with the gain.
LEADERSHIP: A lot of modest rebounds that were not really leadership moves. There were some great individual moves, but they were limited (e.g. NKE, KSU). Tech led the overall market gain but even so there were few movers there. Transports were showing some gains but it was not across the board either. Steel is setting up for another breakout, but this was not the day yet. Not a great day of moving higher, but then again leaders continue to set up.
THE ECONOMY
Chicago PMI posts second month of contraction.
Tell us something we don't already know. Midwest manufacturing was down for the second consecutive month though it did beat expectations. The 47.0 topped the 46.7 forecast and the 44.5 in March. On the mend? Maybe. Hard to say at this point with just 2 negative months, but the trend heading into this reading was lower. In deeper downtrends you sometimes actually see regional manufacturing firm ahead of or contemporaneously with the market. Quite a stretch to call a one month improvement firming. Suffice it to say that it contracted at a slower pace and watch what the market does here.
THE MARKET
MARKET SENTIMENT
VIX: 25.61; -0.1. Still hugging the flat line just over the 90 day SMA, trading in a very flat range for the past week. As noted last week, this is the concerning feature of this move as it did not jump up on the recent pullback.
VXN: 29.04; +0.17
VXO: 26.49; -1.92
Put/Call Ratio (CBOE): 1.03; -0.13. Four in a row after that 2 days off below 1.0 on the close. Before that 2-day snap it marked 20 in a row.
Bulls: 36.7%. Well you knew it could not last with the rally off the March lows. Bulls jumped from 30.9% after a steady decline since January. Not really worried about it; the indicator did its job with the dive below 35% and the crossover with the bears. They are still in crossover mode even with the rise in bulls and the decline in bears. The bulls and bears were eye to eye in mid-February and have crossed. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator. This is smashing that. 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: 41.1%. Bears were fewer in number thanks to the rally, falling from a very high 44.7% that was up from an already freakishly strong 43.3% the week before. That was a surge from an already high 36.6% the prior week. Up sharply from a low of 19.6% on the last rally. It is over 30% and indeed over 35% the prior week, meaning it has blown past 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). This is a huge turn, unlike any seen in recent history.
NASDAQ
Stats: +17.92 points (+0.79%) to close at 2279.1
Volume: 1.74B (-1.3%). Volume was flat on the session and very, very low as NASDAQ tried to bounce. No buying volume to end the week.
Up Volume: 1.216B (+765.665M)
Down Volume: 496.959M (-787.689M)
A/D and Hi/Lo: Advancers led 1.46 to 1. Very modest, matching the session.
Previous Session: Decliners led 2.01 to 1
New Highs: 35 (+9)
New Lows: 129 (+14)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
NASDAQ moved through the 10 day EMA 2277 toward the 50 day SMA (2301) on the high, then faded back to close right at the 10 day but below the long term trendline from the summer 2004. This is a key fight for NASDAQ given the trendline is one that spans much of the rally out of the bear market that ended in late 2002. NASDAQ tried to move higher, but it needs to show more strength as it makes that move.
NASDAQ 100 (+0.81%) held the 18 day EMA on the low and bounced up through the 50 day SMA. Still set up nicely to bounce, the best of the lot. Needs to make the move through the 50 day EMA (1804) to really get this move in good position to make a nice run. Looks promising.
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: +7.48 points (+0.57%) to close at 1322.7
NYSE Volume: 1.576B (+17.65%). Volume was up but 15% of the trade was MRK and SGP. Thus volume really wasn't up and it was still below average.
Up Volume: 1.056B (+739.54M)
Down Volume: 510.332M (-496.817M)
A/D and Hi/Lo: Advancers led 1.6 to 1. Middle of the road.
Previous Session: Decliners led 1.99 to 1
New Highs: 16 (+3)
New Lows: 57 (+7)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP500 moved up through the 10 and 18 day EMA on the high but then faded to close just below that near resistance that is also marked by the early February low. Needs to break through and then move up to the 50 day EMA (1348) and take it out as well to show the rally and the test are part of a stronger move. Monday was not that day, but we will cut it some slack as it was the end of the month.
SP600 (+0.73%) moved up as well, tapping the 50 day EMA on the high before fading with the market. In good shape to make a run, but as with the rest of the market it has to show it.
SP600 CHART: http://investmenthouse.com/ihmedia/SP600.jpeg
DJ30
Same action from the blue chips as they rallied through the 50 day SMA but then faded back for a more modest gain. Closed near a support level at 12,250, but that is doing the minimum. Needs to go ahead and show a strong move back up through the 50 day EMA (12,405) on some non-bad news related stronger trade.
Stats: +46.49 points (+0.38%) to close at 12262.89
Volume: 273M shares Monday versus 209M shares Friday. Volume was up but that was the MRK/SGP news.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
TUESDAY
Construction spending and the all-American ISM are out at 10ET Tuesday. Important, but the real story is the start of the new month and quarter. Q1 ended rather quietly with a lukewarm bounce after the fade from the bounce that took the market off the March lows. A new quarter typically brings new money into the market and that brings out more volume as money is put to work.
With the pullback from the rally off the March lows we of course want to see the volume upside as the money is put to buying. Problem is, even with a nice gain the result is skewed by the new money. That means while the upside wants to see a stronger bounce from here, the real story comes after Tuesday when just the 'ordinary' action returns. Then the rebound shows more of its stripes and just how strong this rebound attempt is.
The indices still remain in good shape to bounce as leadership is still forming up, NASDAQ 100 has a nice look to it, and there is just a lot of disbelief that this rally has or had anything to it. With that kind of cool reception you start looking at the improving patterns and get ideas about a continued or resumed rally.
Now all of the pundits have spoken and the time is here. The indices either make the rebound and resume the rally or it is going to roll over from the lower high touched last week, continue basing or break up the base attempt, and continue in the downtrend. Again, we see a lot of good patterns that are strongly suggesting that is not the case, but even generals that lead the charge have to lead something. That means the market has to follow eventually. That time is here (or it is approaching at light speed), and this modest Monday bounce has to turn into some more serious upside volume. Nothing new or groundbreaking there, just looking at the rally off the lows, the test, and the leaders. Time to step up or step down.
Support and Resistance
NASDAQ: Closed at 2279.10
Resistance:
2286 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
The 50 day EMA at 2328
2340 from the March 2007 low
2370 from the April 2006 peak
2378 is the mid-February peak
2379 from the October 2006 peak
2386 is the August intraday low
2419 is the January 2008 peak
2451 is the August closing low
Some modest resistance at 2500 from interim August lows.
Support:
The 18 day EMA at 2275
2252 is the early February low
2221 is March low
2216 from August 2005 peak
2202 is the January intraday low
2175 from the December 2004 peak
2168 is the March 2008 low
2158 from May 2006
2164 From August 2006
2134 from August, September 2006
2100 from June 2006
S&P 500: Closed at 1322.70
Resistance:
1322 is an ancient trendline
1325 from May 2006 peak prior to the summer 2006 correction
The 18 day EMA at 1325
The 50 day EMA at 1348 is key resistance on a rebound
1368 is the high in this recent lateral consolidation
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
1396 is the January 2008 peak
1406 is the August and November 2007 closing low
1419 is a longer term trendline from the August 2003/September 2004 lows
Support:
1317 is the early February low
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
1272.66 is the March 2008 low
1270 is the January intraday low
1260 from July 2006
1258 to 1255 from May and June 2006 lows
Dow: Closed at 12,262.89
Resistance:
The 18 day EMA at 12,277
The 10 day EMA at 12,291
The 50 day EMA at 12,404 may try to slow it.
12,518 is the August intraday low
12,573 is the mid-February high
12,743 is the November low
12,750 to 12,768 is the February 2008 peak and a series of lows and highs from August 2007
12,786 is the February 2007 peak
12,845 is the August closing low
Support:
12,250 from late March 2007 lows
12,070 from the early February 2008 lows
12,050 from the March 2007
11,731 is the March 2008 low
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.
March 31
Chicago PMI, March (9:45): 47.0 actual versus 46.7 expected, 44.5 prior
April 1
Construction spending, February (10:00): -0.9% expected, -1.7% prior
ISM Index, March (10:00): 47.5 (lowered from 48.2) expected, 48.3 prior
April 2
ADP Employment, March (8:15): -45K expected, -23K prior
Factory orders, February (10:00): -0.8% expected, -2.5% prior
Crude oil inventories (10:30): 88K prior
April 3
Initial jobless claims (8:30): 365K expected, 366K prior
ISM Services, March (8:30): 48.5 (revised from 49.2) expected, 49.3 prior
April 4
Non-Farm payrolls, March (8:30): -50K expected, -63K prior
Unemployment rate, March (8:30): 5.0% expected, 4.8% prior
Hourly earnings, March (8:30): 0.3% expected, 0.3% prior
Average hourly workweek, March (8:30): 33.7 expected, 33.7 prior
End part 1 of 3
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