|
|
money investment, investment help
* * * *
5/13/08 Investment House Daily
* * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit alerts: BZP; CSIQ; SCHN
Buy alerts: DSX; EXM; IBM; VRSN
Trailing stops: None issued
Stop alerts issued: None issued
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 Daily alert service you can sign up at the following link:
http://www.investmenthouse.com/alertdly.html
SUMMARY:
- Session is a push as competing data leaves indices still looking at resistance.
- But . . . some leaders continue to make great moves and money is moving to new areas.
- Gold continues to fall, bond yields rise, dollar starts to rebound from its pullback.
- Retail sales quite palatable, if you take out the cars.
- Business inventories fall on stronger sales, just as the wholesale inventories showed.
- Starting from the same starting point with CPI, YHOO proxy fight on the agenda.
Market slogs to a dead heat, recovering without the help of DJ30, SP500.
News was a mixed bag, i.e. what we usually get in this kind of economy. Hey if everything was rocking along there would be no trick to it, right? Banc of America reported massive credit losses across the board. Who would have thought? All of the brokerages were downgraded. Why not; everyone else has. Wal-Mart's guidance was pensive, noting that it just wasn't sure what the impact of the so-called tax rebate checks would be. As absurd as that might sound it really is important and sage: a lot of it is going into the gas tank and that means it won't benefit WMT as much and the rest of the economy at all. To cap things off, Bernanke spoke and he was very middle of the road.
What about the upside? Retail sales were not near as horrid as anticipated if you take out pathetic auto sales (+0.5% ex-cars versus +0.2% expected). Who wants a car with gasoline at $3.72 nationally? And what about those guys who bought the big diesel trucks they didn't need just to be tough? Ouch. Another apparel maker/retailer surprised (LIZ today, ANN Monday). And . . . Bernanke spoke and was very middle of the road (you can use him for both the upside and the downside). For NASDAQ, a potential though widely discounted proxy fight rumor involving Carl Icahn for Yahoo helped push things higher.
Stocks started soft (mushy was the word muttered frequently here in the offices) but managed to 'fight' back to basically close flat. Actually it was everything but the large cap NYSE indices that closed positive. No big gains though SOX (0.79%), the small caps (0.76%), and the mid-caps (0.61%) didn't put up chopped liver for their numbers.
TECHNICAL. The intraday move was low to not so low. Not really true as we just discussed the small and mid-caps were decent, but it paints the picture of the large cap indices that dominate the market. They did move up, but in taking into account the other factors in the big picture, it didn't mean a whole lot.
INTERNALS: Breadth did manage to swing positive late in the day, and again that was the work of the small to mid-cap stocks posting decent gains. Volume was up on both NYSE and NASDAQ. With SP500 and DJ30 down that would give you a knee-jerk reaction that there was some distribution. Not really the case. The performance in the small to mid-caps was solid and those stocks received money. NASDAQ closed positive. It was a modest gain, but it was a low to high swing that saw stocks outside of the large caps that have pulled the train of late (AAPL, RIMM) move on low trade as other techs moved on solid trade. So, it was not a clear upside internal day, but it was a good session as it showed money spreading out beyond the big names.
CHARTS: Basically no change for the large cap indices as they eye next resistance while holding over near support. SP600 broke over its February high once more, moving up toward the 200 day SMA. The mid-cap 400 moved to a new post-breakout high. SOX cleared its lateral range. There is movement out there, just not in the big 3 indices. They still have work to do. Will it be a case where the children shall lead? That would be very nice as it would be a stamp of validation (maybe just a nod) for some economic improvement.
LEADERSHIP: Some energy, some metals, and transports were moving once more. 'Some' because the first two sectors traded mixed. Not bad after their runs. Transports were at it again. Solar energy related stocks jumped. Smaller industrial stocks crossing many sectors received money. Some large industrial stocks received money. And techs outside of the few, the proud, the largest caps, got some money. That is a positive development as the recent big movers have to slow down a bit. More money in the market. Cool.
THE ECONOMY
The big news was the rise of 0.5% less autos. Take out gas sales and it was up 0.6% because, despite higher prices, gasoline sales are lower as volume dries up. . . due to the higher prices. The interesting thing is that consumer spending is edging higher despite crappy economic numbers with PCE alternating between flat and a 0.1% gain since January. May will be better, just a bit better, as some of the stimulus money is spent.
Retail spending represents more discretionary spending than other measures. Durable goods outside of autos (-2.8%) were up. Building materials rose 1.9% (from -1.5%) and furniture posted another gain at 0.1%, making it two upside months in a row. General merchandise rose 0.5%, making it 4 out of 5 months to the upside. Clothing posted its second straight 0.7% gain, rising 2.9% in the past 4 months.
These are not blowout numbers, but they are not the kind of numbers you would expect from an economy that is continuing lower. Hmmm. Not the kind of numbers you get in a roaring recovery but not diving lower. Muddling along. Showing some improvement, and that is where the focus is. Can it continue? Will the stimulus checks go somewhere other than the gas tank? We will see. We joked about it above, but the fact that discretionary spending is on an upside trajectory (though so flat you have to breakout the surveying instruments to measure it) ahead of the checks is a positive. Can those checks 'prime the pump' and push the economy back into prosperity? Nah. It will take something else on the business side to do that, but don't want to be accused of being totally negative, so I will say there is some upside impetus.
Business inventories fall as did wholesale inventories.
We saw last week the wholesale levels decline as sales jumped. Business inventories rose slower at 0.1% versus the 0.4% gain expected and the 0.5% in February. As seen with the wholesale inventories, sales jumped (1.0%), helping push the inventories lower. This remains a positive: sales are holding up and inventories are low, meaning there is room for production ahead.
THE MARKET
MARKET SENTIMENT
Now that the Fed has entered the game with its credit facilities that actually work, the correlation with VIX that set up during the correction is broken. Volatility and hence VIX can decline and hold at low levels for a very long time and have no bearing on any continued rally.
VIX: 17.98; +0.19
VXN: 21.5; -0.96
VXO: 18.99; -0.37
Put/Call Ratio (CBOE): 0.79; -0.08
Bulls versus Bears:
This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market doesn't have the cash to drive it higher.
Bulls: 44.4%. Bulls continue to rise, posting the sharpest increase in a month, rising from 40.9%. The rally is having its impact, pushing bulls higher, up from 39.1% and 37.8% where it held for a few weeks. Crossed back above bears last week, the usual positioning of the two. Fell to 30.9% in mid-March as the low. The indicator did its job with the dive below 35% and the crossover with the 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: 32.3%. Interestingly, bears rose from 31.8% even with the market rising overall. Down from 35.6% the prior week and 38.9% the weeks before. As with the bulls the jump in bears did its job after hitting 44.7% in the third week of March 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: +6.63 points (+0.27%) to close at 2495.12
Volume: 1.878B (+6.81%). Volume moved higher as NASDAQ recovered off a modest initial selloff, but it was still low even as NASDAQ pulled positive. No real accumulation but as noted above there was some money moving out into techs other than the big names that have done all the work the past couple of months.
Up Volume: 1.109B (-276.198M)
Down Volume: 728.893M (+374.321M)
A/D and Hi/Lo: Advancers led 1.09 to 1
Previous Session: Advancers led 2.27 to 1
New Highs: 91 (+26)
New Lows: 55 (-41)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
Tested lower intraday and then recovered through the close, helped late in the session by rumor of a Yahoo proxy fight. Overall it leaves NASDAQ just below some resistance at 2500 and the 200 day SMA up at 2517, working laterally in a two week range, trying to form a handle to make the next important breakout and follow NASDAQ 100 and SP400 past the 200 day SMA.
NASDAQ 100 (+0.18%) was not the powerhouse on the session Tuesday after it led the move to start the week. It stalled out just as it was making the break to a new rally high. Still made it on the close, but it ran out of juice. Still well set up, and will make the break higher if NASDAQ overall can muster the move through the 200 day SMA as well. Nice set up for the next break higher.
SOX (+0.79%). Chips broke toward the top of the two week range, posting a new closing high on the rebound, trying to take the lead.
SP500/NYSE
Stats: -0.54 points (-0.04%) to close at 1403.04
NYSE Volume: 1.208B (+15.01%). Volume moved higher as the large cap NYSE indices tread water. On the other hand, the small and mid-caps moved well as money was spent on them. That makes the rising trade on so hard to handle.
Up Volume: 647.125M (-145.176M)
Down Volume: 552.691M (+302.451M)
A/D and Hi/Lo: Advancers led 1.15 to 1
Previous Session: Advancers led 2.52 to 1
New Highs: 100 (+31)
New Lows: 32 (-39)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
The large caps basically held steady on the session, tapping toward the 18 day EMA on the low, then rebounding to flat. Still above near support, still at 1400, but the real action is up at the trendline and the 200 day SMA near 1428. A move over that level is the key move to come in this rally if it is going to continue.
SP600 (+0.76%) moved to a new rally closing high, moving in on the 200 day SMA that is 4.5 points overhead. The 200 day is the next major point for just about all indices other than the NASDAQ 100 and SP400.
The mid-caps (+0.61%) continue trucking higher after a definitive move Monday that continued the breakout over the 200 day SMA. Have to like that.
SP400 CHART: http://investmenthouse.com/ihmedia/SP400.jpeg
DJ30
DJ30 had to drag WMT and HPQ around all session, and it showed some wear for it. Undercut the 18 day EMA on the low, but that still kept it above the Friday and Monday lows where it tested 12,750 and held. Making a higher low over that key level, and still taking aim at the 200 day SMA (13,020) and its next key breakout . . . as with the other large cap indices.
Stats: -44.13 points (-0.34%) to close at 12832.18
Volume: 236M shares Tuesday versus 198M shares Monday. Volume up as DJ30 moved in a narrow range, making a higher low. Not a bad thing.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
WEDNESDAY
CPI, the latest read on inflation, is up in pre-open, and there will be more Fed-speak and we will also see what else is coming from the Fed with its 12+ speakers this week. In addition there are more earnings still to come; earnings season is much more than a 2-week event these days. ERTS exploded numbers after hours but then said some disconcerting things in the conference call and dove right back down. AMAT was down originally but then surged on the conference call. Surged is a relative term for AMAT (closed at 19.86, trading at 20.20 after hours), but it was up and that can translate elsewhere.
When and how remains to be seen. The large cap SP500 and DJ30 lagged Tuesday, but they are also in interesting patterns, tightening in their ranges and in position to make a run at resistance and join NASDAQ 100 and SP400 over the 200 day SMA.
There are more stocks moving up to the fore as the rally continues. That is often the case: an initial break higher with the initial leaders taking charge such as AAPL, RIMM, metals, energy, transports - - stocks that have made us a lot of money. As they lead the other, next wave of leaders is under accumulation, building their bases. As the initial leaders take time out to pullback and base a bit, the new leaders emerge.
That is why it is such a positive, despite the overall low volume levels, to see the small caps, mid-caps, and smaller techs start turning up in good patterns and posting breakouts. That is money moving around and new money coming on board. As always, to be really convincing you need to see overall strong volume, but we are making great money playing individual stocks showing great patterns and strong breaks higher. If money keeps coming in we will continue seeing them set up and break higher, and we are going to keep looking for them and let them make the breaks higher and make us good money.
Support and Resistance
NASDAQ: Closed at 2495.12
Resistance:
Some modest resistance at 2500 from interim August lows.
The 200 day SMA at 2517
2609 is an old trendline from summer 2004/summer 2005
Support:
2451 is the August closing low
The 10 day EMA at 2460
The 18 day EMA at 2436
2419 is the January 2008 peak and the early February peak
2392 is the April 2008 peak
The 50 day EMA at 2390
2386 is the August intraday low
2378 is the mid-February peak; 2379 from the October 2006 peak
2370 from the April 2006 peak
The 90 day SMA at 2350
2340 from the March 2007 low
2302 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
2261 is late March higher low
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
S&P 500: Closed at 1403.04
Resistance:
1406 is the August and November 2007 closing low
1428 is a longer term trendline from the August 2003/September 2004 lows
The 200 day SMA at 1429
1433 from a pair of August 2007 lows and December mid-month intraday low
1446 from the December low
Support:
The 10 day EMA at 1399
The 18 day EMA at 1392 held Thursday, Friday and Monday
1396 is the February 2008 peak
1387 is the April 2008 intraday high
The 50 day EMA at 1375
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
The 90 day SMA at 1359
1335 is an ancient trendline
1325 from May 2006 peak prior to the summer 2006 correction
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
Dow: Closed at 12,832.18
Resistance:
12,845 is the August closing low
The 200 day SMA at 13,020
13,092 is the December 2007 intraday low
13,250 from price points in second half of 2007
13,563 is the late December peak
13,780 is the early December 2007 peak
Support:
The 18 day EMA at 12,817
12,786 is the February 2007 peak
12,750 to 12,768 is the February 2008 peak and a series of lows and highs from August 2007
12,743 is the November low
The 50 day EMA at 12,669
12,573 is the mid-February high
12,518 is the August intraday low
The 90 day SMA at 12,490
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
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
May 12
Treasury Budget, April (2:00): $159.3B actual versus $157.5B expected, $177.7B prior
May 13
Export prices, April (8:30): 0.6% actual, 1.2% prior
Import prices, April (8:30): 1.1% actual, 1.1% prior
Retail sales, April (8:30): -0.2% actual, -0.2% expected, 0.2% prior
Retail ex-autos, April (8:30): 0.5% actual versus 0.2% expected, 0.4% prior (revised from 0.1%)
Business inventories, March (10:00): 0.1% actual versus 0.4% expected, 0.5% prior (revised from 0.6%)
May 14
CPI, April (8:30): 0.3% expected, 0.3% prior
Core CPI (8:30): 0.2% expected, 0.1% prior
Crude oil inventories (10:30): +5.6M prior
May 15
Initial jobless claims (8:30): 370K expected, 365K prior
NY Empire State Index, May (8:30): 0.0 expected, 0.6% prior
Net foreign purchases, March (9:00): $62.5B prior
Capacity utilization, April (9:15): 80.2% expected, 80.3% prior
Industrial production, April (9:15): -0.3% expected, 0.3% prior
Philly Fed, May (10:00): -19.0 expected, -24.9 prior
May 16
Building permits, April (8:30): 912K expected, 927K prior
Housing starts, April (8:30): 940K expected, 947K prior
Michigan sentiment, preliminary May (10:00): 62.0 expected
End part 1 of 3
|
money investment
investment help
|
