|
|
world stock market, us stock market
* * * *
5/15/08 Technical Traders Report Update
* * *
We apologize for the later delivery this evening. Jon Johnson's sons are in baseball playoffs and he is helping coach the teams.
MARKET ALERTS
Targets hit alerts: None issued
Buy alerts: CX; JEC
Trailing stops: CTRP
Stop alerts: YTEC
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/alertttr.html
SUMMARY:
- Market answers the Wednesday reversal with another NASDAQ breakout on volume.
- German economy 'zooms' ahead
- Less than great economic data shows there is still room for improvement, but still trying to 'firm'
- Friday after a good move: market just needs to hold onto it.
This time a promising rally hangs on with some volume to boot
The economic data did not help get Thursday off to a great start, but importantly the downside momentum from the Wednesday afternoon close dissipated even with the so-so data. The New York PMI was negative (-3 versus 0 expected), the Philly Fed was not as bad but was still well below the zero line marking expansion or contraction, continuing claims at 370K were still too high (as were continuing claims at 3.03M), and net foreign purchases, while higher than expectations, were negative when you strip out the short term, 'safety' money. The bond market did not like that and the dollar lost its nerve on that number.
Nonetheless the market did not hang up its spikes. The indices lost some ground as oil surged once more but it did not get out of hand. Indeed it kept fighting back and the Philly Fed did actually help some. The two big events: oil reversed and sold off as legislative action to reduce speculation (if you max out leverage on one exchange you can't just simply go to another exchange and keep on speculating; kind of like maxing out one credit card and just using another one). It lasted for about 10 minutes but it helped set the spark for a rebound. Then INTC announced a new do it all chip (we would say 'wipe your butt' chip but that might offend some) and the large cap techs were happy. They along with NASDAQ and SOX led the market higher. The rally continued into the close with some better trade on both NASDAQ and NYSE though NASDAQ was the one showing the above average volume.
TECHNICAL: Excellent low to high action, closing at the highs with NASDAQ and SOX breaking through their 200 day SMA, and this time, holding them.
INTERNALS: Definitely mixed but you take it the way you can get it, or as Eastwood movies used to say 'any which way you can.' NYSE breadth was strong (2.4:1), NASDAQ not so (1.6:1, definitely a large cap move). NYSE volume was up but was still way below average. NASDAQ volume was stronger and above average once again on an upside move, trumping the rising reversal session volume on Wednesday; that is the way you want to counter such a session. NASDAQ has had 4 gains on rising, above average volume to 2 losses on rising, above average volume this month. Some positives are stacking up.
CHARTS: NASDAQ and SOX both cracked through their 200 day SMA and held it to the close on rising trade. SP500 and DJ30 both rallied to their 200 day SMA but time ran out in the session before they could make the move to break through. Same with SP600, butting that level again as it did on the Wednesday high, this time holding right up against it. The mid-cap SP400 and NASDAQ 100 just kept trucking higher; at least they now have NASDAQ and SOX as company. Some key moves are underway and you always worry about the laggards, but this market has shown that, given some leadership, it can break on through and keep on moving higher.
LEADERSHP: The large cap techs were without a doubt moving up but there were many joining them. Transports, solar, metals, some energy, materials (lumber, cement): all things that will be needed in China after that earthquake. Demand was already strong and now they are going to have to rebuild. Martha, go fill up the truck with some copper. The market is finding leadership and it is in the 'usual' places as well as newcomers (and those returning from prior leadership after corrections). Have to like that.
SUM: While Wednesday was disappointing as the move that couldn't hold, Thursday was the repeat, and this time it held. There were some catalysts of course, but there always are a few in a good session and we all like to talk about them as we play pin the tail on the reason for the rally. As is always the case, a catalyst is just the trigger; there has to be something underlying the move, and in this case it is continued global demand and the idea that the US recession is not going to suck the life out of consumption domestically.
THE ECONOMY
Regional manufacturing takes a step back . . . but not too far.
Over the prior two months the regional manufacturers showed some improvement. They weren't breaking through the floor to the upside but they were firming, something you always see before any significant turn comes. Promising, but guardedly so.
Thursday both the New York and Philly PMI released their May surveys and both were well below the neutral zero line. New York reported a 0.63 reading in April and a 0 reading was expected, riding the flat line. Instead it flopped out a -3.2. At least Philly beat expectations with its -15.6 reading (-19.0 expected), and it was much better than the -24.9 belly flop in April, but it is still very negative. Firming? I suppose, but it is more like jell-o hardening than any real floor.
But let's not be negative. The market is moving higher on rising trade and that suggests something is afoot, and the monthly readings are 'firming.' If the economy had been through the wringer and we were all just worn mentally to the nub as a result then these improvements would 1) be overlooked by most who were too worn down to really see the truth, and 2) would make people such as myself more inclined to view them as a turn back up and indicating economic firming just as in late 2002 and early 2003. As it is, with the housing and mortgage issues, the credit freeze, and oil surging, it just doesn't seem possible the economy could be that resilient. Kind of the inverse of the not believing it because things are so bad: here you don't believe it because it seemed things would really get horrid but we haven't turned a negative GDP quarter. So you do what you always do: the market looks better, there is leadership, so play it!
Germany surges.
The headlines were indeed that Germany's GDP 'surged' or 'soared' last quarter. It was up 1.5%. Now if we had a 1.5% gain right now we would be happy but we would not call that a 'surge.' It would be more of a 'start to a recovery.'
But we do have to give Germany some credit. It was the largest quarterly gain in 12 years. Now would that not, excuse the language, suck? Recall we posted a 7.3% gain in Q3 2003. More recently the 4+% in second half 2007.
While it may not be much to us, in the big picture it simply shows that there is new demand all over the world and that is keeping the commodities boom alive. If Germany is pulling its best growth in 12 years, then you can bet most other EU countries are as well and the emerging countries are flying. With the improvements in the US of late and the gains in the market, we may be returning to some glory ourselves.
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: 16.3; -1.36
VXN: 20.13; -1.34
VXO: 17.37; -0.91
Put/Call Ratio (CBOE): 0.78; -0.03
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: 46.0%. Continuing the rise, up from 44.4%, slowing a bit as the week prior they jumped 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. 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: 29.9%. After rising the prior week the bears turned south, falling from 32.3%. 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: +37.03 points (+1.48%) to close at 2533.73
Volume: 2.206B (+4.2%)
Up Volume: 1.796B (+610.371M)
Down Volume: 432.047M (-479.661M)
A/D and Hi/Lo: Advancers led 1.57 to 1
Previous Session: Advancers led 1.02 to 1
New Highs: 74 (+5)
New Lows: 72 (0)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
Both NASDAQ and SOX cleared their 200 day SMA and held the move, using some stronger, above average volume. NASDAQ was led by the large caps, but the move continues to spread out beyond just AAPL and RIMM.
SP500/NYSE
Stats: +14.91 points (+1.06%) to close at 1423.57
NYSE Volume: 1.195B (+0.52%)
Up Volume: 932.312M (+192.196M)
Down Volume: 243.326M (-170.844M)
A/D and Hi/Lo: Advancers led 2.41 to 1
Previous Session: Advancers led 1.48 to 1
New Highs: 94 (+27)
New Lows: 27 (-5)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
SP500 is up to its 200 day SMA along with the small cap SP600, both chasing the mid-cap SP400 and its prior breakout.
SP600 Chart: http://investmenthouse.com/ihmedia/SP600.jpeg
SP400 CHART: http://investmenthouse.com/ihmedia/SP400.jpeg
DJ30
DJ30 is also at its 200 day SMA once more after making a higher low just over the 50 day EMA to end last week. Now we see if there is anything in the tank.
Stats: +94.28 points (+0.73%) to close at 12992.66
Volume: 217M shares Thursday versus 206M shares Wednesday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
FRIDAY
With SP500, SP600 and DJ30 at the 200 day SMA it would be great to see them just go ahead and make the break and run higher, putting some distance on that key point. Maybe they will find the momentum given the INTC news and its new chip. That will have to counterbalance some retail sector earnings after hours where KSS cut its full year outlook and JWN did something of the same. KSS was lower but JWN also had some good news, and it was up. Maybe they will fight to a draw; KSS used to be a leader but it fell from grace. JWN has fared better over the past several years, but its pattern has turned to mush over the past year, forming the right side of a large head and shoulders.
Doesn't sound too promising, and in the bigger picture we are not going to be looking for too much from Friday. That of course leaves room for surprise, but typically we like to take gains on Friday if they are there rather than starting a bunch of new positions. If a strong stock is making a break we won't turn away from it, but we also won't try to turn a mediocre move into a 'must have' buy on a Friday. No reason to in this market as it continues to push forward solid stocks and strong moves.
Indeed, we would be happy if the market can make it out of the week holding the gains. It wouldn't mean much for SP500 and DJ30 to clear the 200 day SMA just for the sake of doing it, i.e. on low volume. That doesn't mean anything and is susceptible to a selloff when the new week rolls around. No, if there is not going to be a strong breakout just give us a market stingy with its gains right now. That way it is set up to continue the move after a pause in the action.
Thus Friday we will continue to look for good stocks making good moves; leaders don't mind what day of the week it is. We just want to make sure the play comes to us versus chasing the play. Usually if you chase a bus you get run over from behind by another vehicle. Let it pull up to the stop and climb on. We see some stocks in that position, and if they do open the doors we will climb on board.
Support and Resistance
NASDAQ: Closed at 2533.73
Resistance:
2615 is an old trendline from summer 2004/summer 2005
2668 to 2673 from November/December 2007 interim peaks
2720 (July 2007 peak), 2724 (December 2007 peak) are key resistance points
Support:
The 200 day SMA at 2517
2500 from interim August lows.
The 10 day EMA at 2478
2451 is the August closing low
The 18 day EMA at 2443
2419 is the January 2008 peak and the early February peak
The 50 day EMA at 2399
2392 is the April 2008 peak
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
2305 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
S&P 500: Closed at 1423.57
Resistance:
The 200 day SMA at 1428
1429 is a longer term trendline from the August 2003/September 2004 lows
1433 from a pair of August 2007 lows and December mid-month intraday low
1446 from the December low
Support:
1406 is the August and November 2007 closing low
The 10 day EMA at 1405
The 18 day EMA at 1396
1396 is the February 2008 peak
1387 is the April 2008 intraday high
The 50 day EMA at 1378
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
The 90 day SMA at 1359
1338 is an ancient trendline
Dow: Closed at 12,992.66
Resistance:
The 200 day SMA at 13,017
13,092 is the December 2007 intraday low
13,133 is the May 2008 high
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:
12,845 is the August closing low
The 18 day EMA at 12,843
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 12,690
12,573 is the mid-February high
12,518 is the August intraday low
The 90 day SMA at 12,493
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): 0.2% actual versus 0.3% expected, 0.3% prior
Core CPI (8:30): 0.1% actual versus 0.2% expected, 0.2% prior
Crude oil inventories (10:30): +200K actual versus +5.6M prior
May 15
Initial jobless claims (8:30): 371K versus 370K expected, 365K prior
NY Empire State Index, May (8:30): -3.2 actual versus 0.0 expected, 0.6% prior
Net foreign purchases, March (9:00): $80.4B actual versus $62.5B prior
Capacity utilization, April (9:15): 79.7 actual versus 80.2% expected, 80.3% prior
Industrial production, April (9:15): -0.7% actual versus -0.3% expected, 0.3% prior
Philly Fed, May (10:00): -15.6 actual versus -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
|
world stock market
us stock market
|
