|
|
money investment, investment help
* * * *
7/07/08 Investment House Daily
* * *
Investment House Daily Subscribers:
MARKET ALERTS:
Targets hit alerts: EAT
Buy alerts: None issued
Trailing stops: NBR
Stop alerts issued: XTO
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:
- Stocks attempt a rebound, fail, but SP500 holds at some 2006 support.
- Oil lower, but . . .
- Desperately seeking some leaders to at least mount a relief move.
Lower oil cannot produce a lasting bounce.
Oil fell to 141.37 (-3.92/bbl) on the close. It was down over 4 clicks early and stocks opened positive in response. The dollar was stronger, gold was modestly weaker, and after bleeding energy, ag, and steel late last week a bounce attempt was on order.
Didn't hurt that analysts were out upgrading some tech stocks (BRCM, JNPR) and the rumor mill was cranked back up with MSFT and YHOO back on the blogs with MSFT telling Icahn if he was successful MSFT would buy some or all of YHOO. MSFT has a bad case of constipation on this; it needs to either do its business or get off the thrown so to speak. There were also rumors to the negative as well as GM is supposedly going to cut thousands of white collar jobs and product lines or models. It buys brands voraciously (e.g. Hummer) then regurgitates them when the slow cycles come. Great management foresight.
Stocks did bounce to start, showing some impressive gains with NASDAQ up 31 points, SP500 rising 18 points, and DJ30 up 111 points. The sellers took their shots all morning, and while they put dents in the gains the indices were not relinquishing them. Then the bad news financials struck again with rumors that FNM and FRE would be subject to new accounting rules and reluctantly put a lot more debt on the books thus requiring a lot more write-downs, etc. Basically the same story repeated again for the financials.
That jerked stocks negative by lunch. DJ30 lost more than 100 points in a 200+ point swing. NASDAQ lost 58 points off its session high. All of this occurred over an hour, sending SP500 below its 2008 lows and onto some 2005 peaks and 2006 lows. That put a bottom in for the session, but it took a couple of hours for it to gel. You could see the intraday bottom trying to build with that rather tight lateral move up to the last hour. Then the shorts started to cover with DJ30 recovering that 135 points to the downside and NASDAQ jumping 45 points off its low, all in 40 minutes. Looked good heading to the close but in the last 20 minutes the sellers took another run and closed NASDAQ and DJ30 barely negative while SP500, the small caps, and NASDAQ 100 managed to scratch out gains. Not much when the session was over, but once more the action leaves the indices in position to bounce. Where have we seen this before?
TECHNICAL. Intraday it looked decent to start but the indices gave up an early gain, turned negative, rebounded positive, gave some of it up. Some character with the comeback, but it was more akin to a drug addict only taking a fraction of the usual dosage of drugs. Hard to get too excited but better than getting totally wasted.
INTERNALS: Hard to get too excited here, either. The indices closed mixed and near to flat but there was bad breadth; not a whole lot of stocks were in the recovery though stocks mitigated their losses with the afternoon recovery. Volume was up though with a half day Thursday that was no mean feat. What it does show us is solid trade on NYSE, topping the Wednesday selling levels, as SP500 tapped the old 2005/2006 lows and rebounded. That shows some buying, covering or otherwise, at that level. Nothing definitive of course; at these levels you look at support levels and how indices respond with volume on bounces as clues to a bounce, but there are always a lot of false signals in this kind of market. Looks ripe to bounce but internals suggest it would be just a narrow breadth short covering move.
CHARTS: As noted, SP500 tapped at some 2005 peaks and some 2006 lows just above the lows for that year. Held a clear line of support from those tops and bottoms and bounced. NASDAQ tapped near its January lows (the higher of the two sets in January and March) and it bounced back. SP600 hit near its March lows, the higher of the two sets, and it shows some life there as well. Once more the indices are trying to put in a bounce but as with other indications the past couple of weeks, it is just an indication; if some new story comes out those attempts could be put in the waste basket for the time being.
LEADERSHIP: Health services, pharma, and biotech continue to set up, looking overall decent to good. That is about it. Oil, energy (e.g. coal), and agriculture are trying to form an interim bottom for a bounce, but that is about all they are doing. The market seriously needs some leaders to step forward, but with oil still over $140 even with a 2.7% decline, not many feel confident about the economic futures of the world economies, and that is keeping most stocks depressed with the more defensive plays showing more life. Interestingly, there is an old adage that a market gain led by energy cannot survive as it eats itself alive. The rise in prices eventually squelches or pinches off the very economic growth that pushes prices higher. It looks as if the $135 to $140 level is the point where the market turns on itself.
THE ECONOMY
The data starts back up Tuesday. Monday was mercifully low on data. Of course the key this week is the start of earnings season. Very few of course, but there is that threat of warnings. In any event, earnings will trump economics right now: $140/bbl oil tells the economic story, and investors want to see what companies have to say about it with their guidance.
THE MARKET
MARKET SENTIMENT
VIX: 25.78; +1. 26.91 on the high before the rebound shoved it back over 1 point on the close. Still well off even the threshold 30 level (hit 37 in January) that could arguably (though not a forceful argument) set a bottom on this selling.
VXN: 30.38; +0.53
VXO: 26.61; +0.24
Put/Call Ratio (CBOE): 1.21; +0.01. Seven straight sessions above 1.0 on the close as the backlog of anxiety grows. As noted over the weekend, in the range that helps set at least a relief bounce attempt.
Bulls versus Bears:
For the second time this year bears are crossing above bulls, doing so basically where they did in March on their way to much more extreme readings just about the time the market made the March low and started the last rally. Positive for the market and if SP500 is going to hold the long term trendline is the place to do it.
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: 31.9%. Down again with another healthy drop from 33.7%. Below the 35% level and now a bullish indicator and getting close to the lows hit in March at 30.9%. Down from a rebound high at close to 50% on the run through May. In March the indicator did its job with the dive below 35% and the crossover with the bears. They are crossing over again now even before the prior lows are hit. 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: 44.7%. Strong surge higher once more, up from 39.3%. Well above the bullish level. Again, that is one of the best indications that sentiment is getting extreme on the negative side. It is again past 35%, the level that historically indicates too much pessimism. 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. 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: -2.06 points (-0.09%) to close at 2243.32
Volume: 2.375B (+66.85%). Volume bounced back above average as the mid-summer volume remains strong. Of course most of it has been on the downside so that is hardly a silver lining.
Up Volume: 1.275B (+783.789M)
Down Volume: 1.042B (+111.733M)
A/D and Hi/Lo: Decliners led 1.91 to 1. NASDAQ 100 closed with a gain and as the breadth indicates, it was a large cap day on NASDAQ.
Previous Session: Decliners led 1.59 to 1
New Highs: 30 (+2)
New Lows: 514 (+115). New lows expanding again now with NASDAQ consistently high along with NSYE, and this is another indication that the selling is getting to the point where a bounce will try to gel, but this indicator could realistically put in a lot more time.
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
Still above its 2008 lows, reaching closer to the higher of the two in January (2200) on the Monday low (2214) then bouncing back. As noted over the weekend, a logical place to bounce but it could put in some more downside and really test those lows before it makes the attempt. In a downtrend below the 10 day EMA (2304) and thus any bounce at this point has to be viewed simply as a bounce in its downtrend.
NASDAQ 100 (+0.58%) gapped higher but it too rolled over after the early gains. As on Thursday, it tapped 1800 on the low and recovered positive on strong, above average volume. It too is set to bounce but it is also in a downtrend below the 10 day EMA as well.
NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: -10.59 points (-0.84%) to close at 1252.31
NYSE Volume: 1.522B (+80.84%). Volume matching the pre-holiday volume. Downside indicates distribution but the SP500 test of support and rebound shows some buying at that level.
Up Volume: 454.084M (+97.746M)
Down Volume: 1.055B (+538.31M)
A/D and Hi/Lo: Decliners led 2.35 to 1. Small caps were hammered. As with NASDAQ it was not a small cap day.
Previous Session: Decliners led 1.91 to 1
New Highs: 13 (-3)
New Lows: 623 (+122). High and moving higher. Starts building part of the foundation for a move higher.
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
Ran up to the March closing lows on the highs then turned over to test downside. It undercut the 2008 lows again but held some June 2006 lows and some August and September 2005 highs and rebounded to cut the losses. It bounced off the 2008 lows last week and could not sustain any upside. It will try again now that NASDAQ has hit near one it its 2008 lows and held.
SP600 (-1.09%) was pounded again, coming close to its March lows as well, then rebounding to cut some losses. Steady dive by the small caps over the past two weeks, over 40 points (11%) without an upside breath. With this test of the 2008 lows it is way oversold and those lows should help provide some upside momentum.
SP600 Chart: http://investmenthouse.com/ihmedia/SP600.jpeg
SP400 CHART: http://investmenthouse.com/ihmedia/SP400.jpeg
DJ30
The blue chips were down but traded in a 280 point range, closing basically flat. Once more it is working laterally as it too trades along some of the 2008 levels. The Dow is 14% off its May levels with just three modest attempts at bouncing and the last not even a bounce, just a lateral move similar to this one. After you get three such moves you start looking for a bounce on the fourth or fifth pause. With the other indices in position to make a bounce once more (yes again) we are looking to see if we can get a bounce from a pretty tough bludgeoning.
Stats: -56.58 points (-0.5%) to close at 11231.96
VOLUME: 248M shares Monday versus the pre-holiday half session 146M shares Thursday.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
TUESDAY
The economic data starts back up Tuesday with pending home sales midmorning. Right now the economic data, while important, takes a back seat to the market's technical position as well as the anticipation of earnings and the warnings that will issue.
After a selloff by the Dow, the other indices have caught up with SP500 undercutting the 2008 lows and going back to the 2006 lows, levels more than a few were looking for it to seek. NASDAQ is just about to its 2008 lows along with SP600. Everyone is getting there and with such sustained selling a bounce remains in the works. It has been in the works for some time but every time things were ripe a news story would tear it apart. At some point there is enough bad news built in and with the indices testing these prior lows with basically a straight drop, things are oversold.
Still not looking for more than a bounce at this point, however. VIX is still too low for a serious bottom. Leadership is too sparse right now with not enough seriously good stocks in good patterns. And of course oil is still over $140 per measly barrel. That adds up to more work that needs to be done over time.
So, we look for a bounce, and if there is another big intraday reach lower that spikes up volatility that will likely do it. If volatility doesn't bounce, that doesn't mean stocks won't; it just won't be as sustainable.
We are going to continue looking at the good patterns that are developing in health/medical sectors and the odd good pattern here and there in other sectors, looking for a rebound move. That includes energy and ag as they were hit hard but many are above support; not great patterns but hold potential as bounce plays that can make us money on something more than just one of those lateral moves that never got off the ground. Again, after this much downside, a bounce will break free to give stocks some breath. After that move we can look for the downside to resume but want to see a pretty decent upside bounce to set up the downside better.
Support and Resistance
NASDAQ: Closed at 2243.32
Resistance:
2261 is a March 2008 interim low
2286 is the first April 2008 gap up point.
The 10 day EMA is 2307
2335 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
2340 from the March 2007 low
2370 from the April 2006 peak
2378 is the mid-February peak; 2379 from the October 2006 peak
The 90 day SMA at 2378
2386 is the August 2007 intraday low
2388 is the June 2008 low
2392 is the April 2008 peak
The 50 day EMA at 2397
2419 is the January 2008 peak and the early February peak
2451 is the August closing low
The 200 day SMA at 2493
2500 from interim August lows.
Support:
2202 is the January 2008 low
2155 is the March 2008 low
S&P 500: Closed at 1252.31
Resistance:
1257 is the March low
1270 is the January low
The 10 day EMA at 1284
The 18 day EMA at 1306
1317 from the February low
1324 is the April low
1331 is the June low
1341 is an ancient trendline
The 50 day EMA at 1343
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
1387 is the April 2008 intraday high
1396 is the February 2008 peak
1406 is the August and November 2007 closing low
The 200 day SMA at 1408
Support:
1244 is an August 2005 peak
1240 to 1221 are September 2005 peaks1234 is the July 2006 low
1224 is the June 2006 low
Dow: Closed at 11,231.96
Resistance:
11,317 from March 2006
The 10 day EMA at 11,470
11,634 is the January intraday low
11,670 is the May 2006 intraday high; 11,642 closing
The 18 day EMA at 11,692
11,731 is the March 2008 low
12,050 from the March 2007
12,070 from the early February 2008 lows
The 50 day EMA at 12,135
12,250 from late March 2007 lows
The 90 day SMA at 12,384
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
The 200 day SMA at 12,817
12,845 is the August closing low
13,092 is the December 2007 intraday low
13,133 is the May 2008 high
Support:
11,061 from February 2006
10,912 peak from March 2005
10,854 from December 2004
10,701-10,705 from July 2006, July 2005
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
July 8 - Tuesday
Pending home sales, May (10:00): -3.0% expected, 6.3% prior
Wholesale inventories, May 910:00): 0.7% expected, 1.3% prior
Consumer credit, May (3:00): $7.0B expected, $8.9B prior
July 9 - Wednesday
Crude oil inventories (10:30): -1.98M prior
July 10 - Thursday
Initial jobless claims (8:30): 404K prior
July 11 - Friday
Export prices, June (8:30): 0.4% prior
Import prices, June (8:30): 0.5% prior
Trade balance, May (8:30): -$62.1B expected, -$60.9B prior
Michigan preliminary sentiment, July (10:00): 56.0 expected, 56.4 prior
Treasury budget, June (2:00): $36.5B expected, $27.5B prior
End part 1 of 3
|
money investment
investment help
|
