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money investment, day trading
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7/21/08 Investment House Daily
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Investment House Daily Subscribers:
Jon Johnson is on the road the first part of this week visiting several companies for potential investment opportunities. He is sending in his market comments and plays he likes as he travels. The reports will be a bit briefer until he returns later in the week.
MARKET ALERTS:
Targets hit alerts: None issued
Buy alerts: CFX; PVA
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:
- Quiet session of consolidation to set up further upside.
Quiet expiration , quiet Monday.
Many times the Monday following expiration is the opposite of that prior Friday. Not the case Monday. There was a basket of more earnings, and BAC helped perk things up when it, as with Citi on Friday, lost less than expected. That was a moral victory and propped up futures early in the session. Oil was up, however, and even with no major issues on the earnings scene, the early upside attempt did not hold up long (131.04, +2.16). It did not, however, result in a selloff. Oil simply bounced back from 4 sessions of selling, rebounding some just as the market did last week from its selling. It was enough, however, to keep the market on idle similar to Friday, but in the bigger picture that was not a bad thing as the market continues to rest after its big surge, holding its gains as it takes a breather.
TECHNICAL. Intraday the action started higher, but most of the session traded below the zero line. No big selloff, just no strength to keep the early upside alive. There was no rollover, however, so the action was 'just right,' i.e. a modest test, holding its gains.
INTERNALS. Modestly positive breadth (1.8:1 NYSE, 1.3:1 NASDAQ) showed no real selling strength and indeed looked good though most of the gains were in the downtrodden financials. Volume declined so no heavy sellig on a down session. Basically just a calm session.
CHARTS. Not bad at all with NASDAQ, SP500, and DJ30 all holding near support at either the 10 day EMA or the 18 day EMA, trading in narrow intraday ranges on lower volume. A classic day of rest or pause that helps consolidate last week's gains while holding them as well. Some would call this a rally losing momentum, and given the gutting the market took heading into the bounce that sentiment is understandable. Stripping aside the gut feelings, the market has bounced off the lows and put in a couple of lower volume quiet sessions as it holds onto those gains. As the market typically bounces a bit higher after such a strong downside run, this action is pretty normal before resuming the move. Indeed, it is constructive as the shorts are not coming in and selling the rally just yet.
LEADERSHIP. As noted, financials sported a decent session of rebound after the BAC earnings, but they could not surge the market higher. Medical/healthcare did not surge but posted a solid session. Tech held up decently while metals, ag, and energy bounced, energy still looking as if it is setting up for another downside leg after this relief move from the recent selling. In short, not a lot of changes, just stocks working through the selling, trying to base up and join the medical/healthcare in the leadership category. Agriculture looks as if it wants to try and form back up; after such tremendous gains it seems unlikely, but if the patterns continue to build you ignore them at your own risk to missing out on new breakouts.
SUM. Less than an impressive session as far as the stats, but that is just what the upside wants as the market took a breather on lower trade and held its rebound gains over near support. Considering the hard selling coming into the bounce, the fact that the market can hold still and hold its gains is a positive. Still looking for more upside from here after this pause to refresh runs its course.
THE MARKET
MARKET SENTIMENT
VIX: 23.05; -1. Continued to peel back from last week's move over 30, still too low to set a serious bottom in the market.
VXN: 29.69; -0.8
VXO: 24.1; -1.36
Put/Call Ratio (CBOE): 0.88; -0.04. Four sessions below 1.0 on the close after 13 closes over that level.
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: 27.8%. Scratched back up last week, but basically no gain, up just 0.4% from 27.4%. I guess it just got about as bad as it could get as the market was not showing any signs of improvement at that point. A sharp plunge from 31.9% the prior week, blowing past the 30.9% low hit in March and well below the 35% level considered bullish for stocks (gets so low there is plenty of money lying around to fund a rally if things turn). Steep drop 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. Now it is going above and beyond. Bulls and bears have crossed over again, doing so 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: 48.9%. While the bulls may have managed a paltry optimism gain, the bears swelled their ranges, rising from 47.3%. Not as strong a move as before with a gain from 44.7% and 39.3% in the preceding weeks. Well above the bullish level and the highest since 1995. 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. 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: -3.25 points (-0.14%) to close at 2279.53
Volume: 1.891B (-16.68%)
Up Volume: 883.557M (-49.532M)
Down Volume: 880.706M (-424.463M)
A/D and Hi/Lo: Advancers led 1.28 to 1
Previous Session: Decliners led 1.22 to 1
New Highs: 48 (-6)
New Lows: 88 (-25)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
Low, below average volume as NASDAQ held steady above near support at the 10 day EMA, moving laterally and building a step for the next move higher in the relief bounce. Still looking for a move up near 2352 to 2360ish as the first major resistance test.
NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: -0.68 points (-0.05%) to close at 1260
NYSE Volume: 1.71B (-1.1%)
Up Volume: 636.056M (-342.412M)
Down Volume: 560.152M (-147.665M)
A/D and Hi/Lo: Advancers led 1.83 to 1
Previous Session: Advancers led 1.16 to 1
New Highs: 22 (-9)
New Lows: 110 (-25)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
Very similar to NASDAQ, holding steady over the 10 day EMA, hanging onto its gains but just below the January intraday low. Financials helped get it here and they were not doormats on Monday; they will have to pick up the slack once more.
SP600 (+0.53%) helped lead the upside Monday, holding the gains from the bounce off the short double bottom, moving laterally over near support. Good action and no complaints from this move.
SP600 Chart: http://investmenthouse.com/ihmedia/SP600.jpeg
SP400 CHART: http://investmenthouse.com/ihmedia/SP400.jpeg
DJ30
DJ30 hung right in there as well, posting a loss but tapping and holding the 18 day EMA on the low. Nice slow session after a solid start the oversold bounce last week. As with the other indices this puts DJ30 in good position to continue the relief bounce later this week.
Stats: -29.23 points (-25%) to close at 11467.34
VOLUME: 212M shares Monday versus 378M shares Friday. Nice low volume session as the blue chips paused.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
TUESDAY
The market weathered a climb in oil by posting a modest consolidation session. Not bad action. Earnings continue to fly now, and they can always throw out a wildcard that undercuts or bolsters any move. Right now the market is technically in good shape to continue the oversold rally and nothing has really undermined it yet. If oil bounces, well, that could change the picture quickly. For now it is doing what it needs to do in order to continue its upside bounce, and thus we will continue looking for really solid upside to play that move as we watch this bounce set up some more downside plays, particularly in energy as those stocks continued their low volume rebound from last week's selling. Won't take long before they are pretty tasty looking.
Support and Resistance
NASDAQ: Closed at 2279.53
Resistance:
2286 is the first April 2008 gap up point.
2340 is the trendline from the summer 2004/July 2006 lows, Q4 2005 consolidation
2340 from the March 2007 low
The 50 day EMA at 2353
2358 is a 50% retracement of the June to July selloff.
2370 from the April 2006 peak
2378 is the mid-February peak; 2379 from the October 2006 peak
The 90 day SMA at 2379
2386 is the August 2007 intraday low
2388 is the June 2008 low
2392 is the April 2008 peak
2419 is the January 2008 peak and the early February peak
2451 is the August closing low
The 200 day SMA at 2471
2500 from interim August lows.
Support:
2261 is a March 2008 interim low
2202 is the January 2008 low
2155 is the March 2008 low
S&P 500: Closed at 1260.00
Resistance:
1270 is the January low
The 18 day EMA at 1267
The 50 day EMA at 1311
1317 from the February low
1320 is a 50% retracement of the May to July selloff
1324 is the April low
1331 is the June low
1344 is an ancient trendline
1370 is the August 2007 intraday low
1374 is the March 2007 closing low
1387 is the April 2008 intraday high
The 200 day SMA at 1394
1396 is the February 2008 peak
1406 is the August and November 2007 closing low
Support:
1257 is the March low
1244 is an August 2005 peak
1240 to 1221 are September 2005 peaks1234 is the July 2006 low
1224 is the June 2006 low
1176 from the Q4 2005 lows
1167 is the January 2005 low
1154 from the May 2005 lows
1142 is the 2005 closing low
Dow: Closed at 11,467.34
Resistance:
11,634 is the January intraday low
11,670 is the May 2006 intraday high; 11,642 closing
11,731 is the March 2008 low
The 50 day EMA at 11,847
11,982 is a 50% retracement of the May to July selloff
12,050 from the March 2007
12,070 from the early February 2008 lows
12,250 from late March 2007 lows
The 90 day SMA at 12,284
12,518 is the August intraday low
12,573 is the mid-February high
The 200 day SMA at 12,685
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
13,092 is the December 2007 intraday low
13,133 is the May 2008 high
Support:
11,317 from March 2006
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 21 - Monday
Leading Economic Indicators, June (10:00): -0.1 actual versus -0.1% expected, +0.1% prior.
July 23 - Wednesday
Crude oil inventories (10:35): +2.95M prior
July 24 - Thursday
Initial jobless claims (8:30): 380K expected, 366K prior
July 25 - Friday
Durable goods orders, June (8:30): 0.1% expected, 0.0% prior
Michigan sentiment, July revision (10:00): 56.4 expected, 56.6 prior
New home sales, June (10:00: 505K expected, 512K prior
End part 1 of 3
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money investment
day trading
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