Comtex SmarTrend(R) Morning Call Oct 12, 2006
October 12, 2006 9:00 AM
Oct 12, 2006 (Comtex SmartTrend Morning Call via COMTEX) --
Ratio: 1.0
Uptrends/Downtrends: 22:22
There was a momentary market-shaking event yesterday as a private plane crashed into a building in New York City and the indices fell, INDU reacted to the news by dropping 80 points in mid-afternoon. Once it was determined that there was no repeat of 9/11/01 the 3 market indices returned to follow the uptrend pause pattern of the last 5 trading sessions. The SmarTrend(R)Daily ups to downs retreated to level at 22:22. All 5 of our proprietary indicators declined slightly, but all stayed well within positive territory (above their respective mid-lines as seen below). None of the 5 were overbought, including the NBDV, which had been for the prior three trading sessions. The widely followed publicly available other indicators confirmed correction of the slightly overbought condition of the three market indices. While the INDU and INX moved down slightly the QQQQ found a new intraday high at 41.83. The CSTA analysis concludes that once again the uptrend pause since the July rally began, is enjoying a soft landing because of the resilient buying force in the marketplace. This is demonstrated in the middle chart below which plots the INX as well as the IBDI, which measures intermediate buying force and intermediate selling pressure, an up sloping indicator which has remained in positive territory for weeks and has not become overbought. So there was no "major sentiment-changing event" discussed in this column yesterday, just brief apprehension that the airplane tragedy in NYC yesterday was a deja vu. Now beginning its 6th day the sideways move of the markets is getting dull, soon investors could get antsy. There are plenty of recent precedents for longer sideways moves than currently is happening. Nevertheless with buyers continuing to outnumber sellers, the CSTA analysis looks for the rally to resume shortly and the market to rise by year-end to the INDU 12,000 level forecasted in this column two weeks ago. Despite the general market doldrums a number of CSTA analysis stocks are making news. Their recent trends and performances are listed below and recent trend changes in all 4000+ stocks followed by CSTA may be reviewed by clicking on www.cstadirect.com.
With the current uptrend pause appearing to be about to be over this is good time to review opportunities at CSTADirect. Intraday yesterday the indices were moving within narrow ranges, about 50 points for the INDU, 6 for INX and .5 for QQQQ, when the plane crash scare interrupted the otherwise quiescent session. Nothing in the intraday indicators signaled an upcoming change in the recent pattern of trading, the market continues to wait for a catalyst. If some catalytic event were to occur that causes sellers to rush into and whap the market the CSTA analysis indicates that downside support for the INDU would be found at 11,750. The probability is more likely that the indices will rally a bit first today as they ended trading yesterday on an uptrend note and appear ready to continue that direction this morning.
Today's prices for crude hit their lowest levels for 2006, dropping to $57.34, fueling the outlook for a slightly stronger market opening this morning. Oil prices remain under pressure as a result of high global inventory levels, a slowing US economy, and a gentle hurricane season. Today's report on US fuel inventories, due out at 10:30 ET, is expected to demonstrate continued rising oil inventories; and experts report the allocation of the proposed 1 million bpd oil production cut among OPEC members is proving difficult. BP production woes again hit the news, as a "highly unusual weather event" of high winds and mud accumulations forced the power shutdown at Prudhoe Field, reducing output from 350,000 bpd Monday to 35,000 bpd this morning. Market sentiment will also respond to today's release of the Fed's Beige Book at 2:00 ET, as investors retrieve from the anecdotal reports of the 12 regional Fed banks indications about inflationary trends, consumer spending activity, general economic health, and any signs of an imminent housing turnaround. Despite an undercurrent of hope for a bottoming of the housing slump, National Association of Realtors lowered their outlook for two key 2006 housing indicators, saying this year median home prices may grow at a 1.6% rate, down from September's estimate of 2.8%; and existing home sales are likely to decline 8.9% to 6.45 million, down from estimates of a 7.6% drop made in September. Yesterday's release of the FOMC minutes shattered hopes of any looming interest rate reduction as uncertainty about inflationary trends remained a key topic in the September minutes. Richmond Fed bank president Lacker took an expectedly more restrictive monetary pose in his speech on the regional business outlook presented in Washington yesterday, asserting further tightening might become necessary should inflation remain at current levels. Another Fed speaker, Fed governor Mishkin will talk about globalization at 1:00 ET today. Trade deficit figures are expected to ease from July's $68 billion record number to $66.4 billion.
This market has shown itself to be unforgiving of downside earnings surprises. Following the disappointing results from Alcoa, Legg Mason and Monsanto, however, Costco reported earnings slightly better than analysts expected of 75 cents compared to 73 cents a year earlier due to a tax benefit, gas profits and less than expected costs. The company also noted a decline in demand for big-ticket items. Strong sales in China generated better than expected results at Yum Brands, as earnings reached 83 cents in the quarter compared to 69 cents a year ago, and beating analyst expectations of 75 cents. PepsiCo reported better than expected results of 88 cents in the quarter compared to 51 cents a year ago, beating the analyst consensus of 86 cents. The company reaffirmed its full year guidance for 2006 of $2.98; analysts are estimating $2.98 2006 results. Also surprising on the upside, McDonald's reported same-store-sales up 7.1% in September and 4.1% in the third quarter and estimated third quarter results of 68 cents, beating analyst expectations of 63 cents.
The following equities mentioned above include:
Comtex SmarTrend Alert
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Ticker Last Close Trend Direction Trend Price Trend Date
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BP 63.86 Downtrend 69.11 2006-08-16
AA 26.85 Downtrend 30.58 2006-07-17
LM 87.15 Uptrend 89.01 2006-08-17
MON 43.95 Downtrend 44.43 2006-09-14
COST 50.07 Uptrend 50.33 2006-09-15
YUM 54.57 Uptrend 47.21 2006-08-15
PEP 63.86 Downtrend 63.25 2006-10-11
MCD 41.25 Uptrend 34.19 2006-07-17
INDU -- DOW JONES: 11,852.13
Lo: 11,794.17 Hi: 11,875.98
Change: -15.04
cstadirect.com
INX -- S&P 500: 1,349.95
Lo: 1,343.57 Hi: 1,353.97
Change: -3.33
cstadirect.com
QQQQ -- NASDAQ: 2,308.27
Lo: 2,292.29 Hi: 2,322.07
Change: +3.60
cstadirect.com
*****
In this daily report there are 9 indicators examined, 5 of which are proprietary and 4 of which are widely available. This report is divided into three sections. The first deals with our 5 proprietary market indicators, the second section examines important economic and business happenings which are expected to affect U.S. Stock market movements and the third section compares the 4 widely available and followed indicators seeking to find a confirmation of our near term (10-30 day) market direction. Experience demonstrates that when these 9 indicators reach extremes they can shortly be expected to change direction and move in the opposite direction. When such happens in all or most of the 9 on or about the same time followed by a move from below an extreme (oversold) to above that extreme (or vice versa for overbought), a change in market direction is very probable. The near term market moves are measured to identify the best possible returns for traders/investors. Daily price/volume examinations provide the best data upon which to base such forecasts. In this report though, intraday indicators are examined to improve the point of entry timing for the expected move.
Comtex News Network, Inc. is not a registered investment advisor and does not provide investment advice. Investors bear complete responsibility for their own investment research and decisions and should seek the advice of a qualified investment professional prior to making investment decisions. CSTA and SmarTrend are registered trademarks of Comtex News Network, Inc. Copyright, Comtex News Network, Inc. 2006
Comtex News Network, Inc. ("Comtex") obtains information from sources deemed to be reliable; however, Comtex does not guarantee the accuracy of any of the information or commentary provided. Comtex makes no warranties, expressed or implied, as to the fitness of the information for any purpose, or to results obtained by individuals using the information. In no event shall Comtex be liable for direct, indirect, or incidental damages resulting from the use of the information. Comtex shall be indemnified and held harmless from any actions, claims, proceedings, or liabilities with respect to the information and its use. Comtex does not make specific trading recommendations or provide individualized market advice. The information contained in the Morning Call product is provided as an information service only.
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Copyright, Comtex News Network, Inc. 2006 ********************************************************************** As of Sunday, 10-08-2006 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 07-17-2006 for AA @ $30.58. As of Sunday, 10-08-2006 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated a DOWNTREND on 08-16-2006 for BP @ $69.11. As of Sunday, 10-08-2006 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated an UPTREND on 09-15-2006 for COST @ $50.33. For more information on Comtex SmarTrend Alert, contact your market data provider or go to CSTADirect.com SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright 2004-2006 Comtex News Network, Inc. All rights reserved. |
