InvestmentHouse Weekend Update:
investmenthouse.com
- Market gets CAT-scratch fever in addition to expiration.
- Despite the 1+% losses, indices hold near support.
- Leaders were still leading or making nice easy pullbacks.
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This weekend there will be no detailed market summary and summary table barring some major event. Jon Johnson's family and friends are celebrating his wife's successful end to a year of battling cancer. Thank you in advance for your understanding.
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It was a wild session for stocks with a lot of crosscurrents. The primary driver was again earnings as stocks again reversed direction as a result of some key reports. First it was Intel’s disappointment that caused some Wednesday selling. Then IBM brought them back with another strong quarter. GOOG rattled NASDAQ, the recent leader, and CAT’s miss gave the industrials cat scratch fever on Friday as the indices fell, with all but NASDAQ 100 sporting 1+% losses.
CAT’s earnings raised issues about the continued expansion, but most of its issues were in the US where the construction sector is still trying to find itself again after that long boom. The financials reported some very solid earnings (e.g. C, WB, COF), a relief given the worries over sub-prime, but those stocks had a pretty horrid session nonetheless. Interestingly, although it is early, earnings are running +9% and remember the very low warnings rate.
Earnings were not the only issue, however. Expiration Friday raised the volume and exacerbated the move. China’s central bank raised interest rates. US interest rates tumbled (4.77% on the 2 year, 4.95% for the 10 year) as the 10 year bond tumbled out of its range. Oil held tough at 75.57, -0.35. With the earnings picture up and down and creating some uncertainty, these other factors were enough to cause some to sell first and ask questions later.
Even with that selling the indices held near support. NASDAQ tapped toward the 18 day EMA, matching the Wednesday low and then rebounding to close at the 10 day EMA. SP600 tested and bounced from its 50 day EMA. DJ30 held above its 10 day EMA on the close, not really a position you consider troublesome. SP500 was not great, but it closed at its 18 day EMA after slightly undercutting that near support. Volume was up, but it was also expiration. Let’s say there was selling but there was also a lot of position juggling as well. Breadth was pathetic; no getting around that.
Nonetheless, there were gainers as stocks such as DO, SLB, FCX, APPL and others climbed higher in the face of adversity. If they were not climbing, most leaders were contentedly holding near support while the rest of the heathens raged. Not very bad action given the 1+% price losses on the indices. Indeed, we are going to look at this pullback as an opportunity for those testing near support just as we did with FCX this past week. We still see the same positives in the market, and as we have seen time and again, these periods of indecision and gloom have yielded great opportunity. After all, NASDAQ and DJ30 have held their breakouts from last week and many leaders, as we see on the report, are holding near support. We will take advantage of those opportunities that present themselves as this pullback turns into a rebound.
THE MARKET
MARKET SENTIMENT
VIX: 16.95; +1.72
VXN: 17.49; +0.94
VXO: 17.33; +2.25
Put/Call Ratio (CBOE): 1.23; +0.43
Bulls: 52.3%. Up from 49.5% and 49.4%. Moving back up toward that 53.8% hit a month back and 56.7% six weeks back. The 55% level is considered bearish, and it topped that level on this last run. Still off the 60% hit in December 2006 but getting closer. For reference it bottomed in the summer 2006 near 36%.
Bears: 19.3%. Back down under the 20% threshold level, down from 21.3% after jumping up from 18%. Spent a month at 18%, well off the 30% hit in March. Well off the 27.5% hit in April. For reference, it hit a post-2002 high in that late June 2006 move (hit near 36%), eclipsing the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005).
NASDAQ
Stats: -32.44 points (-1.19%) to close at 2687.6
Volume: 2.147B (0%)
Up Volume: 511.847M (-1.067B)
Down Volume: 1.848B (+1.237B)
A/D and Hi/Lo: Decliners led 2.77 to 1
Previous Session: Advancers led 1.54 to 1
New Highs: 40 (-81)
New Lows: 143 (+80)
NASDAQ CHART: investmenthouse.com
SP500/NYSE
Stats: -18.98 points (-1.22%) to close at 1534.1
NYSE Volume: 1.989B (+29.97%)
Up Volume: 240.499M (-681.878M)
Down Volume: 1.738B (+158.866M)
A/D and Hi/Lo: Decliners led 3.38 to 1
Previous Session: Advancers led 1.69 to 1
New Highs: 51 (-113)
New Lows: 83 (+47)
SP500 CHART: investmenthouse.com
DJ30
Stats: -149.33 points (-1.07%) to close at 13851.08
Volume: 377M shares Friday versus 265M shares Thursday. Expiration along with CAT’s earnings drove volumes.
DJ30 CHART: investmenthouse.com
Support and Resistance
NASDAQ: Closed at 2687.60
Resistance:
2778 from a July 1999 peak
2887 from a September 1999 peak
2920 from an October 1999 peak
Support:
The 10 day EMA at 2687
2673 is the early July high
The 18 day EMA at 2667
2650 is the November/February up trendline
2634.60 is the June peak
The 50 day EMA at 2615
2601 is the mid-May intraday peak.
2597 is the October/December/January trendline
2531.42 is the February high (post-2002 high); 2525 intraday
2523 was price resistance November 2000
2509 is the January 2007 high
S&P 500: Closed at 1534.10
Resistance:
1539 is the late November to February up trendline
1539 is the mid-June intraday high
1541 is the early June high.
1553 intraday high from March 2000 is the all-time index peak
1560 is the upper channel line from October/December 2006
Support:
1534 is the early July high
1528 is the March 2000 closing high
The 50 day EMA at 1516
1490.72 is the early June closing low
1475 from peaks in December 1999 and January 2000
1461.57 is the February 2007 high.
1440 is the mid-January high
Dow: Closed at 13,851.08
Resistance:
The July high at 14,022
Support:
The 10 day EMA at 13,830
The early June high at 13,676 (closing), 13,692 (intraday)
The mid-June high at 13,689
The early July peak at 13,671
The mid-May peak at 13,556
13,558 is the upper channel line in the November/February channel
The 50 day SMA at 13,554
The 50 day EMA at 13,508
13,504 is the November/February up trendline that marks the lower channel.
The 90 day SMA at 13,175
12,796 at the February 2007 high
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the ‘Economy’ section.
July 25
- Existing home sales, June, (10:00): 5.9M expected, 5.99M prior
- Crude oil inventories (10:30)
- Fed Beige Book (2:00)
July 26
- Durable Goods Orders, June, (8:30): 2.0% expected, -2.4% prior
- Initial jobless claims (8:30): 310K expected, 301K prior
- New home sales, June (10:00): 900K expected, 915K prior
July 27
- GDP advance Q2 (8:30): 3.2% expected, 0.7% prior
- Chain Deflator, Q2 (8:30): 3.4% expected, 4.2% prior
- Michigan sentiment, final July (10:00): 91.5 expected, 92.4 prior |
