AFTER MIDNIGHT
Market Commentary by Toni Hansen
July 21, 2009
Good day! The market has continued to creep higher into the new week. As I mentioned in yesterday's session, the indices are due for a correction from this most recent run, but the pace of the buying early last week made it more likely that the pace of the upside would slow instead of seeing a sharp pivot off highs on the daily time frame into this week. Monday's action confirmed this bias. Even though the indices posted higher highs, they continued to just step higher on the 15 minute time frame. This meant that the slower ascent that began on Friday continued and that the overall upside momentum has shifted.
This action can create a rounded high that can result in a more rapid pullback once the uptrend channel breaks. A slower version took place off the June highs heading into the middle of the month. Since this time the ascent is sharper, a rapid reversal would more likely be shorter-lived and followed by another attempt at highs before it could round off better with a larger price correction. If the upper channel from the past several sessions breaks strongly higher, however, and the pace of the buying does not continue to shift, then the extension will have a higher chance to form more of an inverted "V" pattern off highs since the slowdown into this week will have led to a slower overall uptrend.
Currently, even though the overall pace of the trend has slowed, the upside moves within the trend are more rapid than the downside moves. This means that we do not yet have a strong short setup forming on the 15-60 minute time frames yet, but it is exceptionally rare to see the indices hold a trend above the 15 minute 20 sma for more than 3 days. In fact, I can only recall seeing this happen a couple of times. Typically, they hold them no longer than 2.5 days before they are penetrated.
The Dow Jones Industrial Average ($DJI) ended the session higher by 104.21 points, or 1.19%, to close at 8,848.15 on Monday for the 6th consecutive day of gains. Out of the Dow's 30 index components, only three posted a loss. Bank of America (BAC) was the largest of the three, down 5.04%. Procter & Gamble (PG) fell 0.64%, while Johnson & Johnson (JNJ) fell 0.29%. Caterpillar (CAT) was the biggest gainer ahead of Tuesday's premarket earnings announcement.
The S&P 500 ($SPX) gained 10.75 points, or 1.14%, and closed at 951.13. 431 of the S&P 500's components posted gains. Crude oil futures rose once again to end the session at $63.98 a barrel. After topping $65 intraday, energy stocks were mainly higher on the day. Health care stocks were amongst the laggards.
The Nasdaq Composite ($COMPX) rose 22.68 points, or 1.20%, and it closed at 1,909.29 on Monday for the 9th day of consecutive gains. 85 of the Nasdaq-100's components posted gains. The Nasdaq has not managed to post 9 straight days of gains since July 1998. The index is now up 50.5% off the March lows, recovering half the losses made since the index peaked last year. Apple (AAPL) reports earnings on Tuesday.
In the currency market, the U.S. Dollar ended the day lower, as did interest rates. Fed Chairman Ben Bernanke will be testifying before Congress on Tuesday and he is expected to reconfirm economic weakness. Although his testimony will be widely watched, the week is relatively light on economic data, so most of the eyes will be on earnings.
Updates from Friday's column: The USD/EEK is continuing to form a weekly bear flag and the USD/LVL has been doing so as well. Meanwhile, the NZD/USD is forming a base along highs on the weekly time frame with an upside bias for a breakout. I would have preferred to see a slower correction along the current high to extend the base for a third correction off daily highs in the range before the pair broke higher to help it sustain a larger move, but it broke free on Monday. It has resistance at last October's highs. The EUR/USD has a similar formation, which, if it triggers, will be the third wave higher on the weekly time frame since the early-March lows. Resistance will hit at December highs.
Upcoming Economic Reports and Events:
Tuesday, July 21, 2009
7:45 a.m. ICSC Chain Store Sales Index For July 18:
8:55 a.m. Redbook Retail Sales Index For July 18:
5:00 p.m. ABC/Wash Post Consumer Conf For July 18:
Wednesday, July 22, 2009
No economic events are scheduled for today.
Thursday, July 23, 2009
8:30 a.m. Initial Jobless Claims For July 18 Week:
10:00 a.m. July Philadelphia Fed Business Index: Previous: -2.2.
10:00 a.m. July Existing Home Sales: Previous: +2.4%.
10:00 a.m. DJ-BTMU Business Barometer For July 11:
Friday, July 24, 2009
10:00 a.m. End-July Reuters/U Mich Sentiment Index: Previous: 70.8.
Key Earnings Announcements This Week:
Tuesday, July 21, 2009
Before: AKS, ARB, ALV (?), BJS, BLK, BEAT (?), CAT, KO, CMA, CAL, DD, ELN, FCFS, FRX, HCBK, ITW, JEF, JRN, KCI, LAB, LXK, LMT, MRK, MICC, NEOG, EDU, ORB (?), PCAR (?), BTU, PNR, PCP, DGX, RF, SGP, SHW, LUV, STT, AMTS, UAUA, UTX, UNH, WU
After: AAN, AMD, ALGT, AMLN, AAPL (?), ATHR, BXP, CHRW, CRI (?), CHIC, CNH, EPIQ (?), FULT, GILD, HBHC, IBKC, ILMN, INFN, LLTC, MANH, MRTN, NBR, PTV, PNFP, PTP, PPDI, QLGC, RCRC, RHI, STX, SLM, SFG, SBUX, STLD (?), SYK, SUPX, VFC, VOCS (?), WCN, WSII, YHOO
Wednesday, July 22, 2009
Before: AMG (?), APD, AAI, ATI, MO, ABFS, ATMI, BK, BA, CSL, CFR, DAL, DPZ, LLY, ENTG, GNTX, GENZ, HST, ICLR, IGTE, IMN, KEY, NITE, LII, MEG, MKSI, MNTA (?), MS, NCI, NTRS, NWPX (?), NVR, ODFL, PEP, PFE, PTEC, PJC, PDS, RIMG, SEIC (?), SLGN, STJ, SWK, SU, STI, TCB, MDCO (?), TNB (?), USB, USG, WFC, WHR, WIT
During: EGN, SUSQ
After: AATI, AFFX, ALB, ACL, ADS, DOX, BIDU (?), BXS, BCR, CMG, CRUS, CTXS, CNS, COHU, CPTS, CLB, EXBD (?), CSGP, CVA, CYMI, DRH (?), DST, ETFC, EBAY, EFX, EQIX, RE (?), FFIV, FIC, GGG, HUBG, ISIL, ISRG, IRBT, JAH, KNX (?), LHO, LOGI, MLNX, MCRI, MOS, MTSC, NTGR, NFX, NE, NVEC, OMTR, OSIP, PSSI, QCOM, QDEL, RJF, RUSHA, SNDK, SKX (?), SWKS, TEX, TSCO, TQNT, TBI, TUP, VASC, VMW, WLT
Thursday, July 23, 2009
Before: MMM, ALK, ALXN, ACAT (?), T, AUO, BLL, BMY, BG, CCMP, CSH, CELG, CBR (?), CIT, CME, SUR (?), CMCO, CVG (?), CBE, CVH (?), DHR, DLX, DO, DHX, DDE (?), DVD (?), DSPG, EXP, EMC, EMCI, ECA, ESV, ETH (?), EXC (?), FITB, FCF, FLIR, F (?), GMT, GR, GRC (?), HSY, HUB.B (?), HBAN, RX (?), IPCC (?), IDC, IGT, IVC (?), ESI, JAKK (?), JBLU, KBW (?), KMB, FSTR (?), LLL, LH (?), LTM (?), MAN, MCS (?), MCD (?), MV, MNRO, MOG.A (?), NYT, NEM, NIHD, NCX (?), NUE, OXY, ORI, OMC, PTI (?), PENN (?), PFCB (?), PM, PNC, POT, PLD, PFS, RSH (?), RRC (?), RTN, RGC (?), RS, RAI, RTIX (?), R (?), SWY, SCHL, POOL, SIAL, SPAR, SPF, HOT, SYNT (?), TROW (?), TASR (?), TDY, TIN, TRA, SNAK, TMO, TRAD (?), UTEK, UNP, UPS, LCC, VDSI, VTNC, VNO (?), WSO, WCC, WTNY, WYE, XRX, ZMH, ZOLL (?)
After: ABAX (?), ACTG (?), AEA (?), AEIS, AFL (?), ARG, ALGN, AMZN, AXP, AMP, AMSG, AVID, AVCT, BJRI (?), BRCM, BUCY, BLDR, BNI, CA, COG, COF, CEC (?), CLS (?), CENX, CHRT, CAKE, CB, CYN, CPWR, CNW, CYBS, DDUP, DECK, DDR, DGII, EMN, ESIO, WIRE (?), EZPW, FII, GDI (?), GPN, HWAY, HITT, BLUD, INFA, INSU, IBKR, IFSIA (?), XXIA (?), JJSF, JNPR, KLAC, LCRD (?), LSCC, LEG, WFR, MTD (?), MCRL, MCHP (?), MSCC (?), MSFT, MTX, NARA, NATI, NFLX, NTCT, NTRI, NUVA, OMCL (?), PCTI, PKI (?), PMCS, PGI, QCOR (?), RMBS (?), RFMD, RVBD, SGMO (?), SWIR (?), SIMG (?), SNWL, SONO (?), STAR, SRCL (?), STSA, SPWRA, SRDX (?), SNV, TCO, TZOO (?), WOOF, VISN (?), WRE, WGOV
Friday, July 24, 2009
Before: AXL (?), ACI, ASH, BDK, DOV, FO, GAP (?), IDXX, IR, LNCE, ERIC, NTY (?), OXPS, SAIA, SLB,
After: EEP
Check out my BLOG for detailed comparisons of the current daily price development to similar occurrences of price development in the past.
Toni Hansen is a Market Analyst and Trader with www.tradingfrommainstreet.com. She can be reached at Toni@tradingfrommainstreet.com. |
