This is quite interesting story..
on market direction today.. from bull investor..
<<INTC along with AMD received more downgrades, and that blew
INTC
below its support level. It also dropped another piano on the PC
makers.
*
Even with this news, the Nasdaq was able to move up. That is a lesson
to
be learned: when the market is ready to sell, these types of stories
can
give the final reason to sell. If the market has been punched and
kicked
enough, it does not hurt it to have a few more shots; when it is ready
to
get the heck out of there, it will. That is what we saw today.
*
Moreover, investors may not (or at least should not) be that worried
about
earnings. Back in the spring it was anticipated that third quarter
earnings would show a 33% growth rate. Now they are expected to show a
35% gain. Even with all of the worries about the Fed and economic
slowdown, the expectations have risen not fallen. Yes, more room to
miss,
but that is not going to be the case with the leaders, at least not
from
what we see. VTSS is announcing much better revenue growth ahead, and
it
is not alone. Normal earnings jitters is what we are seeing now.
*
THE MARKETS
*
Again the switch was on as the Nasdaq and S&P 500 rose on stronger
trade
while the Dow sold on stronger trade. We still do not think the Dow is
in
any great danger, however, as support held once again today. We don't
want to be accused of being overly bullish, but it looks to us as if we
have another one of the up legs in this climb out of the bear
beginning.
It may not last a full month as the August move did, but if we get two
weeks of solid gains from the leaders, that is not bad. Things are
certainly falling into place as we have been outlining in the past
week.
*
Overall market stats:
*
VIX: 21.43; +0.25. Volatility edged up again today, though closing
below
its 22.25 session high. This contrarian indicator is still not telling
us
anything that would change our minds on the price/volume action we are
seeing and the leader action.
*
Put/Call ratio: 0.5720; +0.0138. Put buyers were up today as the
overall
put buying continues to rise. Put buyers have broken out of their
recent
range this week, but they are still below real market-turning levels.
We
like to see the uncertainty and unwillingness to believe a rally could
have started; that is they kind of thing that can drive a rally higher
as
the put buyers give up and join the rally. They are not great in
numbers
right now, but there are more of them out there even as the rally
started
today (or at least appears to have started).
*
Bulls/Bears: Bullishness fell back slightly this week as the market
continued to sell back. It is not at reversal levels, but again we
like
the uncertainty in investors as that can drive a rally. Further,
odd-lot
short sales have spiked sharply higher. This has the same impact as
put
buying. Odd-lot short sales indicate the retail investor is shorting
the
market as well. Remember the old saying, when everyone is doing it,
time
to move on. As these shorts get squeezed, the market continues to
rise.
When they throw in the towel and go long, that is another push to the
upside. Levels are not at highs, but they are sharply higher.
*
Remember: these are secondary indicators that we use to confirm moves.
They are not leading indicators. They can be wrong as sentiment is an
ethereal concept.
*
NASDAQ: In opposite action from Tuesday, the techs dove then rose,
ending
the day at its session high. Volume expanded. Leaders were leading on
higher volume. That is the action we were looking for as the index
approached what we consider strong support. We could be getting
another
higher low put in right here.
*
Stats: Up 44.38 points (+1.2%) to close at 3893.89.
Volume: 1.657 billion shares, up 3.8% from Tuesday's 1.596 billion
shares. As fast as volume rose on Tuesday's selling, it reversed as
the
Nasdaq tapped at support. The up volume/down volume ratio pretty much
reversed, with 1.010 billion shares to the upside and 608 million
shares
to the downside. Buyers continued to climb and jumped out ahead, but
it
was no runaway. Advancing issues and declining issues were a near dead
heat as were new highs and lows. We want to see those numbers improve
over the next couple of sessions.
*
The Chart: investmenthouse.com
*
The Nasdaq gapped down at the open, opening right above the up
trendline
marking the May and August intraday lows. It started up from there.
It
pulled back around lunchtime, formed a double bottom by 1:10, and was
running back up. It took out its morning high at 2:00 ET, and then the
real test came. At 2:40 ET the index hit a session high and then
started
to sell. It broke its 15 minute moving average it rode up, and it
looked
as if the Nasdaq might give back a nice piece of work. With 40 minutes
left in the session, however, it tapped the high in the double bottom
pattern and started right back up. It fought all the way back and
closed
right at the session high.
*
The move showed us something in that it was able to fight off the
selling.
That is always good, but it has not been the seal of certain gains to
come. Again, however, after the selling we have seen and the support
we
see, we think the Nasdaq is going to put in a higher low at this point.
Will it continue the building pattern we have seen? Cannot be for sure
at
this point as this is a rough month to make a breakout move. But, it
does
not have to breakout right now. It can test the July high and then
pullback again for another higher low. By the time it makes that next
run, it should be clear for a breakout as all of the fall antics will
be
behind it.
*
Dow/NYSE: The day after the Dow appeared to have started back up, if
stalled on higher volume (a warning lesson in here for the Nasdaq). It
still was able to hold above support at the mid-August high, support it
used on Tuesday as well. No major damage done today, but it needs to
take
advantage of the rising volume.
*
Stats: Down 51.05 points (0.5%) to close at 11,182.18.
Volume: NYSE volume topped 1 billion shares today (1.072 billion), up
8.17%. Down volume maintained a slight edge over up volume, 521
million
to 509 million shares. Not major selling, and a better ratio than
Tuesday
when the index gained ground. NYSE new highs continued to stomp new
lows,
151 to 61, while the A/D line was slightly negative. Not bad overall.>> |
