Unfocused hatred seeks a victim
Outside, I’m looking in, I’m uncertain
The world is black
The world is white
Why think one way
Why see the light
(spoken stuf that is lost)
Operation Ivy, Uncertain
- Where We Are
- What Was Important About Last Week
- What We Are Watching For This Week
- A Word On Discipline
Where We Are:
Taking a look at the broader market:
The power of the Federal Reserve on markets goes without question.
What this market questions is what the new fed chairman, Ben Bernanke, has in mind.
As earnings season winds down, this market seems focused on the absence of suggestive comments from Bernanke.
Markets in the past have sold off with new fed chairmen in place. In ’87 the market crashed two months after Greenspan took over.
Market players need to have an idea of fed policy to feel confident. Without confidence markets wallow.
This past week the year’s breakout trend in energy stocks fell a part.
Momentum on the major indexes has been struggling.
Success and opportunity for buyers has been rare.
Despite lack of general strength, strong up-trends in biotech, broker dealers, defense, REITs, semiconductors, telecoms and transportation are clear positives.
We are always encouraged by strength in the semiconductor and broker dealer indexes.
For the intermediate-term timeframe, we keep a tight watch on the positions of the 50-day and 200-day averages.
As the 50-day averages on the indexes continue to be in play, we want to see them serve as support, not resistance.
If we begin to see 50-day averages slip below 200-day averages, we will interpret it as a new change in trend.
Until then, we see this market as one that continues to struggle in an environment of uncertainty. What happens next week is beyond us.
The Dow Industrial Average
($INDU), +1.16%, closed above its 50-day average in a two and a half month consolidation.
The S&P 500
($SPX), +0.23%, closed just below its 50-day average with a technical uptrend intact.
($COMPQ),-0.03 %, closed just below its 50-day average with a technical uptrend intact.
($RUT), -0.98%, closed on its 20-day average, as its technical uptrend remains strong.
Volume indications on the Nasdaq and Russell indexes notched in two distributions a piece, showing signs of institutional selling. This is not alarming – yet.
Key chart action for the week:
Charts courtesy of Stockcharts.com
The 10-year Note Yield
($tnx) remains poise to breakout of a year and a half long base. Such a move may prove significant in a change of direction for bond prices, which is often a precursor to movement in the equities market,
The U.S. Dollar Index
($USD) pushed higher for the third week in a row, and is now just above its 50-day average.
The Gold Miners Index
($XAU) was slammed with selling action for the week. The violence of the move suggests recent highs may be tough to regain.
The Dow Jones AIG Commodity Index
($DJAIG) slid to its 200-day moving average as the lower line in an upward channel comes into play.
($CMR) bounced off its 200-day average to resistance at its 50-day average.
($CYC) closed just below its 50-day average.
($DJUSTC) closed just below its 50-day average on an upward trend line.
The Semiconductor Index
($SOX) remains in a solid uptrend above its major moving averages in a show of relative strength dominance.
($BKX) are trading above the 200-day average and below the 50-day average.
($XBD) remain in a solid uptrend above all the major moving averages.
($RLX) found support at its 200-day average, and resistance at its 50-day average. The index has yet to challenge highs made last summer.
($HCX) closed above its 50-day average in a month long consolidation.
($BTK) remains in a strong technical uptrend.
($DJR) remains in a strong technical uptrend.
($DJUSHB) continue to be a popular sector for sellers.
($TRAN) remains in a strong technical uptrend.
($XAL) continues in a triangle formation, poised to breakout of a multi-year downtrend.
($DFX) remains in a strong technical uptrend.
($IXE) experienced heavy selling as a the year’s breakout moved collapsed.
($UTY) are sandwiched between its major moving averages as it finds support on a two-year trend line.
The top 10 industry groups from the 6 month RS screen are:
- DRUG DELIVERY
- NETWORKING COMMUN DVCS
- INVESTMNT BROKERAGE-NA
- SEMICONDUCTOR EQUIP MA
- PRINTED CIRCUIT BOARDS
- BUILDING MATRLS WHOLES
- INSURANCE BROKERS
- GENERAL ENTERTAINMENT
What Was Important About Last Week
- Yum Brands Inc.(YUM) , owner of the KFC, Pizza Hut and Taco Bell fast food chains, said Monday that its fourth-quarter profit fell 4 percent, despite an increase in revenue, and it predicted higher U.S. same-store sales in 2006.
- Ryanair Holdings PLC(RYAAY) reported lower third-quarter net earnings despite higher revenues Monday, citing the soaring cost of fuel.
- Video game publisher Activision Inc. (ATVI) on Monday said its fiscal third-quarter earnings slid 30 percent due to weak industry conditions in the U.S. and Europe. The company also forecast a fourth-quarter loss and slashed its earnings expectations for the year.
- Earnings reports upbeat overall (e.g. AET, NWS.A, PRU, CCE, MET, FNF, MAR),
- Lack of catalysts rests market’s focus back on Fed policy uncertainty.
What We’re Looking For This Week
Key earnings releases:
- MONDAY: Glamis Gold Ltd (GLG), Harmony Gold Mining (HMY), iVillage (IVIL), WellCare Health Plans, Inc. (WCG).
- TUESDAY: Abercrombie & Fitch Co. (ANF), Accredited Home Lenders Holding Co. (LEND), Bankrate, Inc. (RATE), Blue Coat Systems (BCSI), Cephalon, Inc. (CEPH), Deere & Company (DE), Qwest Communications (Q), TradeStation Group, Inc. (TRAD), Waste Management (WMI).
- WEDNESDAY: Aftermarket Technology (ATAC), Applied Materials (AMAT), Biogen Idec Inc. (BIIB), Career Education (CECO), Caremark Rx, Inc. (CMX), Genzyme Corporation (GENZ), Hewlett-Packard (HPQ), Mittal Steel Company (MT), Network Appliance (NTAP), Olympic Steel (ZEUS), P.F. Chang’s China Bistro, Inc. (PFCB), Placer Dome (PDG), Synopsys (SNPS).
- THURSDAY: DaimlerChrysler (DCX), Dell, Inc. (DELL), Intuit (INTU), JCPenney (JCP), Merge Technologies Incorporated (MRGE), NETGEAR (NTGR), Paxar Corporation (PXR), Reliance Steel (RS), Target Corporation (TGT), Wild Oats Markets (OATS).
- FRIDAY: Campbell Soup (CPB), RadioShack Corporation (RSH).
On the economic front we have potential market movers with:
- MONDAY: none
- TUESDAY: Retail Sales, Retail Sales ex-auto, Business Inventories
- WEDNESDAY: NY Empire State Index, Net Foreign Purchases, Capacity Utilization, Industrial Production, Crude Inventories,
- THURSDAY: Building Permits, Export Prices ex-ag., Housing Starts, Import Prices ex-oil, Initial Claims, Philadelphia Fed
- FRIDAY: Core PPI, PPI, Mich Sentiment-Prel.
- The Growth Stock Landscape
- What We Like – What We Have
- This Week’s Scans: • SETUPS • BREAKOUTS • BASE BUILDING • SHORTS
This Week’s Word On Discipline:
“Your own mind is a sacred enclosure into which nothing harmful can enter except by your promotion.” – Ralph Waldo Emerson <a href=”http://en.wikipedia.org/wiki/Ralph_Waldo_Emerson