Weekly Momentum, Sentiment, Strength & Technical Indicators...
Zeev, congrats on the recent celebration of your 30th wedding anniversary. As for the weather here in Chicago, you know we're famous for our chilly winds (hence our nickname) as well as great food (especially pizza), great entertainment, beautiful women (which you already know about) and lousy pro sports teams (except for that decade long analomy of the Bulls).
The New Year started off with a bang as all of the major indexes recorded new recovery highs early on with the NASDAQ leading the charge. However, Friday's job report put a damper on the blue chips as the DJIA lost 133 points on Friday and barely ended the week in the plus column. For the week, the DJIA gained 49 points (+0.47%) and closed at 10458. The NASDAQ, which posted new recovery highs on four of the five trading days, gained 80 points (+3.99%) for the week and closed at 2087. It should be noted that despite Friday's sell off, the stochastic indicator, which is in the high ninety's, is signaling that the market is very overbought and could be subject to a pullback over the next few days. For the year, the DJIA is up 0.6% while the NASDAQ has gained 4.2%.
Momentum Index: The Momentum Index is bullish at +6, up considerably from last week's +1 reading. Readings of +4 and higher are regarded as bullish. Breadth was positive again as the NYSE Advance/Decline line gained 2487 units for the week while the number of NYSE stocks making new 52-week highs, which has returned to triple-digits, outpaced the new lows on all five trading days. The NYSE A/D line (+14637) is at its all time high and up significantly from the previous low (-54473) recorded on 03/12/03 when the DJIA bottomed out at 7524.06. The percentage of NYSE stocks above their 200-day moving average improved to 91.5% from 89.0%, while those above their 50-day jumped to 83.5% from 73.9%.
Sentiment Index: The Sentiment Index is neutral at +0 unchanged from last week. VIX recorded a new low on Wednesday (15.50) and continues to linger in bearish territory. Readings under 20 are regarded as bearish, signaling excess complacency in the options pit. There continues to be conflicting signals coming from the VIX indicator and the CBOE Index Put/Call ratio. Unlike VIX which has been bearish since 10/03/03 (less than 20), the put/call ratio has been in bullish ground (greater than 1.69) since 12/23/03. So while VIX is signaling complacency, which is bearish, the put/call ratio is presenting a bullish scenario as traders are buying more puts than calls. It should be noted that over the last couple of years, the VIX indicator has been much more reliable at calling short-term market tops than signaling short-term bottoms.
The percentage of bullish investment advisors is bearish at 57.3%, down a notch from last week's 58.3% reading. For the week ending 12/30/03, U.S. equity mutual funds had inflows of $3.8 billion compared to inflows of $1.6 billion the previous week. U.S. Equity funds have now had positive inflows for eight months in a row.
Strength Indexes: Two of the Strength Indexes remain in bullish territory while the QQQ again showed weakness. The percentage of Dow (DIA) stocks under accumulation was steady at 76.7% as was the S&P-100 (OEX) which checked in at 69.7%. The NASDAQ-100 (QQQ) improved to 44.9% from 41.8%. Readings over 50% indicate that the majority of the stocks in the index are under accumulation, a short-term bullish condition.
Technical Outlook
BONDS (MAR) 01/12/04: Since the close was above the 2nd swing
resistance number, the market's posture is bullish and could see
more upside follow-through early in the session. Near-term
resistance for bonds is at 112.17 and then again at 113.06, while
swing support hits at 110.05 and below there at 108.14. The
market's close above the 9-day moving average suggests the
short-term trend remains positive. Positive momentum studies in the
neutral zone will tend to reinforce higher price action. The next
upside target is 113.06.
T-NOTES(MAR) Momentum studies are trending higher, but have entered
overbought levels. The near-term upside objective is at 115.08. The
market's close above the 2nd swing resistance number is a bullish
indication. The major trend is down with the cross over back below
the 40-day moving average. Near-term resistance for the T-Notes is
at 114.25 and then again at 115.08, while swing support hits at
113.03 and below there at 111.28. The market's short-term trend is
positive on a close above the 9-day moving average.
STOCK INDICES RECAP
The stock market should have corrected Friday considering the
disappointment from the US payroll numbers Friday morning. However,
the stock market was cheered on by the downgrade in the US
Terrorist threat rating. In the end the numbers were bad enough
that the pace of the US recovery is thrown back into question. The
stock market was probably due a correction after the significant
rally off the November lows.
Support for the DJIA is in the 10100 area while resistance remains at 10650. Support for the NASDAQ is 1880 with resistance at 2100 followed by 2330.
S&P500 (MAR) 01/12/04: The market is in a bearish position with the
close below the 2nd swing support number. The outside day down is a
negative signal. The daily closing price reversal down puts the
market on the defensive. Underlying support comes in at 1114.50 and
1111.10, with overhead resistance at 1125.90 and 1133.90. The
market's short-term trend is positive on a close above the 9-day
moving average. The daily stochastic's gave a bearish indicator
with a crossover down. Momentum studies are trending lower from
high levels which should accelerate a move lower on a break below
the 1st swing support. The next downside objective is now at
1111.10.
S&P E-Mini (MAR): The key reversal down puts the market on the
defensive. The outside day down is somewhat negative. The market
made a new contract high on the rally. The market could take on a
defensive posture with the daily closing price reversal down. A
bearish signal was triggered on a crossover down in the daily
stochastics. Stochastics turning bearish at overbought levels will
tend to support lower prices if support levels are broken. The next
downside objective is 1110.63. There could be some early pressure
today given the market's negative setup with the close below the
2nd swing support. Near-term resistance for the S&P Mini is at
1126.25 and then again at 1134.63, while swing support hits at
1114.25 and below there at 1110.63. A positive signal for trend
short-term was given on a close over the 9-bar moving average.
NASDAQ 100 (MAR) A new contract high was made on the rally. The
downside closing price reversal on the daily chart is somewhat
negative. The market's close above the 9-day moving average
suggests the short-term trend remains positive. The swing indicator
gave a moderately negative reading with the close below the 1st
support number. The market should run into resistance at 1536.25
and above there at 1555.88 with support at 1505.75 and 1494.88. The
9-day RSI over 70 indicates the market is approaching overbought
levels. The daily stochastics have crossed over down which is a
bearish indication. Daily stochastics turning lower from overbought
levels is bearish and will tend to reinforce a downside break
especially if near-term support is penetrated. The next downside
target is 1494.9.
CURRENCY MARKET RECAP
Another big probe down in the Dollar left the Greenback into fresh
contract lows and is apparently headed significantly lower. In
fact, with the exception of the Yen, the Dollar was down
aggressively against all the major commodities. The trade assumes
that the BOJ is throwing everything but the kitchen sink at the
market to keep the Yen from rising in the wake of the Dollar slide.
Considering the surprising weakness in the US payroll numbers, it
will be difficult to think that the Fed is going to hike rates and
that might be necessary to turn the Dollar around.
Technical Outlook
YEN (MAR): The market's close above the 9-day moving average
suggests the short-term trend remains positive. The gap lower price
action on the day session chart is a bearish indicator for trend.
The close below the 2nd swing support number puts the market on the
defensive. Swing resistance is targeted at 94.46 and above there at
94.63, with the yen finding support around 93.89 and below there at
93.49. The daily stochastics have crossed over down which is a
bearish indication. Daily stochastics turning lower from overbought
levels is bearish and will tend to reinforce a downside break
especially if near-term support is penetrated. The next downside
target is 93.49.
EURO (MAR): The daily stochastics gave a bullish indicator with a
crossover up. The near-term upside objective is at 1.2936. The
market is in a bearish position with the close below the 2nd swing
support number. Swing support for the Euro comes in at 1.2658, with
overhead resistance at 1.2936. The market's short-term trend is
positive on a close above the 9-day moving average. With a reading
over 70, the 9-day RSI is approaching overbought levels. The
market's key reversal down is a bearish signal. The rally brought
the market to a new contract high. The gap down on the day session
chart is bearish with more selling pressure possible today.
PRECIOUS METALS RECAP
The Dollar slide sparked renewed interest in the gold and silver
markets. In fact, with the Dollar falling into new low ground and
US economic readings coming in very disappointing, some traders
suggested that macro economic uncertainty was fueling flight to
quality buying. The London gold fix was higher which suggests that
bullishness was not just concentrated in the futures pits. Some in
the trade pointing ahead to the February 6th G7 meeting suggesting
that could bring forth intervention talk against the Dollar.
Technical Outlook
SILVER (MAR): Since the close was above the 2nd swing resistance
number, the market's posture is bullish and could see more upside
follow-through early in the session. Initial support for silver is
at 636.0 and below there at 616.5 with resistance likely at 646.7
and 663.5. The market's close above the 9-day moving average
suggests the short-term trend remains positive. The daily
stochastics have crossed over up which is a bullish indication. The
next upside target is 646.7. The 9-day RSI over 70 indicates the
market is approaching overbought levels. A new contract high was
made on the rally.
GOLD (FEB): Support for gold today comes in near 419.03, while
resistance is pegged at 432.43. The daily stochastics gave a
bullish indicator with a crossover up. The near-term upside
objective is at 432.43. It is a mildly bullish indicator that the
market closed over the pivot swing number. The market's short-term
trend is positive on a close above the 9-day moving average. With a
reading over 70, the 9-day RSI is approaching overbought levels.
ENERGY MARKET RECAP
The fresh wrinkle in the energy complex Friday seemed to be fears
that demand was rising in Europe and the US off the weather and
therefore traders were pricing a quickening of the supply draw. The
trade was also supported by ideas that Brent crude output was
declining and that also whipped up concerns of a supply shortage in
the coming months. In the near term it would seem that the market
has forgotten about the 2nd quarter supply glut!
Technical Outlook
CRUDE OIL (MAR): The rally brought the market to a new contract
high. The gap up on the day session chart gave a bullish indicator
and more follow through could be seen this session. It is a mildly
bullish indicator that the market closed over the pivot swing
number. Support for crude is keyed on 33.83 and below there at
33.69, with resistance pegged at 34.23 and 34.49. The market's
short-term trend is positive on a close above the 9-day moving
average. Momentum studies are trending higher, but have entered
overbought levels. The near-term upside objective is at 34.49.
UNLEADED GAS (MAR): Studies are showing positive momentum, but are
now in overbought territory so some caution is warranted. The next
upside target is 104.61. Since the close was above the 2nd swing
resistance number, the market's posture is bullish and could see
more upside follow-through early in the session. Resistance today
is at 104.61, while support should be found around 98.81. A new
contract high was made on the rally. The gap upmove on the day
session chart is a bullish indicator for trend. The market's close
above the 9-day moving average suggests the short-term trend
remains positive. The 9-day RSI over 70 indicates the market is
approaching overbought levels.
HEATING OIL (MAR):The market's close above the 2nd swing resistance
number is a bullish indication. Heating oil should encounter
support around 96.61, with resistance is at 100.21. The market's
short-term trend is positive on a close above the 9-day moving
average. Momentum studies are trending higher, but have entered
overbought levels. The near-term upside objective is at 100.21.
With a reading over 70, the 9-day RSI is approaching overbought
levels. The rally brought the market to a new contract high. The
gap up on the day session chart gave a bullish indicator and more
follow through could be seen this session.
Regards,
Naz
AI
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