AI
Sunday, October 30, 2005 7:02:55 PM
~:~Market Trend Update for the Week Ahead~:~
OVERVIEW:
Manic Depressive is what comes to mind when trying to describe the current market action over the last couple of weeks. Unpredictable and conducive to whipsaws, we see the markets surge or stray on the news of the day, from interest rates to weather patterns there is no real confluence. Many a catalyst have come and gone while the markets twist and turn in the wind. As mentioned in the last update with which this post replies: This coming week should be the real test of the high traffic areas’ upper resistance. These areas are the ones I have been outlining over the last couple of weeks and they are in play, big time. The upper RL of 2100 on the COMP was pierced, but not for long before a retrace occurred after kissing the 50DMA and moving back below the 2100 level finishing out the week around 2089. The SPX attempted a test of its upper RL at 1210, but only got as far as the 200DMA and finished out the week at 1198. The DJIA made it up to the lower RL of 10400 as it continues to trade below the traffic area where a move above will put it back into its traffic area and 10400 area becomes support as opposed to resistance. The R2k followed the COMP’s lead and pierced the upper RL of 645, but gapped down and then recovered to finish near 635. The past couple of weeks have been strange to say the least and with volatility like this the market is anything but boring. The CoT’s data continues to show low open interest on the majors and just the opposite on gold and oil, although the trends appear to be reversing. Commercial shorts remain on the NDX and SPX (albeit in low numbers), but Commercial longs did pick up on the DJIA. Gold is still heavily short and Oil heavily long. All data can be viewed at #msg-7253670 -- As detailed by AMG Data Services, Equity Funds reported net cash inflows totaling $1.407 Bln and outflows totaling -$855 Mln excluding ETF activity in the week ended October 26 as the top 6 funds reporting inflows were ETF’s. Excluding ETF activity Domestic funds reported net cash outflows for the 6th consecutive week (and 11 of 12 weeks) totaling -$619 Mln. Excluding ETF activity, Sectors of note reporting net outflows were by REIT funds ($-44 Mln) for the 5th consecutive week and both Energy and Utility funds (-$51 Mln; -$47 Mln)) for the 3rd consecutive week. Money Market funds report net outflows totaling -$2.687 Bln. Oil managed to stay above $60bbl, but a downtrend continues to be evident. Gold continues its range bound activity closing out slightly above $473 oz. and the U$D had briefly gone below 89 only to regain its footing and finish out at 89.5. The CRB has fallen below its 50DMA to finish out the week where it started at 322. The 10-yrs and 30-yrs T-Note yields gapped up this week to 4.567% and 4.774% respectively…
ECONOMIC #’s:
MBA Mortgage Applications dropped 7.9% in the week ended Oct. 21 compared to the prior week. Also on a seasonally adjusted basis, applications for mortgages to buy homes fell 7.4% and refinancing applications decreased 8.5%. Refinancings accounted for 42.5% of last week's applications, down from the prior week's 42.8%, while adjustable-rate mortgages nosed up to 29.5% from 29.3%. Average contract interest rates on 30- and 15-year mortgages slipped last week to 6.06% and 5.57%, respectively, from 6.09% and 5.62% a week earlier. The rate on one-year ARMs averaged 5.37% last week, up from 5.34%, the MBA said. The 4-week moving average tracking overall mortgage applications is down 1.5%.
Oil Inventories as reported by the DoE (Dept of Energy) and API (American Petroleum Institute). Crude according to DoE rose by 4.4 Mln bbls, but according to API rose by 6.7 Mln bbls. Gasoline according to DoE rose by 200K bbls and according to API fell by – 2.9 Mln bbls. Distillates according to DoE fell by –1.6 Mln bbls, but according to API rose by 197K bbls.
Econ activity for the week ahead and the following expectations are as follows: Personal Income (0.4%), Personal Spending (0.5%), Chicago PMI (57.2), Auto Sales (5.4M), Truck Sales (7.0M), Construction Spending (0.6%), ISM Index (57.0), ISM Services (57.0), Productivity (2.3%), Factory Orders (0.0%), Average Workweek (33.7), Hourly Earnings (0.2%), Nonfarm Payrolls (125K), Unemployment Index (5.1%)...
A disturbing trend indeed and one that has increased in volatility as of late (and I am not talking about just the markets)…
Record profits continue to roll in quarter after quarter for oil and energy companies. I can see if supply has shrunk or margins have increased, but neither is the case. Why such an increase in profits? It’s called price-gouging people and we have been victim to it for a long time, but nothing of the likes as seen since the days of Enron. It is a practice that is encouraged by the powers that be and regulated by none…
More than 2000 U.S. soldiers have died and more than 15,000 wounded for a less than noble cause in Iraq and Afghanistan. The reason for war was fabricated and has changed many times. The American people were misled about Iraq’s involvement in 9/11, then told Iraq had WMD’s and would strike the USA at any given moment. It was later changed again to the removal of a ruthless dictator that was a threat to the region and finally the story settled on a mission for democracy. The bottom line here is that this war is about oil and the enrichment of those companies with ties to the US government. Nothing more, nothing less…
U.S. Vice President Dick Cheney, a former CEO of Halliburton Co., has received hundreds of thousands of dollars from the company since taking office while asserting he has no financial interest in the company. Haliburton is one of a handful of priviledged companies with government ties to benefit from no bid contracts in Iraq and now in New Orleans and who knows where else…
Senate Majority Leader Bill Frist was subpoenaed to turn over personal records and documents as federal authorities step up a probe of his July sales of HCA Inc. stock. The Securities and Exchange Commission issued the subpoena after initial reports that Frist, the Senate's top Republican official, was under scrutiny by the agency and the Justice Department for possible violations of insider trading laws.
U.S. Rep. Tom DeLay stepped down as House majority leader after he was indicted Sept. 28 for an alleged campaign finance scheme where he funneled corporate money given to the Texas committee to an arm of the Republican National Committee, which sent it back to seven GOP candidates for the Texas Legislature. Texas law prohibits corporate money from being used directly in a political campaign.
A prominent Republican fund-raiser for President George W. Bush in Ohio has been charged with illegally funneling money to Bush's re-election campaign. Thomas Noe was charged with making illegal contributions in the names of others to the Bush campaign and with making false statements to the Federal Election Commission.
Former FEMA Director Mike Brown is still receiving tax-payer dollars as a consultant for FEMA. Even after his dismissal, Brown is still on the payroll to the tune of $148,000 a month working from home “pulling all the documentation together” for the investigations into Katrina response. Can you say fox loose in the hen house?
Ben “Helicopter” Bernanke was picked by president George W. Bush to succeed Alan Greenspan as chairman of the US Federal Reserve. Big surprise, Bernanke is cut from the same cloth as his predecessor.
Vice President Cheney's chief of staff, Lewis "Scooter" Libby, has been indicted for perjury, making false statements, and obstruction of justice. Libby resigned Friday after being indicted in the CIA leak investigation.
Poster children for what’s wrong with this Administration…
WHAT CAN WE EXPECT NOW?:
This week will most likely follow the same trend as the past week, but your guess is as good as mine as to what will transpire in the coming week. We see that the usual suspects still have a grip on the market psyche such as rising rates (be it mortgage or lending), inflationary fears, a not so particularly strong earnings or guidance season followed by a heavy dose of geo-political events. There has been no lack of uncertainty and as mentioned plenty of catalysts for more down, but yet to avail. Like a patient on life support, the market refuses to roll over. With that said, the lack of conviction, lack of leadership and volatility in the premise of lower highs and lower lows associated with this current trend is not of a bullish nature, this is more like bear country… With all of the uncertainty surrounding the markets, I tend to believe a further correction is in the works. It is too early for a holiday rally and prices are still too high for positions to be taken up. The Semi’s and Internets (other than GOOG) failed to participate in a positive manner. Last week I had noted the following: The SPX and DJIA have been playing devils advocate, divergences of sorts when compared to the COMP and R2k. These are nowhere near their 200DMA’s, although that can change quickly especially for SPX if the Oil and Energy correction are close to an end. While oil may very well continue to correct, we may witness some rotation out of the COMP and R2k into the DJIA and SPX. It may be the COMP and R2k who play devil’s advocate in the coming week. This appears to be what is taking place as those that were abandoned are now gaining strength and vice versa. At this time all of the indices are fighting the mid-range of their respective Bbands, money flow remains negative (CMF), rate of change (ROC) is close to topping (although this tends to be a leading indicator), MACD shows divergence, bear flags are forming on all of the indices and Bullish sentiment is heading south. Also the volatility indexes VIX/VXN trends appeared to have bottomed and are slowly eking higher. As for Oil, Gold and the U$D I mentioned the following last week: We most likely see Oil shed a couple more dollars per barrel, but I would keep my eye on the big boys of this sector which report this week; namely XOM, VLO and APA (I am sure there are others, but these have my attention). I suspect they will have blowout numbers and this may give a lift to the trading vehicles associated with Oil/Energy plays. Gold is still range bound between $460-480 and appears to be putting in a solid footing for the next move up. I have been saying that I expect another leg up for some weeks now, but I believe patience will prove to be of a virtuous nature. The U$D will most likely continue to meander around this area, but after testing 90 once again it is probably getting close to time for it to crap or get off the pot. Well we got our move in the Oil/Energy, Gold remained steadfast and the U$D looked as if it might crap out, but picked up by the end of the week. Moving forward, we may have seen our move in the Oil/Energy play and continue to correct. Gold is still in a consolidation phase and the U$D may be the biggest beneficiary of the upcoming FOMC meeting.
Technically speaking, Bullish Advisors are at 44.8% with Bearish Advisors at 29.2% and appears to be a slight trend change in Bullish sentiment. The VIX/VXN are now residing in what appear to be a new range of VIX 14-16 and VXN 16-18. The VIX shows a 50/200DMA crossover with VXN moving towards a crossover. The CBOE Equity P/C Ratio ended the week at .675 with a 21DMA of .668. The RSI 5-Days are Neutral across the board. The $NASI Daily (Summation), $NAMO Daily (McClellan), NAHL Daily (Highs/Lows), $NAAD Daily (Advance/Decline), stocks above 200DMA and Bullish %'s are all in steep downtrends. The only exception may be the McClellan where it is oscillating, albeit at a lower level than in the May-July timeframe. Charts of the aforementioned can be viewed below along with the major indices…
NOTE:
CORE Funds: HSGFX, PCRDX, PRPFX, QRAAX, RSNRX ,TAVIX, SRPIX
Speculative Stocks; ANO and picked up some GSX this past week
SWING: USPIX, PMPIX, XLE
Disclaimer:
This disclosure is not a recommendation to buy, sell or do as I do. It is only to give my thoughts on current market conditions and share the positions that I am holding. I am not a day trader and invest mostly in funds or baskets of stocks and attempt to identify up/down trends and occasionally perform swing trades.
OVERVIEW:
Manic Depressive is what comes to mind when trying to describe the current market action over the last couple of weeks. Unpredictable and conducive to whipsaws, we see the markets surge or stray on the news of the day, from interest rates to weather patterns there is no real confluence. Many a catalyst have come and gone while the markets twist and turn in the wind. As mentioned in the last update with which this post replies: This coming week should be the real test of the high traffic areas’ upper resistance. These areas are the ones I have been outlining over the last couple of weeks and they are in play, big time. The upper RL of 2100 on the COMP was pierced, but not for long before a retrace occurred after kissing the 50DMA and moving back below the 2100 level finishing out the week around 2089. The SPX attempted a test of its upper RL at 1210, but only got as far as the 200DMA and finished out the week at 1198. The DJIA made it up to the lower RL of 10400 as it continues to trade below the traffic area where a move above will put it back into its traffic area and 10400 area becomes support as opposed to resistance. The R2k followed the COMP’s lead and pierced the upper RL of 645, but gapped down and then recovered to finish near 635. The past couple of weeks have been strange to say the least and with volatility like this the market is anything but boring. The CoT’s data continues to show low open interest on the majors and just the opposite on gold and oil, although the trends appear to be reversing. Commercial shorts remain on the NDX and SPX (albeit in low numbers), but Commercial longs did pick up on the DJIA. Gold is still heavily short and Oil heavily long. All data can be viewed at #msg-7253670 -- As detailed by AMG Data Services, Equity Funds reported net cash inflows totaling $1.407 Bln and outflows totaling -$855 Mln excluding ETF activity in the week ended October 26 as the top 6 funds reporting inflows were ETF’s. Excluding ETF activity Domestic funds reported net cash outflows for the 6th consecutive week (and 11 of 12 weeks) totaling -$619 Mln. Excluding ETF activity, Sectors of note reporting net outflows were by REIT funds ($-44 Mln) for the 5th consecutive week and both Energy and Utility funds (-$51 Mln; -$47 Mln)) for the 3rd consecutive week. Money Market funds report net outflows totaling -$2.687 Bln. Oil managed to stay above $60bbl, but a downtrend continues to be evident. Gold continues its range bound activity closing out slightly above $473 oz. and the U$D had briefly gone below 89 only to regain its footing and finish out at 89.5. The CRB has fallen below its 50DMA to finish out the week where it started at 322. The 10-yrs and 30-yrs T-Note yields gapped up this week to 4.567% and 4.774% respectively…
ECONOMIC #’s:
Michigan Sentiment - Oct 74.2 vs. 76.9
GDP - Q3 3.8% vs. 3.3%
Chain Deflator - Q3 3.1% vs. 2.6%
Employment Cost Index - Q3 0.8% vs. 0.7%
New Home Sales - Sept 1.222M vs. 1.197M
Help-Wanted Ads Index - Sept 39 vs. 38
Initial Jobless Claims - 10/22 328K vs. 356K
Durable Orders - Sept -2.1% vs. 3.8%
Durable Orders (ex trans) - Sept -1.0% vs. 5.1%
Existing Home Sales - Sept 7.28M vs. 7.28M
Consumer Confidence - Oct 85.0 vs. 87.5
MBA Mortgage Applications dropped 7.9% in the week ended Oct. 21 compared to the prior week. Also on a seasonally adjusted basis, applications for mortgages to buy homes fell 7.4% and refinancing applications decreased 8.5%. Refinancings accounted for 42.5% of last week's applications, down from the prior week's 42.8%, while adjustable-rate mortgages nosed up to 29.5% from 29.3%. Average contract interest rates on 30- and 15-year mortgages slipped last week to 6.06% and 5.57%, respectively, from 6.09% and 5.62% a week earlier. The rate on one-year ARMs averaged 5.37% last week, up from 5.34%, the MBA said. The 4-week moving average tracking overall mortgage applications is down 1.5%.
Oil Inventories as reported by the DoE (Dept of Energy) and API (American Petroleum Institute). Crude according to DoE rose by 4.4 Mln bbls, but according to API rose by 6.7 Mln bbls. Gasoline according to DoE rose by 200K bbls and according to API fell by – 2.9 Mln bbls. Distillates according to DoE fell by –1.6 Mln bbls, but according to API rose by 197K bbls.
Econ activity for the week ahead and the following expectations are as follows: Personal Income (0.4%), Personal Spending (0.5%), Chicago PMI (57.2), Auto Sales (5.4M), Truck Sales (7.0M), Construction Spending (0.6%), ISM Index (57.0), ISM Services (57.0), Productivity (2.3%), Factory Orders (0.0%), Average Workweek (33.7), Hourly Earnings (0.2%), Nonfarm Payrolls (125K), Unemployment Index (5.1%)...
A disturbing trend indeed and one that has increased in volatility as of late (and I am not talking about just the markets)…
Record profits continue to roll in quarter after quarter for oil and energy companies. I can see if supply has shrunk or margins have increased, but neither is the case. Why such an increase in profits? It’s called price-gouging people and we have been victim to it for a long time, but nothing of the likes as seen since the days of Enron. It is a practice that is encouraged by the powers that be and regulated by none…
More than 2000 U.S. soldiers have died and more than 15,000 wounded for a less than noble cause in Iraq and Afghanistan. The reason for war was fabricated and has changed many times. The American people were misled about Iraq’s involvement in 9/11, then told Iraq had WMD’s and would strike the USA at any given moment. It was later changed again to the removal of a ruthless dictator that was a threat to the region and finally the story settled on a mission for democracy. The bottom line here is that this war is about oil and the enrichment of those companies with ties to the US government. Nothing more, nothing less…
U.S. Vice President Dick Cheney, a former CEO of Halliburton Co., has received hundreds of thousands of dollars from the company since taking office while asserting he has no financial interest in the company. Haliburton is one of a handful of priviledged companies with government ties to benefit from no bid contracts in Iraq and now in New Orleans and who knows where else…
Senate Majority Leader Bill Frist was subpoenaed to turn over personal records and documents as federal authorities step up a probe of his July sales of HCA Inc. stock. The Securities and Exchange Commission issued the subpoena after initial reports that Frist, the Senate's top Republican official, was under scrutiny by the agency and the Justice Department for possible violations of insider trading laws.
U.S. Rep. Tom DeLay stepped down as House majority leader after he was indicted Sept. 28 for an alleged campaign finance scheme where he funneled corporate money given to the Texas committee to an arm of the Republican National Committee, which sent it back to seven GOP candidates for the Texas Legislature. Texas law prohibits corporate money from being used directly in a political campaign.
A prominent Republican fund-raiser for President George W. Bush in Ohio has been charged with illegally funneling money to Bush's re-election campaign. Thomas Noe was charged with making illegal contributions in the names of others to the Bush campaign and with making false statements to the Federal Election Commission.
Former FEMA Director Mike Brown is still receiving tax-payer dollars as a consultant for FEMA. Even after his dismissal, Brown is still on the payroll to the tune of $148,000 a month working from home “pulling all the documentation together” for the investigations into Katrina response. Can you say fox loose in the hen house?
Ben “Helicopter” Bernanke was picked by president George W. Bush to succeed Alan Greenspan as chairman of the US Federal Reserve. Big surprise, Bernanke is cut from the same cloth as his predecessor.
Vice President Cheney's chief of staff, Lewis "Scooter" Libby, has been indicted for perjury, making false statements, and obstruction of justice. Libby resigned Friday after being indicted in the CIA leak investigation.
Poster children for what’s wrong with this Administration…
WHAT CAN WE EXPECT NOW?:
This week will most likely follow the same trend as the past week, but your guess is as good as mine as to what will transpire in the coming week. We see that the usual suspects still have a grip on the market psyche such as rising rates (be it mortgage or lending), inflationary fears, a not so particularly strong earnings or guidance season followed by a heavy dose of geo-political events. There has been no lack of uncertainty and as mentioned plenty of catalysts for more down, but yet to avail. Like a patient on life support, the market refuses to roll over. With that said, the lack of conviction, lack of leadership and volatility in the premise of lower highs and lower lows associated with this current trend is not of a bullish nature, this is more like bear country… With all of the uncertainty surrounding the markets, I tend to believe a further correction is in the works. It is too early for a holiday rally and prices are still too high for positions to be taken up. The Semi’s and Internets (other than GOOG) failed to participate in a positive manner. Last week I had noted the following: The SPX and DJIA have been playing devils advocate, divergences of sorts when compared to the COMP and R2k. These are nowhere near their 200DMA’s, although that can change quickly especially for SPX if the Oil and Energy correction are close to an end. While oil may very well continue to correct, we may witness some rotation out of the COMP and R2k into the DJIA and SPX. It may be the COMP and R2k who play devil’s advocate in the coming week. This appears to be what is taking place as those that were abandoned are now gaining strength and vice versa. At this time all of the indices are fighting the mid-range of their respective Bbands, money flow remains negative (CMF), rate of change (ROC) is close to topping (although this tends to be a leading indicator), MACD shows divergence, bear flags are forming on all of the indices and Bullish sentiment is heading south. Also the volatility indexes VIX/VXN trends appeared to have bottomed and are slowly eking higher. As for Oil, Gold and the U$D I mentioned the following last week: We most likely see Oil shed a couple more dollars per barrel, but I would keep my eye on the big boys of this sector which report this week; namely XOM, VLO and APA (I am sure there are others, but these have my attention). I suspect they will have blowout numbers and this may give a lift to the trading vehicles associated with Oil/Energy plays. Gold is still range bound between $460-480 and appears to be putting in a solid footing for the next move up. I have been saying that I expect another leg up for some weeks now, but I believe patience will prove to be of a virtuous nature. The U$D will most likely continue to meander around this area, but after testing 90 once again it is probably getting close to time for it to crap or get off the pot. Well we got our move in the Oil/Energy, Gold remained steadfast and the U$D looked as if it might crap out, but picked up by the end of the week. Moving forward, we may have seen our move in the Oil/Energy play and continue to correct. Gold is still in a consolidation phase and the U$D may be the biggest beneficiary of the upcoming FOMC meeting.
Technically speaking, Bullish Advisors are at 44.8% with Bearish Advisors at 29.2% and appears to be a slight trend change in Bullish sentiment. The VIX/VXN are now residing in what appear to be a new range of VIX 14-16 and VXN 16-18. The VIX shows a 50/200DMA crossover with VXN moving towards a crossover. The CBOE Equity P/C Ratio ended the week at .675 with a 21DMA of .668. The RSI 5-Days are Neutral across the board. The $NASI Daily (Summation), $NAMO Daily (McClellan), NAHL Daily (Highs/Lows), $NAAD Daily (Advance/Decline), stocks above 200DMA and Bullish %'s are all in steep downtrends. The only exception may be the McClellan where it is oscillating, albeit at a lower level than in the May-July timeframe. Charts of the aforementioned can be viewed below along with the major indices…
NOTE:
CORE Funds: HSGFX, PCRDX, PRPFX, QRAAX, RSNRX ,TAVIX, SRPIX
Speculative Stocks; ANO and picked up some GSX this past week
SWING: USPIX, PMPIX, XLE
Disclaimer:
This disclosure is not a recommendation to buy, sell or do as I do. It is only to give my thoughts on current market conditions and share the positions that I am holding. I am not a day trader and invest mostly in funds or baskets of stocks and attempt to identify up/down trends and occasionally perform swing trades.
**Happy Trading**
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