Monday, August 31, 2009
The market is rapidly turning into a gigantic crapfest. The rise of LEHMQ (the bones of Lehman), the massive volume of MTLQQ (ditto GM), FRE, FNM, AIG (which actually has an above 90 composite rating in IBD now), and the big kahuna, C, are dominating market volume. It seems as if the rest of the market has been forgotten, the lotto tickets are in play. The rest of the market? Why, it's being sold off, of course, as evidenced in the index charts. Buyers are drying up, and the wise are taking their profits.
Nowhere is this more evident than in the Nasdaq composite. Despite hype about DELL, INTC, and the latest "they lost less money than the analysts expected" tricks, the Nasdaq has severely weakened.
The Dow industrials are a little stronger, and still in the upper half of the current trading range, but CMF is dropping, and while the last two days have not seen massive volume, there is a trend away from the shriveling volume while it was rising.
I'm still waiting for the Russell 2000 to test the 50dma, which I fully expect possibly this week. September is historically a bad month in the market, and we could very well see another one.
Oil cannot break out past 75. It gets close, then gets swatted back. Enough failures could precipicate another big drop, and while we all drool at the prospect of low gasoline prices, we can't help but realize that the price is low for a reason.
Today was particularly frustrating, as I could not stay connected more than a few minutes most of the day, and had some other stuff I had to do, and in addition it is still hotter than hell here so troubleshooting is very difficult. I missed a lot of the news today, but it seems the market didn't do much after the open. It is hard to make much of pre-holiday volume, but it looks to me like the market is trying to top here. Of course, It's looked like that for months now.
I will have the new highs update shortly.
Well, this is exactly what you don't want to see. This gapped up on news one one of it's drugs, got huge volume, but could not hold the gains. Coming in the technical picture wasn't good, with price relative quite weak and CMF going negative. After today, it looks positively horrible.
One of the few new highs that wasn't a) a flu drug stock, or b) parabolic. It was announced today that WIRE will be added to the S&P 600 small cap index, undoubtably the catakyst for today's move. This has done poorly on earnings recently, and the price relative line is extremely weak, but CMF has remained positive, meaning there hasn't been a lot of selling pressure.
Sorry about the late post, getting on the internet has been like pulling teeth this morning. This chart is about two hours old, but not much has changed since I retrieved it. I figure 1016-1017 to be today's pivot point, and that is where we are now. Oil and gold are bith getting creamed, so XLE ois leading down (big), with XLP leading up (sort of) and good old XLF not far behind. TNX is dropping big time, as the rush into treasuries appears ready to begin.
If you want some good news, here is a stock that has risen rapidly on humongous volume. Keep this up and it will be on the IBD 100 in no time. The stock? LEHMQ. Yep, a bankrupt, dead company is leading the market. Swell.
I have 35 new highs, although the new highs page is very slow to update at the moment. There is only one big breakout, MVL, and that is on an announcement that they are being bought by Disney. I can't wait for "The incredible Hulk meets Goofy" comic book.
I don't know how many updates I will be able to get today, and the afternoon update will probably be a bit late, but if necessary I will go somewhere else to get a decent connection.
Sunday, August 30, 2009
I almost forgot about next week's earnings schedule. The only reports I can confirm for now are all on Tuesday, two before the open, one after the close. The earnings spreadsheet has been updated except for the earnings dates, I have not gotten to those yet, and probably won't be able to until tomorrow.
Three more banks shut down on Friday:
- Affinity Bank, California
- Bradford Bank, Maryland
- Mainstreet Bank, Minnesota
I was thinking of not bothering with the bank body count this weekend (now up to 84), but there was critcism of the financial press this weekend (from Gary Kaultbaum and , of all places, from IBD) for reporting facts. See, reporting the state of the banking sustem has a "negative" psychological effect on investors, and we don't want that. Tha market must go up, so please don't spoil it with facts.
No sooner than I hit "publish" for the last post, I remembered something I did with the relative strength list last night. I took all the stocks on the list before the last two cuts (about 800 stocks), and grouped them according to industry. In the second column is the number of stocks in the group on the list, the third column is the total stocks in that group, and the fourth column is the percentage of the group's stocks that are on the list. The chart above is the top 20 groups in terms of percentage. I will try to track this in coming weeks (if I have time) to see if we can catch any trends.
Sorry about the lack of posts today, but it is incredibly hot here in California and last night I decided to turn my computers off until it cools down a bit. I am now at Starbucks with my laptop, do I am going to post from here for the rest of the night (that is, if I can find anything to post). I mentioned previously that I have been looking for graphing software to make better graphs than the ones I made from the built in grapher in open office. I found one called Grapher 7. It is a bit complicated, so it will probably take me a while to get the hang of it, but it enables several data sets to be graphed together on the same graph. Above is my first attempt, with a stock I picked at random (ADY), I graphed price, volume, and eps data together. It was a little messy, but hopefully by next weekend I will be able to produce readable graphs. I will still be using stockcharts' charts for technicals, but will use this to analyze other data.
Saturday, August 29, 2009
Here are the top 20 performers from last week's relative strength list.
This is the bottom 20.
There is not much of an earnings summary this week, only one stock, VSNT, from the earnings list reported, and reported a quarter of negative growth.
Here are the results of this week's relative strength scan. The methodology is the same as I have been using in recent weeks. Last week I had planned to experiment with fine tuning the methods, but never got around to it. One conclusion I am coming to is that the top 25% of the 52 week high-low range may be too broad, so I will try fine tuning that. This week the cutoff for the 20 day minus the 60 day volume per million shares was 1.5, meaning that all 200 stocks on this weeks list have been increasing in volume.
The spreadsheet will be uploaded later today. As usual, all stocks removed, and the reason for removal, are on page 2.
Well, there are loads of descrepancies between the data I have and what IBD is publishing. I'll have to take a look at my data to see if there are errors in it (possible), but going through the list of top gainers and losers that they published this morning, I see a couple of stocks that were not on last week's list. Where we agree is on last week's top gainer, STEC. Instead of the usual 6 month chart, I used a 3 month chart here to get a better look at the pattern because this has made such a huge run in the last 6 months that it is getting hard to see the pattern. STEC has gone nearly straight up since March, pausing only briefly with weak pullbacks. However, it appears to be slowing down, if not outright weakening, and the steadily declining CMF may be indicating that the big money is no longer going into this thing. I would say it is way, way too late to be trying to get into this.
IBD has EBIX as the second biggest gainer, but I have it neck and neck with BMA, with BMA winning by a nose. BMA is nowhere to be found in IBD's list. Last friday it was breaking out after a newwar flawless test of the 50dma, and was the ideal buy point. In went on to a nice gain from there.
IBD has BPI as the biggest decliner, and it is nowhere on my list. I have STAR, which IBD lists 2nd. I forgot to put an arrow on last Friday, but it is about where it tested the 50dma from below and failed. it went down from there. A break of the 50dma, followed by a failed retest, is a perfect shorting signal. If this pattern doesn't scream "top" then I don't know what does.
I had DIN as last week's second biggest decliner, but IBD doesn't list it at all. Here is another one that broke support, then came back up to test it, and failed. When we start seeing a lot of this among leadership type stocks, that is a good signal that the market is about to correct.
I'll double check to see why there were so many descrepancies this week. Periodically IBD has stocks that just "disappear" from any mention, but with so many, it could be a problem on my end. I actually isn't that important, as this is more an exercise in chart analysis than anythings else, although I do think that tracking the IBD 100 is a good way to gauge the overall health of the market.
Friday, August 28, 2009
Friday's new highs, sorted by industry, page 1
The high volume advancers from the relative strength list
The high volume decliners.
Posting this weekend will probably be like last weekend, mostly early in the morning and late in the evening.
We hit a high at the open of 1039, and it was downhill from there. The first ever so slight sign of weakness in the market in quite some time, that 1035-1040 area looks like it is going to put up a fight. The 975-1040 range is our current battleground, and now that we have been testing the high, it's quite possible we are going to test the low. Just don't blink or you'll miss it.
On the weekly chart, the middle line is the 38% retracement, the top line is the 61% retracement. About equal distance down (i didn't calculate it because it probably isn't exact and it would blow my fantasy world to bits) is 839, which I found some time ago was the 50% retracement level of the 1982-2007 bull market. Right now our next target is the 50% retracement, around 1150.
The Nasdaq is inching closer to the 50% retracement level, and as I have been pointing out it has been weakening severely. It is in a steep uptrend which really is not sustainable. Watch that descending trend line; a decisive break of that could give this renewed strength. I woud expect a pullback first, but this market has lost all connection with reality.
The middle line on the Dow is the 38% retracement, the upper line the 50%, and below is support equal distance below the 38. Yet another weak of declining volume.
The Russell 2000, so far playing the fibonacci script to perfection. It paused and pulled back at the 38, is now just below the 50, where it looks like it might pause again, before another thrust up to the 61. by the time it gets there it will have the descending trend line to deal with. If it gets there, I have a feeling it will be the shorting opportunity of a lifetime.
Despite a positive week, the market is showing glimmers of weakness as the buyers are not stepping up. Everyone is waiting for the inevitable correction, and until the big boys come back from vacations, there's not going to be much to do, except watch the computers run up AIG and Fannie Mae. Swell.
I will have the new highs update shortly.
LCRD is resuming an uptrend after a brief pullback. It did not pull back to fill in the gap, which it may eventually do, but for now it is a breakaway gap, with a breakout today on decent volume, for which there was no news to account for. it could be that traders just liked the pattern they saw and jumped in.
OVTI is an earnings breakout. I don't trust any stock that gaps up big but ends the day below the open. This reported a loss for the quarter, but gave upbeat guidance, which apparently only fooled the people buying at the open. It is still well above support and still in a n uptrend, but I'm looking for it to fill in the gap.
Let's take a little logical exercise. if one of these statements is true, then by inference the other must be false:
1) Oil is in infinite supply and the rate of extraction will grow without limits.
2) Oil is in finite supply and the rate of extraction will hit a limit where it can go no higher.
I missed this op-ed in the NYT, but thankfully the Oil Drum picked it up. I will let the folks at the Oil Drum doing the heavy lifting in refuting the article (they are going to submit an op-ed to the NYT), and do what I do best. Mr. Michael Lynch, who is described as an "energy consultant", is the winner of this week's "Idiot of the week award". Rather than provide the data which refutes the article, I will point out the blatant stupidity on display.
Ah, yes, let's bring up the ghost of Malthus. Any theory that is based on a belief that a resource is finite is "Malthusian", and a priori discredited. So, we read on to find his scathing proof of the "poor analyses of data and misinterpretations of technical material". The problem? He gives none. At all.
The fact that the Saudi's have to pump seawater into wells to keep pressure up is no cause for alarm? You have got to be kidding me.
Throughout the article, he mentions geologists without naming a single one. He also brings up the technology issue, which is true, advanced technology will make more oil recoverable. The problem is, at what rate, and at what cost? That is at the heart of the peak oil thoery, and it is completely ignored. Technolgy will not give us more oil, what it will do is the geologic equivalent of "pulling foward demand" in economics - it will make today's picture look better at the expense of tomorrow's. Look at the chart of the rate of extraction in Mexico's Cantarell field. In 1999, a breakthrough in technology allowed faster extraction, at the cost of earlier depletion and faster decline.
I am not a peak oil "advocate", I am just reporting on what I see. And when I see peak oil theory trashed in the mainstream press without the presentation of any facts whatsoever to refute it, just a "no it's not" argument, it raises my hackles.
Congratulations, Mr. Lynch, you are the winner of the "Idiot of the Week" award.
It looks like this market is going to be cruel to bulls and bears alike. After yesterday's dhort near-collapse that just teased breaking support, this morning's gap up appeared to be breaking through resistance, but immediately reversed course and is heading down. I am looking for 1026 to act like a pivot point today. XLK is leading up, with XLF and XLB not far behind, and XLP and XLV are the laggards.In a reversal of a recent trend, relative strength is in the Nasdaq, relative weakness in the Russell 2000. Although not as dramatic as yesterday's cliff dive, the dollar is weak again today, sending oil and gold both up.
Congratulations to the HFT boys for "guessing" right about DELL last night. There was a big burst of volume and a ramp in price starting 17 minutes before the close, and DELL reported a good quarter and is up big today. Good thing I didn't get in that, or the SEC would be all over me for trading on inside information, even though in my case it really would have been a guess.
There are 100 new highs so far. A pile of dung called DRJ is going parabolic, having just about tripled in the last week. However, there are a few good looking charts with breakouts from decent looking patterns. A few to look at are TRBN, SCSS, OVTI, and ARUN.
Thursday, August 27, 2009
Thursday's new highs, sorted by industry, page 1.
The high volume advancers from the relative strength list
The high volume decliners. The lower number of new highs, along with the inv=crease in the ratio of decliners to advancers, makes today's rally somewhat suspect, although I would not draw too much from that.
A couple of days ago I had added up the volume from the heaviest traded stocks on the NYSE (AIG, C, FNM, and FRE) and noticed that they added up to more than the NYSE composite volume. I asked what I thought might be a dumb question about why they didn't add up, and it turns out it was a dumb question. Denninger inadvertently answered it later that day by linking up to the NYSE home page, where total NYSE volume is listed. I don't know exactly how NYSE
composite volume is computed, but it excludes volume for ETFs, which is a substantial potion of NYSE total volume. So I should have compared them to total NYSE volume.
I also have a winner for idiot of the week, but probably won't have time to do it tonight.
Hat tip Zero Hedge
I had to take care of some business at the DMV this afternoon, never a pleasant task, and taking up most of the afternoon, so I will only have the summary post, although looking over the breakouts from today, nothing was particularly compelling to look at. Here is the 3 month view of the SPX. Although the high is 1037, the primary resistance was around 1028 or so. We got through that today. The short pullback we expected was just that - on half hour, to be exact. The computers must have been out partying today, because the reversal and rally we got was darnright orderly, and just what the daytraders ordered.
It;s a little more obvious on the Nasdaq chart, and possibly a cause for concern among the bulls: the second consecutive day of lower highs and lower lows. Support here at the 20dma looks pretty strong, though, and CMF is reversing a sharp decline.
The drop in the dollar index was not a big surprise today, except for the fact that is was sharp, fast, and had virtually no effect on stocks (although it did result in a sharp reversal in oil).
Gold has been stuck in a trading range for a very long time. Since the mid-July launch of the financial sector, it has seriously underperformed the market.
The Vix has been relatively quiet lately, too, but even though the market has been going up, this has refused to drop below the July low. Consumer confidence may be strengthening, but it seems investor confidence is not.
Maybe I just don't get it, but I would think that if the taxpayers are going to foot the bill, they have a right to know where the money is going. If a bank is so impaired that it needs emergency infusions of cash from the Fed, too bad if that hurts their "competitive" position.
I will have the news highs update in a bit, along with the answer to the dumb question I posed the other day. I also have a winner fof the idiot of the wek award, but might not have the time tonight.