Dow -256.56 at 12325.42, Nasdaq
-61.46 at 2290.24, S&P -27.72 at 1332.83
Earnings Season. Friday's session was not a
good one for the markets as General Electric GE
seemed
to surprise with their earning report. GE is the second largest US company by
market cap and it has a weighting of 2.8% of the S&P 500 so its 12.8% drop on
Friday took the indexes along. Their first quarter earnings were lower by 8% to
$0.44 while expectations were for $0.51 per share. Its revenue missed
expectations by $1.5 billion. The company said the weakness in its financial
services business was the main factor behind its earnings miss. The news shocked
the market, considering in January GE said it expected first quarter earnings
per share would be in the range of $0.50 and $0.53. GE expects second quarter
earnings per share will fall short of the consensus estimate by three to five
cents per share. For full year 2008, GE expects to earn between $2.20 and $2.30
per share, versus the $2.43 consensus. Not all is bad -
Wal-Mart (WMT) raised its first
quarter EPS guidance after reporting March same-store sales on Thursday.
In general (like that word) the market of the last two weeks had seemed to be
showing a change in character as dips were being bought and even though it was
low volume it did look like it was trying to turn back up toward highs. With
Friday's drop back below some support lines we will again have to wait for
things to set up again. This week we will see earrings reports from IBM,
GOOG and INTC and either of these could ove the markets.
The GE miss increased earnings fears and may have reminded many that it is often
better to be out of stocks when they report. Remember to check the
Earnings Calendar
on all overnight holds so you are not caught by surprise.
Perhaps contributing to the Friday weakness was a report
that showed that import prices for March went
up 2.8% compared to a 0.2%
increase in February. The acceleration in import prices was due to a 9.1% jump
in the prices of petroleum imports, while prices of non-petroleum imports rose
1.1%. Also - the April University of Michigan confidence survey
fell to 63.2 from 69.5.
The GE miss sets a cautious tone for
the rest of this earrings season as perhaps people will
be less anxious to buy some weak earnings from other
companies. If this is the case and the market stays weak
than remember it may be better to take earlier profits
on break outs from the watch list. We had 11 upside
break outs this week and 3 shorts compared to 22 longs
and 3 shorts the week before.
The weekly major
indexes.
The top and bottom sectors.
The best and
worst performing industries for the week.
So looks like "stuff" from underground was good while
services bad.
The Dow could bounce at the
little trend but think it not a high odds bet unless the
Monday morning retail sales numbers are an upside
surprise. Here is the triple top pattern as Butch Cooley
mentions in today's commentary. Friday's drop was lined
up pretty well that the apex formed by the lines shown.
We do not know if stochastics will again have to go
below 20 but as shown on the chart, it could happen
pretty quickly if it does go there.
This view pulls back a little and you see the candles were
going above the top Bollinger band for several days and the 50 and 200-day EMAs
just touched and that often means fireworks, as was the case on Friday. They
have now made a bearish crossover unless they reverse in the next day or two.
There may be some support at the 12200 and if not then look for the lower
Bollinger bands again.
More of a bird's eye view showing the 2008 trading range.
On the 27-year view you see that the 50-month EMA is still holding and even if
the trend line has been broken a little the long term bull market is still in
force. Actually though for the Dow it has not been much of a bull market over
the last 9 years as it is about were it was in 1999. At the last bottom in 2002
the stochastics had not gone under 20 though many, like me, prefer to see it do
so. Now they are at 25 so watching over the coming months.
As the Dow declined the
DXD of course went up. The addition of so many Ultra
ETFs has really been great for traders and investors. If
you are a long term holder of some stocks for the
dividends and or long term capital gains, you can offset
any losses in those by using this type of ETF. And by
the skillful use of them even make gains on top of the
other losses. This DXD short Dow bounced for the third
time at the same place at the 200-day EMA making for a
low risk entry. Resistance first is at the recent high
from about 10 days ago.
The transportation index did
not do as poorly on Friday and is still above the trend
line though the 50-200 EMA are about to touch - just as
they were about to make a bullish crossover.
The Nasdaq 60-min chart shows that it closed
Friday filling the gap from the start of the month so on
the bright side - that is out of the way. The RSI and
stochastics are at slightly oversold readings so maybe
can bounce a bit at least on Monday though a gap down
would also not surprise at all.
The longer term view is a bit
boring as the range is old hat by now.
The top 100 market caps in the
Nasdaq are here on the NDX and we show the
Fibonacci lines. The 50% is at 1781 while the 62% is at
1755 so two places to watch for a reversal.
It is almost mid month and we do
not want the QQQQ chart to end the month like
this as the gravestone marker is generally a reversal
candle. (Meaning to the downside) The stochastics are
under 20 but the MACD only recently has made a bearish
crossover.
The Semiconductor index SOX still looks ok and stochastics have turned up
over 20 on this weekly chart.
The S&P 500
chart is similar to the Dow showing two support
possibilities below. The broken trend on Friday along
with the drop below the 50-day EMA were the signals to
go short.
This S&P 500 chart shows that it came up about to the 100-week EMA. this
gave support to the index at the green arrows and is now resistance until it is
broken above. The red arrows are signals to short term traders to sell and or go
short. This is still back above the 200-week EMA at 1322 which is also the 50%
retrace line. The two lows this year were near the 62% retrace line.
Long term S&P 500 monthly as reference.
The Russell 2000 chart is similar to others at the movement
showing Fibonacci lines and the break of the stochastics 80 level this week. A
simple indicator that shows when to sell or short.
\
This XLF chart is an ETF for the Financial Sector now at a minor trend
line with a better possible support at the horizontal below.
The number of stocks in the NYSE that were trading over their 50-day averages
was getting up there but not too high.
Last week we wondered about he VIX as in the past when it touched the
200-day average the market topped and it had not done it this time -- now we
know it is still working though the VIX had not yet moved up much.
The Nasdaq bullish percent chart actually closed above the lower range
line - I guess it may just be lagging - we will see next week.
The S&P 500 bullish percent index gave a crossover sell signal on
Thursday.
The Japanese Yen - like the dollar, mostly consolidated this week.
Oil touched a new highs but closed under them.
You can invest in oil by way of the
oil fund USO as it of course made new highs.
Gasoline in this chart of the week adjusted for inflation.
The chart below from a US Government information site
prices the cost of gas as a percentage of disposable income. Guess it is a ay to
make people feel better but it does shows that you spend less of what you have
than in other times in the last 48 years.
Gold was up 1.5% for the week and is back to the underside of his
imperfectly drawn trend line. I am not too keen on gold medium term though it
may rally again short term as the MACD is showing a possible crossover.
The gold and silver index XAU
consolidating under the 50-day EMA. It is not bullish
until we see a break in the lower chart section trend
line.
Silver also near the 50-day EMA.
The US dollar long term.
And in the Dollar's shorter term
view we have drawn a triangle that may or may not hold
as a long side break out. It is symmetrical so can go
either way. At the moment stochastics are still pointing
down.
|
Butch Cooley Market Comments
(Butch is founder of
Leg Up House
and the
Butch Cooley Worldwide
Hunting and Fishing . He has
been an active trader for decades.)
Stock Market Comments April 11,
2008
The Dow took off a bit early this week, even with
terrible earnings from Alcoa, and with a surge in oil
that netted us new record prices. That is the way of
the market sometimes. I think Monday’s run to test old
highs was just wishful Bull thinking, hoping the markets
had hit a bottom and could set new highs. Many people
just don’t want to be left behind. But it didn’t
happen. 12,733 actually made a triple top in my book,
and from a purely technical look, that’s bad. 12,767
has to be broken and hold, and I just don’t see that in
the near future. From there is was a pretty lame week.
AMR messed up travel, no doubt, but probably avoided a
lot of fines and penalties with the FAA. Frontier Air,
based in Denver filed for bankruptcy, and oil appears to
be a little bit in short supply. But the bigger news
this week was GE, a bellwether if you follow
fundamentals. It’s not so much that they reported some
loss, it’s that they reported some loss and caught most
everyone off guard. GE simply doesn’t normally loose.
It’s unheard of. It’s not right. Both Alcoa and GE
have always been the first reporting earnings and how
they go, so goes the earnings for that quarter. Well,
if that is true, and it is, this is going to be a nasty
quarter for earnings. And just think, next week many
financials will report. But what I read in GE’s numbers
is this is the first time we have seen credit problems
running over into the “real economy”. Up until now,
it’s just been financials. Well, GE is a huge company,
a conglomerate, and has interests in just about anything
imaginable. Besides obvious manufacturing on all
fronts, they are also in the entertainment business,
financials and even healthcare.
So what does all this really mean. It’s all about
anxiety. And the market doesn’t like anxiety. The
market likes to know what is happening, it needs to
know. And none of this was really priced into the
numbers. So what I think it means is a down slide
coming next week, and maybe we will get to test our lows
again. We certainly have tried testing the highs, and
that has gotten us nowhere. Maybe testing 11,600 will
get things rolling again? And then, maybe not.
BC
|
Weekly economic calendar from briefing.com
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Stocks of longer term
interest:
NNRI added 24.5% this
week. This week is the expected filing of the year end
report for NNRF Inc. and ATOLL. On a break over the top
trend line and 50-day EMA you see some resistance at the
$1.10 - $1.15 area.
PLTG was up an additional 65% this week as
volume increased. From its one day 6 cent low it rose
300% in 3 weeks. It is back over the 50-day EMA and it
may stay there this time as the company certainly has a
lot of proven reserves (over a couple of dollars a share
worth) and is operationally profitable.
PYR.v Pyramid Petroleum has remained about uncharged
for a long time on low volume though a week ago there
was some much higher volume one day on the buy side.
This week the company released some news
Pyramid Petroleum announces 2007
reserves information As of December 31,
2007, proved plus probable reserves increased to 2.5
million barrels of oil equivalent (boe) from 1.1 million
boe at December 31, 2006. The value of before tax proved
and probable reserves (NPV 10%) increased to U$49.5
million from $9.5 million, based on forecast prices It
seems it only needs to get volume and listing on the
Toronto exchange.
Now additions to our
watch list.
REDF Over $9.12 (Friday shadow high was $9.40)
SGEN Over $10.00
TASR Short under $9.25
BLC Short
under $10.00
VCI Over $13.10 to $13.23 on good volume -
(from Fastcash)
XRM Over $2.00 on increased volume
PMCS Over $6.55
USD Prohares Ultra Semis ETF over $54.00
GIM Templeton Global Income Fund short
under $9.30 to $9.20 or could be a long for a scalp over $9.50
SMMX Over $8.30
CLDN Over $11.25 - note shadow highs -May
also become a bounce play at support nearer the 50-day
EMA Low Volume Stock
SOEN Over $0.70 with good volume
(from Mezz)
Photographs today by
George Gradinaru
http://www.photo-inside.com
shadow people
life island II
That's a full lid for today - will see you all during the week.
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