主题：11/06/2009 Market View -- 宁子
家园 11/06/2009 Market View SUMMARY:
- Even lipstick won't help as economic worries pound market lower for the second day.
- Same store non-sales rattle investors.
- Jobs report speculation reaching mania level, provides for three scenarios, 2 of which work for the upside
Market elects to continue selling post-decision.
Day two of the Obama pre-term saw the market get clobbered for the second session with 3%.5 to 5% losses. Indeed, it is the worst 2-day move since October 1987 as the indices lost over 9% Wednesday and Thursday.
LIBOR was better again with the 3-month falling again, down to 2.39% from 2.51% Wednesday. Not massive chunks as earlier in the week, but a solid, steady decline. The ECB cut rates 50BP to 3.25%. The Bank of England cast off the more typical English stoicism and cut 175BP to 3%, the lowest level in England since 1955.
On the other side of the ledger, earnings were weak, particularly when looking at guidance. CSCO talks of weak foreign demand and News Corp talks of just weakness. Same store sales showed the weakest comps ever in the history of the results and retailers are dreaming of a red Christmas, and we are not talking about Santa's coat.
Stocks tried to rebound pre-market and were looking pretty good in doing so, but after an attempt to bounce off the lows early the deed was done and stocks sold off all session. The afternoon session started with a bounce on word that House Speaker Pelosi wanted permanent tax cuts passed in 2009. The market was pelted with rocks and garbage and the indices sold off to new lows, however, when she met with automakers who entered the room with one hand out and the other holding a sign saying 'another industry too important to fail.' That raised the specter of another massive bailout of bad business models such as GM that is more of a healthcare management company that makes cars to fund its health plans than a car company that makes cars for profit. Many wonder if it simply isn't better to let it fall on its own weight and allow more efficient companies emerge from the rubble. Many wonder why these poorly managed companies with poor vision and poor management are getting all of our tax dollars while the small businesses are not only unable to feed at the public trough but are going to be burdened with higher taxes to pay for these giants that nature says should become extinct. After all of this the final bell sounded like the end of a prize fight that the market lost. Wow. How many metaphors and similes can we stuff into one paragraph?
Again, Wednesday and Thursday combined for the worst 2-day move since October 1987. The dollar exploded higher on the European rate cuts. Oil barrels spilled down to 60.77, -4.53 with gasoline prices showing up below $2/gallon. The economy is in the tank but gasoline prices are lower. That helps but consumers have to have jobs no matter what the price is.
TECHNICAL. Intraday action was as bad as you would suspect. A four hour selloff set up a second leg for the day, that bounce into the afternoon session, but that was crushed in the last hour. Again, no surprise.
INTERNALS. Very weak as you would expect with breadth near -5:1 on NYSE and -3.5:1 on NASDAQ. Volume did not reach average but it was certainly much stronger as sellers moved in to fill the void the buyers left on Wednesday. That shows distribution, i.e. dumping of stocks in general. Not all stocks were sold on volume (smaller financials, some energy), but overall the sellers came back into the market, and without any buyers, they easily took control. Overall, volume even with sellers assuming control is still light overall. That is good for an attempt to test and hold the prior lows.
CHARTS. The rally off the prior lows is still in tact given the indices have to nearly make new lows for the year to undercut the start of that last rally higher, but it is clearly in jeopardy. As we know another test was going to come at some point and it may be now. We feel it is too soon to make this test and form a solid base for the true bottom, but that remains to be seen. It looks as if the test is on and as we always say, it is the market that is the final arbiter of where it bottoms. SP500 managed to hold support at 900 where it made its early October closing low after that dive to the low for the year. DJ30 is still over 8500 that should act as some support as the initial closing low for the month is at 8451, and the first test of that level held 8500. They can hold at these levels, but at this point the market is in full sell mode again and another test of the prior lows is in play just as it has been since the market made that initial low. Thus we see how it plays out, and as discussed in the 'Friday' section, we react according to what it shows us.
LEADERSHIP. Leaders were down overall, but they were a mixed bag even with sectors with some stocks holding up quite well despite some sharp selling. Financials were down for a second ay but the smaller cap issues such as the regional banks are still holding up, showing relative strength. Energy was similar with some turning lower on stronger volume while other issues held support on lighter selling volume. Airlines tested but are in no trouble thanks to lower oil; seems that is overriding worries of fewer passengers. This move is taking out some leaders but it is also still part of base forming as they rallied some and now will test back some as well. If they are going to be leaders they will hold their patterns, selling back yes, but using the selling to either form handle consolidations or start putting the finishing half on their patterns. Looking at some metals, some tech, some energy you see this happening. We will let them finish their basing and see if they do indeed form bases in numbers. That would indicate that the prior bottom will try to hold.
SUMMARY. It looks as if the test of the prior low is on albeit a bit premature from a historical perspective. The sentiment indicators and market internals all hit levels consistent with a significant bottom. They rallied off those levels and tested in two weeks. A short bounce and they are testing again. Sentiment indications peak, the market rallies, and then it bottoms after that. Again this is rather short in historical terms, but we will watch and see how the indices hold at the prior lows and what kind of bases stocks build. The economic times appear as bad as can be. Out of the depth of gloom and hopelessness bottoms are formed. This looks to be a historic economic crisis on par with the 1930's and 1970's. this has been a relatively short bear market (1 year) in that perspective, but again, we let the market show us if it is going to bottom.
家园 THE ECONOMY Same store sales point to a weak Christmas.
As noted, retail comps were the worst ever. WMT beat expectations with a 2.4% gain, but that is a recession story as we reported over a year ago. There were other solid performances, e.g. BKE (+14%), but the majority were really bad. TGT -4.8%; ANF -22%; TLB; -14%; JWN -16%, COST -4%. BJ, a wholesale club, posted strong results but said it was on its discount gasoline sales. Money being burned in the gas tank is not money that drives the economy so to speak.
The poor results and the other weak economic data have visions of failure dancing in retailer's heads. Estimates after these numbers point to the worst holiday season since the 1960's, whatever that means. That kind of comparison is hard to make, but given the differences in the standard of living between those times you can draw your own conclusions. Does that mean we buy the kids slinkys, hula hoops, and Frisbees? Or translated into today's terms is that a $200 laptop at Target or a massively discounted iPod?
What does that mean for retail overall? It means some are not going to make it after the holiday season. Mervyns is already gone. Linens-n-Things as well. They show retail in distress ahead of the holiday season, and if the holidays don't provide the rain of profits needed to keep retail alive the rest of the year similar to how the monsoon season revives and saves the Serengeti each year, stores will perish. Circuit City. Some department stores. It won't be a fun first couple of quarters for retail in 2009.
家园 Jobless rate Jobless rate bolts to 14-year high of 6.5 percent
The jobless rate zoomed to 6.5 percent in October from 6.1 percent in September, matching the rate in March 1994. Employers have cut jobs each month this year,marking the 10th straight month of payroll reductions.
家园 THE MARKET Bulls versus Bears:
This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market doesn't have the cash to drive it higher.
Bulls: 30.2. Up from the 5 year low of 21.3% hit last week. Nothing like a rally off the prior lows to build up the confidence. Still below the 35% considered bullish for the market. It was at this level in early October just as the market started to dive lower. This move down showed us the largest single week drop we have ever seen, falling from 33.7% to 25.3%. Hit 40.7% on the high during the rally off the July 2008 lows. 30.9% was the March low. In March the indicator did its job with the dive below 35% and the crossover with the bears. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator. This is smashing that. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.
Bears: 48.3%. Down significantly from the 52.7% last week that was off the prior week's 5 year high at 54.4%. Well above the 35% threshold so still a bullish indication. This move over 50 takes it to the highest since 1995. Extreme negative sentiment. 35% is the level that historically indicates excessive pessimism. As with the bulls the jump in bears did its job after hitting 44.7% in the third week of March. Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). This is a huge turn, unlike any seen in recent history.
NASDAQ
Stats: -72.94 points (-4.34%) to close at 1608.7
Volume: 2.414B (+10.58%). Still below average but modestly so as the selling picked up speed. The sellers stepped in on Thursday after sitting out Wednesday. Saw the opening and they are taking it.
Up Volume: 229.649M (+13.756M)
Down Volume: 2.171B (+207.766M)
A/D and Hi/Lo: Decliners led 3.56 to 1. Solid for second straight session.
Previous Session: Decliners led 3.57 to 1
New Highs: 5 (-1)
New Lows: 182 (+99). Watching this closely as the index heads toward the prior low though still well above that level. You want to see the new lows stay significantly below the lows hit on the prior low. Interestingly they were fewer as NASDAQ hit a new 2008 low two weeks back. That is a positive, and if it does it again, great. Want to see it less than 800ish.
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
Bad to worse, gapping lower and selling to close at session lows. 9.9% in two days, closing below the first two October closing lows. That leaves NASDAQ looking at a test of that low, 100 points off that level on the Thursday close (1506 is the 2008 closing low). Now NASDAQ can still hold here and set up a 4 week reverse head and shoulders pattern, an upside pattern. We just have to see how this decline plays out.
NASDAQ 100 (-4.46%) gapped lower as well, forming basically the same pattern as NASDAQ. Some support at 1200 where it bottomed intraday on the first two matching lows in October. So we look at 1200 (closed at 1241.97) as a level to try to bounce the large cap techs.
NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: -47.89 points (-5.03%) to close at 904.88
NYSE Volume: 1.526B (+16.58%). Volume bounced toward average here as well but didn't get their either. Stronger selling volume shows the balance of course in the seller's favor but it is not blowout. Again, better chance of holding prior lows if volume remains low.
Up Volume: 72.807M (-2.579M)
Down Volume: 1.452B (+223.67M)
A/D and Hi/Lo: Decliners led 4.84 to 1
Previous Session: Decliners led 4.01 to 1
New Highs: 8 (+5)
New Lows: 175 (+108). Watching this as well on the test. Spiked well over a thousand on the early October selling.
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
Sold hard, falling to some support at 900, even undercutting that level briefly. Managed to hold it on the low, roughly matching the early October closing low. If it holds here it is makes the right shoulder to a 4 week reverse head and shoulders pattern, and that pattern often forms at the bottom of a cup. Is this a cup? Could be. This current pattern has to yield a breakout to start answering that question.
SP600 (-3.47%) sold off hard as well though it showed relative strength (-3.47%) compared to the other indices. If it holds here it also forms the right shoulder to a reverse head and shoulders. The small caps posted the strongest run off of the last lows. The small caps are economically sensitive and they tend to bottom first after a bear market when an economic recovery is anticipated. Well, maybe. They bottomed with the rest of the market in late 2002 and early 2003. They just moved up really sharply when they took off, and a lot more of them moved with more strength than the rest of the market. Thus this last move off of the lows was very interesting given their relative moves vis- -vis the large caps. That does give us a clue that the market is somewhat factoring in a recovery, and if the indices bottom here of course that would make sense. Money would start moving into the smaller caps because they provide the largest gains in the initial stages of an economic recovery just as with the last recovery. Moreover, the market is moving toward the time of year that, during an uptrending market, small caps perform better, i.e. after the first of the year. Thus while the small caps will bottom with the market, their relative strength in doing so is key, and the strength shown in the last bounce is another reason to watch for a bottom here at the October lows of some sort.
SP600 Chart: http://investmenthouse.com/ihmedia/SP600.JPEG
SP400 CHART: http://investmenthouse.com/ihmedia/SP400.jpeg
DJ30
The blue chips lopped off 9.9% Wednesday and Thursday with volume jumping above average Thursday. The large caps in the Dow were hit hard. Its financials, its energy stocks, and its tech stocks were hammered while the smaller cap versions were less molested. Looks like a test of the initial closing low on the year (8451) is going to be tested; as with the other indices, if it holds you have the same kind of reverse head and shoulders pattern that often forms at the bottom of a cup base. Hell of a deep cup. It is testing and 8451 is the first shelf, then 8175 as the closing low for 2008, then the intraday low at 7882.
Stats: -443.48 points (-4.85%) to close at 8695.79
VOLUME: 344M shares Thursday versus 264M shares Wednesday. Large caps getting the hardest hit.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
家园 FRIDAY Jobs lag. The economic data is fading. Jobs are going to follow the economic data. Thus jobs will be bad. The furor, and that is what it is right now, is building with each bad piece of economic data (factory orders, ISM, ADP, same store sales). -200K are now expected, a number moving higher, following the bouncing ball of bad economic reports. Whispers (fears?) of 250K are out there. 300K as well.
As is often the case when there is speculation gone wild, exposing the bare facts is appropriate and somewhat titillating. It is always more profitable. There are three outcomes possible, at least three I am looking for. There is so much hype that the number will actually be anticlimactic if it is 300K or less. With 10% downside in two sessions leading up to the report, a reading at 300K actually results in a positive open. That is likely the worst outcome unless the positive open turns into a scream back to the upside. That would suggest a bottom. If it opens higher but hems and haws, prepare for more downside and a full test of the prior lows.
Second possibility. The numbers are bad and the market opens lower with an immediate crash to or near the prior lows that holds. Time to close your shorts and we are not talking about after relieving yourself. Then look for a strong bounce. If so then some upside plays on the indices and stocks that hold up are in order. Aggressive but not a bad risk/reward ratio. If it bounces modestly but stalls, watch out for more downside. We will call that scenario 2.5.
Third possibility. The indices crash below the prior lows, rally back to the lows, and fail. That means the bottom attempt at this level is most likely over and the economy is heading even lower, and the market does not see it bottoming in the first half of 2009. Bad news indeed.
Of course we are going to look at playing these scenarios. We will put some index plays on that pick up a move off the prior lows. May have to adjust them if we get a number within all the expectation ranges and the market looks to try and open actually higher. That is not the likely scenario so we are focusing more on the second situation involving testing the prior lows to some extent and then surging back up. After an anticipated 3 days and down nearly 15%, the upside seems more probable even if it is just a short term relationship.
The gloom is high, the economic data is as bad as it has been in maybe ever. The federal government is taking over the financial institutions. The balance of power in Washington suggests there is only more to come. Thursday some democrats were saying that tax rates should not exceed 50% because the worker should be the majority stakeholder of his or her own check. Not even going into the plethora of federal excise taxes on phone service, gasoline, cigarettes, travel, etc. that push the current tax bite well in excess of 50% on all of us, that is a rather horrifying statement. Thanks for letting us keep some of our check so we feel good about getting reamed. Never a discussion about cutting waste or corruption, just how much to take from the workers. No wonder the market is down 10% in two days, democrat or republican in charge.
The point is everything seems about as bad as it can get. At the same time the sentiment indicators spiked to historic levels, some we have never seen before. It hardly seems as if the prior lows can hold given all of the very bad news in the world. In other words, the time is right for the market to put in some kind of bottom. That is why a bad jobs report that sends the market crashing lower early has the potential to reverse the trade. Would prefer a Monday or Tuesday, and that could still occur as well. It is just that the jobs report is such a perfect set up for such a turn.
- 复 FRIDAY
家园 THE PLAYS: Upside: Playing a potential bounce off early weakness.
Play Date: 11/06/2008
DDM (DJ30 Ultra ETF--$32.94; -3.36; optionable)
STATUS: Reverse head and shoulders. DJ30 is heading lower and as discussed in the report, if it holds at the prior lows after the jobs report we want to make the play to the upside if it makes the bottom here.
Volume: 18.279M Avg Volume: 8.147M
BUY POINT: $30.11 Volume=10M Target=$38.75 Stop=$28.00
POSITION: HXD AD - Jan. $30c (low OI) &/or Stock
http://www.investmenthouse.com/ci/ddm.html
Play Date: 11/06/2008
DLTR (Dollar Tree--$38.29; +2.71; optionable): Discount stores
http://biz.yahoo.com/p/d/dltr.html
EARNINGS: 11-25-08
STATUS: Double bottom w/handle. Sold off Thursday but came right back into the game Thursday with strong same store sales. Nice 8 week base that roughly used the 200 day SMA (33.50) as support and bounced it nicely. Good looking start and in position to make a solid break higher with money flow leading the way. Very solid, surviving the retail same store sales issues.
Volume: 4.539M Avg Volume: 2.302M
BUY POINT: $40.08 Volume=3M Target=$47.95 Stop=$37.27
POSITION: DQO BH - Feb. $40c (52 delta) &/or Stock
http://www.investmenthouse.com/ci/dltr.html
Play Date: 11/06/2008
IWM (Ishares Russell 2000--$49.59; -2.00; optionable)
STATUS: Reverse head and shoulders. Another index that has set up this pattern as well and may start Friday lower after jobs. The small caps had the most torrid upside run of the October low, and if the indices bottom it can surge back up here as well.
Volume: 85.234M Avg Volume: 121.234M
BUY POINT: $46.65 Volume=100M Target=$54.95 Stop=$44.74
POSITION: IWM AT - Jan. $46c (73 delta) &/or Stock
http://www.investmenthouse.com/ci/iwm.html
Play Date: 11/06/2008
SPY (S&P Depository Receipts--$90.86; -5.33; optionable)
STATUS: Reverse head and shoulders. And yet another one of the indices showing this pattern and looking for the SP500 to dive lower on the Friday open and then hold the prior lows and then reverse with a bottom.
Volume: 474.123M Avg Volume: 376.284M
BUY POINT: $85.11 Volume=495M Target=$99.85 Stop=$83.77
POSITION: SZC AG - Jan. $85c (66 delta) &/or Stock
http://www.investmenthouse.com/ci/spy.html
Play Date: 11/06/2008
WCN (Waste Connections--$33.48; -0.42; optionable): Waste management
http://biz.yahoo.com/p/w/wcn.html
EARNINGS: Announced 10-21-08
STATUS: Double bottom w/handle. Tried the breakout in mid-September, but as soon as it cleared the August high it reversed and sold with the market into October, forming the first leg of the current 7 week double bottom. Just a bad time to breakout to a new high at the time. Now the market is trying to put in a bottom and WCN has used this time to build its own bottom and it came back to test the 50 day EMA (33.46) Thursday, showing a nice hammer doji at that level. Great set up and poised to move higher, and just has to show us the breakout move.
Volume: 544.522K Avg Volume: 954.223K
BUY POINT: $34.55 Volume=1.4M Target=$39.95 Stop=$32.77
POSITION: WCN AG - Jan. $35c (53 delta) &/or Stock
http://www.investmenthouse.com/ci/wcn.html