EquiTrend Market Watch

EquiTrend Market Watch

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Have You Seen This?

  • Leaders also look bearish

    In This Issue:
    Bearish head & shoulder patterns abound...
    Leaders also look bearish
    Are earnings finally showing signs of life?
    Manufacturing and service sectors improve, trade gap narrows
    Pollyannas caught on tape

    Quote of the week
    "Everyone is trying to jump on that bandwagon. There are projects in emerging markets in which I can make more money than I can in the West at the moment." - Nicholas Field of Schroders Plc, London, manager of approximately $11 billion in emerging-market stocks (see article below - Emerging Market Take Record Share of World Equity).

    Head & shoulders patterns abound...
    The benefit of using technical analysis to make investing and trading decisions is that it removes emotion and the necessity to interpret reams of fundamental and economic data from the decision-making process. The downside of using a technical only approach is that it often provides only short-term insight. As a result, investor and traders with longer-term horizons should use both but as readers of this newsletter witness first-hand each week, the workload and time required to do this type of analysis can be greatly streamlined by relying on charts. Fundamental and technical charts quickly provide an overall snapshot of trends in both stock prices and in fundamentals like earnings and key economic indicators which is far more useful information than single data points....
  • Trading in a very tight range

    In This Issue:

    Stocks stuck in a trading range...
    Leaders head down
    PEs still showing 'earnings-less' recovery
    New home sales down, re-sales up and final GDP number in
    Uptrend still alive but...
    Elliott Wave SPX Perspective

    Quote of the week
    'Stocks are the worst inflation hedge ever invented.' - John Brynjolfson, CIO Armored Wolf in a Bloomberg interview this week.

    Stocks stuck in a trading range...
    Stocks ended basically flat on the week with some sectors higher, and some lower as the consolidation continued. On a daily basis, stocks are now oversold which is positive short-term but remain overbought on a weekly basis.

    But are investors who are betting on higher prices being overly optimistic? As we said last week, the fundamentals and especially earnings are weak but both generally lag in a recovery. But at some point, both need to show steady improvement if a recovery is to grow legs....
  • Rally on hold...

    In This Issue:

    Rally on hold...
    Leaders not heading higher
    'Earnings-less' recovery continues
    Builder optimism stutters, starts surge and Treasury sales fall
    Wall of Worry climb takes a break or...?
    Elliott Wave SPX Perspective


    Quote of the week
    - Randy Johnson, president Independence Mortgage Co., California.

    Rally on hold...
    Stocks took a break this week and volumes were noticeably lower as many traders began their summer vacations. But investors remain bullish and continue to ignore or at least discount bad news for the most part and that alone speaks volumes about this market....
  • Rally off and running again...

    In This Issue:

    Rally off and running again...
    Leaders on hold
    Earnings still in the tank
    Home prices still falling but sales off the lows
    Next weekly newsletter June 14...

    Quote of the week
    "There's consternation in the stock market. If we see a pick-up in long-term yields, an economic recovery will be much more difficult. That concern could be enough to halt the recent stock rally."
    - Russ Koesterich Barclays Global Investors, San Francisco

    Rally off and running again...
    Stocks rallied strongly on Tuesday following the Memorial Day holiday based on a strong showing in the Conference Board's consumer confidence indicator which is interesting - we have found this metric to be of little trading value. However, investors chose to ignore the most recent Case-Shiller home price index that showed home prices continue falling at an accelerating rate....
  • Consolidation continues

    In This Issue:

    Rally on hold...
    Leaders move up
    Earnings still weakening
    Builders get more optimistic but no support from data
    Elliott Wave SPX Perspective


    Quote of the week
    "I used to take $300 for the week -- that was walking- around money. Now I take $100 for the week. Forget about ordering sushi for lunch." Former Bear Stearns trader Guy Irace.

    Rally on hold...
    Now ten-weeks old, the rally spent a second consecutive week consolidating, with the standout exception of the emerging market ETF which moved more than 5% higher. Up more than 30% from its March 6 low, the S&P500 index is still 4% above its 50-day moving average....
  • Leaders languish...

    In This Issue:

    Rally backs off...
    Leaders languish
    Earnings continue to weaken
    Trade deficit rises, Treasury sales inch higher
    Market Yin and Yang
    Elliott Wave SPX Perspective


    Quote of the week
    "Even though economics is a very old subject, it has not truly come to grips with the main difficulty, which is the inordinate practical importance of a few extreme events." Benoit Mandelbrot (1983)

    Rally backs off...
    After nine weeks of gains, the rally finally came to an end this week with all-red across the board for the major indexes. Up 36% from its March 6 low last week, the S&P500 gave back 5% this week but the index is still nearly 6% above its 50-day moving average. And as we see below, earnings continue to decline...

    ...
  • Standing In Front Of A Train

    In This Issue:

    Rally blasts up...
    Leaders fall behind...
    An earnings-deficient recovery?
    Construction spending, ISM and jobs improve
    Last hurrah, then seven lean years?
    Elliott Wave SPX Perspective

    Quote of the week
    "In the U.S., the total market value of housing, commercial real estate, and stocks was about $50 trillion at the peak and fell below $30 trillion at the low.  The original $50 trillion of perceived wealth supported $25 trillion of debt.  This loss of $20-$23 trillion of perceived wealth in the U.S. alone is still enough to deliver a life-changing shock for hundreds of millions of people." 
    - Jeremy Grantham in the GMO Quarterly Newsletter May 2009

    Rally blasts up...
    This rally re-ignited to finish its ninth week of gains pushing the S&P500 up 36% from its March 6 low. More interesting perhaps is the fact that the SPX is showing its first gains for 2009. And stocks are even more overbought than there were last week....
  • Rally takes a breather?

    In This Issue

    Rally takes a breather?
    Leaders bounce back again...
    Earnings forecasts show signs of hope
    Existing and new home sales fall
    Waiting for Case-Shiller
    Treasury demand surges as spending soars


    Quote of the week
    'Tax receipts are just collapsing. [The need to sell more debt] is a big issue in the Treasury market and it is ongoing. The surging budget deficit is the primary cause.' Head Stamford UBS Securities interest-rate strategist Chris Ahrens.

    Rally takes a break?
    It has now been seven weeks since this rally began and this week stocks took a break. Since hitting its low in the first week of March, the S&P500 is up nearly 28%. Last week we mentioned that the S&P500 index was 9.6% above its 50-DMA and that is about where it stayed this week (9.5%) so stocks remain overbought. But indexes are also still banging up against key resistance areas that taken together with how overbought stocks are across the board, increases the chances for a correction. And now this rally is losing momentum. If prices hold up it will show that investor demand and interest in stocks is increasing despite the technicals pointing to a drop. But that must be considered a long shot....
  • Rally now six weeks young...

    In This Issue:

    Rally six weeks old...
    Leaders down... no there back up again...
    Earnings, still not real signs of improvement
    Treasury sales still falling, so are housing permits and starts


    Quote of the week
    "Anyone who is doing anything sensible right now is either losing money or is out of the market entirely," Quant trader "who is seeing something scary in the capital markets" in article by Tyler Durham.

    Rally now six weeks young...
    This rally marked its sixth-week birthday this week. Since hitting its low in the first week of March, the S&P500 is up 28% with Financials leading the pack. But that being said, this and most other major indexes are getting really stretched (overbought) and 89% of the stocks in the SPX index are above their 50-day moving averages (DMA), which is the highest level since mid-2006 according to Bespoke. Last week we mentioned that the index was 8% above its 50-DMA and that extended to 9.6% this week. Another challenge that faces stocks this week is that major indexes are getting close to bumping up against key resistance areas that taken together with how overbought stocks are across the board, increases the chances for a correction....
  • Fifth up week in a row

    In This Issue:

    Rally five weeks old...
    Leaders jump out
    Falling consumer spending in the spotlight
    Still in sell mode but...

    Quote of the week
    "When we look at the systematic financial system we're in, and it affects every country in the world including Canada, I think staying bearish is the route to go," Economist Nouriel Roubini.

    Rally finishes fifth week...
    Stocks finished their fifth consecutive week of gains. Given the weak performances Monday and Tuesday with the S&P500 dropping more than 3%, Thursday's strong close with a gain of nearly 4% was a pleasant surprise for the bulls for a number of reasons. It came on the last trading day of a holiday shortened week and a strong close on the last trading day is a bullish sign. It means that investors are confident enough to hold over the weekend and a long one at that. However, weekly volume was below average and that should be a concern....
  • Longest running streak of weekly gains in eighteen months

    In This Issue:

    Rally still going...
    Leaders lagging
    The new earnings season kicks off
    Case-Shiller index implies worst home price declines may be over
    Economic metrics also leveling
    We're still in sell mode

    Quote of the week
    'Investors are still heavily in cash and the challenge they are facing is how to scale back into growth-oriented investments. For that reason, technology leadership is not surprising given many are flush with cash and little debt,' - David Kreinces, a portfolio manager with ETF Portfolio Management.

    Rally still going...
    It was another good week for the bulls. As Dan explained this week from his Miami home, there is a lot of cash on the sidelines looking to get into the market. Despite the fact that we are still bear market, cash doesn't do much good if it isn't working which is why this rally has been so explosive But the fact that pundits like Jim Cramer are so confident that a new bull market has begun is a bearish omen. At true market bottoms, the majority including the Jim Cramers of the world, have given up, and this is most certainly not the case now.

    ...
  • Rally Continues Its March

    In This Issue:

    Rally just keeps on going...
    Leaders fall behind
    Earnings - Getting worse but not as fast...
    Home sales pick up at the expense of prices
    We're still in sell mode

    Quote of the week 'The main issue right now is that there's just a lot of [Treasury] supply out there. The Treasury is selling a lot more than the Fed is buying.' - Futures trader Arthur Bass. Demand from domestic and foreign institutions for the $34 billion five-year Treasury note auction was 30% this week, compared to 48.9% from the previous auction in February and an average of 30.1% for the last 10 auctions.

    Rally marches on...
    It was another good week for stocks driven higher by expectations that toxic bank assets would be finally removed from bank balance sheets by the taxpayer. Before Friday's 148-point drop, the Dow Industrials had gained an impressive 21% in just thirteen trading days.

    Stocks were further helped by some short-term good news in existing and new home markets which is really not good news at all. The difference is that investors are now interpreting bad news by buying more stocks and that is a good sign as it shows sentiment is becoming more bullish....
  • After two weeks up what will happen this week?

    In This Issue:

    Rally just keeps on going...
    Leaders fall behind
    Earnings - Yup, still getting worse
    Net Treasury capital outflow hits a record
    Builder's sentiment bearish despite blip in starts
    We're still in sell mode
    Elliott Wave says rally will keep going

    Quote of the week
    "Everyone is saying that we're going to go back and test the lows, but you know, the market doesn't usually reward the consensus view." - Craig Hodges, portfolio manager for Hodges Capital Management.

    Rally just keeps on going...
    It was certainly a week of news driven markets. First there was dancing on Wall Street when news was released Tuesday that housing starts jumped 22% causing the market to rally nearly 180 points. Clearly investors had no intention of looking this gift horse in the mouth. Maybe it had something to do with the luck of the Irish and all that green beer being poured in pubs in New York...

    ...
  • Does this bounce have legs?

    IN THIS ISSUE:

    Reversal gains traction
    Leaders soar with the pack
    Earnings - Still getting worse
    Scant economic news, a good thing...
    But is this rally running on empty?

    Quote of the week
    "Few doubt the importance of consumer spending on the U.S. economy and its multiplier effect on the global economy, but what is underappreciated is the role of credit-card availability in that spending," - Meredith Whitney in the Wall Street Journal article this week entitled Credit cards are the next credit crunch.

    Reversal gains traction...
    After four weeks in a row of losses across the board, stocks made gains and impressive ones at that with the major indexes (except the Dow) making double-digit gains. But there are signs that this brief albeit powerful bear market rally may already be on its last legs.

    ...
  • Catching a Falling Safe

    IN THIS ISSUE:

    Stocks fall, a reversal afoot?
    Leaders fall with the pack
    Earnings - Any one have a tourniquet?
    Bad economic news but good market action?
    Looking forward

    Quote of the week
    "All the major [US] banks are basically insolvent at this point. Until that changes and until credit gets flowing again, it's hard to see how we have any real recovery." - David P. Prokupek, chief executive of the Denver portfolio manager Geronimo Partners in Bloomberg article Thursday.

    Stocks sink again but is there a reversal afoot?
    Stocks sank for the fourth consecutive week of across the board losses for the major indexes but an interesting thing happened in the last hour of trading. At 3:26PM Friday New York time, the Dow Industrial declines stopped almost on a dime and the index...

    ...

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