MoneyTec 2.0 - Online Forex Traders & Brokers Social Networking Community » Trading Talk » Fundamental Trading

[Broco]

2009 March 16

The market moves upwards

On Friday, March 13, the stock market increased, having demonstrated a long-expected power one day after NYSE indices indicated the finish of decrease. Nasdaq index grew for 0.4 %. Shares of Dow industry index, S&P 500 and NYSE indices increased as much as 0.8 %. Nasdaq volume fell for 17% and NYSE volume decreased to 11 % in comparison with Thursday levels. Thursday was the day when the market correction finished. It seemed that shares were going to relieve from the part of profit on Friday. But the market consolidated. Session growth reflected growth of major indices 4 days running, and in two cases there was a significant increase. During a week Nasdaq had grown as much as 10.6 %. S&P 500 increased for 10.7 %, NYSE - for 10.2 %, and Dow industry index - for as much as 9 %. As you know, the stock market had been decreasing during many months with a number of weeks of huge losses and a few weeks of a significant growth.
Though under these market conditions weekly growth for even more than 10% for the most part of major indices is significant.

The last time the market weekly increase for 10% and more indicated the beginning of the market upwards trend, though this rising movement lasted for a short time. Now the question is – how long the current rising attempt will last for?

Within last months the market promised to stop falling several times, but every time these attempts turned to be unlucky. Leading shares tried to match intense movement of the market, but IBD 100 index fell behind the growth of major indices. IBD 100 index rose approximately for 4.6 %. We note that the best shares slowly start consolidating.

Top banks had been the dominating subject for the financial news during a week. Citigroup claimed it will not need government support anymore, and the company will remain to be private. When the bank reported its profit for the first two months of 2009 year, it heavily conduced to the market’s three days’ rally. Following to CITI group, JPMorgan (JPM) and the Bank of America (ВАС) reported about the same intentions that week. In the week 7 – 13 March ETF SPDR’s financial funds grew for 33 %, though it remains for 70% lower than its 52 week’s minimum point. ETF decreased and showed its minimum point the last week.

Market conditions:

Though shares’ growth is slight, we observe completion of the market’s decrease. It means the profound shift was made – withdrawing purchasing prohibition will start funding portfolios. At the same time careful investors may wait for the first deep market correction. As a rule, the first correction turns to be significant and entry options can become rather more attractive.

[Geofforex]

Nice analysis? Do you do this every week?

[Broco]

Thank you, here is the continuation:

On Friday stocks went down and closed the third week of growth

Review of the USA market from March 30
Stock market closed Friday with significant losses, unpromising economic data and tough comments from the major bank officers of the state. NASDAQ and NYSE indices decreased for 2.6 %, S&P - for 2 % and Dow - 1.9 %. Falling stocks overplayed growing stocks in approximate relation 3 against 1. The volume of two major exchanges dropped. But there was no collapse for the best market stocks, and just a few decreased significantly. After having the meeting with Obama a number of CEO managing problematic financial institutions announced moderate forecasts for the March results after two strong months. Normally day loss in the rate of 2% or 2.6% would be too much. But the market is still volatile. Friday decline is not considerable against the day chart. Friday losses could not prevent major indices to register profit within the third week in succession. The week gave Dow index 6.8 % of increase, S&P 500 +6.2 %, Nasdaq +6 % and +5.5% for NYSE index.

The market performed in a positive manner the last week. The volume dropped when prices were falling and the volume grew when the market grew. There were no days of distribution. The market closed after reaching its maximum twice – on Monday and Thursday.

The market gained more than 10% of increase against the session of March 16 – the first distribution day starting from March 12 when correction finished. Some concerns were caused by a too slight grow of IBD 100 index – just 4.4 % within the week – being behind expanding indices. Itcontinuedthetendencyofcurrentrally. Finally, themarketrallywillrequireleaders.

The index of Emergency Medical Services (EMS), declined for 6 %.

Volume of trades increased against the average value significantly but fell by the end of Friday.

The index of Monro Muffler Brake (MNRO) dropped for 7 % in active trading. Stocks of tires shops and services ended 3 weeks growth.


According to economic news, consumers’ revenues decreased for 0.2 % - a little worse than it was expected. Private expenses increased for 0.2 %, after 1% of January increase. РСЕ (personal consumption expenditure deflator), the favorite indicator of the FR for inflation, grew for 1 % in February – more than it was expected. РСЕ core increased for 1.8 % in February exceeding the forecast. Reuters/University of MichiganConsumer Sentiment Index gained 57.3 for March. In February it was 56.3. It is little better than expected but near the worst value of the last 30 years.

[Broco]

On Friday stocks demonstrated a reversal from going down to increasing and transformed morning losses into the growth by the end of the day. Eventually NASDAQ increased for 1.2 %. 1% of growth was granted to NYSE Composite and S&P 500 indices, 0.5% - to Dow industry index. In comparison with Thursday level, NASDAQ and NYSE volume fell down for 23 % and 21 % respectively. Friday provided one more proof of the stock market’s strength. Increased number of purchases started prior to closing promoted major indices to the top of their daily range.

The week increase of NASDAQ was 5 %, of NYSE – 4.4 %, S&P 500 - 3.3 %, and +3.1 % to Dow. S&P 600 index for small-cap companies had shot up for 6.8 %. It was the fourth consecutive week of growth for major indices. In the case of NASDAQ we see the fourth consecutive week of prominent growth. Technological index grew more than for 25% in this period being ahead of NYSE indices. The flow of positive or “better than expected” economic data conduced to a new upward trend of the stock market. Two reports of Friday morning seemed to threaten this tendency. In March employment market lost 663 000 workplaces, unemployment rate reached 8.5% and is expected to grow further.

Unemployment rate went up to its maximum for 25 years, as Department of Labor reports. Analysts forecast that within four or five months we’ll see over 500 thousand of losses of workplaces. Unemployment rate is believed to reach its maximum - 9.5 % - in October, whereas more pessimistic forecast reports about 10% next year. 1 year before a more extended rate, including both part-time and full-time employees, grew from 9.1% to 15.6%. Department of Labor revised January report about workplaces with 86 000 growth.

Institute of Supply Management Index – indicator of economic activity in services sector – went down to 40.8. A slight growth was expected. For the first hour of trades this data declined the market. ResearchinMotion (RIMM) wasleadingintechsshares. On the late Thursday BlackBerry manufacturer reported about quarter profit which exceeded estimations.

RIMM increased for as much as 21 % and was the most traded stock on NASDAQ. In the meantime reserves started decline. On the contrary, golden shares such as Randgold Resources (GOLD) and Royal Gold (RGLD) sharply declined within the last days.
Still there are a few opportunities for purchasing shares, because just a few shares formed correct basis and strong start for prices. IBD 100 demonstrated poor 0.2% of growth on Friday and just 1% within a week. Gilead Sciences (GILD) was ahead with 2.28% of increase up to 46.98 in active trading. Medicine manufacturer grew after the positive results of the last stage of clinical testing of the pressure control appliance were reported. Allegiant Travel (ALGT) declined heavily for 3.68 down to 45.42. Airline service operator reported about the pop as of 15.8 % in the year traffic. The level of return of 10-year’s Treasuries increased for 2.90 % from 2.75 % on the market of state obligations on Thursday’s closing.

[Broco]

On Thursday stock market finished shortened week by significant increase due to the optimistic forecast by Wells Fargo (WFC). NASDAQ and NYSE indices both grew for 3.9 %; S&P 500 went up with a leap for 3.8 %, and Dow index added 3.1 %. The growth flashed around the market, only four groups from 197 IBD sectors fell down. On the NYSE market the relation between advanced and declined stocks was as of 15 against 2 – due to the plenty of bank stocks and for NASDAQ this relation was as of 5 against 2. The volume of two major stocks grew; here NYSE was leading. It can be explained by huge trading volumes with Wells Fargo and Bank of America (BAC) stocks as well as with other stocks of financial sector. The mere volume of trading with BofA stocks amounted to more than 1 billion of stocks presenting solely the largest volume increase on the NYSE market. Wells Fargo surprised Wall Street having reported about preliminary profit as of 55 cents per share for the first Quarter.

Rise of bank shares was caused by the reaction after their profound recession. Friday increase reversed the week from decline into growth. The volume decreased but it might happen because of the shortened week.
The most positive news is that now major indices have 5 week’s raising history. The lowest indices for many years were supported by the gradually growing market at last. NASDAQ grew for 31 % against its minimum on March, 9th. NYSE grew for 29 % against its minimum on March, 6th; S&P 500 added 28 %, and Dow - 25 %.
Here is one more sign of that economy is getting better: Retails stocks are returning as leading. Aeropostale (ARO) clothing store chain increased for 12 %. In March its comparable sales were beneath the forecast, but the company expects to earn 35 cents per share in the first quarter, much more than the forecast gives. Besides, Buckle (BKE) stocks grew for 10 %. Jos. A. Bank Clothiers (JOSB) increased for 5 % on Thursday and for 20 % on Wednesday.

[Broco]

The week closed with a slight increase, IBD 100 оutrode the market
Review of the US market by May 4

On Friday the week closed with a moderate increase, low-volume stocks slightly grew.

On Friday NYSE was leading and marked 1% of increase which happened due to the rise of oil and gas stocks. Dow and S&P 500 added 0.5 %; Nasdaq closed almost without changes - 0.1 %.

NYSE volume decreased for 25 % and Nasdaq - for 23 %.

The US market had a few of incentives for movement because the most part of major international exchanges were closed for 1 May holiday.
The growth of University of Michigan consumer confidence index and a number of stabilization signs in industry served as new indications for market proving that the economy started consolidating.

The same factors seem to influence rise of oil prices which grew for 2.08$ up to 53.20$ per barrel. This 5-week’s peak point in oil prices caused growing of power-generating sector.

Oil-related sectors were among leaders of the day. But essentially there is no one shares pretending to be the market leader. Many of them are just recovering after huge losses of recent months.

In general, leaders achieved good results.

Chinese company Longtop Financial (LFT), software engineer for business purposes, added 2.54 and reached 26.20. The share broke through the key level 26.09 which is the entry point after bounce from 10 week’s moving average.

VistaPrint (VPRT), online supplier of services and products, grew for 2.91 up to 37.26 in large volumes. The company reported on late Thursday and its forecast for year left analysts’ expectations behind.

Beacon Roofing Supply (BECN) increased sharply for 1.21 up to 17.11, also in active trading, broke through 15.15 level – purchase point.

But the member of IBD 100, Buffalo Wild Wings (BWLD), fell for 2.22 down to 36.82. This is their third decrease in succession in large volume.

The upward market trend is still safe. Nasdaq registered its 8th rising week in succession though for modest 1.5 %.

Other major market indices demonstrated the dynamics similar to its behavior within 7 recent weeks.

The last week Nasdaq became the first market index among growing indices which broke 200-days’ moving average.

Two months of rapid growth can give a respite to May.

IBD 100, the index of the best market shares, increased for 2.8 % within the week. It is a positive consolidation after the period of underrun from other indices.

As a rule the best shares of rise won in bull rally.

Though anomalous rally has its historical precedents. Our research of post-crisis bull rally of 1932, 1938, 1975 and 2002 year show that the best leaders in these rallies appeared after the general market growth had begun.

My opinion remains the same: the market growth within the last two months significantly lost contact with actual economy which is still down. Before the growth continues at least one week of decline is required.

[pinalli]

EUR
The Euro had another down day on Wednesday one day before the European Central Bank is set to announce the results of their May meeting in which an expected 25 basis point interest rate cut and possible aggressive stimulus actions will be revealed. Also weighing in on the Euro’s poor performance Wednesday was the rating agency, Standard and Poors announcing that it had cut the credit ratings on five German banks.
At 11:00PM GMT, the Euro was trading down .6% to the Japanese Yen to 130.96, down .3% to the British Pound to .8806, down .73% to the Canadian Dollar to 1.5551, down .84% to the Australian Dollar to 1.78 and down .02% to the Swiss Franc to 1.5086.
YEN
The Yen picked up steam on Wednesday as safe-haven flows returned to the Japanese currency after several sessions of lower trading. With the US Stress Test results due out later today, the Yen benefitted from the unease investors have with the Dollar and the overall US Economy.
At 11:10PM GMT, the Japanese Yen was trading up .52% to the US Dollar to 98.25, up .5% to the Swiss Franc to 86.82, down .1% to the Australian Dollar to 73.56 after a day of being up sharply and up .25% to the British Pound to 148.66.
USD
While there have been some signs that the US economic outlook is improving, there is also increased anxiety about what is considered to be “unknowns” in the economy such as the banking sector, the auto sector and the housing sector. In addition to the stress test results, a key unemployment report is due out on Friday as well as a revised housing report for April.
At 11:20PM GMT, the Dollar was trading down .02% to the Euro to 1.3326, down .27% to the Sterling to 1.5124, down .73% to the Canadian Dollar to 1.1664, down .85% to the Australian Dollar to .7485 and down .7% to the New Zealand Dollar to .5844.
Chart: USD/JPY
USD/JPY survived an attempted sell-off back below the 200-day moving average after the better than expected ADP number, but the way it has flip-flopped back and forth through this and other key moving averages suggests a very confused market - note also how all of the major MA's are converging here, further muddling the situation. It looks like we need a sell-off through 96.00 or a rally above 100.00 again to get better directional interest. If bond yields continue to edge higher, the side of least resistance will likely be higher.