Archive for August, 2009|Monthly archive page

Things To Come

GSRTrades Weekly Market Report

 Things To Come

Market Bias
 
Buyer’s Caution

Our market bias is based on a combo of Fundamental and Technical evidence. Economic and earning trends are matched against our analysis of price and volume charts, giving us an inidcation of how friendly the market is for our beloved Breakout Growth Stocks.

This is active trading, not investing. Our holding periods can las a day to months. The idea here is to keep it simple. The goal is to accumulate as many trading profits as possible.

 

Where We Are

One day weighs little in the market’s bigger picture. But it can give a signal of things to come.

Friday’s heavy volume sell-off on the Dow Industrials and S&P 500 came with less than 1% price drops for each index.

Both indexes are just under New Highs for the year.

The fact that both notched in Distribution days, where volume exceeded the previous day, suggests the selling was of institutional grade.

Over the last month, only the S&P 500’s volume pattern has a dominant bearish bias, experiencing four Distribution Days to two Accumulation Days.

But trends have to start somewhere. And it’s usually volume that leads them.

For those unfamiliar with the way we trade, we never want to bet against institutional drift.

Failure for the major indexes to close at highs all week also suggests that the Bull is tired.

We may see some “Window Dressing” on the last day of the month Monday as portfolio managers look to add top stocks to their holdings to look good.

But the market is ripe to rollover before the Labor Day weekend from fear of what the big boys may do when they return thereafter – as they traditionally set new strategies for the remainder of the year.

An Employment Report set for release Friday will also cause some hesitation. This more than any other news release next week, earnings or economic related, has the potential to change the market’s tone.

There’s also further technical evidence of a weakened Bull, though not quite enough to lower our bias from Buyer’s Caution.

The number of top-earning growth stocks, the darlings of the Street with their superior fundamentals, has been lagging in the New High and Breakout categories.

When this pack of leadership begins to slip it often sets a tone for the overall market.

We’ve been watching this set in for a couple weeks now.

Some may see it as more bricks in the “wall of worry” that rallies tend to inspire. Maybe they’re right, maybe they’re not.

We’re only paying attention to the odds, which have told us for weeks that it’s not the time to be adding new growth stocks holdings.

As for the Bull’s progress, a one-year-base breakout in the Biotechnology Index ($BTK) needs to be recognized.

The $BTK hit an all-time high. We alluded to this event happening in last week’s commentary.

New Highs for the year were also notched in for Consumer Staples, Technology, Semiconductors, Telecoms, Banks, Broker Dealers, Healthcare, Drugs, Homebuilders, Transportation and Defense.

 

Technically Speaking

 

MAJOR INDEX PERFORMANCE
BIAS
Index
Change
Wk. %
Action
+
DJIA
+38.24
+0.40%
New High for year
+

Nasdaq
+7.87
+0.39%
New High for year
+

S&P 500
+21.38
+0.27%
New High for year
+

Russell 2K
-1.65
-0.28%
New High for year

or = Above or Below 40-week exponential moving average. + = 50-day MA above 200-day MA

 

FOUR-WEEK VOLUME INDICATORS
   
Accumulation
Distribution
BIAS
Index
Major
Minor
Major
Minor

DJIA
3
2 4 1

Nasdaq
5
2 2 1

S&P 500
2 2
4
1
Russ. 2K
4 1 4 0
Accumulation = index up with more volume than previous day’s. Distribution = index down with more volume than previous day’s.

 

SECTOR PERFORMANCE
BIAS Sector Wk. % Action

U.S. Dollar -$DXC
+0.32% Consolidates below 50-day MA
+

Gold & Silver Miners -$XAU
+2.12% Holds above 50-day MA
+

Consumers -$CMR +1.88% New High for year
+

Cyclicals -$CYC -0.31% Shy of New High for year
+

Technology-$DJUSTC
+0.80% New High for year
+

Semiconductors -$SOX +3.28% New High for year
+

Software -$GSO -0.36% Shy of New High for year
+

Telecoms -$XTC -0.71% New High for year
+

Banks-$BKX +0.85% New High for year
+

Broker Dealers -$XBD +2.10% New High for year
+

Retail -$RLX +1.09% Shy of New High for year
+

Healthcare -$HCX -0.23% New High for year
+

Biotechnology -$BKX +4.77% New High for year
+

Pharmaceutical – $DRG -0.31% New High for year
+

REITs -$DJR
+2.72% Shy of New High for year
+

Homebuilders -$DJUSHB +4.32% New High for year
+

Transportation -$TRAN -1.18% New High for year
+

Airlines -$XAL
+2.77% New High for year
+

Defense -$DFX -0.01% New High for year
+

Energy Index -$IXE -0.62% Consolidates above 50-day MA

or = Above or Below 40-week exponential moving average. + = 50-day MA above 200-day MA.

 

Potential Market Movers This Week

Earnings releases:

  • MONDAY: China Mass Media Corp (CMM), SINA Corporation (SINA)
  • TUESDAY: America’s Car-Mart, Inc. (CMRT), PLATO Learning (PLATO)
  • WEDNESDAY: Hovnanian Enterprises, Inc. (HOV), Joy Global Inc. (JOYG), Zale Corporation (ZLC)
  • THURSDAY: Ciena Corporation (CIEN), Del Monte Foods (DLM), Quiksilver (ZQK)
  • FRIDAY: H&R Block, Inc. (HRB)

Economic data:

  • MONDAY: none
  • TUESDAY: Construction Expenditure, Pending Home Sales Index (NAR), Car Sales, ISM Mfg. Report on Business, ICSC/GS Weekly Chain Store Sales Snapshot
  • WEDNESDAY: Factory Order, ADP National Employment Repor, Job Cuts, Minutes of Aug. 11-12 FOMC Meetin, Productivity and Costs
  • THURSDAY: Chain Store Sales, ISM Non-Mfg. Report on Business
  • FRIDAY: Employment Repor, ECRI Future Inflation Gauge, ECRI Weekly Leading Index  

 

This Week’s Work On Discipline

“The discipline of desire is the background of character.” — John Locke

This Market Report is our broad analysis that is the foundation for our Growth Stock Report, which highlights trading opportunities in individual stocks.

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