The Waiting Game
Where We Are
We’re on the lookout for a Follow Through Day this week, where at least a 1.7% rally on one of the major indexes in a day, with volume greater than the day before, would tell us institutions are stepping up.
Without the heavy buyers, we’re unlikely to change the Sell Bias we’ve held for more than a month now.
The broader market’s heightened volatility around key technical support areas for the last three weeks has been tough for Bulls and Bears alike.
Trading ranges can be hell on the speculator. Where bulls can say a bottom is being hammered in, bears argue nothing has been able to inspire the major averages to hold convincingly above their 40-week moving averages.
We chose not to think so much in times like these. Eventually the market will find its traction one way or another. That’s when we’ll do our job of weighing out the evidence to gauge the sustainability for either direction.
As the majority of sectors wrestle with their 40-week averages, it’s too early to tell which way the tug of war will win out. Often these averages serve as technical support areas, where at a minimum, we might expect a more substantial bounce than what we’ve had so far.
Last week’s broad-based gain was mostly due to Thursday’s rally, with two of the hardest hit sectors, Energy and Materials leading the charge.
For any enduring rally to occur, we’d like to see sectors like Retail, Semiconductors and Financial to take charge.
Major Index Price Action
Major Index Volume Action
Primary Indexes – ETFs
Sectors – ETFs
News To Watch This Week
Monday June 14 :
- Earnings : Chindex ( CHDX ), Korn/Ferry ( KFY ), La-Z-Boy ( LZB ), MDS Inc ( MDZ )
- Economic: None
Tuesday June 15 :
- Earnings : Best Buy ( BBY ), Casey’s General ( CASY ), FactSet ( FDS )
- Economic: Export Prices ex-ag, Import Prices ex-oil, Empire Manufacturing Survey, Net Long-Term TIC Flows
Wednesday, June 16 :
- Earnings: American Apparel ( APP ), Canadian Solar ( CSIQ ), FedEx ( FDX)
- Economic: Housing Starts, Building Permits, PPI, Core PPI, Capacity Utilization , Industrial Production , Crude Inventories
Thursday, June 17 :
- Earnings: Actuant ( ATU ), J.M. Smucker ( SJM ), Kroger ( KR ), Pier 1 Imports ( PIR )
- Economic: Initial Claims, Continuing Claims, CPI, Core CPI, Current Account Balance , Leading Indicators, Philadelphia Fed
Friday, June 18 :
- Earnings: None
The Word On The Street
- I am preparing for Flash Crash 2…sadly the excuses used to play down Flash Crash 1 have been exposed as bogus, so I wonder what the next set of excuses are – its been a while since we used the old ‘rogue trader’ excuse so my money is on that horse. Bob Janjuah, Chief Credit Strategist at RBS
- “We have just entered Act II” of the crisis as Europe’s fiscal woes worsen and governments are pressured to curb budget deficits that may push the global economy back into recession, according to George Soros via Bloomberg.
- What differentiates this correction and the one we saw in February is that the leading indicators are unwinding this time around. That should leave us sceptical that any rally will persist for long. Albert Edwards, Soc Gen strategist
- The odds of a double-dip recession remain very low for 2010 and we would need to see a “persistent” decline in the ECRI’s Leading Indicators Index to be convinced that the risks of a double dip are here. Despite this, a slow-down is a near guarantee and that profits have likely already peaked for this cycle, according to Lakshman Achuthan, ECRI Managing Director
This Week’s Word On Discipline
“In the last analysis, our only freedom is the freedom to discipline ourselves.” –Bernard Baruch
This Market Report is our broad analysis that is the foundation for our Growth Stock Report that highlights opportunities in individual stocks.