Market Talk April 2009

[Uptrend]

Time to load up on FAZ Pet the bear!

BTW I am starting to keep a logbook of sorts of trades, and the conditions of what went wrong and what went right. For example when I start to realize a profit on a trade, but have not sold, I tend to try and convince myself that it is time to book profits, and sell early, but usually could have let the position run further. Is that the fear of failure or the fear of success?

[etftalk]

Good idea on the logbook.

Gary Smith (not Gary B. Smith on Fox), who wrote the book, How I Trade for a Living, said his trades that he let run were the reason for his success.

It's a pretty good book. A litttle out dated but he talks about how he went from years of losing, into being a successful trader.

[XL-entLady]

"
What's wrong with this picture?
Below is a chart showing the level of daily New Highs on the New York Stock Exchange. Below that chart is the S&P 500's chart.
Here are your questions today ...
1. Look at the level of New Highs going back to April of 2008. Compare that to the action the S&P 500.
Question: What is wrong with this picture?
2. Now look at the S&P 500's chart. Note the price action from November 2008 to yesterday.
Question: What is now happening for the third time?
Question: What was significant about yesterday's close and what does that mean?

** Feel free to share this page with others by using the "Send this Page to a Friend" link below.

Answers to the above Questions ...
1. Look at the level of New Highs going back to April of 2008. Compare that to the action the S&P 500.
Question: What is wrong with this picture?
Answer: The yearly New Highs are still at depressed levels ... levels that are associated with Bear Markets or corrections. Historically, for a Bull Market or a strong underlying rally condition a minimum of 100 is an important level ... at 50+, conditions are starting to percolate. To have only 3 out of thousands of stocks reach a New High yesterday is a very poor condition.
2. Now look at the S&P 500's chart. Note the price action from November 2008 to yesterday.

Question: What is now happening for the third time?
Answer: The S&P has hit its resistance line for the 3rd. time.
Question: What was significant about yesterday's close and what does that mean?
Answer: The S&P closed slightly above the resistance line on Monday, and then fell below it yesterday. It means that the S&P is "NOW testing a critical 5 month resistance level". The S&P 500 needs to move past this resistance level in order to keep the market moving higher. A downside failure would result in a pull back."

http://stocktiming.com/Wednesday-DailyMarketUpdate.htm

Lady

[JTH]

What's wrong with this picture?

"You're traveling through another dimension -- a dimension not only of sight and sound but of mind. A journey into a wondrous land whose boundaries are that of imagination. That's a signpost up ahead: your next stop:"


599

[XL-entLady]

"You're traveling through another dimension -- a dimension not only of sight and sound but of mind. A journey into a wondrous land whose boundaries are that of imagination. That's a signpost up ahead: your next stop:"


599

But you could be right ....

[XL-entLady]

Sunday, April 19, 2009

Comparing the Technical Strength of Sectors


At a reader's suggestion, I have compiled the last five week's data on Technical Strength for eight S&P 500 sectors and displayed them above. This gives us a quick visual look at which sectors are strongest and weakest and which are gaining and losing strength.

Technical Strength is the name that I gave to a proprietary indicator that measures short-term trending behavior. Basically, a stock, sector, or index can be said to be trending if it has a high ratio of directional movement to total movement. The Strength readings for each sector vary from +500 (strong uptrend) to -500 (strong downtrend). Readings between -100 and +100 suggest no significant trending.

Each morning before the market open, I post to Twitter the Technical Strength status of the 40 stocks in my basket (five of the most highly weighted issues in each of the above eight sectors). This is a great way of staying on top of the market's day-to-day shifts in trending behavior.

Notice that almost all of the bars are above zero. Right away that tells you that we've been in an intermediate-term uptrend. That might seem obvious, but you'd be surprised how many people have been emailing me for the last several weeks, telling me that the rally is phony, that it's about to turn, that it's not grounded in fundamentals, etc. Perhaps that will prove to be worthwhile investment advice. It is worse than worthless as trading guidance.

When the great majority of stocks are moving in sync, that's not usually when markets sustain a turnaround. Rather, prior to important reversals, we see rallies peter out, with fewer stocks registering fresh new highs and fewer stocks and sectors sustaining their Technical Strength. Lately, we've seen strength in the Materials sector (note the rising Technical Strength week over week, above) and among the Financial stocks. The Materials shares are reflecting growth themes, especially among emerging economies. The Financial stocks are reflecting growing optimism regarding bank recapitalization. It is difficult to sustain the downside when these themes are dominant.

That having been said, look at the last two column bars for each of the sectors. Some of the sectors gained Technical Strength on the week, others lost a bit. This kind of mixed performance while the overall S&P 500 Index is making new highs suggests that the rising tide is not lifting all ships equally. I am watching this carefully, as such slowing down of strength is what we'd expect to see prior to a market consolidation (See the recent indicator post for further evidence of a slowdown in market strength).

Finally, watch that XLY to XLP ratio; it's a nice indicator of growth interest vs. defensiveness among stock traders. It pulled back last week, as the chart indicates; we also pulled back in XLF, which strongly reflects banking stock interest. Those themes will be front and center as we start next week's trade."

http://www.traderfeed.blogspot.com/

Lady

[XL-entLady]

ETF Rewind - Week 16 (04/17/09)

(Click Image to Enlarge/ Glossary)
http://marketrewind.blogspot.com/

[etftalk]

Interesting turn of events near the close. A reversal (or swing) day. That 825 area looks pretty important for the S&P on Thursday.

[JTH]

UPS didn't seem to get much news today.


http://online.wsj.com/article/BT-CO-...23-716743.html

2nd UPDATE: UPS 1Q Net Dn 56%, Expects 2Q Profit Below Views


By Bob Sechler
Of DOW JONES NEWSWIRES

United Parcel Service Inc. (UPS) said Thursday that an economic recovery in the U.S. and Asia is expected by early 2010, though Europe may take longer to revive.
The world's largest package delivery company by revenue is viewed as a bellwether for global economic activity, and the broad slowdown saw it report a 56% drop in first-quarter earnings and offer disappointing guidance for the three months to June 30.
But despite what Chief Financial Officer Kurt Kuehn said is shaping up as a "challenging" second quarter, he and Chief Executive Scott Davis voiced optimism the U.S. economy "will hit bottom later this year" and then begin a recovery.
They said economies in Asia should recover on the same basic trajectory, although Europe likely will lag, partly because of slower enactment of government stimulus programs.
As for China, Kuehn noted that it remains a relative bright spot amid the global slowdown. UPS' Chinese export volume -- meaning Chinese businesses shipping goods out of the country -- was up 10% to 12% in the first quarter, about the same growth rate as in the fourth quarter.
"Clearly, [China] is not growing at the rate it was [prior to the global downturn], but reports of China's demise are greatly exaggerated," Kuehn said in an interview.
Still, UPS shares were off 2.5%, at $53.37, in recent trading after the company's first-quarter results fell short of Wall Street's consensus expectations and after Kuehn made clear that conditions may well get worse before they start to improve.
The company said average daily U.S. domestic shipping volume will be off 4% to 6% in the second quarter, compared to a 4.3% drop in the first quarter.
"The second quarter will be a bit more challenging than the first," Kuehn said on a post-earnings conference call with analysts.
UPS forecast second-quarter earnings of 45 cents to 55 cents a share. Analysts polled by Thomson Reuters projected 65 cents.
The company reported first-quarter net income of $401 million, or 40 cents a share, down from $906 million, or 87 cents a share, a year earlier.
The results included a writedown related to the retirement of 44 McDonnell-Douglas DC-8 aircraft. The company said it was retiring the entire DC-8 fleet earlier than expected because of overcapacity. Earlier this month, competitor FedEx Corp. (FDX) said it was grounding 14 aircraft for similar reasons.
Excluding items, UPS pegged its first-quarter profit at 52 cents a share, the low end of its February forecast and below Wall Street's target of 56 cents. Revenue fell 14% to $10.94 billion, compared to analysts' consensus expectation of $11.44 billion, according to Thomson Reuters.
Operating margin fell to 6.6% from 11.8%, while consolidated average daily volume -- which includes international shipments -- slid 3.9% and average revenue per package fell 6.9%.
The company said per-package revenue slipped in the quarter because customers opted to reduce package weights to save money, and because of reduced fuel surcharges.
-By Bob Sechler, Dow Jones Newswires; 512-394-0285; bob.sechler@dowjones.com
(Kerry E. Grace contributed to this report)

[JTH]

Gold & Silver plus the markets are up. Who's telling the real story?