Here is Wednesday’s summary of events impacting the market direction. Although, I did not publish this prior to Friday’s trading session, there are enough observations made in the report that still render it useful for analysis of the future market direction. Now, let us get back into the swing of things…
Economic data and news events were somewhat mixed, but slightly favored the bulls. It could be said that the market appears to be wrestling with another one of its inflection points over the shortened Thanksgiving holiday trading week. Neither bullish nor bearish news events have provided sufficient catalysts to push equities above or below short-term support and resistance levels and this translates into consolidation and indecision.
Typically, when identifying bullish or bearish events, I look for sustainable catalysts, instead of one-time or short-term events, with the potential to create positive and negative ripple effects within an industry, asset class, or regional or global economy. One pattern that I am observing in reading the daily volumes of news and reports is that many of the bullish catalysts appear to be cyclical in nature in comparison to bearish concerns which tend to be more secularly oriented. Of course, none of these qualitative fundamentals has been officially quantified, but when one consistently studies a subject like the markets on a full-time basis, patterns will emerge.
Wednesday’s modestly positive trading session can be attributed to further dollar weakness related to reports of India’s central bank attempting to purchase another 200 tons of IMF gold. As implied in an earlier report, this carry-trade is looking a little tired.
Furthermore, price-volume analysis indicates that such "price up and volume down" days are being used for distribution, i.e. selling into market strength. For how much longer this can persist is almost anyone’s guess.
The trends for stocks remain up, but the rate of change in their momentum is decelerating. Due to the abnormal trading week, the weight assigned to some of these observations could be discounted. However, should this pattern persist when regular trading resumes next week, some caution should be exercised.
Price Volume Analysis (PVA) for Hillbent 3000: N/A. Significantly lower volume on the pre-Thanksgiving holiday trading session does not allow for an objective study of price and volume trading patterns. The recording of PVA information shall resume with next week’s regular full trading schedule.
- PUVU: price up & volume up (most bullish) @ n/a
- PUVD: price up & volume down (indicative of distribution and selling into strength) @ n/a
- PDVU: price down & volume up (contrarian bullish signal for capitulation and transfer of stocks from weaker hands) @ n/a
- PDVD: price down and volume down (most bearish based upon lack of buyers to establish support) @ n/a
(*Note that the Hillbent 3000 screens the top 3000 market capitalization stocks with a minimum average daily volume of 100,000 shares and also includes ADRs that fall within these parameters. This group represents at minimum @ 95%+ of the aggregate market capitalization of more than 8000 equity issues trading on U.S. exchanges.)
Bullish Events
- Economic Data:
- MBA Purchase Applications Index rose 9.6% for the week of Nov-20-2009 as 30 year fixed rate loans averaged 4.82%. Refinancings declined 9.5% but still comprised 70% of all applications.
- October’s Personal Income met consensus expectations @ +0.2% vs. previous month @ 0.0% and declined -1.0% yr/yr vs. previous month’s -2.8% yr/yr. Personal Consumption Expenditures (PCE) rose 0.7% vs. consensus 0.5% and previous month’s -0.5% and reflected a +0.9% yr/yr improvement vs. previous month’s -0.3%. PCE price inflation met consensus expectations @ +0.2% vs. previous month’s +0.1 and yr/yr increased +1.4% vs. previous months’ +1.3%
- For the week of Nov-21-2009, Initial Jobless Claims improved to -466k vs. consensus expectations @ -495k and previous report @ -505k. The four week moving average also broke below the important psychological barrier @ -500k to -495k for a change of +16.5k. The expiration of employment benefits probably allowed for Continuing Claims to decrease 190k to 5.423mm (Nov-14-2009 data). Workers receiving extended benefits declined 34.6k to 539.5k.
- October’s annualized rate for New Home Sales was up +6.2% to 430k and exceeded consensus expectations @ 410k and previous month @ 402k. Positive results are being attributed to first-time buyer credits which have been extended and expanded. With housing starts being down, the inventory supply situation has vastly improved to 6.7 months vs. previous month’s 7.4 months and last year’s 11.1 months. This is supporting median prices which rose +0.7% m/m to $212.2k and dropped only -0.5% yr/yr. It is reported that the lower end of the market is finding support , although average prices fell 8.3% to 2.61.1k.
- Demand in the Treasury Auctions was quite impressive. A record $32bn in 7-year notes attracted respectable bid to cover ratio of 2.76.
- Earnings:
- Deere (DE) reported 4Q earnings @ $0.023, beating consensus estimates @ $0.20. Revenues were down -29.8% @ $4.73bn vs. $4.44bn. In terms of guidance, the company sees FY2010 sales down -1.0% vs. consensus estimates @ -2.0% and 1Q sales down -10% vs. consensus estimates @ -12%.
- Tiffany (TIF) reported 3Q earnings @ $0.33, beating consensus estimates @ $.024. Revenues were down -2.9% @ $598mm vs. expectations @ $575mm The company issued positive guidance for FY2010 earnings @ $1.88-1.98 vs. consensus @ $1.77.
- Dollar weakness: India may buy IMF’s remaining lot of 200 tons of gold Gold prices higher. Dollar weakness created a bias towards riskier investments and stocks prices were slightly stronger.
- Market Outlook: BNP predicts that European stocks may yield a total return of 12% to 14% next year, as valuations are attractive when adjusted for interest rates, while sales growth will boost earnings.
- Carryover from Europe: FTSE: 5364.8 +40.9 +0.8%, DAX: 5803.0 +33.7 +0.6%, CAC: 3809.2 +24.5 +0.7% :
- Carryover from Asia: Japan up +0.43%, Hong Kong +0.84%, China +2.30%, Taiwan +0.54%, Australia +0.79%, Singapore +0.46%, South Korea +0.33%, India +0.40%
- Japanese Exports Surprise: In a sign of improving global demand for Japanese goods amidst the smallest drop in a year, Japan’s Finance Ministry reported October exports decreased -23.2% yr/yr vs. expectations @ -26.8% yr/yr.
- Australia Outlook: Deputy Governor of the RBA, Ric Battellino, stated that Australia’s economy has entered a "new upswing" that will last for several years and help the nation’s households fund mortgage costs.
Bearish Events
- Economic Data:
- October Durable Goods declined on a monthly basis to @ -0.6% vs. consensus estimates @ +0.5% and previous month (revised) @ +2.0%. On a yr/yr bais, new orders improved slightly but still registered weakness @ -11.9% vs. previous month’s -19.6%. Ex-transportation, durables declined -1.3% on a monthly basis vs. previous month @ +0.9% and annualized @ -16.9%. Components of weakness in the report were present in machinery and communications equipment while primary metals, fabricated metals, electrical equipment, and transportation showed gains.
- Even though the Reuters/University of Michigan’s Consumer Sentiment Index beat expectations @ 67.4 vs. 67.0, the numbers still indicate a lack of optimism on the part of consumers. The report marks the second straight decline since September’s reading @ 73.5.
- The EIA’s most report indicated weaker demand for crude oil during the week of Nov-20-2009. Oil inventories increased 1mm barrels vs. previous week’s build @ 900k. Gasoline stocks also increased 1mm.
- Natural gas in storage rose 2bcf for the week of Nov-20-2009.
- Market Outlook: Exane BNP Paribas forecasted "a double-dip recession looks unlikely in 2010 as fiscal stimulus and restocking have yet to have their full impact on GDP growth."
- European Economic Data: Germany’s GfK consumer confidence survey unexpectedly dropped -0.3 in December to 3.7 vs. consensus estimates @ 4.0.
- Recapitalizing China’s banks: Chinese bank stocks reflected weakness based on worries that they may need to raise more capital. Goldman Sachs said, "although capital raising may not be imminent and will likely be a managed process, we believe this could be a sector overhang."
ETF Market Trends™ Monitor (11-25-2009)
| U.S. Equity ETFs | |||||||
| Equity Indexes | Price | %Chg | Vol% | PMI | ST | MT | LT |
| DIA (DJ Industrials) | 104.63 | 0.26% | -47.07% | 67 | up | up | up |
| SPY (S&P 500) | 111.38 | 0.35% | -44.51% | 82 | up | up | up |
| QQQQ (Nasdaq 100) | 44.18 | 0.43% | -62.74% | 81 | up | up | up |
| IWM (Russell 2000) | 59.33 | -0.02% | -23.43% | 13 | up | down | up |
| VXX (VIX Futures) | 37.76 | -1.69% | 31.32% | 21 | down | down | down |
| Major Sectors | Price | %Chg | Vol% | PMI | ST | MT | LT |
| IYZ (Telecom) | 18.93 | 0.69% | -40.83% | 77 | up | up | up |
| XLB (Materials) | 33.26 | 1.62% | -29.08% | 100 | up | up | up |
| XLE (Energy) | 58.11 | 0.78% | -32.35% | 80 | up | up | up |
| XLF (Financials) | 14.67 | -0.20% | -55.57% | 20 | down | down | up |
| XLI (Industrials) | 27.96 | 0.83% | -46.96% | 78 | up | up | up |
| XLK (Technology) | 22.04 | 0.05% | -58.88% | 30 | up | up | up |
| XLP (Consumer Staples) | 27.14 | -0.15% | -30.98% | 17 | up | up | up |
| XLU (Utilities) | 30.02 | 1.15% | -17.45% | 83 | up | up | up |
| XLV (Health Care) | 31.07 | 0.52% | 7.52% | 88 | up | up | up |
| XLY (Consumer Discrtn) | 29.19 | 0.97% | -21.26% | 100 | up | up | up |
| Key Industries | Price | %Chg | Vol% | PMI | ST | MT | LT |
| BBH (Biotech) | 98.66 | 0.63% | -46.89% | 61 | up | up | up |
| CRBQ (Global Commodity Equities) | 43.79 | 1.46% | -74.01% | 100 | up | n/a | n/a |
| CUT (Global Timber) | 17.68 | 1.17% | -0.91% | 64 | up | up | up |
| FAA (Airlines) | 24.75 | 0.77% | -92.31% | 0 | up | down | n/a |
| FAN (Global Wind Energy) | 15.57 | 0.52% | -53.37% | 54 | down | down | up |
| FDN (DJ Internet Index) | 24.12 | 0.37% | -61.02% | 92 | up | up | up |
| GDX (Gold Miners) | 52.83 | 2.68% | -21.91% | 88 | up | up | up |
| HAP (Hard Assets Producers) | 34.29 | 1.42% | -77.56% | 98 | up | up | up |
| IAI (Broker-Dealers) | 27.82 | -0.54% | 85.79% | 11 | down | down | up |
| IGF (Global Infrastructure) | 34.75 | 0.93% | -59.43% | 67 | up | up | up |
| IGN (GSTI Networking) | 26.23 | 0.38% | -82.62% | 42 | down | down | up |
| IHI (Medical Devices) | 52.26 | 0.58% | 32.41% | 44 | up | up | up |
| ITA (Aerospace & Defense) | 49.52 | 0.79% | -63.31% | 98 | up | up | up |
| IYT (Transportation) | 71.27 | 0.58% | -65.47% | 79 | up | up | up |
| KIE (Insurance) | 34.79 | 0.17% | -46.97% | 57 | down | down | up |
| KOL (Coal) | 35.35 | 2.02% | 5.08% | 88 | up | up | up |
| MOO (Agribusiness) | 43.52 | 1.68% | 181.13% | 76 | up | up | up |
| NLR (Nuclear Energy) | 23.20 | 1.67% | -5.30% | 81 | up | down | up |
| OIH (Oil Services) | 120.65 | 0.88% | -34.83% | 85 | down | up | up |
| PHO (Water Resources) | 16.44 | 0.12% | 150.01% | 26 | down | down | up |
| PPH (Pharmaceuticals) | 66.07 | 0.72% | -47.13% | 88 | up | up | up |
| PXR (Emerging Mkts Infrastructure) | 43.37 | 0.32% | -40.33% | 64 | up | up | up |
| RKH (Regional Banks) | 77.87 | -0.43% | -70.83% | 27 | down | down | up |
| RTH (Retail) | 95.36 | 0.75% | -58.74% | 99 | up | up | up |
| SEA (Global Shipping) | 13.55 | -0.37% | -65.40% | 91 | up | up | up |
| SLX (Steel) | 60.05 | 1.85% | -76.14% | 93 | up | up | up |
| SMH (Semiconductor) | 25.65 | 0.51% | -59.15% | 53 | up | up | up |
| SWH (Software) | 41.25 | 0.86% | -98.44% | 100 | up | up | up |
| TAN (Global Solar Energy) | 9.37 | 0.54% | -62.65% | 54 | up | up | up |
| XME (Metals & Mining) | 50.33 | 2.15% | -40.48% | 93 | up | up | up |
| International Equity ETFs | |||||||
| Americas | Price | %Chg | Vol% | PMI | ST | MT | LT |
| EWC (MSCI Canada) | 26.49 | 1.81% | -63.80% | 93 | up | up | up |
| EWW (MSCI Mexico) | 49.00 | 1.85% | -51.06% | 92 | up | up | up |
| EWZ( MSCI Brazil) | 77.90 | 1.51% | -39.77% | 81 | up | up | up |
| ILF (Latin America 40) | 48.75 | 1.82% | -54.08% | 91 | up | up | up |
| ISI (S&P 1500) | 49.88 | 0.44% | -78.78% | 100 | up | up | up |
| Europe | Price | %Chg | Vol% | PMI | ST | MT | LT |
| EWG (MSCI Germany) | 23.16 | 1.22% | -50.97% | 90 | up | up | up |
| EWQ (MSCI France) | 26.76 | 1.40% | -0.45% | 80 | up | up | up |
| EWU (United Kingdom) | 16.98 | 1.13% | -49.33% | 74 | up | up | up |
| IEV (S&P Europe 350) | 40.74 | 1.32% | -48.97% | 96 | up | up | up |
| RSX (Russia) | 31.30 | -1.32% | -40.26% | 92 | down | up | up |
| VGK (Vanguard Europe) | 52.65 | 1.54% | 1.12% | 100 | up | up | up |
| Asian-Pacific | Price | %Chg | Vol% | PMI | ST | MT | LT |
| EWA (MSCI Australia) | 23.99 | 2.48% | -50.16% | 92 | up | up | up |
| EWH (MSCI Hong Kong) | 16.07 | 1.07% | -55.47% | 91 | up | up | up |
| EWJ (MSCI Japan) | 9.45 | 1.72% | 13.79% | 75 | down | down | up |
| EWM (MSCI Malaysia) | 11.03 | 0.27% | -22.43% | 56 | up | up | up |
| EWS (MSCI Singapore) | 11.64 | 1.13% | -47.53% | 70 | up | up | up |
| EWT (MSCI Taiwan) | 12.56 | 0.80% | -14.89% | 38 | up | up | up |
| EWY (MSCI South Korea) | 46.48 | 0.65% | -64.71% | 59 | up | up | up |
| FXI (FSTE China) | 45.16 | 0.33% | -53.73% | 65 | down | up | up |
| IF (Indonesia Fund) | 10.44 | 1.26% | -11.22% | 17 | up | up | up |
| IFN (India Fund) | 30.89 | 1.05% | -6.44% | 73 | up | up | up |
| VNM (Vietnam) | 25.94 | -5.02% | 65.89% | 4 | down | down | n/a |
| Emerging Markets | Price | %Chg | Vol% | PMI | ST | MT | LT |
| EEM (MSCI Emerging Mkts) | 41.75 | 1.16% | -35.18% | 93 | up | up | up |
| EWX (Emerging Small Caps) | 47.03 | 1.47% | -79.60% | 100 | up | up | up |
| GAF (Middle East & Africa) | 62.55 | 1.73% | -49.79% | 100 | up | up | up |
| GMF (Emerging Asia Pacific) | 73.41 | 0.41% | -24.81% | 52 | up | up | up |
| GML (Emerging Latin America) | 80.04 | 1.75% | -68.63% | 98 | up | up | up |
| GUR (Emerging Europe) | 43.13 | -0.32% | 255.46% | 96 | down | up | up |
| Alternative Assets | |||||||
| Commodities | Price | %Chg | Vol% | PMI | ST | MT | LT |
| COW (Livestock) | 28.52 | 1.39% | -70.54% | 83 | up | up | down |
| DBA (Agriculture) | 26.35 | 1.62% | 74.33% | 77 | up | up | up |
| DBB (Base Metals) | 20.92 | 1.60% | -58.86% | 85 | up | up | up |
| DBC (Commodities) | 24.67 | 2.41% | -19.62% | 95 | up | up | up |
| GLD (Gold) | 116.62 | 1.65% | 35.23% | 81 | up | up | up |
| JJC (Copper) | 43.92 | 1.36% | -27.97% | 90 | up | up | up |
| JJG (Grains) | 41.07 | 1.72% | -47.65% | 51 | up | up | up |
| PTM (Platinum) | 18.70 | 3.80% | 11.71% | 92 | up | up | up |
| SLV (Silver) | 18.52 | 1.48% | 11.82% | 96 | up | up | up |
| UGA (Gasoline) | 36.37 | 2.86% | -20.86% | 93 | up | up | up |
| UNG (Natural Gas) | 9.57 | 6.22% | 29.19% | 83 | down | down | down |
| USO (Oil) | 39.47 | 2.31% | -9.18% | 92 | down | up | up |
| Forex | Price | %Chg | Vol% | PMI | ST | MT | LT |
| BZF (Brazilian Real) | 27.04 | 0.67% | -16.43% | 66 | down | up | up |
| CEW (Emerging Currency) | 22.38 | 0.45% | 42.42% | 57 | up | up | up |
| CYB (Chinese Yuan) | 25.30 | 0.00% | -17.47% | 25 | lateral | lateral | lateral |
| DBV (G10 Currencies) | 23.36 | 0.21% | 10.64% | 72 | down | up | up |
| FXA (Australian Dollar) | 93.40 | 1.39% | -3.29% | 97 | up | up | up |
| FXB (British Pound) | 166.84 | 0.87% | -68.49% | 99 | up | up | up |
| FXC (Canadian Dollar) | 95.38 | 1.22% | -34.23% | 96 | up | up | up |
| FXE (Euro) | 151.26 | 1.20% | 36.54% | 99 | up | up | up |
| FXF (Swiss Franc) | 100.01 | 1.34% | 7.57% | 96 | up | up | up |
| FXM (Mexican Peso) | 78.11 | 0.59% | 7.24% | 64 | up | up | up |
| FXY (Japanese Yen) | 113.72 | 1.38% | 175.06% | 77 | up | up | up |
| ICN (Indian Rupee) | 25.35 | 0.40% | -27.20% | 30 | up | up | up |
| UUP (U.S. Dollar) | 22.02 | -1.21% | 33.38% | 0 | down | down | down |
| XRU (Russian Ruble) | 35.69 | -2.50% | -19.28% | 100 | down | up | up |
| Bonds | Price | %Chg | Vol% | PMI | ST | MT | LT |
| AGG (Investment Grade) | 105.55 | 0.09% | -22.56% | 96 | up | up | up |
| BWX (Int’l Tsy Bonds) | 60.29 | 1.07% | 163.14% | 89 | up | up | up |
| EMB (Emerging Markets Bonds) | 103.19 | 0.16% | -17.91% | 80 | up | up | up |
| HYG (Hi Yld Corp) | 86.27 | 0.10% | -24.30% | 14 | up | up | up |
| IEF (7-10 Yr Tsy) | 92.49 | 0.34% | -10.53% | 91 | up | up | down |
| JNK (Hi Yld Bonds) | 38.20 | 0.39% | -34.57% | 94 | up | up | up |
| MBB (Mortgage Bonds) | 108.20 | 0.14% | -49.92% | 63 | up | up | up |
| MUB (Nat’l Muni Bond) | 102.76 | 0.01% | -22.48% | 46 | up | down | up |
| SHY (1-3 Yr Tsy) | 84.26 | 0.05% | 2.57% | 100 | up | up | up |
| TIP (Tsy Inflation Protect) | 106.28 | 0.40% | -19.15% | 93 | up | up | up |
| TLT (20 Yr+ Tsy) | 96.04 | 0.46% | -20.57% | 85 | up | up | down |
| WIP (Int’l Inflation Protect) | 58.40 | 1.02% | -34.57% | 94 | up | up | up |
| Real Estate | Price | %Chg | Vol% | PMI | ST | MT | LT |
| FIO (Industrial Office) | 22.11 | -0.50% | -94.75% | 0 | down | up | up |
| ICF (Cohen & Steers) | 49.12 | 0.51% | -42.55% | 47 | down | up | up |
| ITB (Home Construction) | 11.72 | 0.69% | -20.18% | 61 | down | down | up |
| IYR (DJ US Real Estate) | 43.06 | 0.37% | -50.32% | 24 | down | up | up |
| REM (Mortgage Reits) | 14.75 | -0.47% | -51.47% | 7 | up | down | up |
| REZ (Residential Index) | 29.25 | 0.29% | -95.88% | 0 | up | up | up |
| RTL (Retail Index) | 19.99 | 0.86% | -4.33% | 33 | down | down | up |
| XHB (Homebuilders) | 14.70 | 0.82% | -46.43% | 72 | down | down | up |
*PMI measures strength of % daily trading range on scale of 0 to 100
**ST = Short-Term Trend; MT = Intermediate Trend; LT = Long-Term or Primary Trend
***Vol% measures % change in daily volume vs. average daily volume
Market Momentum Diary: 11-25-2009
| % Stocks > Mov Avg | 20-Day MA | 50-Day MA | 200-Day MA |
| Today | 66.85% | 54.38% | 85.20% |
| Yesterday | 64.48% | 52.55% | 85.25% |
| Last Week | 68.42% | 57.67% | 86.51% |
| Last Month | 17.88% | 37.68% | 85.63% |
| Daily Market Stats | NYSE | NASDAQ | |
| Advancers | 2008 | 1223 | |
| Decliners | 1031 | 1444 | |
| Advancing Shares | 2077109400 | 814692800 | |
| Declining Shares | 973151200 | 538901800 | |
| 52 Week New Highs | 240 | 125 | |
| 52 Week New Lows | 2 | 18 | |
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