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Market Direction Summary (01-21-2010)

Dow-30 -216.90 @ 10172.98; S&P 500 -24.72 @ 1091.76; Nasdaq 100 -55.75 @ 1794.82; Russell 2k -11.24 @ 617.12; VIX +5.04 @ 27.31; U.S. Dollar Index -0.10 @ 78.28; 10 Year Tsy Rates -0.13 @ 35.98; Crude Oil -1.98 @ 74.10; Gold -10.20 @ 1093.00; CRB -1.95 @ 275.56; DJ-U.S. Real Estate Index -3.81 @ 170.01

Without the release of any key U.S. economic indicators on Friday, the market was given an extra day to process President Obama’s banking reform proposal and will probably continue to stew over his audacity this weekend.

The Obama Adminsitration, Wall Street’s sponsor, is starting to show some old school tough love (compliments of Paul Volcker’s influences) to its struggling-in-recovery greed and high risk addicted cohorts. One could fairly criticize that they should have done so much earlier, but let’s be real about the situation. We are talking about a seriously dysfunctional and codependent sociopolitical relationship.

After advancing 9 out of the previous 10 months, the biggest risk to the stock market has proven to be Wall Street’s inability to discern America’s populist boundaries of toleration. Frankly dear readers, the bankers just do not give a damn and find the temptation of another "bump" (or "bonus" if you prefer) impossible to resist.

Meanwhile, the American sheeple play their own role as enablers by bending over and taking job cuts, salary reductions, and impending higher tax burdens for the sake of corporate socialist patriotism.

Performance & Market Momentum

For the week, the Dow 30 Industrials, S&P 500, Nasdaq 100, and Russell 2000 respectively ceded -5.02%, -4.94%, -4.86%, and -4.53%. If you are a money manager or professional trader, you might be wondering if this is all just a bad dream in which you find yourself managing a triage unit. That’s the weekly perspective.

However, from a monthly perspective, things are quite as bad. The Dow 30 Industrials, S&P 500, Nasdaq 100, and Russell 2000 respectively have only declined -2.45%, -2.09%, -3.52%, and -1.32% month-to-date.

Market breadth, in terms of momentum, has decelerated rapidly. Within the Hillbent 3000 universe (top 3000 market cap weighted stocks, including ADRs, with minimum average daily volume > 100k), only 14% of stocks are trading within short-term uptrends and just 51% are above their intermediate uptrend support levels. Key support levels, e.g. 20 and 50 day moving averages, were violated in droves by individual stocks.

Price Volume Analysis

On Friday, sellers continued to dominate the market as bearish (48% price down & volume down) and capitulating (37% price down & volume up) trading patterns dominated stocks. From a weekly perspective, things are not any prettier. Bearish (51% price down & volume down) and capitulating (31% price down & volume up) trading prevailed during the week as well.

Positive Earnings Reports… So What…

The tone of the market has changed. For a while, it seemed that almost no negative news event could derail stock bulls. Now it seems that no amount of positive news or lack of negative news can get them off the sidelines. In technology, Google (GOOG) and Advance Micro Devices (AMD) delivered better than expected results and consumer credit companies, Capital One Financial (COF) and American Express (AXP), beat estimates by cutting costs to offset lower revenues. General Electric (GE) and McDonald’s (MCD) also reported earnings above consensus estimates.

Next week’s key earnings should provide more visibility on corporate America’s navigation of the financial crisis.

  • Monday, Jan-24-2010 –> Finance (CIT)
  • Tuesday, Jan-25-2010 –> Technology (AAPL, VMW, ERIC, TXN, WAT); Finance (SLG); Industrial Products (CNH, ETN, SEE); Healthcare (AMGN, DGX); Energy (HAL); and Utilities (EOC)
  • Wednesday, Jan-26-2010 –> Autos (TTM); Basic Materials (DD, NUE, STLD, X); Technology (ALTR, CBE, EMC, GLW, MOLX, SI, STM, VZ, STM, VZ, YHOO); Construction (JEC, RYN, SHW); Consumer Discretionary (DV); Consumer Staples (ENR, MHP); Finance (LFC, BXP, RF, TRV); Industrial Products (GWW, PTV); Healthcare (GILD, JNJ, KCI, NVS, SYK); Energy (BHI, BTU, WFT); Retail (ABC, MCK); Transportation (CNI, LFL, DAL); Utilities (FPL)
  • Thursday, Jan-27-2010 –> Aerospace (BA, GD); Basic Materials (ATI, PX); Technology (ARMH, BMC, CAJ, CCI, CTXS, TEL, GIB, FLEX, HRS, LRCX, LSI, MOLXA, QCOM, ROK, SAP, JAVA, SYMC); Conglomerates (UTX); Consumer Discretionary (SWK); Consumer Staples (HSY); Finance (ACF, AMG, BBVA, BLK, CFR, DRE, ETFC, NYB, SEIC); Industrial Products (CAT, ITW, OI, MWV); Healthcare (ABT, CVD, WLP, STJ, VAR, HES); Energy (HES, MUR,NE, COP, SII, VLO); Retail (GMCR, NFLX); Transportation (NSC); Utilities (EGN, SO, UGI)
  • Friday, Jan-28-2010 –> Aerospace (ATK, COL, GR, LLL, LMT, RTN); Auto (F, OSK); Basic Materials (ARG, EMN, POT); Business Services (DNB, RHI); Technology (AVT, CA, CHKP, JNPR, KLAC, MOT, MSFT, MXIM, NOK, T, AUO, SND, SY, TSM); Conglomerates (DHR, MMM, TXT, TYC); ConstructionConsumer Discretionary (LEG, PG, RCL, TWC, MJN); Consumer Staples (CL, EL, MKC, MO); Finance (BBD, BEN, CB, MFG, GNW, TROW, WDR); Industrial Products (BLL, BMS); Healthcare (AZN, BAX, BCR, BDX, BMY, CELG, LIFE, LLY, ZMH); Energy (CNX, HP, IMO, OXY, RDS.B); Retail (AMZN, CAH); Transportation (CP, JBHT, KSU); Utilities (AEP, D, ENI, EQT, KT, NST, XEL) (CX);


Early Warnings From Bond Market?

The ever-prescient bond market may already have given us an early warning at the end of the previous week when the release of the Jan-15-2010 Industrial Production report led to a bearish breakout for 10 year treasury yields vs. their 20 day moving average and initiated a key reversal after 5 consecutive weeks of rising interest rates. Rates for the 10 year treasury bond declined another -3.64% or -13.6 bps this week.

Last Wednesday’s inflation friendly PPI report and mediocre Housing Starts report (despite a jump in residential construction permits) did little to aid the cause of bond bears. The 20+ Year Treasury Bond ETF (TLT) is up @ 3% in two weeks and now only 0.4% under its 200 week moving average. With industrial capacity utilization rates @ 72, there is still plenty of slack in the economy. Combine this with a potential retreat from quantitative easing and government spending after the GOP’s upset victory in Massachusetts senate race and one has a benign environment for inflation.

Next week’s economic data will give bond bears plenty of opportunities to restate their case.


Summary
The market direction has turned on a dime and although the fundamentals for some companies make them attractive from a valuation perspective, market price trends should take priority. With all of the earnings and economic data coming out next week, there will be plenty of catalysts for the market to reverse its downward momentum. Until it does, caution should be used. When it does, look towards exchange traded funds and stocks displaying the greatest amount of relative strength during this correction.

ETF New Highs and New Lows (01-22-2010)

ETF 5 Day New Highs: (Note * denotes 250 day new high)

  • U.S. Equities (VXX, VXZ)
  • International Equities (N/A)
  • Commodities (UNG)
  • Forex (FXY)
  • Bonds (IEF, SHY)
  • Real Estate (N/A)

ETF 5 Day New Lows: (Note * denotes 250 day new low)

  • U.S. Equities (DIA, IWM, SPY, QQQQ, IYZ, XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY, CRBQ, CUT, FAA, FAN, FDN, GDX, HAP, IAI, IGF, IGN, IHI, ITA, IYT, KIE, KOL, MOO, NLR, OIH, PHO, PPH, PXR, RKH, RTH, SEA, SLX, SMH, SWH, TAN, XME)
  • International Equities (EWC, EWW, EWZ, ILF, ISI, EWG, EWQ, EWU, IEV, RSX, VGK, EWA, EWH, EWM, EWS, EWT, EWY, FXI, IFN, VNM, EEM, EWX, GAF, GMF, GML, GUR)
  • Commodities (COW, DBA, DBB, DBC, GLD, JJC, PTM, SLV, UGA, USO)
  • Forex (BZF, CEW, CYB, DBV, FXA, FXB, FXC, FXM, ICN, XRU)
  • Bonds (EMB, HYG, JNK, WIP)
  • Real Estate (FIO, ICF, ITB, IYR, REM, REZ, RTL, XHB)

Signing off at Hillbent on The Market Direction and ETF Market Trends™…

ETF Market Trends™ Monitor (01-22-2010)

U.S. Equity ETFs
Equity Indexes Price %Chg Vol% PMI ST MT LT
DIA (DJ Industrials) 101.63 -2.01% 205.75% 3 down down up
SPY (S&P 500) 109.21 -2.23% 154.00% 5 down down up
QQQQ (Nasdaq 100) 44.16 -2.92% 112.37% 8 down down up
IWM (Russell 2000) 61.66 -1.91% 65.85% 26 down up up
VXX (VIX Futures) 31.89 8.77% 255.61% 88 up down down
Major Sectors Price %Chg Vol% PMI ST MT LT
IYZ (Telecom) 18.72 -1.84% -16.50% 16 down down up
XLB (Materials) 31.63 -1.98% 155.61% 8 down down up
XLE (Energy) 56.29 -2.39% 46.20% 9 down down up
XLF (Financials) 14.18 -3.26% 186.14% 14 down down up
XLI (Industrials) 27.84 -1.52% 106.82% 2 down down up
XLK (Technology) 21.66 -3.48% 295.94% 4 down down up
XLP (Consumer Staples) 26.29 -0.23% 30.01% 31 down down up
XLU (Utilities) 29.82 -2.20% 40.70% 0 down down up
XLV (Health Care) 31.66 -1.09% 80.05% 10 down up up
XLY (Consumer Discrtn) 29.02 -1.93% 116.01% 3 down down up
Key Industries Price %Chg Vol% PMI ST MT LT
BBH (Biotech) 99.46 -0.13% -24.40% 19 down up up
CRBQ (Global Commodities) 41.53 -1.67% 74.30% 52 down down n/a
CUT (Global Timber) 17.27 -2.04% -34.60% 14 down down up
FAA (Airlines) 31.73 -2.28% -9.59% 16 down up n/a
FAN (Global Wind Energy) 14.04 -2.32% 5.83% 11 down down down
FDN (DJ Internet Index) 23.87 -2.77% 18.05% 11 down down up
GDX (Gold Miners) 43.82 0.16% 104.00% 48 down down up
HAP (Hard Assets Producers) 32.66 -1.80% 111.85% 35 down down up
IAI (Broker-Dealers) 26.89 -2.68% 101.11% 14 down down up
IGF (Global Infrastructure) 33.80 -2.06% -42.95% 13 down down up
IGN (GSTI Networking) 26.54 -3.18% 28.54% 4 down down up
IHI (Medical Devices) 54.29 -0.29% 45.31% 0 down up up
ITA (Aerospace & Defense) 51.34 -1.76% 24.32% 0 down up up
IYT (Transportation) 72.13 -2.10% 57.24% 10 down down up
KIE (Insurance) 35.08 -2.39% 88.91% 12 down up up
KOL (Coal) 34.93 -2.95% 63.72% 19 down down up
MOO (Agribusiness) 42.91 -2.50% 58.47% 3 down down up
NLR (Nuclear Energy) 22.19 -1.07% -48.34% 20 down down up
OIH (Oil Services) 121.59 -3.93% 98.18% 12 down up up
PHO (Water Resources) 16.46 -2.14% -9.98% 2 down down up
PPH (Pharmaceuticals) 66.55 -1.86% 124.88% 5 down up up
PXR (Emerg Mkts Infrastructure) 41.19 -3.12% 138.06% 8 down down up
RKH (Regional Banks) 78.63 -2.97% 97.12% 10 down up up
RTH (Retail) 91.42 -1.20% 83.36% 4 down down up
SEA (Global Shipping) 14.24 -1.79% 40.30% 36 down up up
SLX (Steel) 58.90 -3.65% 197.28% 12 down down up
SMH (Semiconductor) 25.67 -4.96% 175.30% 11 down down up
SWH (Software) 40.73 -2.81% -14.09% 1 down down up
TAN (Global Solar Energy) 8.88 -5.43% 82.56% 15 down down up
XME (Metals & Mining) 49.97 -3.03% 154.09% 11 down down up
International Equity ETFs
Americas Price %Chg Vol% PMI ST MT LT
EWC (MSCI Canada) 25.08 -2.03% 128.95% 13 down down up
EWW (MSCI Mexico) 47.28 -0.98% 78.35% 54 down down up
EWZ( MSCI Brazil) 67.90 -1.78% 98.37% 22 down down up
ILF (Latin America 40) 44.33 -1.38% 133.59% 21 down down up
ISI (S&P 1500) 49.19 -2.17% 34.03% 2 down down up
Europe Price %Chg Vol% PMI ST MT LT
EWG (MSCI Germany) 20.86 -1.84% 27.20% 14 down down up
EWQ (MSCI France) 24.56 -2.35% -56.87% 11 down down up
EWU (United Kingdom) 15.68 -2.85% -25.56% 2 down down up
IEV (S&P Europe 350) 37.09 -2.34% 27.96% 0 down down up
RSX (Russia) 31.50 -3.26% 96.26% 0 down up up
VGK (Vanguard Europe) 46.45 -2.17% 53.87% 3 down down up
Asian-Pacific Price %Chg Vol% PMI ST MT LT
EWA (MSCI Australia) 22.04 -2.04% 52.81% 0 down down up
EWH (MSCI Hong Kong) 14.85 -1.53% 105.85% 13 down down up
EWJ (MSCI Japan) 10.17 -1.07% 9.43% 6 down up up
EWM (MSCI Malaysia) 10.81 -1.55% 5.70% 20 down down up
EWS (MSCI Singapore) 11.06 -1.43% 52.95% 26 down down up
EWT (MSCI Taiwan) 12.35 -2.91% 43.31% 14 down down up
EWY (MSCI South Korea) 47.61 -2.84% 88.66% 8 down up up
FXI (FSTE China) 39.05 -1.41% 149.89% 3 down down up
IF (Indonesia Fund) 9.73 -1.52% -18.90% 0 down down up
IFN (India Fund) 30.20 -1.95% 30.14% 29 down down up
VNM (Vietnam) 24.58 0.00% 3.52% 18 down down down
Emerging Markets Price %Chg Vol% PMI ST MT LT
EEM (MSCI Emerging Mkts) 39.61 -2.22% 101.07% 10 down down up
EWX (Emerging Small Caps) 46.49 -2.43% -0.06% 18 down down up
GAF (Middle East & Africa) 60.29 -1.73% -74.51% 20 down down up
GMF (Emerging Asia Pacific) 70.52 -2.70% 31.76% 3 down down up
GML (Emerging Latin America) 74.31 -1.31% 161.80% 27 down down up
GUR (Emerging Europe) 43.37 -2.65% -11.88% 22 down up up
Alternative Assets
Commodities Price %Chg Vol% PMI ST MT LT
COW (Livestock) 28.61 -0.35% -50.09% 44 down up down
DBA (Agriculture) 26.12 -0.11% 62.92% 86 down down up
DBB (Base Metals) 21.87 -0.41% 230.07% 86 down up up
DBC (Commodities) 23.49 -1.18% 80.03% 37 down down up
GLD (Gold) 107.17 -0.19% 20.71% 69 down down up
JJC (Copper) 45.85 1.55% 183.47% 75 down up up
JJG (Grains) 36.65 -0.95% -54.24% 27 down down down
PTM (Platinum) 18.44 -3.32% 79.55% 35 down up up
SLV (Silver) 16.78 -1.70% 43.47% 74 down down up
UGA (Gasoline) 34.62 -1.45% -2.92% 7 down down up
UNG (Natural Gas) 10.35 2.68% 47.55% 36 up up down
USO (Oil) 36.34 -2.42% 52.70% 3 down down up
Forex Price %Chg Vol% PMI ST MT LT
BZF (Brazilian Real) 25.44 -1.05% 33.50% 48 down down up
CEW (Emerging Currency) 21.89 -0.50% -37.85% 42 down down up
CYB (Chinese Yuan) 25.28 -0.02% 17.90% 60 lateral lateral lateral
DBV (G10 Currencies) 23.12 -0.52% 375.33% 6 down down up
FXA (Australian Dollar) 90.28 -0.10% -24.52% 13 down down up
FXB (British Pound) 160.63 -0.53% -9.31% 47 down down up
FXC (Canadian Dollar) 94.18 -0.60% 119.49% 35 down down up
FXE (Euro) 141.14 0.31% -32.81% 55 down down up
FXF (Swiss Franc) 95.56 0.04% -11.71% 45 down down up
FXM (Mexican Peso) 77.18 -0.16% -42.62% 22 down down up
FXY (Japanese Yen) 110.40 0.56% -11.03% 87 up up up
ICN (Indian Rupee) 25.35 -0.12% -53.58% 70 down up up
UUP (U.S. Dollar) 23.08 -0.19% -39.35% 43 up up down
XRU (Russian Ruble) 33.12 -0.46% -78.90% 0 down down up
Bonds Price %Chg Vol% PMI ST MT LT
AGG (Investment Grade) 104.46 0.06% -40.91% 38 up down up
BWX (Int’l Tsy Bonds) 56.97 0.07% -49.42% 76 down down up
EMB (Emerging Markets Bonds) 102.06 -0.28% -40.21% 45 down down up
HYG (Hi Yld Corp) 86.77 -0.95% 117.86% 11 down down up
IEF (7-10 Yr Tsy) 90.61 0.09% -44.65% 72 up down down
JNK (Hi Yld Bonds) 38.62 -0.95% 130.23% 17 down down up
MBB (Mortgage Bonds) 107.28 -0.05% -7.39% 29 up up up
MUB (Nat’l Muni Bond) 103.22 -0.07% -15.31% 4 up up up
SHY (1-3 Yr Tsy) 83.59 0.08% -8.16% 100 up down down
TIP (Tsy Inflation Protect) 105.19 -0.09% -33.50% 91 up up up
TLT (20 Yr+ Tsy) 92.00 -0.17% 13.92% 44 up down down
WIP (Int’l Inflation Protect) 55.91 -0.53% -52.60% 24 down down up
Real Estate Price %Chg Vol% PMI ST MT LT
FIO (Industrial Office) 22.87 -2.14% -25.61% 0 down down up
ICF (Cohen & Steers) 49.95 -2.31% 94.54% 17 down down up
ITB (Home Construction) 12.15 -2.33% -15.57% 8 down up up
IYR (DJ US Real Estate) 43.82 -2.25% 90.69% 10 down down up
REM (Mortgage Reits) 14.60 -0.95% -79.16% 15 down down up
REZ (Residential Index) 29.46 -2.42% 126.95% 10 down down up
RTL (Retail Index) 20.38 -2.49% -45.00% 0 down down up
XHB (Homebuilders) 14.95 -1.84% 161.29% 5 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: 01-22-2010

% Stocks > Mov Avg 20-Day MA 50-Day MA 200-Day MA
Today 33.90% 55.50% 81.73%
Yesterday 44.56% 66.92% 83.36%
Last Week 76.79% 84.08% 86.91%
Last Month 68.76% 67.16% 84.33%
Daily Market Stats NYSE NASDAQ
Advancers 560 727
Decliners 2543 1979
A/D Ratio 0.22 0.37
Advancing Shares 697540300 447261000
Declining Shares 5666310900 2378141900
A/D Shares Ratio 0.12 0.19
52 Week New Highs 5 19
52 Week New Lows 0 0
% Stocks in Uptrends ST MT LT
Hillbent 3000 Universe
14.23% 51.20% 84.07%

Hillbent Market Direction Resources

Disclosures: Hillbent does not provide individualized market advice. The information we publish regards companies in which we believe our readers may be interested and our reports reflect our sincere opinions. Nevertheless, they are not intended to be personalized recommendations to buy, hold, or sell securities. Investments in the securities markets, and especially in options, are speculative and involve substantial risk. Each individual investor should determine their respective appropriate level of risk. It is recommended that you seek personal advice from your professional investment advisor and conduct further independent due diligence research before acting on information published in any of our reports. Most of our information is derived directly from information published by the companies on which we report and/or from other sources we deem to be reliable, without our independent verification.

Therefore, we cannot assure the completeness or accuracy of information contained within these reports and we do not in any way warrant or guarantee the success of any action which you take in reliance on our statements.

Hillbent.com, Inc. or its affiliates may own positions in the equities mentioned in our reports. We do not receive any compensation from any of the companies covered in our reports.

Source: ETF Market Trends: Wall Street Ponders Administration’s Tough Love