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Technical Analysis : Week 31/09
July 27, 2009
The S&P500 Index closed at 979 last week. This indicates a gain of 39 points (4.1%) from the previous week’s close. The week closed at 979, established a new high for the year. Last week gained was mainly build on Thursday from the surprisingly good result from the Existing Home Sales data. Overall throughout the market, the sentiment is very bullish and happy.
The market had a very positive week with 4 positive days and a pause in the mid week. The market tested the high of June at 950 on Monday followed by 2 days of establishing the bases at the level of 950. The market continued it surged on Thursday after the stabilizing period. The market shot up to 975 on Thursday as it seek to establish a new high for the year. On Friday, the market struggled in the opening trading period but it manages to close higher at the end with the help of the growing bullish sentiment.
Looking at weekly candles, the S&P500 Index is suggesting another upward pushes in the coming week. In this coming week, the weekly bullish candle should be quite small as there are evident of slowing down in the past few weeks.
Looking at daily candles, the S&P500 Index looks like it will have a bullish Monday. This is because the daily candle shows on Friday suggest that the bull has an upper hand against the bear.
The immediate support levels are S1: 975, S2: 950 and S3: 925.
The immediate resistance levels are R1: 1000, R2: 1050 and R3: 1100.
The Dollar Index (DXY) closed at 78.74 for the week. The growing strength of the crude oil price is likely to weigh on the dollar.
In conclusion, the market this coming week should be going up to test the 1000 level. The underlying bullishness in the market is a major force that is hard to break until something big exploded again. So do trade with caution, as the economic is still not yet out of the woods.
By
Lawrence Chua
Sector Rotation : Week 31/09
July 27, 2009
Materials (5.78%) lead the charge last week followed by Health Care (4.93%), Utilities (4.71%), Energy (3.88%), Consumer Discretionary (2.97%), Industrials (2.54%), Technology (2.51%), Consumer Staples (2.21%) and Financials (1.47%).
There are no notable sectors that are leading the market week in week out. It seems that the market cannot decide where to invest their money for a long period of time. This trend will likely to continue till the month of October when the liquidity in the market back to normal again.
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In summary, most of the sector will be positive in the coming week except for the financial. This is because there are growing numbers of banks facing the prospect of bankruptcy.
Market Analysis : Week 31/09
July 27, 2009
The market continued to keep up with the strong advances after a week of strong gained. Last week the market managed to break away from the level of June high to established another new high for the year. The surprisingly strong housing data and good earnings had been the catalyst for last week.
On Monday, the market tested the June high with the help of better than expected CB leading indicator. The market went higher as the bull was totally in control because there was no disappointing news from the economic and earnings data.
The market went sideway sitting above the level of June high on Tuesday and Wednesday while listening to Fed Chairman Benernake Testifies before the House Financial Services Committee. There were also no economics data and major earnings news to move the market.
On Thursday, the market rejoiced from the news of surprisingly good Existing Home Sales data. The market soared throughout the whole trading day as the buyers keep bidding the market higher.
On Friday, the last trading day of the week, the market started badly as the earnings from Microsoft and Amazon disappoint the streets. However, the bullish sentiment from the street had manage to push the market higher at the closing bell.
Major Event
- FDIC closed 6 subsidiaries of Macon, Ga.-based Security Bank Corp. and N.Y.-based Waterford Village Bank; bring failures to 64 in 2009.
- Bankruptcy looming on Guaranty Financial Group, one of the largest banks based in Texas, after suffering nearly 1.5 billion in mortgage write-downs.
- GDP set for 4th straight decline since the Great Depression
Economic Data
A flurry of important economics data will be release in the coming week. Starting on Monday, the market will kick off with the housing data follow by the Consumer Confidence data on the next day. In the mid week, Durable Goods Orders will be released. The market will close off with the GDP data on Friday.
Earnings
The earnings had been fantastic for the last few weeks. Currently of the 500 companies on the S&P500, 181 reported earnings were off 26% from the year-ago quarter, vs. consensus estimates calling for a slide of 36%. After 2 weeks of earnings, 71% have beat earnings estimates and some of them are starting to provide guidance for the first time in 2 quarters.
In this coming week, big dogs like Verizon Communication, Exxon Mobil, Chevron, Walt Disney, Honeywell International, Rockwell Automation and Travelers Companies will be releasing their earnings.
Others notable names in their respective industrial that are going to announce their earnings are Amgen, Manitowoc, CF Industries, Viacom, Symantec, Aetna, General Dynamics, Sprint Nextel Corporation and Wynn Resort.
Summary
Economic data will be very important in the coming week. The market will be watching for the excellent result in the housing data, improve orders from durable goods, an increase in consumer confidence and a not so bad GDP figures. Earnings will likely to be good in the coming week.
The Crude oil prices had been slowly raised once again last week and manage to close above $65. This has helped the stabilization in the commodity sector.
The underlying bullish sentiment in the market did not seem to losing its steam after 2 weeks of surging. The bullish sentiment has help by the fact that the Asia Market had been doing very good for the pass few weeks. There are very few bad news in the market currently to upset the bullish sentiment too. Many of the short sellers have either watching at the sidelines or join in the bull camp for the past few weeks. This is because many of the short sellers have been slaughter by the surging bull lately.
The market is no doubt very bullish at the moment, but do keep in mind that the economic is still very unstable. The consumer credit debts have been on the rise and the unemployment rate did not seem to be stopping. The Gross Domestic Product likely to set for a 4th straight decline, which will be shown in the coming reports.
In conclusion, I am expecting the market to test the elusive 1000 mark for S&P500 in the coming week. However, I am long term sideways in the market at least till 2014. This is because the de-leveraging of the massive huge debts in the United State will take a pretty long time. Do watch out for the market if it shoots up furiously in the coming week.
As the saying goes … What go up must come down eventually.
By
Lawrence Chua
Foreword : Week 31/09
July 27, 2009
Last week, the Dow Jones Industrial Average gained 350 points to close at 9093 (3.99%) followed by the S&P500 Index gained 39 points to close at 979 (4.1%) and the Nasdaq Composite gained 79 points to close at 1965 (4.2%).
Jul ‘09 - Energy II
July 22, 2009
In this second part of our coverage of this massive Energy sector, we’re going to look at the industries that make up the other half of the most significant business on our planet.
In last month’s report, we covered in great detail, everything you needed to get started in understanding the Energy, Oil and Coal industries. This month, we pick up where we left off.
Technical Analysis : Week 30/09
July 20, 2009
The S&P500 Index closed at 940 last week. This indicates a gain of 61 points (7%) from the previous week’s close. The week closed at 940, breaking the 4th consecutive week of losses. The gains also wiped out all the losses from the past four weeks. It was a week of joy and celebration as traders and investors bid the stocks higher to celebrate the good news from quarterly reports from the major industrial companies. It was also a week that crude oil prices stabilized and manage to close higher above the $62 level. Overall throughout the market, the sentiment is very bullish and happy.
The market had a very positive week with 4 consecutive positive days followed with a pause in its last trading day. The market took 2 days of massive gains to break through the important resistance level at 900 and 925 on Monday and Wednesday respectively. On Thursday, the market shot up again to bring us back into the trading range of the month June. On Friday the market maintained the gains and held off at the important level 940 to setup an interesting week ahead.
Looking at weekly candles, the S&P 500 Index is suggesting an upward direction in the coming week. The strong bullish bar of the weekly candle suggests that the market only had a single direction at the moment, which is up.
Looking at daily candles, the S&P500 Index looks like it will have a positive Monday. This is because the daily candle shows ugly hammers that indicate that the following day is likely to continue the trend of the previous day.
The immediate support levels are S1: 925, S2: 900 and S3: 875.
The immediate resistance levels are R1: 950, S2: 975 and S3: 1000.
The Dollar Index (DXY) closed at 79.5 for the week. The reversal of the crude oil price is likely to weigh on the dollar.
In conclusion, the market this coming week should be going up if it can break above the major resistance level of 950. The testimony in capital hills by Fed Chairman Bernanke will be crucial. The earnings from the major companies will dominate and determine the direction of the market. So continue to stay alert and cautious as the market can swing wildly in earnings season.
Sector Rotation : Week 30/09
July 20, 2009
Energy Sector (6.84%) led the turnaround in the market followed by strong gains from Technology (6.38%), Materials (6.23%), Consumer Discretionary (5.83%), Industrials (5.32%), Financials (2.79%), Consumer Staples (2.7%), Utilities (2.34%) and Health Care (1.69%).
The continuing strength from the technology sector has been one of the steady sectors this year. Technology has benefited from the upside of Apple Inc and Google Inc. Most of the technology companies do not have debts and are cash rich which allows them to thrive in this kind of environment. Technology sector is likely to be the main driver for the market in the remaining quarters.
As the market goes into the 2nd week of the earnings season, there is an industry that will go into their profiting season soon. This industry had been beaten down for the pass few months due to the seasonal effect. This provides an excellent investment to this industry as it has beaten down and it will be going into their money making season soon. To know more about this industry, feel free to sign up for this coming monthly report at Patterntradertools.com
In summary, as the market goes through a wild swing, there are certain industries that will thrive no matter what the market does. The seasonal effects usually play the most important role in this kind of industry. So always look out for the sector and seasonal rotation in the market to stay ahead of others.
Market Analysis : Week 30/09
July 20, 2009
The market staged a huge rally last week after the previous 4th consecutive week of losses. The surprisingly excellent earnings from major industrial leaders such as Goldman Sachs, JP Morgan, Intel, IBM and GE had helped the market to erase the losses from the previous 4th negative weeks.
On Monday, the market was supported by major support levels. The reversal of the market came when the famous analyst, Meredith Whitney upgraded Goldman Sachs just one day before the earnings day. The sudden upgrading of Goldman Sachs sent short sellers scrambling to close their positions which in turn led to a major bear squeeze on Monday.
On Tuesday, the market went sideways for most of the day after the massive gains on Monday. The earnings from Goldman Sachs did not disappoint the market. This piece of good news supported the market throughout the trading session. The market managed to close slightly positively towards the closing bell, as there was no bad news released.
On Wednesday, Intel set the bullish tone for the market after it released its better than expected earnings result and sunny outlook. The economic data Industrial Production came out better than expected -0.4% vs -0.6% forecast. Overall the market had little excuse not to rally on the day with all the good news that came out.
On Thursday, the market reacted sluggishly to the better than expected earnings from JP Morgan Chase and GE in the opening trading period. Then the big surge to the upside came when CNBC showed the world that the renown economist Nouriel Roubini had changed his tune of a negative economic forecast in United States.
On Friday, the headline of CIT group seeking bankruptcy protection chapter 11 soon had sent the market back into a cautious tone. The market traded sideways throughout the day as big players decided to take a long weekend after the massive rally throughout the week.
The market’s breath was extremely positive throughout the whole week across the board.
Major Event
- FDIC closed Georgia, South Dakota banks; bring failures to 55 in 2009
- Sunny Outlook from Intel
- Fed Chairman Bernanke Testifies
- Bankruptcy status of CIT Group
Economic Data
This coming week the market will not have much economic data to digest. The most important data for the week will be Existing Home Sales and Weekly jobless claim, which is scheduled to be released on Thursday, and Consumer Sentiment on Friday.
Fed Chairman Bernanke will be in focus as he testifies on Capitol Hill on Tuesday and Wednesday.
Earnings
The market will be facing another round of massive onslaughts of earnings in the coming week.
On Monday, notable earnings results will come from industrial manufacturer Eaton Corp., toymaker Hasbro Inc., and oil services giant Halliburton Co. Texas Instruments Inc. and Zions Bancorp both are expected to report after the close.
Tuesday brings an avalanche of quarterly reports from companies including DuPont, Caterpillar Inc., Continental Airlines Inc., Western Union Co. and UnitedHealth Group Inc. Technology firm Apple Inc. and Advanced Micro Devices Inc. are scheduled to report after the closing bell.
Notable big companies that are going to release their quarterly reports later in the week are Microsoft Corp. McDonald’s Corp and American Express.
Summary
This coming week is likely to get another round of interesting surprises from earnings. Most of the companies are likely to have a better than expected earnings result. Technology companies should surprise to the upside as big boys such as Intel and IBM have already given good results.
Crude oil prices had slowly risen again last week and managed to close above $62. This will bring much joy for the energy and commodity sector.
In conclusion, I am expecting the market to go higher as the sentiment in the market had changed to be bullish. The influence of media and the better-than-expected earnings result from the major industrial leaders had lifted the bullish sentiment in the market. The underlying bullishness in the market will prevent the bears from striking the market and it will encourage the bulls to participate in the market. I’m short term bullish, long term sideways.
Foreword : Week 30/09
July 20, 2009
Last week, the Dow Jones Industrial Average gained 597 points to close at 8743 (7.3%) followed by the S&P500 Index which gained 61 points to close at 940 (7%) and the Nasdaq Composite gained 130 points to close at 1886 (7.4%).
Technical Analysis : Week 29/09
July 13, 2009
The S&P500 Index closed at 879 last week. This indicates a fall of 17 points (1.9%) from the previous week’s close. The week closed below 880 which signals the failure of the bulls to break through a major resistance. It was a week of caution as investors and traders unloaded their profitable positions. It was also a week for the oil traders to unwind their positions as the free fall of crude oil prices continued to hog the headlines. Most of them are also afraid of being caught by the new regulation from the CFTC.
The market had a negative week but it was largely contributed by a single trading day on Tuesday. The market sold off on Tuesday as oil giant Chevron came out with lousy guidance which led to the sell off in the energy sector which in turn pulled all the others sector down in sympathy. The backdrop of a 9.5% unemployment rate also aided the strength of the bears on Tuesday. The bears continued to paw at the market on Wednesday’s trading opening. However the bulls gained the upper hand once the market hit a significant support level of 870. Profit taking from the sellers and a surge in bargain hunting helped to support the market from falling further. Thursday was a dull day for traders. On Friday, the market tested the low of 870 without success as the strength of the Nasdaq Composite prevented it to break through and it ended up closing slightly below Wednesday’s closed.
Looking at weekly candles, the S&P500 Index is suggesting a mixed direction for the coming week. The weekly candle shows 1 down candle followed by 1 Doji and 2 down candles. However some people will argue that it shows 4 weekly down candles. It will be a down week if you consider the 2nd week as a Doji but if you consider as 4 down weekly candles, then this week should either take a pause or reversal of direction. This is because of the 5th candle reversal, which occurs very often in the past.
Looking at daily candles, the S&P500 Index looks like it will have a positive Monday if it can break above the 887 level. This is because the market had tested the low 870 twice without breaking through and this means that the market is likely to test the high of 887 in the coming days.
The immediate support levels are S1: 870, S2: 850 and S3: 825.
The immediate resistance levels are R1: 887, S2: 925 and S3: 950.
The Dollar Index (DXY) remained at the same level of 80.3 for the week. The continued fall of crude oil prices is likely to aid the dollar.
In conclusion, the market this coming week should be going down if it can break through the major support level of 870. The earnings and guidance from the Big Tech and Financial companies will be crucial. Retail sales and Manufacturing data will also be very crucial. Market players will also be looking at the FOMC Minutes. The only sure thing that will happen this coming week will be the high volatility in the market. Volumes are also likely to start picking up as the market players access the situation. So stay alert and stand aside to watch the developments in the market.
