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Technical Analysis : Week 36/09
August 31, 2009
The S&P500 Index closed at 1028 last week. This indicates a gain of 2 points (0.3%) from previous week’s close. This week gained marked the highest closing price for the year.
Last week the market was very choppy and traded very lightly. More than half of the total traded volumes are concentrated on the Zombies 5 like Citigroup, Bank of America, AIG, Freddie Mac and Fannie Mae. The market was trading at the wild range of 1036 to 1025. Technically, the market seems to be hitting a wall at 1036. The market seems to be running out of steams as ‘Doji’ horde the headline for the week.
The market did not react to the good news and data. The market seems to be selling into the good news and buy into every small dip. The bargain hunters are busy picking up bits and pieces of the market to push it higher.
Looking at weekly candles, the S&P500 Index is suggesting a pause or slightly down in the coming week. This is because the weekly candle show a perfectly balance ‘Doji’ with the bull and bear having equals strength. The bear seems to have an upper hands as the market sell off with heavy volumes last week.
Looking at daily candles, the S&P500 Index looks like it might be having a paused or downside on Monday. This is because the candle shows a ‘Doji’ with the bear having the upper hand.
The immediate support levels are S1: 1025, S2: 1000 and S3: 980.
The immediate resistance levels are R1: 1050, R2: 1100 and R3: 1150.
In conclusion, the market this coming week will likely to be consolidating between the ranges of 1000 to 1030. The bear will have the upper hands going into this week, as the Chinese’s Market continue to weight heavily on the world’s market. This coming week will likely to be a slow week as most of the traders are taking either a week or a long weekend off from work. The true test will likely to come next week when majority of the traders and investors return to the market. Friday Non-Farm Payroll will be a major market mover’s news. Watch out for the awaken Bear!!!
Sector Rotation : Week 36/09
August 31, 2009
Financials (1.26%) once again lead the market for the week followed by Consumer Discretionary (1.03%), Industrials (0.55%), Technology (0.25%), Consumer Staples (0.16%), Health Care (0%), Materials (-0.5%), Utilities (-0.64%) and Energy (-1.53%).
This week the Financials leading the charge as majority of the traded volumes in the market revolve around Citigroup, Bank of America, AIG, Freddie Mac and Fannie Mae. Speculators had been busy bidding up all these zombie companies. This kind of rally will unlikely to last long. The market will likely to show its true color in the mid week of September.
This month August, the special report features Transportation. In order to know the health of the economy, one should have an insight of the Transportation. This is because Transportation is the blood of the economy. Seasonality plays a big part in Transportation sector. You will get to know the information on seasonality plays in this coming special report. Furthermore you will have an insight of how the market will likely to behave in the coming month September.
Grab the copy at www.Patterntradertools.com
In Summary, the safest thing to do now is to watch the market behaviors. The defensive sector will likely to fare better than the active sectors such as Financials and Energy in the coming months.
Market Analysis : Week 36/09
August 31, 2009
Last week the market was such a drag. The market did not really move much for the whole week. The market was really indecisive as whether to go higher or take the plunge. The market was kind of tired, as the good news from Housing, Consumer Confident and even better GDP result did not spur the market to a bigger rally.
On Monday, the market open higher but the bidder wane off after hitting a high of 1035. After the market hit the high of the year, investors and traders were seen taking profit as volume spike up. The market ended lower in the closing bell due to the renew fear in the market.
On Tuesday, the market once again opens higher due to the better than expected news from the Case Shiller report. In the report, it stated that that housing prices had been slowing down in the decline. The market cheers the result of the rising consumer confidence briefly as the market ‘buy on rumor and sell on news’. As the market sold off, the bargain hunter came in to pick up the pieces to rally the market. In the closing bell, the market ended closing lower where the bargain hunter came into the market in the earlier day.
On Wednesday, the market continues the sell off at the opening bell as the durable goods order result was mixed. The Core Durable Goods Orders was bad (0.8 v.s. 1.0). This means that the consumers are not spending on big items such as the Plasma television, Refrigerator and others. The market got a boost from the New Home Sales as it came out better than expected (433K v.s. 393K). The market did not manage to hold unto the gained as it tumbled down immediately after the good news from New Home Sales.
On Thursday, the market went south at the opening bell despite of a slightly better than expected GDP report in Q2. The falling of the Crude oil prices in the opening bell gave the bear an extra edge to push the market lower. The market suddenly took a turn at 1pm EST without any news. The crude oil prices also turn at 1pm EST from bearish to bullish. The rally turn out to be a great run for the market. The rally was likely being push by the hedge fund traders and also the robot traders.
On Friday, the market open higher but closes lower towards the end of the day. The Personal Spending (0.1% v.s. 0.2%) and Personal Income (0.2% v.s. 0.3%) came out worst than expected. The reports show that the consumer had already tightened up their spending as they are having lesser income.
Major Event
- FDIC had closed 3 banks on Friday. The largest of Friday’s three closures was Affinity Bank with total assets of $1 billion, based in Ventura, Calif.
- Troubled banks rose to 416 at the end of June from 305 at the end of March. This is the largest number of banks on its “problem list” since recession continued to saddle banks with soured loans. Assets at troubled banks totaled $299.8 billion, the highest level since Dec.31, 1993.
- Chinese banks continue to slow their lending in August.
- Shanghai Composite Falling more than 6%, the worst fall since the Shanghai Surprise. (31/08/09)
- Japanese voters hand LDP a resounding defeat, pushing main opposition DPJ into power and signaling a potential change in economic policies.
Economic Data
This week the market will be focusing on the Manufacturing data and Non-Farm Payroll. Manufacturing data such as Chicago PMI, ISM Manufacturing PMI, Construction Spending, Factory Orders and ISM Non-Manufacturing PMI will be features in the week. Employment data such as ADP Non-Farm Employment Change, Weekly Unemployment Claims, Non-Farm Employment Change and Unemployment Rate will be publishing. Lastly the market will also take note of the FOMC Meeting Minutes on Wednesday.
Earnings
There are only a handful of companies that are going to release their result in this coming week. The notable companies are from the auto industry. Ford Motor, GM and others are slated to report on Tuesday. Interactive media companies such as Take-Two and Shanda Interactive will also release their report. Traders and investors will likely to watch closely on the Homebuilder Hovnanian Enterprises, which is slated to report its earnings on Wednesday.
Summary
The market did not react to the good news for most of the week. In fact, the market was acting like ‘buying on rumors and sell on news’. Heavy volumes were recorded on the seller as compare to average volumes on the buyer.
Many Insiders has been selling their shares recently. There are no insiders buying for the past few weeks. So you have to wonder who is pushing up this market?
Recently the market was very choppy as it was traded very lightly in volume. There are more than 40% of the recent traded volumes are contributed by the top 5 dieing companies like Citigroup, Bank of America, AIG, Freddie Mac and Fannie Mae.
Nowadays, the market clearly shows the greedy side of it. Many people are jumping into this sinking ship with both feet as they have missed out the great run since March low. This was clearly shown in recent trading days. The market was sold off with heavy volumes and suddenly it will close higher at the end of the day with averagely volumes.
The market will be looking for any good news and economic data for this week to hold unto the gained in this coming week. The market sentiments were rather mixed last week. Insiders and investors are unloading their shares but bargain hunters and those people who have missed out the rally have been buying on every dip in the market.
The crude oil prices have been very volatile recently. After it hit a high of $75, it drop quickly back to $70 and bounces off the $70 levels. The volatility in the crude oil price likely to increase as the market enters into September.
In conclusion, the bargain hunter will do its best to hold unto the gained with buying on every dips in the market. The market will likely to trade in a sideway range with wild swings. The market will likely to be tepid and traded in low volumes as many traders will be taking long weekend or 1 weeks off in the first week of September. The market will only face the true test after Labor Day. Therefore I am expecting the market to range violently despite the facts that the Chinese’s Market had been suffering for the past few weeks. Just be extra careful in this market.
The Shanghai Composite closing -6.74% and Asia market closed in red.
From,
Lawrence Chua
Foreword : Week 36/09
August 31, 2009
Last week, the Dow Jones Industrial Average gained 38 points to close at 9544 (0.4%) followed by the S&P500 Index gained 2 points to close at 1028 (0.3%) and the Nasdaq Composite added 9 points to close at 2029 (0.4%).
Aug ‘09 - Transportation
August 30, 2009
Planes, trains, automobiles and ships … how would live without them?
Transportation has become such an integral part of our lives and a major component in any business. The health of the transportation sector is always keenly watched as an indication of the country’s economic state.
In a global economy where everything depends on timely deliveries, speed and reliability, most businesses depend on an efficient transportation system. This makes Transportation the busiest and most competitive sectors in a booming economy and the longest suffering and highest maintenance industry in an ailing economy.
This report breaks down this massive sector into four parts; Rails, Shipping, Trucking and Airlines.
Technical Analysis : Week 35/09
August 24, 2009
The S&P500 Index closed at 1026 last week. This indicates a gain of 22 points (2.2%) from the previous week’s close. This week gain marked the highest closing price for the year.
Last week the market went down huge on Monday and breaking the support level of 980. The market staged a comeback starting on Tuesday till Friday as it manages to close higher at the end of the week. The strong reversal was help by the rising crude oil prices, which kind of resemble last year price action between the market and the crude oil prices.
The S&P500 Index had already been rising more than 51% off the March 09 low. It had risen by more than 13% in this year. The S&P500 Index is only 34% off the 2007 high.
Technically, the market establish itself a good momentum for the upside surging as it took a mini correction on Monday, which tested the 980 levels. After it had taken the 980 levels, it manages to rebound from the major support level. The market use the support level as a spring board to surge higher from Tuesday till Friday breaking the 1000 resistant level and challenging the 1025 level the first time in 2009. On Friday, It managed to close above the 1025 level to establish itself for a higher position in the coming week.
Looking at weekly candles, the S&P500 Index is suggesting a slight gained or a pause in the coming week. This is because the weekly candle shows that the bull had the upper hand throughout the end of the last trading week. However the bull might have a tough time to crack the 1025 resistant level without a strong economic data as a backup.
Looking at daily candles, the S&P500 Index looks like it might be having a pause or downside on Monday. This is because of the 5th candle reversal pattern that might be forming on Monday. Furthermore, the strong resistant of 1025 might pose a challenge to the bull. Investors and traders will likely to be profit taking today after 4 days of gained in last week.
The immediate support levels are S1: 1025, S2: 1000 and S3: 980.
The immediate resistance levels are R1: 1050, R2: 1100 and R3: 1150.
The Dollar Index will likely to strengthen in the coming weeks, as the economic seem to be on the recovery mode. The Fed will likely to give speeches that will support the dollar as a collapse of the dollar will have another round of problem for the economy as warn by Warren Buffet.
In conclusion, the market this coming week will likely to be consolidating between the ranges of 1000 to 1030. The bull will have the upper hands going into this week, as the major player seems very happy with the current Bull Run. The market will be looking for any positive news to spike up and challenge the upper resistant levels. Good report from the Housing data and Manufacturing data will definitely send the market to the roof. The GDP report will also play a crucial factor in this coming week. However be warn that the bear is lurking around at the sidelines and ready to strike the market when it is overly confident.
By,
Lawrence Chua
Sector Rotation : Week 35/09
August 24, 2009
Energy (6.68%) lead the charge for the week followed by Financials (6.67%), Materials (5.76%), Industrials (5.42%), Consumer Discretionary (5.03%), Technology (4.42%), Utilities (3.77%), Health Care (3.09%) and Consumer Staples (2.44%).
This week the energy sector lifted the whole market because of the unexpectedly large draw down in the crude oil inventories and the expiration of the front month crude oil contract. Financials had been doing well with the better than expected data from the Existing Home Sales and the bullish speeches from the IMF and Fed Chairman.
More good news will likely to be appearing in the headlines to fuel the stock to a higher ground. The energy sector will likely to be benefit from the surging crude oil price again. However be warn that when the crude oil price went out of control, it can be a denoting bomb to the market and the economy.
In Summary, the safest bet would still be the defensive sector especially the health care sector. The growth of the Health Care sector is very healthy as it did not gained too much in the recent mini bull run. They are unlikely to take too much of a beating too if the market decide to profit take and send it to a lower ground.
Market Analysis : Week 35/09
August 24, 2009
What a crazy market!!! Last week we had experience a rollercoaster ride from free falling to surging a new high for the year. The world market had a scared on Monday when China’s market went down for more than 5% and as a result, it drag down the entire Asia market. Fear was rampaging throughout the Asia market especially when the Chinese’s market falls again on Wednesday. The US market managed to recover on Wednesday due to an unexpected larger draw down in crude oil, which imply better economic situation as the demand picking up in the latest week. On Friday the whole world cheers and celebrated for the better than expected economic data from European powerhouse, France and Germany. The whole world was also delighted from the better than expected Existing Home Sales data and the bullish outlook of the economy from Fed Chairman Bernanke.
On Monday, the whole world was gripped by the fear of the Chinese’s Market. The U.S. Market did not make the exception and it crashed badly. The NAHB Housing Market Index came out flat on Monday did not help to prevent the free falling.
On Tuesday, the market recovered half of the losses from the previous day. The market staged a recovery despite the fact that the economic data were not that positive. The Housing Starts and Building Permits report came out slightly worst than expected. The producer price index came out negatively which suggest that the price to produce goods had dropped from previous month.
On Wednesday, the market recovered all the losses from Monday. The market was surprise from the larger than expected drawn down of the crude oil (-8.4M v.s. 1.1M). Overall the energy sector surge the most and lifted the market on Wednesday. The good news from the oil data also ease off the fear from the Chinese’s market, which fall more than 4% in the earlier period.
On Thursday, the market continued to surge higher despite the fact that the Unemployment Claims came out worst than expected (576K v.s. 548K) and the CB leading Index came out flat. The only good news on Thursday was the Philly Fed Manufacturing Index shows signs of improvement in the manufacturing industry.
On Friday, The market was help by the better than expected economic result from the European powerhouse, France and Germany. The surprisingly good data from the Existing Home Sales (5.24M v.s. 5.03M) jolted the market higher. The bullish speech from the Fed Chairman Bernanke gave the final pushed for the market to end up closing higher for the week.
Major Event
- FDIC had closed another 4 banks on Friday. Guaranty Bank of Texas has become the 2nd largest bank failure in this year with deposits of around 12 billion.
- All the 3 main Indexes recorded a new high in 2009 with the Crude oil price. Dow – 9505, S&P500 – 1026, Nasdaq – 2020 and Oil - $74.
- Unemployment rates hit double digits in 15 states, D.C. California joblessness up to 11.9%; Michigan, Rhode Island leads country.
- Fed Chairman Bernanke, “We Save the World”.
- Warren Buffet warns against the risk of over inflating the U.S. Dollars.
- Credit Card delinquencies (payments more than 30 days late) rose to 6.7% up from 6.68%. Charge-offs (listed as ‘uncollectible’ by the banks) rose to 9.55%, up from 7.64%. This trend is accelerating.
- Nobel Prize Economist Nouriel Roubini Warn the risk of a double-dip recession is rising.
Economic Data
The market will mainly focus on the housing data and GDP data in this coming week. On Tuesday, the market will be looking at the Consumer Confidence and Case-Shiller House Price Index. On Wednesday, the market will be looking at the New Home Sales, Core Durable Goods Order and Crude Oil Inventories. On Thursday, the market will dissect the GDP data and the Unemployment Claims result. Lastly on Friday, Consumer data will be schedule to be release.
Earnings
As earnings season coming to the end, there are only a handful of notable companies that are going to announce their earnings in this coming week. These Companies are Staples Inc, Medtronic Inc, Novell Inc, Tiffany & Co and Dell.
Summary
Last Monday despite the gloomy picture painted throughout the world, the U.S. market managed to recover very well from the scare at the end of the week. The U.S. market also shows the world that it is still a very resilient market and it will take a lot of bad news to stumble the current Bull Run. The U.S. market had continues its climb and establishing a new high week in week out as if the world is back to normal once again. The last few weeks saw a continuous climb in Unemployment Claim. Furthermore, the credit card delinquencies rate had been on the rise sharply for the past few months. Adding to the fuel, the mortgage default rate had been rising too along with the Prime mortgage. The market players had started to watch with concern on the rise of the crude oil prices. A repeat of last year might happen if the crude oil prices shot up too fast and furious, which will stun the growth of the economy and drag the whole world market down again.
The market will be looking for any good news and economic data to justify a higher closing in the coming week. The market sentiments prove to be too bullish that the bad news had been swiped under the carpet but the good news will be published in the headline.
The crude oil prices are likely to establish a higher high at the range of 80 to 100, which were the targets from Goldman Sachs. The rise of the crude oil prices will likely to create another mini bubbles in the commodity sectors.
In conclusion, the market seems to forget about the underlying risk in the economy and they will press the buy button when the market fall a little. This kind of strong bullish momentum will likely to prevail until the market returns to the normal volumes environment. This means that the market will likely to show its true color in October onwards where big investors and players come back to the market again. I am expecting the market to continue testing the upper range and entice more people to buy into this market. So Short term Bullish but long term very bearish. I am expecting another big fall soon. Watch out for the Oil Prices!!!
By
Lawrence Chua
Foreword : Week 35/09
August 24, 2009
Last week, the Dow Jones Industrial Average gained 184 points to close at 9506 (2%) followed the S&P500 Index rise 22 points to close at 1026 (2.2%) and the Nasdaq Composite gained 35 points to close at 2020 (1.8%).
Technical Analysis : Week 34/09
August 17, 2009
The S&P500 Index closed at 1004 last week. This indicates a loss of 6 points (-0.6%) from the previous week’s close. This week loss marked the 5th candle reversal in the weekly candles.
Previously …
“ Looking at weekly candles, the S&P500 Index is suggesting a pause to the upside in the coming week. This is because the S&P500 Index is at its 4th consecutive week of positive gains and is likely to be a doji candle for a 5th candle reversal pattern. If that is the worst that can happen, then the best we can get is more healthy upsides.”
Last week the market traded pretty sideways to the downside. The market traded sideways in the range of 992 to 1010 for the week. The market should have traded even lower than the 1000 level if not for the “Stick Save” that happened throughout the week. The “Stick Save” refers to the sudden spike in the last 15 to 30 minutes in the closing bell.
The market started badly in the first two days of the week due to profit taking ahead of the FOMC announcement on Wednesday. The Fed maintained the Fed Fund Rate’s record low interest rate of 0.25% on Wednesday. The market rallied as the Fed did not come out with any surprising news. However the Fed did hint that they would be in the process of slowing down the purchase of long term Treasuries and shut off the program by this coming October. The market continued to rally till Thursday because of the better than expected GDP report from the European giants, France and Germany.
On Friday, the market fell off quickly as it threatened to wipe off the gains from Wednesday and Thursday when the worst than expected Consumer Sentiment report was revealed. The market proved to be resilient as the “Stick Save” appeared in the last 30 minutes to send the S&P500 up to close above the 1000 level.
Looking at weekly candles, the S&P500 Index is suggesting a pause to the downside in the coming week. This is because the weekly candle indicates a Doji pattern. However looking at the Doji, the bulls had more of an upper hand than the bears. The bears will be making waves if the S&P500 can convincingly break below the 990 level in the coming week.
Looking at daily candles, the S&P500 Index looks like it might be testing the low of 992 on Monday. The daily candle did not show any clear sign of direction but the market seems to be testing the lows rather than the highs.
The immediate support levels are S1: 1000, S2: 990 and S3: 980.
The immediate resistance levels are R1: 1025, R2: 1050 and R3: 1100.
The Dollar Index (DXY) closed at 79 for the week again. The dollar will likely to gain strength as the markets go into the risk aversion trade.
In conclusion, the market this coming week should be going down and trading between the range of 1000 and 980. The market will be expected to trade lower if the housing data does not meet expectations. Further sell off from the Chinese market are likely to spill over into the western markets and the rest of the world.
As of the time of this report, Monday is expected to make a major sell-off to start the week on a negative note. S&P Futures have been reading -1.75% to -2.15% all afternoon and now during the pre-market. Asian markets closed averagely -3.25% to the downside and European markets are trading -2.50% down.
