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Top stock market 101 news stories... |
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Weekly Market Newsletter, June 7th, 2010 |
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The Week Ahead: The jobs report failed to inspire confidence in stocks as all but 20,000 jobs created were temporary census workers. The report was a catalyst for the Dow Industrials to fall below 10,000 on increasing volume. Nervous markets will be watching the Consumer Credit report on Monday, Wholesale Trade numbers and the Fed Beige Book data on Wednesday. By Thursday, expect the International Trade numbers as well as the Jobless Claims for the past week. Friday's Retail Sales, Business Inventories, and Consumer Sentiment releases will rap up a busy and likely volatile week.
Stocks to Watch: Industrial and Material stocks faired the worst do to ties with the global economy. Heavier than normal volume was associated with Caterpillar (CAT), Boeing (BA), and General Electric (GE). Others include Textron (TXT), Jacobs Engineering (JEC), and trucking company Ryder Systems (R ). Worries about less global demand for steel impacted US Steel (X ), AK Steel (AK), and Cliffs Natural Resources (CLF). Concerns about European debt problems can be seen through ETF stocks of Europe such as the I-shares for Italy (EWI), Spain (EWP), and Belgium (EWK) whose debt is greater than Spain and Portugal relative to the size of its economy.
Special Note: During the the market peak in 2007 and subsequent low in 2009, many analysts cited US companies market presence in countries overseas as a saving grace for continued earnings growth despite a weak domestic economy. The burgeoning debt crisis is proving to have no boundaries as seen by a growing list of European countries including the recent threat of default by Hungary. How long can earnings be sustained as economies around the world endure budget cuts and contraction of the very debt that helped sustain their growth?
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Weekly Market Newsletter June 1, 2010 |
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The Week Ahead: Markets head into June concerned about higher oil prices do to the Gulf oil spill, the weakest consumer spending report in seven months, and Spain's credit rating being cut by Fitch. Further insight will be provided by three reports on Tuesday: Auto Sales, the ISM Manufacturing Index, and Construction Spending. In addition to this watch Thursday's Jobless Claims, Productivity and Costs, Factory Orders, and the ISM Non-Manufacturing Index. Lastly, Friday's Employment Report may have the most impact on stocks and bonds.
Stocks to Watch: Stocks related to the oil spill disaster in the Gulf continue to weaken as Halliburton (HAL), Baker Hughes (BHI), Diamond Offshore Drilling (DO), and FMC Technology (FTI) headed lower. Nabors Industries (NBR) bucked the trend as it is mostly a land driller and its stock headed higher. The growing possibility of a weakening European economy had Dow Chemical (DOW) down as 2/3 of the company's sales come from overseas. Blue Coat Systems (BCSI), a network security management firm, lost 1/4 of its value on a ratings cut over concerns about its European business.
Special Note: Volatility in May was the worst in over a year for the Dow Industrials. The biggest losing sectors were Energy down 11.8%, Industrials down 9.8%, and Materials down 9.7%. The rate of change in the core CPI figures which excludes food and energy fell to the lowest level since 1966. In addition to this, the now privately computed M3 money supply numbers show the broadest aggregate measure to have declined by almost 10% on an annualized basis. Perhaps deflation is the real threat going forward in all asset related markets.
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Bearish Measured Move Pattern |
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Bearish measured move or measured move down is a three phased continuation chart pattern. The pattern starts as reversal of an existing uptrend but is considered as continuation pattern as the pattern is only confirmed after the second phase. The 3 phases of bearish measured move are reversal decline phase, consolidation/retracement phase and continuation decline phase.
The requirements of bearish measured move pattern include,
- The pattern should begin at the top/end of a strong uptrend.
- The reversal decline phase starts near a high. The downward price decline should be pretty orderly; usually breaking a major support and forming a price channel. This phase lasts from a few weeks to many months. If the price is greatly curved, then the validity of the pattern is challenged.
- The consolidation/retracement phase follows the first phase. If it is a price retracement, it can be up to 67% of the first phase. Consolidation patterns such as
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Bullish Measured Move Chart Pattern |
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Bullish measured move or measured move up is a continuation chart pattern which starts as a reversal pattern. This is a three phased formation which forms over several months. The 3 phases of bullish measured move are reversal advance phase, consolidation/correction phase and continuation advance phase.
The requirements of a bullish measured chart pattern include,
- The pattern should form at the end of a strong downtrend.
- The reversal advance phase starts near an established low and lasts for a few weeks to many months. The upward price increase should be orderly; usually forming a price channel. If this uptrend is greatly curved, then the validity of the pattern is greatly challenged.
- The consolidation/correction phase occurs after an extended uptrend. The correction can be up to 63% of the reversal advance. Consolidation patterns such as
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Weekly Market Newsletter, May 24th, 2010 |
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The Week Ahead: Financial regulatory reform is seen contributing to market volatility as the final bill is hoped to be completed by July 4 and includes an overhaul on derivatives. Triple digit moves for the DOW could become the norm as evidenced again on Friday's reversal up day. Watch Existing Home sales numbers on Monday and the Consumer Confidence report on Tuesday. Durable Goods Orders and New Home Sales figures are released Wednesday. The GDP report on Thursday will be closely watched while Friday ends the week with Personal Income & Outlays and a consumer sentiment report.
Stocks to Watch: The Cme Group (CME) and Intercontinental Exchange (ICE) are two entities that are seen as probable winners benefiting from the Financial Reform package regarding derivatives if differences between the House and Senate get worked out by July. Technology stocks like Dell Computer (DELL) fell nearly 7%, but Marvell Technology (MRVL) rose over 8% on a big quarterly jump in revenues. Ann Taylor Stores (ANN), having tripled in the past year, showed margin growth last quarter with less discounting.
Special Note: Foreign equity indexes have been leading the charge to the downside versus the perceived lower risk U.S. markets. With key levels beginning to breakdown on the major indexes such as the 200 day moving average the " flash crash" low made earlier this month, and the 10,365 area on the DOW mentioned here last week investors may want to adopt a more defensive posture near term until the volatility calms down. This may mean selling into rallies or buying puts against long positions for protection.
Check out NobleTrading's new earnings calendar, upgrades and downgrades, and analyst coverages.
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