Thursday, April 19, 2007

Unbelievable, 14 for 15

Market Action:
Well, the market sure didn’t continue going down after the initial drop off. In fact, it was open down and drone higher but not all day, just half a day. For the last three hours of the day the market went back down except for the last few minutes. Shortly after the close, GOOG announced their earnings which the street really liked, driving the stock up about 3% in after hours trading…at least the pattern of trading varied somewhat on Thursday.

This market has been very difficult to call over the past few weeks. We picked Wednesday as the day for it to show some price weakness and if you look at the three indexes we follow, that is the focal point of the highest prices. The NASDAQ Comp index did have slightly higher prices on Tuesday but, for the most part, Thursday’s trading only tried to show some strength as none of these indexes pushed to new highs. True enough, the NASDAQ 100 did manage to move to a higher price but only marginally so.

Still, the Dow managed to generate yet another Record Closing High price, the old headliner high as we like to call it. As we look at the numbers this evening, a nice pattern has emerged that shows weakness in this latest price move. Our last post was pretty adamant about the possible turn and Thursday’s opening was pretty deep with most of the world’s markets being down overnight. But the US market decided to whistle past the graveyard and not worry about anything going on right now. Let’s look under the technical covers.

Our primary focus has been volume and Thursday’s volume was the highest it’s been since mid-March. That would be a good sign except that the majority of it was in stocks that were down; and, the reason for that was that there were about twice as many stocks down as up on Thursday. Looking back at Wednesday, the same picture show up but not quite so glaring. On Wednesday, there was just a modest negative bias in the breadth and volume figures.

Our momentum indicator peaked after Monday’s trading and that carried the day even up until Thursday’s new high in the Dow even though the SP 500 couldn’t quite manage a new high. We note the 14 up days out of 15 trading days (basis the Dow) and wonder how sustainable it can be. Considering the Dow is up about 500 points in those 15 days, the price alone should need to be rested. In 25 days the Dow is up about 800 points. This rally has got to be getting tired and the technicals seem to confirm it.

So, tonight, with the GOOG news, maybe the market can do something different and start up in the morning and fall from where ever that is to go back down and test the lows we established 25 days ago. At least we could see some exhaling.

In the News:
The LEI, leading economic indicators, were up 0.1% last month even though the prior month’s number was revised down by the same amount. Looking back from March of 2006 to this March, the LEI index is down 0.8%.

We just had to make a comment on the headline concerning the weekly jobless claims from Thursday morning. The WSJ is reporting that the “Jobless Claims Fall Less Than Expected”. The headline almost makes it seem like a bullish thing, since they are falling less than expected. The only problem is that jobless claims are Bad economic statistics and the market wants them to fall. Since they fell “less” than expected, that means they are worse than expected.

Dow Industrials: 12,808.63 +4.79
VIX: 12.54
HUI: 351.83 (down 10)
QQQQ: 45.15
QQQRS: 0.96 bid
QQQRT: 1.40 bid
RYVNX: 16.16
RYAIX: 21.05
RYCWX: 34.13
TLT: 88.38
BEGBX: 14.02

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