From now on I’ll be sending the market reports after the market closes instead of during the trading day. There is just too much going on particularly in these trading conditions to put those reports together for you. So the MidDay Market Report now becomes the After Market report. As usual these reports will not be sent every day, but rather on days like today when the market makes a significant move.
::: Today’s Market Action :::
It was just a matter of time before any news that could be construed as negative or outright negative would provide an excuse to digest the remarkable gains over the past couple months. The lower than expected GDP number before the bell, pushed down by a huge drop in residential construction activity started things off in the red. However, the bulls held their ground remarkably well and for a bit it appeared there was a chance that another sell off attempt would be averted. But the research note out of Goldman Sachs indicating they are cutting growth forecasts for motherboard shipments proved to be just the excuse needed for significant profit taking. All was not lost however. Volume levels indicated that today’s selling was not particulary intense and is just the kind of action you want to see after a run up. A few more days like today would be good for the sustainability of the upward trend.
If you haven’t yet had a chance, you may like to see the annotated charts of the daily and weekly charts of the Nasdaq over at the blog. Was the technical action over the previous two weeks forecasting today’s move? Hmm… http://investing.typepad.com/tradingstocks/2006/10/nasdaq_takes_ou.html
::: Major Indices Performance – The Numbers :::
(Note: volume averages are based on the average over the past 50 days)
Data as of 4:00EST
* Despite above average selling, there were no indications of distribution (institutional selling) in any of the major indices today. This is just the kind of selling you want to see following big market gains. Too many distribution days can derail a market rally.
Nasdaq: DOWN 1.2% today with volume 19% ABOVE average
Nasdaq ETF (QQQQ): DOWN 1.42%, volume 23% ABOVE the average
Dow: DOWN .6%, volume 23% ABOVE average
Dow ETF (DIA): DOWN ..47%, volume 27% ABOVE the average
S&P ETF (SPY): DOWN .63%, volume 14% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 1.17%, volume 17% ABOVE the average
::: SelflInvestors Leading Stocks :::
SelfInvestors Leading Stocks did not hold up well today which is a bit of a concern.
Summary:
* Advancers led Decliners 276 to 69.
* Advancers were up an average of 1.57% today, with volume 62% ABOVE the average
* Decliners were d own an average of 2.18% with volume 25% ABOVE average
* The total SI Leading Stocks Index was DOWN 1.43% today with volume 33% ABOVE the average
* Where’s the Money Flowing *
Many investing websites just provide leading industries based on price performance alone.. without the volume, this can be misleading. The only way that I know of to guage industry/sector strength WITH volume levels is through the analysis of ETF’s. A couple years ago this was not possible, but as more traders/investors use ETF’s they become a much better tool for guaging the health of the market and seeing where the money is flowing (or not flowing). Using the proprietary SelfInvestors Demand Indicator score which measures price and volume movements, I’m able to quickly see which sectors/industries are seeing the greatest inflows of cash. For a detailed look at how I go about gauging sector/industry strength please see the following post: http://investing.typepad.com/tradingstocks/2006/09/wheres_the_big_.html
* Current Leading Sectors/Industries:
Retail, Consumer Servics, HomeBuilders, Biotech, Software (Biotech is a fairly recent new addition)
* Current Lagging Sectors/Industries:
A BIG SHIFT is underway.. for the first time in a few months commodities are being replaced by Semiconductors! Broadband is also appearing on the Laggers list for the first time.
* Today’s Market Moving Industries/Sectors (UP):
Nothing moved up with volume today
* Today’s Market Moving Industries/Sectors (DOWN):
Semis were the big loser today, followed by Home Builders, Broadband and Software
** Stocks **
The stocks section will be an area where I highlight one stock selected from a group of stocks moving up with volume well above average. Today’s stock is Netgear (NTGR), provider of consumer routers and other networking hardware. It busted out to new all time highs today on a strong outlook in its earnings reports which was followed by a series of upgrades.
ABOUT: NetGear, Inc. designs, develops and markets networking products for home users and for small business. The Company’s product offerings enable users to share Internet access, peripherals, files, digital multimedia content and applications among multiple personal computers (PCs) and other Internet-enabled devices. NETGEAR sells its products primarily through a global sales channel network, which includes traditional retailers, online retailers, direct market resellers, value-added resellers and broadband service providers. The Company’s product line consists of switches, adapters, and wired and wireless devices that enable Ethernet networking, broadband access and network connectivity. These products are available in multiple configurations to address the needs of the Company’s customers in each geographic region, in which its products are sold.
FUNDAMENTAL: Very good consistent growth every since ’02 and expected to remain that way. Sales growth has been accelerating for the last several quarters. If there is one strike against the company, it’s that Margins and ROE are below industry averages.
TECHNICAL: Gapped up out of base to record all time highs with near record volume. A bit extended now, but may offer a better entry should the market digest gains over the next couple weeks.
SELFINVESTORS RATING: With a total score of 48/60 (24/30 for fundamentals, 24/30 for technical), NTGR is a solid SelfInvestors breakout stock.