::: Today’s Market Action :::
If there has been any question about whether a correction from these lofty levels would ensue, today’s action probably put those questions to rest. In the weekend review email I mentioned that the Nasdaq was showing signs of a top (resistance, 3 straight weeks of weakening action)and that the correction begins now. On Monday and Tuesday, the bulls held their ground just as they have over the past several days, preventing significant selling. However, new fears are creeping into the market. The lower than expected GDP on Friday, the Chicago PMI at a 14 month low yesterday and a much larger drop in the Manufacturing ISM this morning to 51.2% (anything below 50% indicates contraction), there are fears that perhaps the economy may be slowing a bit too much. That provided an excuse to lock in some nice profits and that trend should continue over the next couple weeks.
It should be noted that the Nasdaq led the way down today, with semiconductors providing leadership to the downside. Distribution (institutional selling) occurred in the Nasdaq, but not in the S&P and Dow. Technically, the Nasdaq is currently sitting right on support of its upward trend line but has the momentum to take out that level and ultimately test the area around 2250, where the 50 and 200 day moving averages converge. Both the Dow and the S&P looked relatively healthy today, despite the selling and some room before testing their upward trend lines. Be sure to check out the blog later this evening or in the morning – I’ll have a full report detailing the health of the market, complete with annotated charts.
::: Major Indices Performance – The Numbers :::
(Note: volume averages are based on the average over the past 50 days)
Data as of 4:00EST – End of Day Nov 1st 2006
* Only the Nasdaq qualified as distribution selling today
Nasdaq: DOWN 1.37% today with volume 6% ABOVE average
Nasdaq ETF (QQQQ): DOWN 1.36%, volume 29% ABOVE the average
Dow: DOWN .42%, volume 8% ABOVE average
Dow ETF (DIA): DOWN .55%, volume 1% ABOVE the average
S&P ETF (SPY): DOWN .75%, volume 10% ABOVE the average
Russell Small Cap ETF (IWM): DOWN 1.90%, volume 9% BELOW the average
::: SelflInvestors Leading Stocks :::
The most concerning thing about today’s action was the performance of Self Investors Leading stocks. This is an index comprised of 360 of the fastest growing companies leading the market higher. They did not fare well today. In fact it was one of the worst performances in a few months.
Summary:
*Decliners led Advancers 311 to 49.
* Advancers were up an average of 1.07% today, with volume 18% ABOVE the average
* Decliners were d own an average of 2.39% with volume 18% ABOVE average
* The total SI Leading Stocks Index was DOWN 1.92% today with volume 18% ABOVE the average
* Where’s the Money Flowing *
Many investing websites provide leading industries based on price performance alone. However, without accompanying volume levels, this can sometimes 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, Software, Biotech (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. The list in order of weakness – Semis, Broadband, Clean Energy
* Today’s Market Moving Industries/Sectors (UP):
Gold and Utilities bucked the trend with nice gains today. Looks like the gold bottom has officially been put it and it’s beginning another leg up.
* Today’s Market Moving Industries/Sectors (DOWN):
The list is long today – Semis, Clean Energy, Biotech, Oil Services, Retail & Global Dividend
** 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 and most likely breaking out of a base or consolidation. Today’s stock is .. there were no stocks worth highlighting today. Yes, it really was an ugly day for leading stocks.