MidDay Market Report – 8.16.06

We’re at the halfway point of the trading day and the market still has a good chance of holding/staging a breakout today.  Currently the S&P is sitting in breakout territory above the 1290 area and will need to hold above that level into the close.  The Dow has some work to do and needs another 50 points before I’d be calling a break out in the Dow.  Volume levels are once again a bit of a concern today, particularly in the S&P and the Dow.  Volume is actually quite good in the Nasdaq.  Here’s the breakdown:

Nasdaq: up 1.08% today with volume currently tracking 10% GREATER than 50 day average
Nasdaq ETF (QQQQ): up 1.35%, volume 6% GREATER than average
Dow: up .58%, volume 18% BELOW 50 day average
Dow ETF (DIA): up .70%, volume 31% BELOW the 50 day average
S&P ETF (SPY): up .67%, volume 25% BELOW the 50 day average
Russell Small Cap ETF (IWM): up 1.04%, volume currently tracking 25% BELOW 50 average

Leading stocks that make up the SelfInvestors Breakout Tracker database are fairing well in terms of price movement, but once again there is no volume behind the move which is even lighter than yesterday.

*Advancers are outpacing Decliners 282 to 85.
*Advancers are up 1.49% today but volume is tracking 15% BELOW the 50 day average at this point in the trading day
*Decliners are down 1.13%, but the good news is that volume is very light on the down moves as well.  Volume is currently tracking 19% BELOW the average at this point in the trading day.
* The total SI Leading Stocks Index is up .88% today with volume 16% below the average

Remember, it’s all about the close.  Let’s see if we can add to the gains with greater volume to finish the day.. my bet is that we end the day near flat.  I feel that the inflation data gains have about run their course, but we’ll see. 

MarketSnapshot & MidDay Updates (Today the Rally is Muted)

I mentioned several weeks ago to members of Selfinvestors.com that another major upgrade is in the works.. I won’t give a timeline because these projects always seem to take much longer than expected.  BUT, I will say that one new feature will be a Market Snapshot page where you’ll be able to quickly see just how well the overall market is doing.  Along with this new feature will be a MidDay Update on days when the market moves significantly in any one direction.  I’ll discuss the strength of the move as well support and resistance areas.  This new feature will be available to registered users of SelfInvestors.com completely free.

** MARKET SNAPSHOT **

Looking at the price change is of course one piece of the supply/demand puzzle that all financial sites use.  What you won’t see at nearly every financial site is a focus on the volume behind each move.  That’s where the SelfInvestors Market Snapshot page comes into play.  Throughout the day (updated every 15 min.), you’ll be able to not only see price changes in the major indices (Nasdaq and Dow) and ETF tracking indices (SPY, QQQQ, DIA & IY), but you’ll be able to guage the volume as compared to its average at 15 minute intervals throughout the trading day.  For example, at 1:15PM EST the Nasdaq is up 1.7%, but volume is tracking 11% below the average at this point in the trading day. 

We’re at the halfway point of the trading day today and looking at the numbers makes it clear that today’s rally doesn’t have the big fellas behind it.  Considering yesterday’s volume was very light as well, we could still get a day of accumulation (if today’s volume can surpass yesterday’s), but we’re going to need to see some volume into the close on the upside. 

The rest of today’s data is as follows:

Nasdaq ETF (QQQQ): up 1.85%, volume currently tracking 6% higher than average
Dow: up .84%, volume -25% from average
Dow ETF (DIA): up .84%, volume -42% from average
S&P500 ETF (SPY) up 1.00%, volume -16% from average
Russell Small Cap ETF (IYM): up 1.57%, volume -23% from average

** Self Investors Leading Stocks Index **

Another component of the Market Snapshot page is the data for the SelfInvestors Leading Stocks Index, which you can currently find just to the right of this post.  SelfInvestors Leading Stocks are stocks that are currently in the Breakout Tracker database.  Most of these stocks are near a breakout or have already broken out.  This database is comprised of market leaders so provides a great look at the health of the market.  Again, looking at today’s data indicates that the rally today is muted.. no reason to get too excited about today’s move.

While advancers are crushing decliners 313 to 34 and advancing stocks are up 1.96%, volume is currently 16% below average at this point in the trading day for these advancing stocks.  Institutions are not putting money to work in leading stocks today.

** Where’s the Money Flowing **

Many 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 example, the Market Snapshot page is currently showing that demand is currently greatest in Pharmaceuticals, Financials, Gold, Health Care and Telecom while demand is weakest in Consumer Services, Aerospace/Defense, Internet, Transports and Oil & Gas Services.

** Stocks **

The final component of the Market Snapshot page is a section that displays Breakout Tracker stocks moving up and down with significant volume.  This area is still in the planning stages.

** Several Other Features Planned **

Other components of the Market Snapshot page will include article headlines, SelfInvestors portfolio allocation, quick links to SelfInvestors State of the Market reports, Accumulation/Distribution calender, etc.   

If you’d like to begin receiving the MidDay Updates as well as the Weekend Review Reports, feel free to sign up for the free membership on the home page of SelfInvestors.com

Weekly Market Review – PPI and CPI Inflation Data Coming

The anticlimactic end to rate hikes came to an end last week as most everyone expected. It didn’t take long for traders to "sell the news".. Remember, the market looks several months into the future and had already priced in the end to rate hikes.  Now the market turns to more important things such as the actual data that this data dependent Fed is basing its decisions on. Kicking it off on Tuesday and Wednesday is the all important  PPI and CPI inflation data which will give us another clue as to just how fast inflation is rising.  This data has the potential to be a real market mover, so be prepared one way or the other.  I still think there is more risk to the downside than potential to the upside.  We’ll probably see a pop Monday morning on news of a cease fire agreement in the Middle East, but I would expect that to be short lived.  The market has been flashing warning signs and put together another 2 days of distribution (institutional selling) last week following the Fed decision.  When the market speaks, it pays to listen.  Be careful out there.

It was another  busy and profitable week in the Model Portfolio.  Two short positions were covered – one for a quick 3 day gain of 23% in Grupo Simec (SIM), the other for a 7% loss in Business Objects (BOBJ).  These were replaced by 2 new short positions on Tuesday which I continue to hold for gains.  Only one long trade was attempted in Dril Quip (DRQ) and promptly sold for a 3% loss as the stock reversed course.  Currently, the portfolio allocation is roughly 30% short, 10% long and 60% cash.  The portfolio gained 1.5% for the week and is sitting on a gain of 14.5% year to date.

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Want to take your membership to the next level?  Premium members who have been following along with buy and sell alerts in the Model Portfolio are smashing average returns with a 14.5% YTD performance.  In addition to alerting you to the best opportunities on the long side, short opportunities are used to make money during a downturn.  That’s just one of many premium features….

Would you like a database of stocks all ranked according to fundamentals and technicals, complete with pivot points, earnings date, % change from breakout and moving averages, future earnings estimates and relative strength rating?  How about Stock Watch reports highlighting long and short opportunities for the coming week?

Try it out for yourself for 30 days!  Sign in to your account here: http://www.selfinvestors.com/amember/member.php and take advantage of the no risk trial.

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** Best/Worst Performers **

– Top 10 Performing Industries For the Week –

1. Office Supplies                            6.60%
2. Networking & Comm Devices      6.55%
3. Multimedia & Graphics Software 4.40%
4. Drugs – Generic                           4.10%
5. Personal Serivces                        2.80%
6. Catalog & Mail Order Houses       2.80%
7. Nonmetallic Mineral & Mining         2.35%
8. Specialized Health Services         2.35%
9. Hospitals                                       2.15%
10. Publishing – Periodicals               1.85%

– Top 10 Worst Performing Industries For the Week –

1. Music & Video Stores                  -14.85%
2. Trucks & Other Vehicles             -11.35%
3. Rental & Leasing Services          -10.20%
4. Major Airlines                                -8.90%
5. Residential Construction               -8.15%
6. Farm & Construction Machinery   -7.65%
7. Drug Delivery                                -7.50%
8. Manufactured Housing                 -6.90%
9. Sporting Activities                        -6.70%
10. Movie Production                        -6.20%

– Top 5 Best Performing ETFs For the Week –
 
1. Turkish Invest Fd (TKF)                     6.00%
2.Chile Fund (CH)                                  6.00%
3. Russia & E. Europe (TRF)                 4.15%
4. Morgan Stanley India (IIF)                  3.10%
5. Templeton Dragon Fund (TDF)          3.10%

– Worst 5 Performing ETF’s –

1.SPDR Homebuilders (XHB)                 -8.15%
2. Dow Jones Transportation (IYT)      -4.05%
3. PowerShares Clean Energy (PBW) -3.70%
4. Gold Miners (GDX)                           -3.60%
5. Commodity Index (DBC)                    -3.50%

**  IPO’s worth watching for the coming week **

1. InnerWorkings (INWK): provides printing solutions.  The company believes its unique technology enables it to obtain favorable pricing, deliver high quality products and services to its clients.  During the first quarter, the company reported strong growth from the year ago period.  Trading is set to start Wednesday.

2. GNC (GNC): This is a carryover from last week and no trading date has been set.  Specialty retailer of nutritional products, including vitamins, herbs, minerals and supplements with over 5800 locations worldwide.  Earnings and sales are growing quickly. 

** Upcoming Economic Reports (8/14/06- 8/18/06) **

Monday:        No Events
Tuesday:       PPI, Treasure Capital Inflows, NY Manufacturing Index, Retail Sales
Wednesday:  CPI, Industrial Production, Real Earnings, Housing Starts, Petroleum Status
                       Mortgage Applications
Thursday:      Money Supply, Philly Fed Survey, Leading Indicators, Jobless Claims
Friday:           Consumer Sentiment (Prelim)

** Latest Blog Entries – In Case You Missed Them!**

– SelfInvestors Blog –

1. Today’s Notable Earnings Movers (NCTY, ECLG) (Aug 10)
http://investing.typepad.com/tradingstocks/2006/08/todays_notable__4.html

2. Yahoo Demos New Ad Platform (Aug 8)
http://investing.typepad.com/tradingstocks/2006/08/yahoo_demos_new.html

3. Today’s Notable Earnings Mover’s (VTIV, JOBS) (Aug 7)
http://investing.typepad.com/tradingstocks/2006/08/todays_notable__3.html

Today’s Notable Earnings Movers – The9Limited (NCTY), eCollege.com (ECLG)

Here are today’s notable earnings movers…

Note:

* fundamental rank in brackets does not include latest results
* earnings movers only include those stocks in the SelfInvestors.com database at this time, so won’t include managed stocks that are technically damaged (ie. YHOO)

UP

  • The9Limited (NCTY) Gaming Activities, fundamental rank [24/30] up 9%, closes near lows of day but move probably sets up carving out of right side of base

DOWN

  • eCollege.com (ECLG) Education & Training Service, fundamental rank [23/30] down 38%, goodbye, yesterday’s move kind of telegraphed today’s
  • World Fuel Services (INT) Wholesale Other, fundamental rank [24/30] down 14%, failed base but bounced off 200 day moving average

Yahoo Demos New Ad Platform

In a bid to catch Google in search advertising, Yahoo unveiled portions of its long awaited platform at the Search Engine Strategies convention in San Jose today.  There doesn’t appear to be any earth shattering features at first glance, just "me too" features in line with what Google already provides such as targeting geographic areas and creating budgets for their campaigns.  The one glaring difference is the abolishment of an auction style bidding system in which companies bid for placement in the search engines.  Some business are already complaining because of the lack of transparency.  In the existing Yahoo system (as well as Google), customers could bid just one cent more to appear higher in the search engines.  Not knowing what others are paying for keywords takes this advantage away, potentially creating more revenue for Yahoo.  However, the lack of transparency may drive advertisers away.  We shall see.  Yahoo’s new system is set to launch in the 4th quarter or in the first quarter 2007.  Given, the long delays already, I’d put my money on the first quarter at the earliest. 

Here’s a link to the full Red Herring article

Today’s Notable Earning’s Movers – Inventiv Health (VTIV); 51Jobs (JOBS)

Here are today’s notable earnings movers…

Note:

* fundamental rank in brackets does not include latest results
* earnings movers only include those stocks in the SelfInvestors.com database at this time, so won’t include managed stocks that are technically damaged (ie. YHOO)

UP

  • Inventiv Health (VTIV) Business/Management Services, fundamental rank [25/30] up 12%, today’s move sets up beginning of right side of new base
  • Blackbaud (BLKB) Business Software & Services, fundamental rank [27/30] up 11%, back above 50 day moving average; will probably spend a few more weeks carving out a base
  • Gigamedia (GIGM) Internet Service Providers, fundamental rank [20/30] up 5%, carving out right side of nice looking base
  • AMN Healthcare (AHS) Staffing & Outsourcing Services, fundamental rank [23/30] up 5%, continuing bounce off recent test of support; early July breakout remains intact

DOWN

  • 51job Inc (JOBS) Staffing & Outsourcing Services, fundamental rank [23/30] down 24%, holding at 50 day moving average; any hopes of carving out a great great looking base now gone
  • NDS Group (NNDS) Diversified Electronics, fundamental rank [23/30] down 10%, taking out support of 200 day moving average; any hopes of carving out new base any time soon gone
  • Universal Compression Holdings (UCO) Oil/Gas Equipment & Services, fundamental rank [23/30] down 4%, holding at 50 day moving average; late June breakout remains intact

Weekly Market Review – Wanted: Goldilocks

In last week’s report I mentioned it would be a difficult tight rope for the market to walk in the coming months as traders look for "goldilocks" numbers.  Traders want indication of a slowing economy, but not too slow… all while keeping inflation in check so the Fed will ease up on rate hikes.  Before the jobs report was released, fed funds futures were pricing in a 44% chance of an August 8th rate hike.  That number dropped to just 19% after the number was released and the market surged as a result, taking out key resistance points in both the Dow and S&P (the Nasdaq hit resistance of its 50 day moving average) .  However, it took just a few hours for traders to hit the sell button ahead of the weekend, leaving both the Dow and S&P with failed breakouts.  Clearly, there is still a considerable amount of skittishness.   Should the Fed pause on Tuesday, I would be very surprised to see this market catapult for a breakout move.   I think the move we’ve seen off the bottom over the past several weeks is a pricing in of the pause in rate hikes.  From now on, it will be all about the economy and inflation numbers.  These numbers will be the drivers of the market, not the Fed decision.

It was a busy week in the Model Portfolio as I began to place short term bets on the short side.  At the beginning of the week I closed a long position in my lone oil play Veritas (VTS) for a quick 6% gain due to a lack of buy volume at the breakout and in days following.  Over the course of the week, premium members were alerted to a flurry of small short positions (currently 6 in all) which now represent around 35% of the portfolio.  The rest of the portfolio is 10% on the long side and 55% cash.  Considering the market continues to meander higher, the shorts are in solid shape and are up 1% collectively for the week.  With the market a bit overbought up here and a lack of volume behind recent moves higher, playing the short side with a few small positions currently makes more sense.
_______________________________________________________________

Want to take your membership to the next level?  Premium members who have been following along with buy and sell alerts in the Model Portfolio are smashing average returns with a 13% YTD performance.  In addition to alerting you to the best opportunities on the long side, short opportunities are used to make money during a downturn.  That’s just one of many premium features….

Would you like a database of stocks all ranked according to fundamentals and technicals, complete with pivot points, earnings date, % change from breakout and moving averages, future earnings estimates and relative strength rating?  How about Stock Watch reports highlighting long and short opportunities for the coming week?

Try it out for yourself for 30 days!  Sign in to your account here: http://www.selfinvestors.com/amember/member.php and take advantage of the no risk trial.

______________________

** Best/Worst Performers **

– Top 10 Performing Industries For the Week –

1. Silver                                            7.00%
2. Jewelry Stores                            6.85%
3. Internet Service Providers           6.30%
4. Residential Construction              6.00%
5. General Contractors                    5.75%
6. Farm Products                             5.30%
7. Multimedia & Graphics Software 4.20%
8. Electronic Stores                         3.95%
9. Cleaning Products                       3.60%
10. General Building Materials         3.55%

– Top 10 Worst Performing Industries For the Week –

1. Education & Training Services     -8.60%
2. Specialty Eateries                        -6.50%
3. Drug Delivery                               -6.00%
4. Medical Appliances & Equip         -5.40%
5. Semis – Memory                           -4.65%
6. Gaming Activities                         -4.25%
7. Oil/Gas Drilling & Exploration        -4.05%
8. Aerospace/Defense                    -3.15%
9. Diversified Communications         -2.80%
10. Metal Fabrication                        -2.80%

– Top 5 Best Performing ETFs For the Week –
 
1. Ishares Silver  (SLV)                        8.50%
2.Central Fund Canada  (CEF)              5.20%
3. SPDR HomeBuilders (XHB)               4.30%
4. ASA Gold (ASA)                              2.50%
5. Powershares Water (PHO)              2.30%

– Worst 5 Performing ETF’s –

1. India Fund  (IFN)                                -6.30%
2. HLDRS Oil Service  (OIH)                  -3.55%
3. PowerShares Oil  (PXJ)                    -3.20%
4. HLDRS Internet  (IIH)                         -2.25%
5. Morgan Stanley  (IIF)                         -2.05%

**  IPO’s worth watching for the coming week **

1. Aircastle Limited (AYR): acquires and leases comercial jet aircraft to passenger and cargo airlines.  Sales and earnings are Trading is set to start Tuesday.

2. Evercore Partners (EVR):  NY financial firm providing advisory services corporations on mergers, acquisitions, divestitures and restructurings.  The company also offers investment management to institutional investors.  Sales and earnings are surging as the company reported profit and revenue that were more than double from the year ago period.  Trading starts on Friday.

3. GNC (GNC): specialty retailer of nutritional products, including vitamins, herbs, minerals and supplements with over 5800 locations worldwide.  Earnings and sales are growing quickly.  Trading set to start on Friday

4. Intermetro Communications (MTRO): provider of VOIP network infrastructure is fast becoming profitable.  Trading set to start sometime this week.

5. Qimonda (QI):  Spinoff of Infineon.  Munich based supplier of semiconductor products designing semi memory technologies and developing a variety of semi memory products on a chip.   For the year ending September 30, Qimonda reported net income of $22 million on net sales of $3.41 billion. For the six months ending March 31, Qimonda reported a net loss of $144 million on net sales of $1.95 billion. Formed in 1952, Qimonda has about 10,469 employees.  Trading set to start on Wednesday.

** Upcoming Economic Reports (8/7/06- 8/12/06) **

Monday:        Consumer Credit
Tuesday:       FOMC Rate Decision, Productivity & Costs, Economic Optimism, Retail Sales
Wednesday:  Wholesale Trade, Petroleum Status, Mortgage Apps, Job Vacancies
Thursday:      Money Supply, Treasury Budget, Trade Balance, Jobless Claims
Friday:           Import Price Index, Business Inventories, Retail Sales

** Latest Blog Entries – In Case You Missed Them!**

– SelfInvestors Blog –

1. Today’s Notable Earnings Movers (GES, SBUX) (Aug 3rd)
http://investing.typepad.com/tradingstocks/2006/08/todays_notable__2.html

2. Breakout Highlights – Bancorp (TBBK) & Gilead Sciences (GILD) (Aug 2nd)
http://investing.typepad.com/tradingstocks/2006/08/breakout_highli.html

3. Today’s Notable Earnings Movers (AQNT, KEYS) (Aug 1st)
http://investing.typepad.com/tradingstocks/2006/08/todays_notable__1.html

4. Today’s Notable Earnings Mover’s (CFK, ZVXI) (June 31st)
http://investing.typepad.com/tradingstocks/2006/08/todays_notable_.html

Today’s Notable Earnings Movers – Guess (GES), Starbux (SBUX)

Here are today’s notable earnings movers…

Note:

* fundamental rank in brackets does not include latest results
* earnings movers only include those stocks in the SelfInvestors.com database at this time, so won’t include managed stocks that are technically damaged (ie. YHOO)

UP

  • Guess (GES) Apparrel Clothing, fundamental rank [27/30] up 10%, breaking out from long base today to new all time high
  • DJO Inc (DJO) Medical Appliances & Equipment, fundamental rank [24/30] up 6%, broke out to new all time high today but is well off those highs; probably spends a few weeks forming a handle from here
  • Wellcare Health Plans (WCG) Health Care Plans, fundamental rank [25/30] up 4%, took a big dive at the open but has reclaimed support and then some with a big reversal

DOWN

  • Starbux (SBUX) Specialty Eateries, fundamental rank [27/30] down 8%, well off morning lows and there should be some support around 30
  • Las Vegas Sands (LVS) Resorts & Casinos, fundamental rank [27/30] down 8%, continuing the basing process; I’d be real tempted to pick this up off the 200 day moving average
  • Scientific Games (SGMS) Diversified Computer Systems, fundamental rank [25/30] down 8%, not coming back for a very loooong time; maybe good short if tests resistance of 200 day moving average
  • Tower Group (TWGP) Property & Casualty Insurance, fundamental rank [27/30] down 4%, taking out support of 50dma again.. go on to form triple bottom?
  • Oceaneering Intl (OII) Oil & Gas Drilling & Exploration, fundamental rank [23/30] down 4%, a successful test of the 50 day moving average today, keeping uptrend intact

Breakout Highlights (7.16.06 – 7.31.06) [Bancorp (TBBK) & Gilead Sciences (GILD)]

With the market staging a rally in the last half of July, the number of breakouts picked up significantly and the success rate was much higher.  New leaders are emerging in banking, telecom and health/drug related issues as the market tries to pull itself out of the correction.  Oil stocks also continue to do well as most continue to report record profits. 

IN the last half of July, there were total of 41 breakouts tracked in the SelfInvestors.com Breakout Tracking database, with 22 finishing the period with a gain, 2 with no gain and 11 with a loss.  Just 2 stocks dropped 8% or more, indicating a failed breakout.  That’s a darn good success rate.  If you were in oil and banking stocks you did well at the end of the month, with about half of the breakouts occurring in these industries (10 in banking, 8 in oil). 

The biggest breakouts, with gains of 18% from the breakout occurred in Grupo Simec (SIM), a Mexican steel producer; Datalink Corp (DTLK), a data storage solutions provider and Flag Financial (FLAG), a small bank holding company providing banking, mortgage, investment and insurance services.  The biggest loser was no contest – Baidu.com (BIDU) plummeted 27% during the period and is currently testing support of its 200 day moving average.

Below is a screenshot of the database with shows the top 8 breakouts for the last 2 weeks of July.  Please click here to see the larger image.

The top 2 highest rated breakouts for the period just happen to remain in a buyable range (although technically Gilead Sciences should get a new pivot point sine the break above the handle on 7/26 was with weak volume).  It would provide a nice entry on a break from current consolidation above 63.  The top breakout in the period was once again a bank stock!  If you haven’t had a chance you may like to see the last Breakout Highlights report, in which I highlighted one of the highest rated bank stocks in the database – Cascade Bancorp (CACB).  It’s currently well extended past a proper buy point, but may consolidate soon. 

Let’s have a look at the charts of a couple top ranked breakouts – Gilead Sciences (GILD) and Bancorp (TBBK).

TBBK first broke out on July 19th and it looked like at the time it would be off to the races like other high quality bank stocks.. but the very next day it reversed course and has been meandering quietly since.  I thought that its earnings report yesterday would be more of a catalyst for movement in either direction, but it continues trade quietly.  Although it remains in a buyable range and above key support of the 50 day moving average, I’d be hesitant to initiate a position here before the next Fed meeting.  I"m holding off on this one until after the Fed meeting unless it stages a big high volume move out of this consolidation before then.

You see the first breakout attempt with poor volume, so a purchase there should have been avoided.  GILD is a great company and has formed a decent looking base, but it’s a bit on the severe side in the left of the base.. I would probably avoid this one at the breakout unless it was showing volume at least double the average.

ETF, IPO & Breakout Stocks Analysis, Tracking & Research