::: Today’s Market Action :::
I mentioned in the weekend review that the bulls had fought off the bears remarkably and kept this market afloat and profit taking to a bare minimum. The longer the bulls hold their ground, the greater the certainty of another leg higher in short order. I didn’t expect it to happen today. Today’s action was not out and out, frenzied buying by any stretch, but technically there was indication of accumulation in the Nasdaq as it reclaimed support of its upward trend line. Both the S&P and Dow bounced off their respective trend lines. Yes, today’s action was mighty positive and we should be preparing for the Nasdaq to take out its 52 week highs. If not, the upward trend line on all indices are shaping up to be strong support levels. Now bring on the elections!
::: 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 6th 2006
* Accumulation (institutional buying) today in the Nasdaq
Nasdaq: UP 1.51% today with volume at the average
Nasdaq ETF (QQQQ): UP 1.45%, volume 7% BELOW the average
Dow: UP 1%, volume 10% BELOW average
Dow ETF (DIA): UP 1.03%, volume 7% ABOVE the average
S&P ETF (SPY): UP 1.13%, volume 3% BELOW the average
Russell Small Cap ETF (IWM): UP 1.16%, volume 10% ABOVE the average
::: SelflInvestors Leading Stocks :::
The Self Investors Leading Stocks Index is comprised of stocks in the Breakout Tracker, which is a database of the fastest growing companies near a breakout or having already broken out of a base. Leading stocks did fare quite well today.
Summary:
* Advancers led Decliners 324 to 62.
* Advancers were up an average of 2.13% today, with volume about average
* Decliners were down an average of 1.32% with volume 40% ABOVE average
* The total SI Leading Stocks Index was UP 1.58% today with volume 6% 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 gauge 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 (over last 30 trading days):
Internet, Consumer Services, Utilities, Retail, Biotech, Homebuilders
* Current Lagging Sectors/Industries (over last 30 trading days):
Semiconductors, Broadband and Clean Energy
* Today’s Market Moving Industries/Sectors (UP):
Lots of sectors moving with volume today – Networking, Biotech, Clean Energy, Retail, Software, Technology
* Today’s Market Moving Industries/Sectors (DOWN):
Only Utilities sold with volume today.. looks like profit taking
** 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 Charles Schwab (SCHW), the full service broker trying to become a discount broker :).. and doing well after the shift. The stock broke out of a base today to a new multi year high.
ABOUT: Charles Schwab engages, through its subsidiaries, in securities brokerage, banking and related financial services. The Company provides financial services to individuals and institutional clients through three segments: Schwab Investor Services, Schwab Institutional and U.S. Trust. The Schwab Investor Services segment includes the Company’s retail brokerage and banking operations, as well as the division that serves company 401(k) plan sponsors and third-party administrators and supports company stock option plans. The Schwab Institutional segment provides custodial, trading and support services to independent investment advisors (IAs). The U.S. Trust segment provides investment, wealth management, custody, fiduciary, and private banking services to individual and institutional clients.
FUNDAMENTAL: A company that was a bit slow to offer discounted trading, but once it did the earnings and sales began to pick up again. Earnings growth has surged to about 40 – 50% in the last couple years with strong sales growth around 20%. Margins and ROE continue to rise just as they have for a couple years and are excellent. Once again a premier company.
TECHNICAL: Broke out with good volume today to a new multi year high. The construction of the base isn’t exceptional but it’s good enough for a great company in a strong industry and strong market.
SELFINVESTORS RATING: With a total score of 50/60 (27/30 for fundamentals, 23/30 for technical), SCHW is a top SelfInvestors breakout stock.