::: Today’s Market Action :::
With the market looking tired up at key resistance levels, it’s no wonder the market was a bit skiddish about the inflation data this morning despite the fact that much of the rise was due to the largest increase in auto prices in 15 years. Clearly, the market was looking for an excuse to sell and it got it’s reason. Despite heavy selling today, the bulls are showing their teeth once again after homebuilders sentiment improved a bit – possible indicating the housing market has stabilized.
However, it’s going to take quite an end of day push here to avoid a day of distribution, which would be the first in nearly a month. You never like to see heavy selling when the market is pulling back from its highs, but considering the magnitude of the rise over the past several weeks, one or two should be expected and even welcomed to help keep this market in order. Orderly advances help to sustain a lengthy rally, so profit taking is up here is welcomed. For more of my notes on the current health of this market, please see the latest blog post: http://investing.typepad.com/tradingstocks/2006/10/market_priced_f.html
(Note: volume averages are based on the average over the past 50 days)
Data as of 2:45EST
Nasdaq: down .95% today with volume 12% ABOVE average
Nasdaq ETF (QQQQ): down 1.13%, volume 21% ABOVE the average
Dow: down .33%, volume 1% BELOW average
Dow ETF (DIA): down ..43%, volume 15% ABOVE the average
S&P ETF (SPY): down .5%, volume 27% ABOVE the average
Russell Small Cap ETF (IWM): down .59%, volume 7% ABOVE the average
::: SelflInvestors Leading Stocks :::
SelfInvestors Leading Stocks are down significantly today, but volume levels indicate just normal profit taking.
Summary:
* Decliners leading Advancers 251 to 64.
* Advancers are up an average of 1.06% today, with volume 20% ABOVE the average
* Decliners are down 1.35% with volume 12% BELOW average
* The total SI Leading Stocks Index is down .90% today with volume 5% BELOW 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.
* Leading Sectors/Industries: Retail, Software, Consumer Services, Homebuilders
* Lagging Sectors/Industries – Remains just as it has for past several weeks: Oil and Gold – although I don’t expect to see these industries on the list for too much longer.
* Today’s Market Moving Industries/Sectors (UP) – Utilities and Pharma are bucking the trend today with good moves up; global dividend plays also faring well
* Today’s Market Moving Industries/Sectors (DOWN) – Semiconductors (on the Intel downgrade) and Energy plays seeing significant selling today.
** 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 Chicago Mercantile Exchange(CME), which this morning announced a merger with CBOT Holding’s to create a futures trading powerhouse.
ABOUT: Chicago Mercantile Exchange Holdings Inc. (CME) offers market participants the opportunity to trade futures contracts and options on futures contracts, primarily in four product areas, including interest rates, stock indexes, foreign exchange and commodities. CME’s key products include Eurodollar contracts and contracts based on United States stock indexes, including the S&P 500 and the NASDAQ-100. The Company also offers contracts for the principal foreign currencies and for a number of commodity products, including cattle, hogs and dairy. Its products provide a means for hedging, speculation and asset allocation relating to the risks associated with interest-rate sensitive instruments, equity ownership, changes in the value of foreign currency and changes in the prices of commodity products. CME’s customer base includes professional traders, financial institutions, institutional and individual investors, corporations, manufacturers, producers, supranational entities and governments.
FUNDAMENTAL: They don’t get too much better than CME with consistent growth each and every quarter of around 30 – 50% quarter over quarter. That goes for sales and earnings.
TECHNICAL: Cleared a long base and vaulted to a new all time high on Oct 9th and remains in that range but something to be careful of is fact that it has formed a late stage base, so is more vulnerable to failure. Perhaps the CBOT purchase will give it the strenght for another leg up.
SELFINVESTORS RATING: With a total score of 51/60 (29/30 for fundamentals, 22/30 for technical), CME is considered a top breakout stock