Skip to main content

Writedowns + Contraction = Rally???

OK, so UBS writes off $19 billion and cans the chairman. The ISM survey shows continued contraction in manufacturing, specifically declines in new orders and increases in materials prices. Lehman says they have no liquidity problem but they feel it is worthwhile to dilute present shareholders by issuing preferred shares.

Last week this news would have sent the markets into a tailspin. This week it instigates a rally in stocks and the U.S. dollar as well.

So where does that leave us? Looking at the S&P 500, it seems everything is set for more gains. Today's action takes the index significantly above its downward sloping trendline and its 50-day moving average. Volume was good though not as heavy as bulls would have liked. We saw an accelerated rotation out of bonds and commodities and into the most beaten down sectors - financials, retailers and tech. Market sentiment is extremely positive - all news is good news.

What could hold us back? There is a resistance level in the 1390 range, just a little way above today's close. This level is based on the lows made in March and August of last year. The index has twice tried to make a significant move above this level and failed both times.

We have a long way to go before we reach the 200-day moving average which, by the way, has clearly turned down starting in the beginning of February.

And finally, there is the matter of fundamentals. I've already mentioned the ISM survey. At 48.6 it was better than expectations but just a fraction above last month's level. In any case, being under 50, it still represents contraction in the manufacturing sector. The construction industry also registered continued declines. Automakers reported sharply lower sales. We've seen consumer spending flatten. Morgan Stanley is out with a report stating we are in the worst banking crisis in 30 years. Then there are the proverbial "shoes" yet to be discovered but ready to drop at an inopportune moment.

Today, none of that mattered. In the spirit of the day, I can't wait for Citi to report another $14 billion writedown, as Goldman expects it will. I'm sure the markets will rocket higher again.

Comments

Popular posts from this blog

Running TradeRadar on Windows 7 and Windows 8

Development of the original TradeRadar Stock Inspector software was begun back in the days before Windows 7 and Windows 8 were available.

As these newer versions of Windows have become more popular, we have heard from some users that they are having problems installing and running TradeRadar on their newer PCs.

The good news is that TradeRadar will work just fine on Windows 7 and Windows 8. All you have to do is adjust the Windows Compatibility Settings to ensure TradeRadar runs as intended.

It is recommended that you can apply Compatibility Settings when running the initial installation; however, it is also possible to apply Compatibility Settings after the program has been installed.

Prior to installation
After downloading the install program, go to the folder where you have stored the TradeRadarStkInsp_7_Setup.exe or TradeRadarStkInsp_7_PRO_Setup.exe executable. Right-click on the executable file and select Properties. Click the Compatibility tab. Adjust the Compatibility mode to …

Durable Goods report for Sept just so-so but Computer segment is on fire

The Durable Goods advanced report for September 2011 was released on Wednesday.

I like to dig into the Durable Goods report because it can be useful for seeing how tech in aggregate is performing and how the sector may perform in the future. I always focus on two particular measures: shipments and new orders. Let's see how it played out last month.

Shipments -- 

I generally give less importance to Shipments since this is a backward looking measure reflecting orders that have been confirmed, manufactured and shipped. It's similar to earnings reports -- it's good to know but the data is in the past and we're more interested in the future. The following chart shows how September shipments looked for the overall tech sector:


Results for the overall tech sector were a bit weak but take a look at the next chart which tracks the Computers and related products segment:


Results here were actually quite good and, to make things even better, the previous month was revised upward.

N…

Alert HQ has moved!

End of an era!

This site was started way back in 2006/2007 to showcase my blog posts and the Alert HQ buy signals and sell signals. Alert HQ grew to include other kinds of stock alerts including Swing Signals, Trend Busters, Trend Leaders, Cash Flow Kings and more.

In the meantime, I built a sister site, TradingStockAlerts.com and I started using some of the same Alert HQ content over there. As a result, I am discontinuing the Alert HQ data here at Trade-Radar.com

The good news, however, is that all the Alert HQ signals and stock screens are still completely free. In addition, the pages have been enhanced so that you can hover over a stock symbol and a small chart will pop up so you can get a quick look at the stock's recent price action. If you click on a symbol it will take you to a page with plenty of financial and technical analysis information (still free!) as well as a larger chart that you can play with in terms of adding or deleting indicators, moving averages, etc.

Click …