Skip to main content

Weekly Review - Markets go from hopeless to hopeful

Wow, what a week we have just been through! It looked like the wheels were really coming off before the government rode in to the rescue and the markets turned on a dime.

Barrels of ink and gigabytes of pixels have been expended writing about Lehman declaring bankruptcy, Merrill selling itself, the near demise of AIG, the announcement of a systemic bailout plan and the other events of the week so I won't repeat them here in any detail. Suffice to say, all the major averages save the Dow Industrials managed to end the week higher. Mid-caps notched a 2.1% gain over the prior week and small-caps zoomed up 4.6%.

I will limit myself to presenting a few of the market statistics that we track. Each week our Alert HQ process scans over 7200 stocks and ETFs and records their technical characteristics. The following chart based on daily data summarizes the state of our technical indicators:

Stock Market Statistics, 9-19-2008
Moving Average Analysis --

Despite the strong rallies on Thursday and Friday, our indicators continue to paint a dismal picture of the market. Though we had a modest increase in the number of stocks that are above their 20-day moving average we only had a very small increase in the number of stocks that are above their 50-day moving average. As a sign of the market's overall health, I like to track the number of stocks whose 20-day MA is above their 50-day MA. That indicator continued its downward path again to make it three weeks in a row of declining values.

Trend Analysis and Buying Pressure --

As for the trend indicators, there has been no respite. We use Aroon analysis to generate our trending statistics. This week saw another increase in the number of stocks in strong down-trends and another decrease in the number of stocks in strong up-trends.

We use Chaikin Money Flow to track buying and selling pressure. This week we saw a nice uptick in the number of stocks exhibiting strong buying pressure.

S&P 500 Sector Analysis --

Below we present our sector analysis for the S&P 500. We have looked at three characteristics:
  1. Percentage of stocks in a sector whose Aroon analysis indicates they are in an UP trend
  2. Percentage of stocks in a sector whose DMI analysis indicates they are in an UP trend
  3. Percentage of stocks in a sector that are trading with their 20-day moving average above their 50-day moving average.
S&P 500 Sector Analysis, 9-19-2008When all was said and done, this week's volatility didn't drastically change the picture in our sector analysis from how it has looked for the past few weeks. We do see a slight bullish stirring in Energy. Consumer staples continues its leadership. Financials certainly perked up and Technology showed some improvement.

In summary --

Stocks have definitely improved with the powerful rallies of Thursday and Friday. What is striking, though, is that it didn't make that much of an impact on our indicators. Two days of good gains have not been enough to significantly move the needle and it goes to show how beaten down stocks were prior to the rally.

Since our indicators use data averaged over time, it will take continued positive action in the markets before the indicators sound an "all clear". Indeed, the Dow, the S&P 500 and the NASDAQ are all still below their 50-day moving averages with the NAZ still below its 20-day MA. The 200-day MA is commonly thought of as an indicator of a bullish trend. Except for the Russell 2000, they all have quite a way to go before they attain that milestone.

In any case, the tone of the market is now hopeful rather than hopeless. If Congress and the Treasury can agree on a plan quickly it will go a long way toward restoring health to stocks. Still, this market is fragile and I wonder what prolonged debate will do to the currently positive sentiment among investors. I am not so sure this is going to be a V-shaped bottom.

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 …