Saturday, August 30, 2008

Free Stock Alerts - Alert HQ for Aug 29, 2008

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move.

Volume was very low this week but the market still managed to make some big moves. After all was said and done, the major averages ended the week down modestly. For the month of August, however, they did manage a gain. Many analysts said the low volume was a sign that investors lacked conviction. Or maybe that most traders were on vacation. In any case, there were no startling trend reversals among the major averages and the situation in individual stocks was much the same.

As a result, this week's alert lists are again somewhat abbreviated compared to those that were generated during the recent run-up. This week we have 23 BUY signals and 11 SELL signals based on daily data. Looking at weekly data, we have 21 BUY signals and 4 SELL signals.

Stop by Alert HQ and download your free lists. The lists based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch lists.



Thursday, August 28, 2008

Dell whiffs - why it was no surprise

Dell reported earnings after the close today. Net income dropped 17% to $616 million in the quarter on a revenue increase of 11% to $16.4 billion.

Excluding restructuring and other charges, Dell would have earned 33 cents a share. Including the charges, per share earnings are on track to be the lowest the company has recorded since late 2006 or early 2007. And this is after the company spent over a billion dollars to buy back shares.

Yesterday, I wrote a post on the Durable Goods Report (read it here). I made the point that new orders for Computers and related products were down 10.7% in July. That was more than twice the 4.7% drop that occurred in June. Shipments for Computers were down 12.9% in July after being down almost 5% in June.

Well, we recently received earnings from Hewlett-Packard (HPQ). In the PC segment, where they compete directly with Dell, H-P turned in pretty good numbers on a 15% increase in sales.

Given the fact that H-P and Dell are the two largest U.S. PC manufacturers, if one is doing well while orders and shipments are falling, it stands to reason that the other will not be doing so well. That other one had to be Dell.

Disclosure: none



ProShares Links - the list for 8-28-2008

It's time for another list of links to posts by other bloggers that are writing about ProShares ETFs. This week's list is comprised of posts from Seeking Alpha. I recommend that you click through to the authors own sites after reading these posts on the Seeking Alpha site.

Thu, Aug 28 SKF Mortgage Fraud Is on the Rise, Infecting the GSEs
Thu, Aug 28 DOG, PSQ, SH An Investor's Guide to Bear Markets
Thu, Aug 28 EFZ EFZ: Portfolio Hedge with Risks
Wed, Aug 27 SH Getting Centered
Sun, Aug 24 FXP Shanghai's Own Stock Market Rules
Sun, Aug 24 SKF Lax Underwriting , Foreclosures, and Credit Crunch Stimulate Misery Industries
Sun, Aug 24 SKF Big Ben's Jackson Hole, Wyoming Pep Rally
Sun, Aug 24 DUG, DXD, EEV, EFU, EWV, FXP, MZZ Double Short ProShares ETFs
Fri, Aug 22 EEV, EWV, FXP, SCC, SDP, SJH Double Short ProShares ETFs: Volatility Goes Both Ways
Fri, Aug 22 SRS Freddie and Fannie: Living in the Past
Fri, Aug 22 SCC, SSG Will UltraShort ETFs Experience Whiplash Again?
Thu, Aug 21 SEF The Twin I-Beams of Investment Success
Wed, Aug 20 SSO How Private Equity Funds Manage Such Big Returns
Wed, Aug 20 SH High Yield Credit Spreads at Post Bear Stearns High
Wed, Aug 20 TBT How About This for a Hedge Combo: TBT and TLT
Wed, Aug 20 SCC, SZK, UCC, UGE Consumer Discretionary ETFs: How They Differ
Wed, Aug 20 SDS, UWM ETFs on the Outperformance of Two Securities
Tue, Aug 19 DIG Time To Gradually Reaccumulate Energy Stocks - And Gold
Tue, Aug 19 EFZ The Georgian Crisis: Impact on ETFs?


In order to go beyond what Seeking Alpha has to offer, I am providing this link to the Google "Search Blogs" feature that will return any blog post that includes the symbol for one of the ProShares ETFs that was written in the last month. Bookmark this post and come back to use this link at any time. There may be some overlap with the content from Seeking Alpha.



Wednesday, August 27, 2008

Durable goods report lights up Wall St - but who's lurking in the shadows?

"Was a sunny day, not a cloud in the sky. Not a negative word was heard." - Paul Simon, Was A Sunny Day
Today's durable goods report surprised investors by posting a rise of 1.3% in new orders for the month of July. This was way more than the anemic 0.2% expected by economists. Shipments clocked with a robust gain of 2.5%.

Digging down a level, it turns out that much of the gains were due to transportation equipment, specifically aircraft. New orders were up 28%. (Now if Boeing could just deliver...)

Excluding the volatile transportation sector, new orders were up only 0.7%

Exports were generally identified as the driver behind these good numbers. This led some analysts to worry that we are unlikely to see growth like this continue with world economies slowing and the dollar rising.

In the meantime, though, it was time for stocks to bask in the sun; the major averages all made healthy moves to the upside today. Still, there were a few sectors casting shadows on the good times.

Technology fading into the darkness?

I was surprised to see the mixed up situation in the Tech sector. At the Computers and electronic products summary line, new orders actually fell, sliding 1.3%. Drilling down into the sector a little further we see that new orders for Computers and related products were down 10.7%, more than twice the drop we saw in the May-June comparison. Shipments for Computers were down 12.9%.

The bright light in the Tech sector turns out to be semiconductors with shipments in July up a whopping 33.9%.

After digesting this data, though, the question is whether it is reasonable to continue to regard Tech as a "safe" sector.

Defense on the decline?

Who else was stuck in the shadows? New orders for Defense capital goods were down 25.7%. (George Bush and the Pentagon must be running out of juice...)

Anomaly in the auto industry?

Motor vehicles showed an increase of 1.2% in new orders. This, at a time when GM and Ford are experiencing plunging sales and burgeoning losses. Is this just the result of a strike ending at an axle plant that supplies GM? If so, don't expect a positive number next month.

In summary --

Industrials managed to eke out a decent gain today and tech stocks rose nicely along with everyone else though, surprisingly, they did not rise as much as the financials did. All in all, a good durable goods report with just a few pockets of weakness. And that's all it took to part the clouds on Wall Street.



Tuesday, August 26, 2008

Cree on a roll - rising on rumors or something more substantial?

One of the stocks that showed up on this week's Alert HQ list of BUY signals based on daily data is Cree, Inc. (CREE)

It has a chart that meets the Alert HQ criteria. The stock has been in a steady decline for months and has just popped up over its 50-day moving average. Its DMI is turning positive just as MACD has already done. It appears a reversal to the upside is underway. The 6-month daily chart is below:

Chart of CREE
The stock has recently benefited from a good earnings report. A week ago Cree announced that fourth-quarter profit rose 31 percent as sales of the company's light-emitting diodes drove a 22 percent revenue gain to beat Wall Street expectations. Per share profit rose from $0.08 to $0.09 for the quarter.

For the full fiscal year, Cree reported net income of $33.4 million, or 38 cents per share, down from a profit of $57.3 million, or 72 cents per share, in fiscal 2007. Revenue rose 25 percent to $493.3 million from $394.1 million.

Despite the improvement on a quarterly basis, it can be argued the stock is still expensive. With a PE of 60, a Price/Sales ratio of 4 and a PEG of 2.6 Cree is no bargain at its current price of $22.84. So far, though, the stock has managed to hang onto its gains.

Today on Barron's Tech Trader Daily site, Eric Savitz may have offered a reason. Apparently, there are all kinds of rumors floating around about Cree. One is that IBM might make a bid for the company. Another is that Cree and Korean company LG are planning to set up a joint venture in China, to make LED backlights. According to Andrew Huang, an analyst at American Technology Research, the stories range from "makes no sense" to "unlikely".

In summary, Cree has exceeded Wall Street expectations but still seems a bit expensive. Based on future earnings potential as a prime supplier to many of the leading users of LED backlighting technology, the stock could tack on more gains if the tech sector rallies. Without that kind of rising tide, though, investors may allow the stock to sink back below its 50-day moving average.

As I usually recommend, it's always a good idea to put the Alert HQ stocks on a watch list and see what happens.

Source: Cree: AmTech Says IBM Bid Rumor “Makes No Sense;” Contends Report Of LG Display Venture “Unlikely True”

Disclosure: none



Saturday, August 23, 2008

S&P 500 sector analysis for Aug 22, 2008

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.
Each of these characteristics would tend to be associated with a bullish trend. The following bar chart presents our results:

S&P 500 Sector Analysis, 08-22-2008
The first fact that jumps out is that Energy has become the clear laggard. How the mighty have fallen! It is no surprise we saw an over-sold bounce in oil last Thursday.

At the other end of the spectrum, Health Care and Consumer Staples are doing quite well, reflecting the popularity of defensive positioning among market participants.

Consumer Discretionary, a previously out of favor sector, has made great progress. In my opinion, however, it is questionable whether this sector can hold on to its gains. With back-to-school shopping currently underway, we should soon see whether the sector justifies its popularity.

There has been a great deal of focus on the Financial sector and how it has rallied so strongly off its lows. Looking at the sector results above, it appears that Financials are not doing all that great at the moment. It's no wonder, with the continuing stream of negativity revolving around Fannie and Freddy, auction-rate-securities, the housing market, etc.

Pulling back to view the S&P 500 as a whole, the chart below shows the recent progress of the index.

S&P 500, 08-22-2008
In this chart, it appears that the index has broken the up-trend that has been forming since the July low. We now have a situation where the index started making lower lows last Monday and didn't show any gains until Thursday and Friday. Friday's closing high, however, establishes the second lower high since the current rally peaked back on August 13.

In summary, it can be said that our sector analysis indicates that the stocks making up the S&P 500 are in a so-so condition. Roughly speaking, most sectors are lucky if half of the stocks making up the sector are showing bullish characteristics from a technical analysis point of view.

Combine the sector situation with the recent weakness in the overall index (lower highs and lower lows) and it raises flags of caution. If the S&P can't continue Friday's rally, investors may need to prepare for another trip down to the area of the July lows.



Weekly review - stocks hit the brakes

Major averages gave way this past week. Losses seemed rather modest but the underlying data is starting to look very suspicious. Yes, we had a big rally on Friday but our data shows a real slowdown in upward momentum.

We use both daily data and weekly data collected from the Alert HQ process to compile the market statistics discussed below. Each weekend we scan over 7200 stocks and ETFs looking for BUY and SELL signals. In the process, we collect various technical information that we roll up into charts like the ones below.

Stock Market Statistics based on Daily Data, 08-22-2008
The chart above is based on daily data. It clearly shows that many stocks have fallen below their 20-day and 50-day moving averages. It also shows that more than a thousand stocks are no longer exhibiting strong up-trends according to Aroon analysis. The number of stocks showing strong buying pressure according to Chaikin Money Flow analysis showed a small decline.

So is this merely a pause in a major up-trend? For the optimists, we can point to the fact that we don't have a big increase in stocks exhibiting strong down-trends according to Aroon. The number of stocks whose 20-day MA is above their 50-day MA actually showed a very slight increase.

Stock Market Statistics based on Weekly Data, 08-22-2008
In the chart above we show the results of analysis based on weekly data. As can be expected, the data on weekly charts is slower moving and smoother than what we see on the charts based on daily data. Nevertheless, the action in this past week did show a similar slowing of momentum. Analogous to what we saw in the first chart, we have a decrease in the number of stocks trading above their 20-week and 50-week moving averages. In addition, we see the number of stocks exhibiting strong up-trends according to Aroon analysis has failed to show any increase.

In summary --

Our data has shown market internals improving for some time now but this past week it looks like someone hit the brakes. The number of stocks exhibiting bullish technical characteristics showed a noticeable decrease.

Nothing goes up in a straight line so it's possible that last week was just a detour on the way to a stronger market recovery. On the other hand, there are strong signs that stocks have reached an intermediate high.

This past week was light on data and light on volume. This week we have plenty of potentially market-moving data on tap. We will see existing home sales and new home sales, the revised 2nd quarter GDP, durable goods orders, Chicago PMI, University of Michigan consumer sentiment and the weekly numbers on initial claims and crude inventories. All this during a pre-holiday week that typically exhibits low volume.

The combination of low volume, lots of data and slowing momentum could make this a wild week for investors. This might be a good time to pull over to the side of the road and let the more venturesome drivers pass.



Free stock alerts - Alert HQ for Aug 22, 2008

This post is to announce that the latest list of free stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move.

Despite a strong rally on Friday, the major market averages ended the week with modest losses. Unfortunately, we seem to have lost some of the momentum we saw in the Alert HQ numbers during previous weeks. It seems like most stocks decided to tread water.

As a result, this week's alert lists are rather abbreviated compared to those that were generated recently. This week we have 19 BUY signals and 12 SELL signals based on daily data. Looking at weekly data, we have 28 BUY signals and 10 SELL signals.

Stop by Alert HQ and download your free lists. The lists based on weekly data show those stocks that have exhibited some good follow-through after a recent trend reversal. If you want to be early in identifying the newest trend reversals, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch lists.



Wednesday, August 20, 2008

Why H-P couldn't move the market

Hewlett-Packard (HPQ) was unable to rescue the stock market today. Though major averages finished with gains after two down days, the tech-heavy NASDAQ was not able to rally to any significant extent. What happened?

H-P, IBM, Cisco and Oracle, as the three-hundred-pound gorillas of the U.S. tech industry, are often able to move markets when they release earnings. This always frustrates me as these four companies are hardly representative of the hundreds of small and mid-size companies that make up a large part of the tech universe.

Not to disparage the company, H-P's numbers were very good. For its third quarter, earnings rose 11% from a year ago as sales reached $28 billion. That's serious money.

It's worth looking at the company's main lines of business to get a true read on how HP is doing.

PCs: Personal computer sales rose 15% from a year ago to $10.3 billion, with notebook revenue up 26% and desktop sales rising by 6%. Operating profit was $587 million.

Comment: notebooks are hot and the company is standing up to Dell while making good progress internationally. Great revenue number but, as is typical in the PC industry, that profit margin of 5.6% is no great shakes.

Printers: Imaging and printing revenue was up 3% to $7 billion, and the division reported an operating profit of $1 billion. Printing supplies led the growth, as sales rose 11% from a year ago.

Comment: hmmm. A former strongly performing business, currently undergoing job cuts. Separating the selling of replacement cartridges and other supplies, one could draw the conclusion that the hardware part of the business saw shrinking sales. Indeed, consumer printing product sales fell a big 14%.

Storage & Servers: Enterprise storage and servers sales rose 5% to $4.7 billion,

Comment: no individual consumer demand taints this line of business. The conclusion is that businesses are buying but they aren't buying much.

Software: The software business reported a 29% increase in revenue to $781 million.

Comment: great growth number but this is H-P's smallest division

So it appears that things were good at HP but not all that good. What its results say about industry trends may be good for some tech companies but certainly not for all tech companies. The enterprise segment is seeing slow growth while personal computers is seeing strong growth. One could extrapolate from this that those companies supplying parts for personal computers or selling personal computers are in good shape. Those companies in the enterprise technology sector may see anemic growth.

Furthermore, revenue from overseas markets made up 68% of H-P's sales. That doesn't say much for growth in U.S. sales. And it raises a question mark as the dollar appreciates.

On the positive side, the company provided optimistic forward guidance for the next quarter. In addition, the services sector of the business turned in double digit growth. If H-P can effect the same kind of performance from their soon to close EDS acquisition, it will be good news indeed for the company.

After ruminating on these details, however, investors must have decided to return to a somewhat cautious stance on tech. And maybe that had something to do with why the company, though tacking on a nice enough gain itself, was not able to move the market today.

Disclosure: none



Tuesday, August 19, 2008

ProShares ETFs - is Consumer Goods a better bet than Consumer Services?

Consumer discretionary stocks have been in the news lately. As oil prices moderated and the U.S. dollar appreciated, the stocks shot upward. The consumer discretionary ETFs, naturally, followed suit.

There are a number of fund companies that offer ETFs focused on the consumer discretionary sector. They include:

  • Consumer Discretionary Select Sector SPDR (XLY) - large-cap blend with 83 stock holdings
  • PowerShares Dynamic Consumer Discretionary (PEZ) - mid-cap blend with 60 stock holdings
  • Vanguard Consumer Discretionary VIPERS (VCR) - large-cap blend with 411 stock holdings
In looking at the ProShares family of ETFs we see that there are two long ETFs in this category:
  • Ultra Consumer Goods (UGE) - large-cap blend, 147 holdings
  • Ultra Consumer Services (UCC) - large-cap blend, 226 holdings
ProShares also has a pair of corresponding Ultra Short ETFs:
  • UltraShort Consumer Goods (SZK) - large-cap blend, 147 holdings
  • UltraShort Consumer Services (SCC) - large-cap blend, 226 holdings
So it seems there is quite a bit of variety among the ETFs in this sector in terms of number of ETFs available and the number of holdings in each ETF. ProShares, however, is the only fund company that splits the consumer discretionary sector into two parts and has created separate ETFs for each.

Focus on the ProShares ETFs --

Since the stock market peak in the fall of 2007 UGE has performed better than UCC. You can see UGE in red in the chart below and UCC in blue. What might account for that difference?

Chart of UCC and UGE
The Consumer Services ETF (UCC) includes all kinds of retailers as well as cable companies, media companies, restaurants, airlines, advertising companies, hotels and casinos. As we know, airlines have been hammered by high fuel prices. Retailers have suffered as the real estate crisis has depressed consumer sentiment and gas prices lightened consumer wallets. High gas prices have also encouraged consumers to drive less. Less traveling has, of course, negatively impacted the hotels and casinos. All in all, this ETF has a great deal of vulnerability to a slowing economy and the process of inflation eating away at disposable income.

The Consumer Goods ETF (UGE) includes the companies that actually produce the products sold at the retailers that are part of the holdings of UCC. Thus, there is a certain linkage between the two ETFs. Dragging down the performance of UGE lately are U.S. auto makers and a selection of homebuilders. The problems in these two sectors are serious and well known. There are also a number of companies that might also be found in a Consumer Staples ETF and it appears that these stocks have been helping to prop up the ETF.

So both ETFs include stocks that are in sectors that are under extreme pressure. The difference between the two seems to be related to exports. The Consumer Goods companies that actually manufacture products have the potential to sell those products worldwide. With many of the services companies, they derive the majority of their revenue from customers in the U.S.

Conversely, with the U.S. leading the global economy downward, it makes sense that Consumer Services would be the worse performer.

Conclusion --

ProShares allows investors to more finely tune their approach to the Consumer Discretionary sector. When inflation is falling, the economy strengthening, real wages increasing and consumer sentiment improving the Consumer Services ETF (UCC) would probably outperform. In an economy as we see it today with dismal consumer sentiment, rising prices reducing consumer spending power and better growth taking place in developing countries, the Consumer Goods ETF (UGE) will at least do better than Consumer Services.

Both ETFs rallied lately but seem to have failed to get through their downward trending 200-day moving averages. With the U.S. economy in a questionable state and foreign economies showing signs of slowing, it is conceivable this recent rally is at an end. I suspect investors would do better at this point by buying either of the two ultra short ETFs.

Disclosure: none



Sunday, August 17, 2008

Weekly review - rally continues with focus on the dollar

Mixed economic reports seem to have resulted in mixed markets this week. Large caps made little progress (Dow down 0.6%, S&P 500 up 0.1%) while small caps displayed decent gains (NASDAQ up 1.6% and Russell 2000 up a very nice 2.6%).

As everyone tries to determine whether the next bull market is now beginning, economic reports refuse to be clear. Industrial production and the New York Empire State Index were both up slightly, suggesting economic activity, while not growing strongly, is at least holding its own. Retail sails were somewhat soft, impacted by a horrible auto sector. Weekly jobless numbers continue to disappoint.

CPI showed higher than expected inflation despite the large drop in commodity prices we have seen recently. Apparently investors decided that lower commodity prices would show up in more benign inflation numbers in the near future so stocks ended up rallying the day CPI was announced.

Whether the new bull market has begun or not, it is clear that stocks have been in rally mode. Can they keep it up?

Reviewing the technical situation, we try to get a sense of the market by looking at the data we gather from the Alert HQ process. We use both daily data and weekly data to compile the market statistics discussed below.

Looking at daily data and weekly data --

An overview of the short-term technical picture is presented in the following chart of market statistics based on daily data collected by our Alert HQ process. Each weekend we scan over 7200 stocks and ETFs looking for BUY and SELL signals. We also collect various technical information that we roll up into charts like the ones below. The first chart is based on daily data, the second chart is based on weekly data.

Stock market statistics based on daily data, 8-15-2008
Moving average analysis --

Looking at the chart above based on daily data, we that stocks have essentially gone straight up since the fourth of July. There is a wide divergence between the number of stocks trading above their 20-day moving average and the number trading above their 50-day moving average. Likewise, the number of stocks whose 20-day MA is above their 50-day MA is also lagging. This is an indication that, based on daily data, stocks have moved so quickly they have left their 50-day moving average way behind.

Note also that we are getting to the area where the last rally peaked. As a minimum, I would expect to see consolidation soon with stocks spending some time moving sideways.

The moving average information based on weekly data shows a similar situation with more and more stocks trading above their 20-week and 50-week moving averages


Stock market statistics based on weekly data, 8-15-2008
Looking at trend information, Aroon analysis based on daily data shows more and more stocks in strong up-trends and fewer and fewer stocks in strong down-trends. Based on weekly data, the action is similar but moving more slowly.

Looking at accumulation, the Chaiken Money Flow analysis based on daily data shows that buying pressure eased this week. The weekly data, however, still exhibits a gradual increase in buying pressure.

Focus on the dollar --

It's clear that investors are for the most part bullish as most stocks continue to show improvement. The moving average analysis presented here confirms the bullish disposition. If you look at the major indexes, you will see that the Dow and the S&P 500 are just poking above their 50-day moving averages. Significantly, however, the NASDAQ and the Russell 2000 have both moved above their 200-day MAs and seem to be hanging onto their gains. If the NASDAQ and the Russell 2000 can continue this behavior it will certainly be bullish for the entire market.

There is one chart, though, that I feel compelled to share. Below is the chart of the PowerShares U.S. Dollar Bullish ETF (UUP). You can see how the dollar has sharply broken out to the upside.

Chart of UUPThis action in the dollar is pointed to as one of the bullish catalysts that is driving the current rally. It's worth looking at some of the pros and cons related to the dollar rally.

Some observers have pointed out that a rising dollar will slow exports. This would be a serious issue as exports have been the one bright spot in U.S. manufacturing. Others have said that the dollar would have to appreciate quite a bit more before exports would be negatively activated. Let's call this one a wash for now but it could turn into a negative in the trend continues.

The higher dollar causes commodities that are traded in dollars to appear cheaper to U.S. consumers. This should eventually translate into a lower inflation rate. This would clearly benefit consumers; hence, the strong action in the consumer discretionary sector. Let's call this one a plus.

So why is the dollar appreciating? Typically, a country's currency appreciates if interest rates are higher than rates in other countries. This implies that the country's economy would be doing better than other countries. Is that the case today? Far from it. The dollar is appreciating because the perception is that the U.S. economy is so weak, the Fed dares not raise rates. With European and Asian economies also slowing now, the expectation is that the Europeans and Asians may have to lower their rates to stimulate their economies. Ironically, after being the source of the global economic malaise, the U.S. is now perceived as less bad. We can call this a wash, also.

This brings me back to exports. A rising dollar will eventually cause U.S. exports to slow but more immediately, the weakening foreign economies will undoubtedly reduce demand from abroad. This is clearly a negative. It means that the manufacturing sector will see a shift. After being focused on exports, it will become more dependent on domestic demand. And speaking of demand, falling commodity prices, rather than being an effect of an appreciating dollar, are more accurately a reflection of falling demand due to slowing global economic growth. Another negative.

Conclusion --

So with the dollar strengthening and commodities weakening the rally in stocks continues. Yet the underpinnings of the rally have some a decidedly uncertain foundation. There are as many analysts who insist this is just a feel-good rally in a bear market as there are analysts who feel we have seen the bottom and the markets are heading up from here.

For now, our technical analysis indicates the way forward is up while the fundamentals are less convincing. Let's hope the fundamentals catch up with the technicals.



Saturday, August 16, 2008

Free stock alerts - Alert HQ for Aug, 15, 2008

This post is to announce that the latest list of stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move.

Once again this week, the alert lists are free!

Markets were mixed this week and so were our signals. Large caps more or less went sideways whereas small caps tacked on decent gains. In terms of our signals, the ones based on daily data delivered a decrease in BUY signals while the ones based on weekly data delivered an increase in BUY signals.

In any case, we have another set of good sized alert lists this week. We have 45 BUY signals and 7 SELL signals based on daily data. In addition, we have 65 BUY signals and 29 SELL signals based on weekly data.

Stop by Alert HQ and download your free lists. I myself like the lists based on weekly data and this week we have a nice increase in weekly BUY signals and a corresponding decrease in weekly SELL signals so there is some interesting action there. If you want to be early in identifying the new trend, the lists based on daily data are for you. No matter which preference you have, there are bound to be a few stocks you will want to add to your watch lists.

As always, do your homework and good luck trading.



Thursday, August 14, 2008

Is investing like dieting?

OK, so the title of this post is calculated to make you say "Wha..?" But there is actually a similarity that is worth talking about.

Recently, there has been a study released on dieting. The study emphasizes that those people who write down every single thing that they consume are much better at controlling their eating habits and actually losing weight. By documenting their true eating habits, these dieters have a much better idea about what exactly they are eating, where they are giving in to temptation and allowing fattening foods into their diet and where they are accomplishing their goals by eating the right things at the right times. And by tracking their weight as they document their eating, they are forging a relationship between input and output, cause and effect. Thus, they are better able to modify their behavior.

The study determined that those dieters who rigorously wrote down what they ate were better able to lose weight and keep it off compared to those dieters who did not follow the same process.

This reminds me of one of the investing techniques that is often overlooked. There are a number of investing guides that recommend that investors document their trades in detail. This means to write down their reason for buying the stock, the price at which it was bought, their reason for selling the stock, the price at which it was sold, commissions and the profit or loss.

The important aspect of this approach is to keep track of the reasons for buying and selling. Only in this way can an investor know WHY they made money or lost money.

There are so many questions that can be answered by using this technique. Is your system, if you have one, working? Are you following any kind of rules for buying and selling? When you bought that stock, what was your profit expectation and why? What was your exit strategy and were you able to stick with that strategy? Are you consistent in the way you execute your trades? If you vary your reasons for buying a stock, which approach yields the best results? If you vary your reasons for selling a stock, are you selling too late, too early or right on time?

What it really comes down to is common sense. You can't improve something if you can't measure it or understand it. All investors want to improve their results. The only way to understand your results is know how precisely you obtained those results. Only then can you adjust your approach to repeat the processes you followed when the results were beneficial and avoid the approaches that led to losses.

For those of you who have downloaded the TradeRadar software, be aware that under the Portfolio menu item the "Individual" selection opens a screen that allows users to do exactly what we have described above. There are text boxes for recording the reason for buying and the reason for selling, entries to capture purchase price and selling price, commissions, number of shares, etc. Profit or loss is automatically calculated.

If you are looking to fatten your profit margins, try keeping detailed records of your trading as described in this post. This should allow you to develop the discipline and consistency to profit more often.



Tuesday, August 12, 2008

Safe to buy the Ultra Short Financials again?

Monday I bought the ProShares Ultra Short Financial ETF (SKF). I have bought and sold this ETF several times in the past year or so.

Here are my reasons why I think now is a good time to own SKF:

Financial stocks are emerging from earnings season. The somewhat misplaced enthusiasm over the way many of the financials exceeded drastically lowered expectations is beginning to fade. In terms of year-over-year results, these stocks, pretty much across the board, stunk up the place. We are now seeing some analyst downgrades, even for the likes of Goldman Sachs.

The winds of adversity are blowing in the direction of the financials again. Auction Rate Securities are negatively impacting a range of financial institutions. They are engaged in buying back illiquid securities and are facing potential fines as the New York Attorney General generally makes life miserable for them. It appears that bonds backed by consumer loans and credit card debt are becoming increasingly shaky. Credit requirements are tightening according to surveys of loan officers so lending is slowing. Merger and buyout activity has slowed drastically, curbing yet another potential earnings stream.

Housing has not improved. Indeed, we have probably seen the peak for 2008. It is already August and as fall approaches, the residential real estate market will go into hibernation until spring of 2009. This won't help the mortgages or mortgage-backed securities still on the balance sheets of many financials.

The SEC ban on naked shorting of financial stocks is set to expire on Wednesday.

We have seen the short energy/buy financials trade evolve into short energy/buy tech. Tech stocks are getting all the attention and financials are getting all the bad press.

SKF had fallen to support at about the $110 range (see the horizontal line on the chart below) and was trading at its 200-day moving average. On Monday the ETF dropped nearly to $106 but recovered and closed over $110. With the fundamental picture for financials deteriorating once again, it appears safe to buy SKF again. As I have written in prior posts, though, it doesn't pay to chase the ultra ETFs. Having fallen from its July peak of over $200 down to $110, Monday looked like it was presenting a pretty good entry point so I picked up the ETF at $111 and change.

Chart of SKF, 8-12-2008
Closing today at $119.75, SKF has at least started out on the right foot. If the financials wilt as I expect, it may not be too late to jump on this trade.

Disclosure: long SKF



Monday, August 11, 2008

Another slick deal for Google or Yahoo or both?

In discussing Google and its sources of revenue, I have often pointed out that the company does much more than monetize search. Pointing to Google's SEC submissions, I have shown that the AdSense product provides roughly one third of Google's revenue. Given the billions of dollars Google pulls in each quarter, this is no insignificant amount.

Today, ValleyWag wrote about the deal Google has made to provide advertising for Yahoo! It was generally believed that the agreement was strictly related to search advertising. Today, the parties published their agreement. Many sections are blanked out as there are aspects of the deal that the companies do not wish to make public yet.

What is surprising is that the deal is not limited to search advertising at all. A major component seems to be AdSense. The language of the agreement discusses that AdSense ads can be deployed to Yahoo!-owned properties and such other sites as meet Google requirements.

ValleyWag makes the point that Google can learn about ad placement from Yahoo! while Yahoo! has the potential to learn more about search advertising. Maybe, maybe not. The more compelling argument is that Google now has a new and larger inventory of prime ad spaces to target with AdSense. These high-traffic properties owned by Yahoo! were, I suspect, previously unavailable to Google.

So this is clearly a good deal for Google. What does this mean for Yahoo?

Yahoo! seems to be willing to try anything to boost advertising revenues. The company is already a solid performer with respect to display ads. It is no secret that Google is pulling away from Yahoo! and everyone else in terms of search share and search-advertising revenues. Now, it seems that Yahoo! wants a piece of contextual advertising and that they feel it is better to contract it out to Google rather than develop it in-house.

Is this a bad thing on the part of Yahoo? I'm not sure that it is. I would think that Yahoo! did a make-buy determination and decided that it would be easier and cheaper to go with Google's AdSense and be almost immediately able to begin collecting the revenue stream. It is true Yahoo! will need to share that revenue with Google but it is undoubtedly a step forward for both companies.

So maybe there is hope for Yahoo! after all. The company failed to sell its search functionality to Microsoft but is doing the next best thing by bringing in Google's search-advertising technology which is the best in the industry. Adding contextual advertising via AdSense is a smart way to further monetize Yahoo! properties with minimal investment. If you're a Yahoo! investor, this should be cause for at least a little optimism.

Disclosure: none



Sunday, August 10, 2008

Weekly review - after a good week, will we get follow-through?

Oil down, stocks up. Seems a simple formula. Dollar up, Euro down. It's easy to play this game, isn't it?

Let's see, what other games can we play? Banks pay fines for sleazy behavior in auction rate securities market, pay billions to wronged investors and take more junk onto their balance sheets. Financial stocks close the week with a gain. Huh?

Ok, so maybe this stuff isn't so simple after all. In actuality, as the market has moved steadily upward we have continued to receive numerous conflicting signals. This week initial claims came in higher than expected, extending the trend of the last few months showing a deteriorating job market. This contributed to lower than expected wage costs when the productivity numbers were released. Speaking of which, productivity increased, something not usually associated with a recessionary economy.

Other conflicting signals can be found thanks to the currency markets. Tech has been a strong sector in the recent rally and exports seem to be the driving factor. With the dollar strengthening this week, it is reasonable to wonder if a stronger dollar will weaken the robust U.S. export machine. Financials have been another strong sector. This week Fannie Mae and Freddie Mac reported huge earnings misses as did AIG. As I mentioned above, auction rate securities are coming home to roost to the tune of billions of dollars. Citi and Merrill have already been tagged for billions and UBS is next in line.

Turning our attention to technical analysis, we see major market averages are challenging their moving averages. The S&P 500 is pushing up against its 50-day moving average and, to my amazement, the NASDAQ is pushing up against its 200-day moving average! Is the bear market really over?

Against this backdrop, we try to get a sense of the market by looking at the data we gather from the Alert HQ process. We use both daily data and weekly data to compile the market statistics discussed below.

Looking at daily data --

An overview of the short-term technical picture is presented in the following chart of market statistics based on daily data collected by our Alert HQ process. Each weekend we scan over 7200 stocks and ETFs looking for BUY and SELL signals. We also collect various technical information that we roll up into a chart like the one below:

Stock market statistics based on daily data, 8-8-2008
Moving average analysis --


Looking at the chart above based on daily data, everything seems to be going gangbusters. More than half of the 7200 stocks and ETFs we evaluate are above their 20-day moving average and, at this rate, the number above their 50-day moving average will soon be there, too. The number of stocks whose 20-day MA is above their 50-day MA is also increasing nicely.

Looking at buying and selling pressure --

We also plot the results of Chaikin Money Flow analysis. This indicator is moving steadily in a bullish direction. The number of stocks undergoing strong accumulation or buying continues to increase at the fastest rate we have seen since we began accumulating this data.

The Aroon analysis we do shows stocks in strong up-trends or down-trends. Based on daily data the number of stocks in a strong up-trend is increasing at a very good pace. The one sour note in this song is that according to Aroon, the number of stocks in a strong down-trend stopped falling and actually increased slightly this week.

Weekly data --

We also present market statistics based on weekly data in the chart below:

Stock market statistics, weekly data, 8-8-2008
The weekly data naturally has similarities to the daily data. As can be expected there is a certain lag in all the curves presented in this chart. What is disconcerting, however, is that some of the curves are flattening out instead of moving up. Indeed, we saw a confirmation of this in the Alert HQ list of weekly SELL signals which increased in number over the previous week.

Conclusion --

Market sentiment is undeniably positive despite a mixed environment tossing various positive and negative nuggets of financial and economic news at investors.

Many stocks have turned in earnings considerably lower on a year-over-year basis. Nevertheless, the fact that they beat lowered expectations has been greeted with investor enthusiasm. The continued decline in commodity prices is welcomed by investors even as the accepted reason for the decline is a weakening global economy that is reducing demand.

Looking at the charts, we seem to be at an inflection point with various stocks, ETFs and major averages bumping against important moving averages. This coming week will be about follow-through. Can the NASDAQ make a significant push up through its 200-day moving average? Will the Dow make a clean break above its 50-day moving average? Will the ProShares Ultra Short Financial ETF (SKF) finally fall below its 200-day moving average? Will the iShares FTSE/Xinhua 25 ETF (FXI) recover or continue to a new low? Will the SPDR S&P Homebuilders Index ETF (XHB) fall back as it approaches its 200-day moving average? Will Cisco Systems (CSCO) hold above its gap, stay above its 50-day MA and challenge its 200-day MA?

Lots of questions and lots of moving averages coming into play. Absent a major negative economic report or financial bomb, the path of least resistance seems to be up.

The coming week brings retail sales, CPI, weekly numbers for initial claims and crude inventories, the New York Empire State Index, industrial production and consumer sentiment. Plenty of opportunities to move the market. Will you get the follow-through you're looking for?



Saturday, August 9, 2008

Free stock alerts - Alert HQ for August 8, 2008

This post is to announce that the latest list of stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move.

This week I also want to announce that the alert lists are free!

We have been offering the Alert HQ lists of BUY and SELL signals for months now. It is undeniable that the Alert HQ system does indeed identify many profitable trades. On the other hand, there have been a significant number of false signals, where things didn't work out as expected.

As a result, I have decided to make the Alert HQ stock signals free for now. As I have mentioned in numerous previous posts, the stock lists are excellent additions to a watch list. Keep an eye on the ones you determine to have the most potential and verify that the stock price is following through as expected. Do some fundamental research on the stock to ensure that the business model and profitability look good to you. Then pull the trigger.

This week the major stock indexes all turned in strong performances. With oil dropping, the dollar rising and the Fed holding interest rates steady, significant factors were in place for a rally. Cisco Systems delivered solid earnings and CEO John Chambers gave an upbeat forecast. This lit a fire under tech stocks and the NASDAQ gained over 4% this week. (Note that Cisco is one of our BUY signals this week.) Despite more huge losses reported by companies such as Fannie Mae, Freddie MAC and AIG, even the financials joined the party to the extent that lots of banks are on this week's BUY list.

As a result, we have another set of good sized alert lists this week. We have 63 BUY signals and 14 SELL signals based on daily data. In addition, we have 54 BUY signals and 46 SELL signals based on weekly data.

Stop by Alert HQ and download your free lists. I myself like the lists based on weekly data. These stocks have shown some follow through and often appear to be the more reliable trades. If you want to be early in identifying the new trend, the lists based on daily data are for you.

As always, do your homework and good luck trading.



Thursday, August 7, 2008

Microsoft out of ideas?

"Sometimes money buys you everything and nothing."
-- Prince, from the song Condition Of The Heart
Yesterday Bloomberg reported an analyst's expectation that Microsoft (MSFT) would institute a $20 billion share buyback program.

There hasn't actually been a formal announcement from Microsoft that I have seen, yet the news has rapidly spread around the Internet as the Bloomberg report was picked up by bloggers, news sites and technology sites.

UBS analyst Heather Bellini expects Microsoft to complete the repurchase over the next three months, and that the amount is at least five times larger than its average share buyback per quarter in the last fiscal year, according to the Wednesday Bloomberg article.

So what does this mean?

Earnings --

When companies buy back shares, net income is spread across fewer shares. This results in an apparent increase in earnings per share even if total income stagnates. A buyback of this size might raise Microsoft's EPS by as much as $0.10 per share.

Strategy --

The size of this buyout would be a confirmation that Microsoft is out of ideas. With the deal to acquire Yahoo! apparently dead, Microsoft seems to have nothing else to do with the money than to buy back shares. To me this is an indication that there was no plan beyond buying Yahoo! and that Microsoft has no significant new initiatives in the pipeline. The reliance on doing a deal shows that Ballmer and Icahn are birds of a feather with no real strategy beyond buying and selling assets.

For those of you who would like to see a resurgent Microsoft stock trading higher based on organic growth and compelling new product introductions, you may have to wait for quite a while. In the meantime, financial shenanigans appear to be the rule.

Disclosure: none



Wednesday, August 6, 2008

ProShares Links - this week's list, 8-6-2008

It's been a few weeks since the last time I published a list of links to posts by other bloggers that are writing about ProShares ETFs. I have accumulated a good list now, most from Seeking Alpha and one from Barron's Online.

Wed, Aug 6QLDAugust Market in Store for a Bounce
Tue, Aug 5UYGEnergy May Not Be the Top Performing Industry
Tue, Aug 5MZZTuesday Outlook: Fed Day
Mon, Aug 4SDSWas That a Bottom? Let's Get Real
Mon, Aug 4SDPTime to Short the Utilities
Fri, Aug 1SKF, UYGThanks, Chris! Love, ProShares
Thu, Jul 31DIG, DUGMost Overbought and Oversold ETFs
Thu, Jul 31PST, TBTSearching for the Best Bond ETF
Thu, Jul 31DDM, DIGETF Update: Leveraged and Inverse ETFs, Short ETFs, Microcaps
Thu, Jul 31DIG, DUG, QIDBank Stocks: Another Day Through The Looking Glass
Wed, Jul 30SSO, UYGOptions Trader: Wednesday Outlook
Tue, Jul 29SSODouble Longs: An Equity Idea in a 6% World?
Sun, Jul 27DUGWhy I'm Not Buying Oil's Recent 'Correction'
Sun, Jul 27USDNo Quick Recovery for Stock Markets
Sun, Jul 27SRS, SRO, SSOIs the Structural Bear Market Nearing Its End?
Fri, Jul 25PSTIn a Vulnerable Bond Market, Two ProShares ETFs To Play
Thu, Jul 24SRS, UREWhy the Housing Bill Won't Help the Housing Market
Thu, Jul 24SRS, UREThe Nature of a Crowded Trade: This Time It's Housing
Thu, Jul 24SDS, SKFBust, Bail, Repeat: The U.S. Enters into an Ever-Worsening Cycle
Thu, Jul 24QIDOn Oil, Gold and Flying Pigs
Wed, Jul 23SKFBanks, Airlines: One Extreme, Then Another; Decent Q From Hershey?; Frothy Bud
Wed, Jul 23EWVShould Japan Investors Welcome the Return of Inflation?
Tue, Jul 22DOG, SDSThe Prudent Bear Fund is a Joke....

In order to go beyond what Seeking Alpha has to offer, I am providing this link to the Google "Search Blogs" feature that will return any blog post that includes the symbol for one of the ProShares ETFs that was written in the last month. Bookmark this post and come back to use this link at any time. There may be some overlap with the content from Seeking Alpha.



Monday, August 4, 2008

Semiconductor rankings out - roadmap to investment opportunities?

"We're all pilgrims on the same journey-but some pilgrims have better road maps."
- Nelson DeMille
We write here on a fairly regular basis about semiconductor companies. IC Insights just came out with their Semiconductor Supplier Ranking for the first half of 2008. They provide two charts, one based on sales and one based on growth rate.

There are some interesting aspects to the rankings that are worth reviewing.

Qualcomm (QCOM) is a company that we previously held in our trading portfolio. It recently saw its stock jump based on the ending of litigation but it was a big gainer in the rankings due to exceptional sales growth. QCOM moved up four spots and is now considered the 10th largest semiconductor manufacturer based on sales and is the number two stock based on growth rate.

Taiwan Semiconductor (TSM), a company we recently wrote about (read the post here), made gains in both rankings as well. The company moved from sixth to fifth place based on sales and is the top stock based on growth rate.

Another stock we have written about here, SanDisk (SNDK), did not make the top 20 on either list.

The continuing malaise in the DRAM sector is well illustrated by Qimonda which dropped 12 positions from being ranked 18th overall in 2007 to 30th in 1H08.

We have written about the trend toward "fabless" semiconductor companies and discussed why Taiwan Semiconductor would benefit. Two companies that made good gains in the rankings happen to be fabless: Qualcomm, discussed above, and Broadcom which jumped three positions and is now ranked number 20 based on sales and number 6 based on growth rate.

AMD, despite being left for dead by the financial media, actually registered a 9% growth rate y-o-y and, though it dropped four positions, managed to hang in at number 15 in the rankings based on sales.

As can be seen, there are companies that have managed to shine in spite of a slowing global economy that is impacting semiconductor sales. Unfortunately, it seems that the stock price doesn't always track the rankings and some of the top ranked stocks are in nasty down-trends. Values or value traps? The fact that IC Insights provides a list of biggest by sales and best by growth rate allows an investor to cross reference between the two lists to find solid companies with critical mass and an aggressive growth rate.

An investor could do worse than to pick their semiconductor stocks from the top 20 lists provided by IC Insights. I would encourage readers to read the report at IC Insights to review the lists and draw their own conclusions.

Disclosure: none

Sources: Shakeups Rock 1H08 Top 20 Semiconductor Supplier Ranking



Sunday, August 3, 2008

Weekly review - major averages struggle, broad market rises: I'll take what I can get

"And I'd like to leave this game a winner...
But tonight I'll take what I can get"
-- Dashboard Confessional

Despite news of Merrill Lynch raising more capital and another bank failure, financials owned this past week. The sector gained a strong 4%. Other sectors weren't so lucky. The major averages barely budged though the Russell 2000 managed an 0.8% gain.

Oil strengthened on the week but finished at about $125 per barrel, still low by recent standards. Economic news was mixed. ISM manufacturing came in at 50, better than expected and indicating flat growth which, after all, is better than contraction. GDP came in at 1.9%, lower than expected but still indicating an expanding economy. Jobs showed a seventh straight month of declines though not as bad as expected and unemployment went to 5.7%, higher than expected.

Small caps kept the ball rolling in the stock market this week. Without the decent showing in the Russell 2000 we wouldn't have seen the continued improvement in the stock market statistics we track below. Major averages stagnant but gains in the broader market? That's OK, I'll take what I can get. Our technical analysis of the market follows.

Looking at daily data --

An overview of the short-term technical picture is presented in the following chart of market statistics based on daily data collected by our Alert HQ process. Each weekend we scan over 7200 stocks and ETFs looking for BUY and SELL signals. We also collect various technical information that we roll up into a chart like the one below:

Stock Market Statistics, week ending 8-1-2008
Moving average analysis --


We now have four weeks in a row where the short-term moving averages have been climbing. The number of stocks above their 20-day moving average increased again but the rate of increase is slower than the previous week's. We're just about at the point where half of al stocks we track are above their 2-day MA.

The number of stocks above their 50-day moving average moved up and has reached a level of a 2625, just above one third of all stocks. This metric is moving steadily upward.

Finally, we see that the number of stocks whose 20-day moving average is above their 50-day moving average has increased two week's in a row and is now ever so slightly above the reading we got at the March low.

Looking at buying and selling pressure --

The Aroon analysis we do shows stocks in strong up-trends or down-trends. This week's chart shows the number of stocks found to be in strong up-trends has increased again and has hit a level of 1900. Though better than the level at the March low, it is still only about 26% of all stocks we track.

The number of stocks determined to be in a strong down-trend has fallen to 1320. This is about 18% of all stocks.

Based on Aroon analysis, then, if 26% of stocks are in up-trends and 18% of stocks are in down-trends, this implies that 56% of stocks must still be stuck in non-trending price patterns.

We also plot the results of Chaikin Money Flow analysis. This indicator is moving steadily in a bullish direction. The number of stocks undergoing strong accumulation or buying has now moved up to 862. Not shown on the chart is the number of stocks shown to be undergoing strong distribution or selling. This indicator has fallen for the fourth week in a row and is now at 349, the lowest reading we have registered since we began collecting Chaikin data back in March.

Weekly data --

We also present market statistics based on weekly data in the chart below:

Stock Market Statistics based on weekly data, week ending 8-1-2008
The daily data paints a picture of a market that is decidely bullish though beginning to exhibit characteristics of being over-bought. The weekly data is not nearly so exuberant.

We see that the number of stocks trading above their 20-week moving average is moving up. Likewise, the number of stocks trading above their 50-week moving average is moving up.

We continue to see a drop, however, in the number of stocks whose 20-week MA is above their 50-week MA.

Aroon analysis shows a mixed picture. The number of stocks in strong down-trends based on weekly data is falling but the number of stocks in strong up-trends is also falling.

Chaikin Money Flow shows very slow but steady progress in a bullish direction.

The major averages --

The following chart of the S&P 500 shows how, despite continued improvement in the broad market, large caps making up this index have stalled out, failing to breach overhead resistance in the 1275 range. The average continues to trade well below the 50-day moving average. As we discussed last week, the 50-day MA is still pointing downward and increasing its distance below the 200-day MA which is also pointing down. Even a strong showing by financials couldn't lift the average much this week.

Chart of SPX, 08-01-2008
The following chart of the Russell 2000 shows that small-caps are where the action is. The good news is that this average has managed to hang in above its 50-day moving average. The bad news is that it hasn't been able to challenge its 200-day moving average. The further bad news is that both moving averages continue to point downward though neither is heading downhill as steeply as the moving averages of the S&P 500. With the Russell 2000, we appear to be nearing an inflection point. A failure to get above that 200-day MA could send the average into another down leg.

Chart of RUT, 08-01-2008
Conclusion --

At this point, the markets are struggling to make progress. Promising rallies in the major averages seem to last only a few days. Still, as our market statistics based on daily data show, the broad stock market has managed to eke out some further gains this week.

The question is, can the gains continue?

From a fundamental point of view, it is clear that the U.S. economy continues to expand albeit very slowly. There are still headwinds in the form of a weakening jobs picture, stubborn inflation despite falling oil prices, potential timebombs still lurking within the financial sector, a housing market still in disarray and an auto industry that is a mess. With this kind of environment, there are individual stocks that can out-perform while we might see major averages struggle.

From a technical point of view, stocks in general are still moving up; however, there are the challenges of being over-bought as well as various kinds of overhead resistance in the form of previous bottoms or important moving averages. Failure to sweep these obstacles aside could easily tip stocks to the downside again.

For now I remain cautiously optimistic while keeping a couple of ultra short ETFs in the portfolio just in case.



Saturday, August 2, 2008

Alert HQ for the week ending August 1, 2008

This post is to announce that the latest list of stock alerts is up and available at Alert HQ. Each week we scan over 7200 stocks and ETFs looking for fresh BUY and SELL signals. We apply a combination of proprietary and standard technical analysis techniques to identify those stocks that are beginning to move.

Markets were somewhat mixed this week with the Dow down a bit, the NASDAQ flat and the S&P 500 and Russell 2000 up a bit. Nevertheless, this week's action saw stocks advance sufficiently to continue the trend we saw last week where BUY signals outnumbered SELL signals. Based on daily data we have 63 BUY signals and only 4 SELL signals to offer this week

When it comes to signals based on weekly data, however, we see BUY signals and SELL signals running neck and neck: 29 BUY signals and 30 SELL signals.

Despite the good number of BUY signals based on daily data, major market averages seem to be struggling to overcome resistance. If that resistance is indeed overcome, we should see a nice rally ensue. Use Alert HQ to build your watchlist and be ready to take action.




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Disclaimer: This site may include market analysis. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.




 
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