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Sunday, April 4, 2010

Weekend Winners and Losers for April 1, 2010

What follows is a combination of our Weekly Review and the Weekend Winners and Losers where we announce the weekend's free stock signals available at Alert HQ.

Today we have the following stock picks and signals:
  • Based on daily data, we have 5 Alert HQ BUY signals and 45 SELL signals
  • Based on weekly data, we have 5 Alert HQ BUY signal and 6 SELL signals
  • We have 96 Bollinger Band Breakouts based on daily data and 214 Breakouts based on weekly data.
  • We have 694 Cash Flow Kings
  • 36 Swing Signals -- 30 BUY signals and 6 SELL Signals
  • 304 Trend Leaders, all in strong up-trends according to Aroon, MACD and DMI. We have 93 stocks that are new additions to the list and 179 that fell off the previous list.
  • 22 Trend Busters based on daily data of which 14 are BUY signals. We also have 32 Trend Busters based on weekly data.
  • 146 Gap Signals -- stocks with upside or downside gaps or gaps that have been closed. We see 63 downside gaps and 83 upside gaps based on daily data. We also have 42 Gap Signals based on weekly data.
The view from Alert HQ --

The big news of the week was employment. Wednesday's ADP report showed an unexpected drop in jobs while Thursday's initial claims were in line and still showing hefty numbers of people joining the ranks of the unemployed. On Friday, it was announced that nonfarm payrolls increased by 162,000 in March. Though below consensus expectations of 184,000 this was the first increase in jobs many months and the highest rate in three years. Unfortunately, the stock market was closed Friday so today's Alert HQ results don't reflect investor opinions on whether to focus on the good news of the increase in jobs or the bad news of the miss in expectations. Note that treasury bond yields did increase in response.

With that said, let's take a look at some of the numbers we track at Alert HQ.

In the chart below we count the number of stocks above various moving averages and count the number of moving average crossovers, as well. We scan roughly 7000 stocks and ETFs each weekend and plot the results against a chart of the SPDR S&P 500 ETF (SPY).

SPY versus the market, Moving Average Analysis for 04-01-2010

The chart shows some slowing in upward momentum. Interestingly, we are at the same levels from which we dropped into a correction in January and February. This time, though, the economic backdrop is more clearly showing recovery on the way. It will be worth watching to see if we can move up through this level where more than 5000 stocks are above their 50-day moving average. We are clearly in over-bought territory but then that is what rallies look like.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.

SPY versus the market, Trend Analysis for 04-01-2010

This chart shows that the S&P 500 has continued to grind out gains while the broader market is losing some up-trend momentum. In other words, the two charts are consistent though this chart suggests we are not so over-bought.

The outlook --

Investors will have had a long weekend in which to mull over Friday's Non Farm Payroll report. I'm thinking this is a pretty good report: not so good as to suggest the Fed will need to tighten rates right away but good enough to confirm that the economy and the jobs picture are on the mend. As such, there will not be a big move in stocks either direction.

Some folks have pointed to MACD beginning to suggest that stocks, in particular the S&P 500, are beginning to break down. Indeed, you can see that on the chart of SPY below:


On the other hand, Williams %R and Slow Stochastics show the market to be in good shape and probably ready to extend the current rally to new highs.

The coming week will bring only a few economic reports: the ISM Services Index, pending home sales, minutes from the last FOMC meeting, crude oil inventories and the usual weekly initial jobless claims and continuing claims.

Well, the first quarter is now in the books. Before you know it, we will be in the middle of another earnings season. For now, expect stocks to continue the up-trend. Some pretty high expectations are built into prices so it will be interesting to see if earnings reports deliver. We shouldn't have long to wait before volatility returns to this market. And volatility means good action in our Swing Signals and Trend Busters.

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