Analysis from Broco
Review of the US market by May 16
On Friday the market finished a volatile week with moderate losses. NYSE fell for 1.2%, S&P 500 lost 1.1 %, Dow declined for 0.8 %, and Nasdaq – for 0.5 %. The volume of major exchanges fell down. Taking into account that Friday was expiration day for options, this decline was strange. On the other hand, it is better when the market drops torpidly. Energetic and financial sectors dominated among losers of the day. From May 8 to 15 NASDAQ lost 3.4% and stopped its 9 wee's of continuous increase. The same week took 5% from S&P 500, 5.6% from NYSE Composite and 3.6% - from Dow industrial index . NASDAQ and NYSE faced resistance in its 200 days' moving averages. Besides, all indices closed near minimum points of their week's discretion. Though trading volume was lower than the volume of preceding week due to the expectation of normal correction. Leading growth stocks were under pressure but managed to take over the market on Friday. IBD 100 index increased up to 0.1%, index fell for 3.5% within a week – on the level of leading indices or better. IBD index of economic optimism of the best growth stock was behind of the market within the most part of current upward trend. A number of leading stocks demonstrated growing dynamics. Red Hat (RHT), developing company of open source operating systems, added 1.74 up to 19.86 due to rumors about its selling to IBM company. Its stocks passed key exit point of 19.26. But profit of the company in the last quarter increased for 10%, and analysts forecast EPS (earnings per share) decrease within the future four quarters. After such a long growth certain market consolidation could be expected. Now, when upward trend of the market is under pressure, one should think carefully before purchasing of any share and ready to fix profit in some cases. On preceding “main day” of the market indices heavily bounced in the beginning but took a long pause before a new growth started. At that time a lot of new attractive growth stocks. Counting market distribution days does not cause concerns. April 14 and 22 distribution days are removed from counting. Since the market grew a lot, these days are not in the focus of attention anymore. Besides, in the view of low market volatility it is sensible to take into account smaller changes of indices on the event of removing distribution day from accountancy. What are the leading groups according to the results of the week? In fact protective papers played this role and included stocks of commercial education and provision related branches. Tobacco as classical protective branch was the fifth strong group of the wee
Third month of increase: The last trading hour market increased due to the volume growth and closed May
Final increase marked positive mood of investors on Friday. NASDAQ grew for 1.5% in the final trading hour having demonstrated its day growth in fact by this rapid movement. NYSE, S&P 500 added 1.4 % and stocks of industrial Dow - for 1.1 %. The volume of two major exchanges grew and raised the last hour too. Closing short positions and increasing commodities prices served as the main reasons of growth. But on the whole closing of the week was optimistic especially if to take into account moderate trading within the week. On Wednesday NASDAQ had higher volume of sales, its 5th distribution day within the last weeks. Still the index replied by growth within two next sessions, both in increased volume. The week growth of NASDAQ is 4.9 %, its best week value from the beginning of April. NYSE moved for 3.7 %, S&P 500 +3.6 %, +2.7 % Dow. At the same time major indices closed the third month of growth in succession. Week growth of NYSE was rather high, therefore distribution day - May 13 – may be excluded from calculating. Despite a strong growth of broad market, growth stock did not demonstrate notable results on Friday. A number of growth stock reached a higher volume. In many cases they just continued forming consolidation figures. On Friday IBD 100 added 1.2 %. Starent Networks (STAR) achieved maximum value for 17 months. Manufacturer of wire-free appliances grows after it was corrected up to 10 wee's moving average value. Some growth stocks continued correction. Quality Systems (QSII) went below 50 days' moving average value Stocks four-time lost 5 % after quarter report which demonstrated that sales disappointed investors. Stocks of public health sector were among the weakest on Friday. Stocks of transport companies were leaders of the day. Baltic Dry Index, indicator of commodities delivering cost – and indicator of industrial activity at the same time – achieved its maximum October point. Chinese demand for ironstone exceeded parlays. The market was tuned in increase when the government revised GDP value of the first quarter for a rise. But the report about industrial activity of Middle West was not encouraging. The market faces several negative factors including accruing sale of government obligations, rising oil prices and concerns about growing inflation in the future. In fact, weakness of stock environment was to a significant extent a response to a leap of yield of government notes. On Friday yield of 10 years Treasuries fell down for 17 points thereby erasing we's growth. USA dollar demonstrated a strong decline perhaps due to a reason that investors are looking for safer assets.
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According to the results of the week, IBD 100 is behind the broad market
On Friday stocks closed in a combined way in a lower volume after a strong recovery from morning losses. While loosing 1.6% within a day, NASDAQ compensated the most part of losses having lost only 0.2%. S&P 500 added 0.1% and Dow - 0.3%. Within the first several hours there was a high volume accompanying strong sales. By the end of the day NASDAQ volume fell down for 17% and NYSE – for 30%. Major indices closed the week with a slight increase. NYSE supported by rapidly growing commodities and demonstrated the best growth – just 1.1%. S&P 500 grew for 0.7 %, Nasdaq – for 0.5 % and Dow – for 0.4%. The market also recorded distribution day – decreasing of the volume growth on Wednesday with a slight decline on Thursday. The volume increased on that day as well. A number of top-ranked growth shares had sales. On June 1 wireless communication provider Neutral Tandem (TNDM) demonstrated a new maximum value after it bounced from 10-' moving average. The last week this share experienced a heavy drop, in particular, on Monday, Wednesday and Thursday. Chinese software manufacturer Longtop Financial (LFT) passed 28.84 – its recovery point, but lost 4% on Friday. Though the previous day it strengthened a little. After loosing huge 15% it met support of 50 day' average and won back the most part of its losses. Whereas the most part of major growth shares avoided serious problems, IBD 100 lost 2.1% for the week. According to the results of recent four weeks, index won from the broad market. It was a long-awaited consolidation of growth shares' indices. But growth index was behind broad indices from March 12 to May 8. Under common conditions growth shares must be leading stocks of the market. Though against the background of falling prices – or financial panics – after active sales of shares any subsequent growth is to be caused by the growth of the most underestimated stocks attracting strategic investors. As a rule, real leaders appear later. L's have a look at Taser International (TASR) manufacturer, one of superstars of the market in 2003 – 2004 years. When bursted technical bubble caused bear market, investors should have been waiting until 2003 March – the start of real bull market. And even then 4 months were required for Taser to take leadership. L's compare the situation with today's market. 3 months after current confirmed upward tendency begun more leaders appeared. Foundations are forming and stocks start their growth. Some of them face problems but there is no wave of massive falls. This is not the guarantee of future profit yet. You still need to choose a correct moment for entrance, take inevitable losses as granted and trade in harmony with the market state.
Review by June 19 On Friday there was no peculiarly good news, but NASDAQ grew later and was leading on combined market. The index of big technological companies grew for 1.1%, NYSE and S&P 500 added 0.3% and 0.5% respectively. Dow lost under 0.2% and scarcely avoided a new distribution day. It closed session under its 200-days' moving average value within the 5th day running. Other major indexes support value over its 200-days' average, thereby having transferred this controversial area from resistance into support. Notwithstanding the volume increase, day results cannot be canceled. The last “quadruple witching” day in March, distribution day was registered. On Friday leaders avoided recession. Whereas a few shares fell down in a strong volume, other met support in a key average volume or built new foundations. There was no leader with a big volume decline. IBD 100 increased for 1.2 %, having decreased its losses down to 1.8 % by the end of the week. Growth shares ranked the best behaved better than S&P 500 with its 1.6% drop down but at the same time much worse then NASDAQ result with the loss as of 1.7%. Chinese stocks continued performing as leaders of growth. Fuqi International (FUQI), jewelry manufacturer, added 1.50% and reached 17.63, more than in triple. Perfect World (PWRD), Bejing developer of on-line games, added 2.50% and reached 29.18 in a huge volume. Other Chinese stocks – such as Shanda Interactive Entertainment (SNDA), AsiaInfo (ASIA) and American Dairy (ADY) – look much better after recent bounces. Despite the week of inactive action on the market, at least one leading growth share reached a new maximum. HMS Holdings (HMSY) was growing within five days in succession – four times in a high volume. On Friday share grew for 0.90 in a heavy volume so to be able to close in 40.06. Among the most active stocks, Microsoft (MSFT) shows a certain activity. The share was growing within 16 among 19 recent sessions and is higher for 59% against its march achievement. On Friday the security added 0.57 after Goldman Sachs included software company in its list of purchases. Its fundamental features are combined though. Its profit increase as of pretax 42% and ROE as of 53% are great but its EPS rating is just 64. It means that one third of all other stocks shows a faster growth of EPS.
Well today everything started to drop..
It seem that it's hiting support line.....
By Friday's closure trading moved up because Russel composition was revised and stocks closed in a combined way against the background of increased volume.
NASDAQ closed with 0.5% increase. S&P 500 and NYSE lost 0.1%, Dow fell down for 0.4% having shown the fourth distribution day within recent weeks. IBD 100 added 1.2% having gained due to major indices within the third day in succession. Volume grows, stocks decline due to revise of Russel indices. On the last Friday of June volume grew after it had been declining for the most part of the day. NYSE volume increased for 74% and NASDAQ volume grew for 58%. Indirect proof say that Friday's volume increase was related to Russel re-computation. Widely-known Russell Investments' indexes are recomputed every June. Funds related to Russel were selling or buying stocks in respect of whether they are on the index list. Till the last trading hour the volume of two exchanges was below an average level. Whereas other indexes grew, Dow fell down within 8 among 10 recent sessions. Three shares weight down Dow heavily and they did not relate to Russel. Boeing (BA) fell down for 18% within the last 10 sessions; General Electrics (GE) declined for 13%; and Alcoa (AA) lost 10%. On the last Friday of month the best growth shares grew or sharply went down in a large trading volume – almost equally. American Dairy (ADY) added 2.31 and reached 40.96 in triple volume. Valeant Pharmaceuticals (VRX), which started on Wednesday, lost 1.52 and went down to 24.66 approximately in fivefold volume. Hawkins (HWKN), the company of chemical branch, added 0.80 up to 22.50 in more than 14-times fold volume growth. The share was added to Russel composition. Within the last June days news were combined and did not influence much. Private income rate added 1.4%, above the forecasted rate as of 0.3%. Savings ratio sharply increased from 6.9% and it is the best result from 1993 year. It makes investors concern about economic slowdown. Though the news, which impacted stocks, was ambigious. Retail stocks, which would suffer under such a scenario, grew in general. According to the results of the last week of June, major indexes closed in a combined way, only NASDAQ fixed increase. Nevertheless, IBD 100 grew for 0.7% within the last week of month and gained against a broad market.
Review of the US stock market by July, 3 When major indexes experience a strong decline, it causes serious concerns about the market prospectives. But when this decline happens in a low volume with slight losses among leading growth stocks, it tells about the possibility of a false alert. Stocks sharply rebounded on Thursday, but the volume was typically low for a session before a long weekend. NYSE index was leading with its 3% decline; S&P 500 sank below for 2.9%; NASDAQ lost 2.7% and Dow – 2.6%. The volume was below NYSE for 25% even after the exchange decided to prolong its trading for 15 minutes. NYSE referred to a poor order execution. NASDAQ volume decreased slightly. On Thursday IBD 100 experienced a decline as of 2.9 %. The wee's index of growth stocks lost 2.3% - similarly to week's loss of NASDAQ. The week closed with the 2.2% decline of NYSE index; S&P 500 lost 2.5% and Dow lost 1.9%. Negative news established the background in the beginning of the day before the opening of the market. Labor Department with the reference to payroll journal reported about occupation decline as of 467 000, which strongly exceeds the forecast. This report supposes tough problems with consumer expenditures. Labor report caused movement to protective assets. US dollar consolidated. Gold, which often moves against USD, declined. The value of August gold futures fell for 10,30$, or 1.1 %, up to 931$ per ounce. Simultaneously, oil price went down approximately for 4% within a day. Oil, car manufacturing, mechanic engineering and retails stocks declined the most. Data about work positions created a steadily negative mood, even after a surprisingly strong report of factory contracts. In May factory contracts increased for 1.2% and easily overrun analytics' forecasts. It was the most serious increase in the year and third growth for four months. But the market neglected this news. Though leading growth stocks performed steadily. Green Mountain Coffee Roasters (GMCR) lost 1.61% and got down to 58.45.Other factors reduced a negative effect: the volume was lower than average for 17%; the share stayed above its day's moving average value. One of the share worthing monitoring is probably Chinese American Dairy (ADY). Though on Thursday it decreased for 1.8% in the volume under average, it builds the main profile of a high, outlined flag – pattern which sometimes causes enhanced increase. Potential entrance point is 44.10.
The review of the US market by July, 10 If the rule is true that the market clams down before reversal starts, then, Friday's behavior of stocks gives us a hope for a growth. Major indexes closed in a combined way. The volume fell down and was languid for two major exchanges on Thursday. Trading on NASDAQ was even less dynamic than it was during a preholiday session on July 2. Leading growth stocks did not move up or down notably. In general price movement was very slight on the market. On Friday NASDAQ grew for 0.2 %. Dow and S&P 500 each added 0.4 % whereas NYSE declined for 0.7 %. IBD 100 added 0.4 %. According to the results of the first July week, the index of growth stocks fell down for 2.4 % and thus it followed broad indexes. All major indexes stayed lower than its 50-days' average value. S&P 500 and NYSE are still very close to their 200 days' average value. Dow got lower than its 200 days' average value whereas NASDAQ was definitely higher. NASDAQ is still a leader among indexes in 2009 year; its growth amounts to 11 % for the year. Technologies contributed to its leadership position. It is proved by the fact that Philadelphia semiconductor index grew for 22% this year. On Friday the value of technology-containing stocks were pushed by Goldman Sachs' forecast. Reuters reported that David C. Bailey from Goldman Sachs raised the evaluation of the US computer manufacturers' segment by changing “neutral” estimation into “attractive”. In the “note for ClBailey emphasized that hardware segment which is depressed now will be No 1 for investments when economy recovers. He raised the estimation of Dell (DELL) and Seagate Technology (STX) from “neutral” to “buy”. Due to the neDell (DELL) slowly grew for 0.07 up to 13.22 in a double volume. Seagate added 0.47 up to 10 with the volume grow as of 37%. These two shares have EPS rank lower than 35 which means that the profit of around two of every three shares grow with higher rates. It was a successful day for many lagging members of the market. IBD toolmaker was leading among 197 industry groups. The stocks which are fuel oil price-sensitive - air companies and carriers - were successful as well. Oil prices closed the week below $60, the first time ever for around two months. On Friday Chevron (CVX) warned about its decline in revenue. The last days of the week the market was calm and upward trend is still under pressure. Investors are recommended to be as careful as possible until the situation is clear rather than to guess the future movement of the market. As for now, upward tendency will be renewed or the market will move to correction.
Stock markets demonstrated the third week of growth in succession, but the growth is getting down
Whereas economic news was better than it was expected on Friday, the market did not make profit upon this news.
The stocks stayed within the narrow trading range and closed the session in a combined way. NYSE was leading for the second day in succession and added 0.6 %. Dow and S&P 500 slightly changed for 0.2 % and 0.1 % respectively. Nasdaq lost 0.3 %. NYSE volume grew whereas Nasdaq volume lost. A dull trading allowed NASDAQ to avoid a “distribution day”. On Friday IBD 100 declined for 0.1 %. According to the week results, the index of growth stocks with the highest ranking fell down for 0.4 % and was behind the major indexes which grew a little. For the last time upward trend continued on a weak basis because economic data indicated decline but weaker than “it was expected”. Until a certain moment it seemed to be enough. Though on Friday NASDAQ bulls demanded something more significant: what about signs of authentic growth? The answer of economy was languid enough. Decline of GDP in the second quarter was “less than expected”. Chicago Purchasing Manager’s Index demonstrated the highest level starting from September but this message was only regarded as warning call given prior to publishing ISM index. On Monday ISM index will be published. According to GDP and government data, consumer expenses declined below the expectations. Market analysts believe that a languid recovering is more probable than an acute recovering of V-type. Among industry groups the stocks of regional auto dealers demonstrated a serious increase on Friday whereas the stocks of gold-mining sector consolidated growth. The stocks of RV (auto company) traditionally used to be early drivers prior to recovering of the economy but a tough pressure of credit and petrol prices conduce to a negative environment. Drew Industries (DW), the manufacturer of RV components, added 24 % in a triple volume on Friday. They also reported about the profit of 12 cents per share against a supposed loss in 6 cents. The sales were also above the forecast. Thor Industries (THO) — the manufacturer of buses and auto parts – added 11 % in the volume above average more than in four times. Both shares have weak EPS ratings but the group can perform as economic barometer and demonstrate signs of recovering. On the bottom side, medical shares were negative leaders among main losers of the day. Several shares of IBD 100 were winning reports back. HMS Holdings (HMSY) declined for 6% notwithstanding its report on Q2 level. Two shares, which reported on late Thursday, declined within Friday session. Vistaprint (VPRT) lost 4 % and Synaptics (SYNA) fell down for 33 %. McAfee (MFE) software manufacturer won the most part of Thursday loss and its growth amounted almost to 5%. Summing up: Friday, 13 of July, was an extremely hard day for the market and analysis – closing of month, week and crucial data for the USA GDP for the second quarter – all this enhanced market uncertainty sharply. It is important that the last 5 months (starting from March 9) – we have a continuous growth of stock market. June correction was not successful because 10% is not the figure. Though the basis is still very weak - but it is still declining. A deep correction is still vital, current rates of purchasing are not a
Stocks got down sharply, but NASDAQ avoided distribution day, NYSE declined in volume USA markets are decreasing. The market finished its continuous increase on Friday and showed a “distribution day”. Friday results: NASDAQ declined for 1.2% on Friday and 0.7% within a week after it had added 1.1% the previous week. It looks like the market intends to start consolidation. Meanwhile, on Friday NYSE and S&P 500 indices lost 1% and 0.9% respectively; Dow decreased for 0.8%. All indexes interrupted 4-wee' continuous increase. NYSE volume grew while NASDAQ declined. This way increase of NYSE volume together with significant losses conduced a clear “distribution day” for NYSE-related indexes. Though it was a “distribution day” deserving additional comments. Perhaps power cuts conduced decreasing of NYSE Thursday volumes and impacted comparison of two sess' volumes. Though it brought up account to four distribution days for S&P 500 and three other major market indexes. Does it mean that now upward market trend is under pressure? Not yet, but one or two distribution days are enough so that to turn market light from green to yellow. Among leaders of growth, market action was very slight. There actually were no leaders grown in rapid trading, but just a few declined in a big volume. Some losers were related to Chinese stocks, perhaps, circulating with the movement of Chinese market where Shanghai index lost 3% on Friday. Chinese large real estate operator and the company which did IPO the first in 2007 year - E-House Holdings (EJ) – lost 0.68% and reached 21.66 almost in double volume. This decline happened despite Oppenheimer & Co. analysts raised rating of E-House stocks to “Buy”. Manufacturer of electric transformers Jinpan International (JST) fell for 6.67% to 30.52 in sixfold middle volume. Electromotors manufacturer Harbin Electric (HRBN) fell for 0.49% to 16.53% in almost double volume. Recently the share found support in its 50 d' line. Though these Chinese shares are not the best stocks of market. Current upward market trend indicated leaders among Chinese stocks with the best fundamental and technical ratings. They did not show any alarm trigger on Friday. These stocks such as mass jewelry maker Fuqi International (FUQI), software manufacturer Longtop Financial Technologies (LFT) and searching operator Baidu (BIDU) all went through a slight correction – taking into account that all institutional investors did not get rid of these stocks. Friday news included discouraging data about consumer expenses and sentiments which frightened the market. Though Bloomberg reported about the opinion of JPMorgan about economic recovery: it will have V form. This point of view is in contradiction with less optimistic expectations. On Friday IBD 100 fell for 2% and lost 0.9% according to week results. Our expectations and scenario: “Unlike JPM analysts, I believe that economy is going to recover in “L” format just because due to a long-term and fatal weakness of consumer demand in the USA. Meanwhile US government and FRS has done a little to resolve the problem. Thus I deem a deep and durable downward correction as probable and estimate the decline to be over 50% of current month increase; it will take 2 – 3 months. Perhaps, we have already seen the first movement in the market decline on August, 14 – one more attempt of increase is quite possible and unpredictable. The market seems to move so hard – it is caving in under its own weight which demands some resolution in the form of corre
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Here we will post weekly research of the US market by Broco