Archive for December, 2005|Monthly archive page

the growth stock report will return after the new year…

the growth stock report will return after the new year…

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Who's Working for Who?

Traders,

Simmer down, for the battle will be hotter

Simmer down, and you won’t get no supper

Simmer down, and you know you bound to suffer

Simmer down, simmer, simmer, simmer right down

Bob Marley, Simmer Down

Our current position:

BUYERS’ EDGE INTACT

In this week’s edition you will find:

  • Where We Are
  • What Was Important About Last Week
  • What We Are Watching For This Week
  • A Word On Discipline

The following sections can now be found on our home site:

Where We Are:

Taking a look at the overall markets:

As the broad market indexes retreat for the week we’re hearing the Talking Heads on TV come out and refresh us with every reason why we should be afraid the market’s run is over.

Awareness is good, but we should never confuse it with what it takes to make money.

For us making money comes from sticking to our strategy and following specific rules.

We’ve bought into this recent rally and have reaped the benefits.

When the market pulls back we are often tested with our positions, but have stops in place to take the worry out.

We can be right half the time and still make money, but we’re happy to say we’re right a lot more than half the time.

Leadership from Biotech, Broker Dealers, and Transportation continues to look promising.

New highs from the Oil Services and Materials (in particular Gold) is also providing opportunity.

With modest pullbacks in the works, we see nothing to be concerned with.

Should these modest pullbacks begin to occur on heavy volume – we’ll begin to see things otherwise.

Successful speculating is more about observing than it is thinking.

We’re sitting back and letting the strategy do the work.

The strategy works for us – we don’t work for the strategy.

Technically speaking:

The Dow Industrial Average ($INDU),-0.91%, pulled back for the second week in a row and is flirting with its 20-day moving average.

The S&P 500 ($SPX), -0.45%, hit a fresh high for the year before pulling back to its 20-day average.

Nasdaq ($COMPQ), -0.73%, hit a fresh high for the year before pulling back to its 20-day average.

Russell 2000 ($RUT), -0.26%, hit a fresh high for the year though continues to trade above its 20-day average.

Volume indications for the week gave us two days of distribution for the S&P 500. We’re looking at a buy side bias over the past three weeks, though have some concern over lower volume on the exchanges.

New Highs – New Lows Ratio has been consolidating over the past few weeks. The ratio os car from its highs made over the summer, which is not a good sign as new index highs have been achieved over the past few weeks.

Investors Intelligence reports that the number of bullish money managers increased over the week with the ratio now at 2.57 in favor of the bulls. This is a contrarians indicator that has been bearish for months. So what good is it? It has historical accuracy, though does not signal tops and bottoms as if it were an alarm clock. Tops and bottoms take time to be put in, markets tend to fall a part when everyone is bullish.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The 10-year Note Yield ($tnx) edged above last week’s high as it flirts with a three year downward trend-line.

The U.S. Dollar Index ($USD) has been consolidating for five weeks now.

The Gold Miners Index ($XAU) had a huge week as it broke out to a fresh high.

The Dow Jones AIG Commodity Index ($DJAIG) shot to just shy of the year’s high before pulling back.

Consumer Staples ($CMR) has been consolidating for five weeks. Consumer Cyclicals ($CYC) continues to trade in step with the major indexes as it took out last week’s high before pulling back.

Technology ($DJUSTC) shot to a new high on the year before pulling back.

The Semiconductor Index ($SOX) shot to a new high on the year before pulling back.

Banks ($BKX) pulled back for the second week in a row.

Broker Dealers ($XBD) pulled back for the second week in a row.

Retail ($RLX) pulled back for the second week in a row.

Internet ($IIX) pulled back for the second week in a row.

Healthcare ($HCX) has been consolidating for five weeks while tangled in its major moving averages.

Biotech ($BTK) pulled back for the second week in a row.

REIT’s ($DJR) pulled back for the second week in a row.

Homebuilders ($DJUSHB) pulled back for the second week in a row.

Transportation ($TRAN) pulled back for the second week in a row.

Airlines ($XAL) has been consolidating for five weeks.

Defense ($DFX) remains near the year’s highs in a five month trading range.

Energy ($IXE) advanced for the week and is now above its major moving averages though considerable off the year’s high. Meanwhile Oil Services ($OSX)
continues its pace into new high territory.

Utilities ($UTY) edged above last weeks high as it trades above its major moving averages.

The top 10 industry groups from the 6 month RS screen are:

What Was Important About Last Week

STOCKS:

  • The world’s biggest computer-chip maker Intel (INTC) expects sales of between $10.4 billion to $10.6 billion in the quarter, down from an earlier range of $10.2 billion to $10.8 billion.
  • The world’s biggest maker of chips for cell phones, Texas Instruments (TXN) said it expected to earn between 38 cents and 40
    cents a share in the fourth quarter, better than an earlier estimated range of 36 cents to 40 cents.
  • Toll Brothers (TOL) reported a 72% gain in fiscal fourth-quarter profit, though warned earnings for fiscal 2006 could fall below Wall Street forecasts due to a slowdown in the housing market

ECONOMY:

  • The Bureau of Labor Statistics revised its measure of third-quarter productivity growth in the nonfarm business sector to a seasonally adjusted annual rate of 4.7% – up from an earlier reading of 4.1%. It is the fastest growth in productivity, a measure of output per worker hour, in two years.

Key earnings releases:

  • MONDAY: VistaCare, Inc. (VSTA).
  • TUESDAY: Best Buy Co., Inc. (BBY), Engineered Support Systems (EASI).
  • WEDNESDAY: Winnebago (WGO).
  • THURSDAY: Adobe Systems (ADBE).
  • FRIDAY: Carnival Corporation & Carnival plc (CVL), Darden Restaurants (DRI).

On the economic front we have potential market movers with:

  • MONDAY: Treasury Budget.
  • TUESDAY: Retail Sales, Retail Sales ex-auto, Business Inventories, FOMC policy announcement.
  • WEDNESDAY: Export Prices ex-ag., Import Prices ex-oil, Trade Balance, Crude Inventories.
  • THURSDAY: Core CPI, CPI, Initial Claims, NY Empire State Index, Net Foreign Purchases, Net Foreign Purchases, Capacity Utilization, Industrial Production, Philadelphia Fed.
  • FRIDAY: Current Account

The Following Sections Are Now On Our Home Site:

This Week’s Word On Discipline:

“In reading the lives of great men, I found that the first victory they won was over themselves… self-discipline with all of them came first.” – Harry S. Truman

Opportunity and Symtoms

Traders,

Trickle downstream

With the underwater steam

Fish on the side

He’s a looking for a dream

Beta Band, She’s The One

Our current position:

BUYERS’ EDGE INTACT

In this week’s edition you will find:

  • Where We Are
  • What Was Important About Last Week
  • What We Are Watching For This Week
  • A Word On Discipline

The following sections can now be found on our home site:

Where We Are:

Taking a look at the overall markets:

The broader market has cooled off after an impressive run.

We have enough confirmed leadership and institutional support to deem this environment one for the bulls.

As we look as the bigger technical picture, the Nasdaq is leading the way for breakouts from multi-year bases.

Small Caps and Growth Stocks are the drivers.

Biotech, Broker Dealers, and Transportation has been the hot money.

We are now watching the Semiconductor Index around a key inflection point at the 500 level, which serves as resistance for an almost four-year downward trend-line.

We are also seeing strength in Oil Services, but not Energy.

Material based issues are also gathering momentum, and in particular Gold Miners.

The market tends to go where Technology and the Semis go – so a clear break here is what we want – but it could take months for this kind of clarity to be discerned.

Whether we look at this current environment three months form now as an incredible buying opportunity, or just a symptom of the year coming to a close, is not for us to decide.

We continue to hit our 20% profit targets, and in some cases much more – which is all we want.

We know what we know, and more importantly know what we don’t know.

Technically speaking:

The Dow Industrial Average ($INDU), -0.49%, ticked within kissing distance to the year’s high before retreating for a loss on the week.

The S&P 500 ($SPX), -0.25%, failed to take out last week’s high, thogh remains solidly above its major moving averages.

Nasdaq ($COMPQ), +0.46%, hit a new high for the year.

Russell 2000 ($RUT), +1.02%, hit a new high for the year.

Volume indications weigh in for the bulls over the past three weeks as institutions step in to support the long side.

.

New Highs – New Lows Ratio continues to trend higher, though is significantly off the year’s high.

Investors Intelligence shows bullish money managers over bearish money managers by a ratio of 2.64. This contrarians indicator is bearish.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The The 10-year T-Note Yield ($TNX) came off of recent lows and is poised to come out of a three year downward trend-line.

The U.S. Dollar Index ($USD) has been consolidating for three weeks above its major moving averages.

The Gold Miners Index ($XAU) hit a new high before retreating for a loss on the week. The index is above its major moving averages as it holds a recent breakout.

The Dow Jones AIG Commodity Index ($DJAIG) had a strong week as it rebounded after hitting a three-month low.

Consumer Staples ($CMR) holds bround above its major moving averages poised to breakout of a year long base. Consumer Cyclicals ($CYC) moved to within a hair of the year’s high.

Technology ($DJUSTC) is behaving like a leader as it approaches a two -year high.

The Semiconductor Index ($SOX) broke out to a new high on the year.

Banks ($BKX) hit a new high before retreating for a loss on the week.

Broker Dealers ($XBD) posted a slight loss on the week though hold a solid uptrend.

Retail ($RLX) lost ground as it trades roughly half way between the year’s high and recent lows.

Internet ($IIX) was little changed on the week as it holds a solid uptrend.

Healthcare ($HCX) has been consolidating for three weeks just off recent lows and well of the year’s high.

Biotech ($BTK) pulled back after a solid month of rallying.

REIT’s ($DJR) were little changed as the trade with a neutral technical bias.

Homebuilders ($DJUSHB) were negative for the week as they struggle with down trending major moving averages.

Transportation ($TRAN) pulled back after a solid month of rallying.

Airlines ($XAL) remains poised to come out of a multi-year triangle pattern.

Defense ($DFX) continued a six month consolidation.

Energy ($IXE) was slightly higher with the Oil Service Index hitting a new high.

Utilities ($UTY) were little changed as they struggle to stay above major moving averages.

The top 10 industry groups from the 6 month RS screen are:

What Was Important About Last Week

STOCKS:

  • Tivo (TIVO_ said revenue was up 30% to $49.6 million, with subscribers now numbering four million.
  • Tiffany (TIF) said it earned $23.8 million in the quarter, up 37% from a year ago. But revenue rose only 8% to $500.1 million – short of the $505 million analysts expected.
  • Wal-Mart (WMT) gave a disappointing outlook for December sales.

ECONOMY:

  • Nonfarm payrolls grew by 215,000 jobs in November. The growth was the best since July, and topped the year’s average monthly rate of about 167,000.
  • The unemployment rate held unchanged at 5%. President Bush.
  • Gross domestic product grew at a 4.3% annualized rate in the quarter. Previous estimates were for a 3.8% growth rate, following 3.3% in the second quarter.
  • The economy has now grown at a 3.3% annualized pace or better for 10 straight quarters, the longest such streak since 1983-84.
  • The National Association of Realtors reported sales of existing homes fell 2.7% in October to a seasonally adjusted annual rate of 7.09 million.
  • New home sales jumped 13% in October to a seasonally adjusted annual rate of 1.42 million units, a new record. Economists expected home sales to fall.
  • National Retail Federation that said Thanksgiving weekend sales were 22% higher than a year ago.
  • Consumer confidence bounced to 98.9 in November from 85.2 last month, beating Wall Street forecasts.
  • An American Research Group poll last month found that just 13% of Americans believe the economy is improving and 61% believe it will be worse a year from now.
  • Durable goods orders rose 3.4% in October, beating expectations.
  • Gold settled at $502.50 an ounce, the highest price since February 21, 1983.

Key earnings releases:

  • MONDAY: Jos. A. Bank Clothiers (JOSB), CMGI (CMGI).
  • TUESDAY: America’s Car-Mart, Inc. (CMRT), The Kroger Co. (KR), UTi Worldwide (UTIW).
  • WEDNESDAY: Hovnanian Enterprises, Inc. (HOV), Veritas DGC Inc. (VTS).
  • THURSDAY: Costco Wholesale Corporation (COST), Korn Ferry International (KFY), National Semiconductor (NSM), Shuffle Master, Toll Brothers (TOL).
  • FRIDAY: none

On the economic front we have potential market movers with:

  • MONDAY: ISM Services
  • TUESDAY: Productivity-Rev., Factory Orders
  • WEDNESDAY: Crude Inventories, Consumer Credit
  • THURSDAY: Initial Claims
  • FRIDAY: Mich Sentiment-Prel., Wholesale Inventories

The Following Sections Are Now On Our Home Site:

This Week’s Word On Discipline:

“Slow and steady wins the race.
” — Aesop