Archive for February, 2006|Monthly archive page

Narrow Daylight

Traders,

Narrow daylight entered my room

Shining hours were brief

Winter is over

Summer is near

Are we stronger than we believe?

Diana Krall, “Narrow Daylight”

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 are on our home site:

Where We Are:

Taking a look at the broader market:

Evidence collected for the week gave us modest glimpses of a bull wanting to push higher.

We had a new high for the Dow Industrial Average, and almost one for the S&P 500.

New highs were also marked for Banks, Biotechnology, Broker Dealers, Consumer Staples, Defense, REITs and Transportation.

It’s a huge plus to have banks rearing their head.

But it appeared Tech names weren’t invited to the party.

As the price action on the Tech indexes, $NDX and $DJUSTC, continues to wind up in a narrow range, we’re likely to see a strong move develop either way.

Periods of low volatility are followed by periods of high volatility.

Should tech crumble, it’s likely to provide less Growth Stock trading opportunities.

This market is favoring Consumer Staples over the Cyclicals, which means money is going towards safer, less risky issues. The things people always need like food, and not the more speculative things like trendy tech fashions is the difference here.

On a bearish note, we are not seeing a healthy number of new highs being made. Markets that don’t produce strong numbers of individual new highs in step with the averages are telling us things aren’t as great as they appear.

We’re also keeping a tight watch on Homebuilders.

Should the market head south it will need a sector to lead the action. This has been the market’s weakness, and is a likely candidate.

Technically speaking:

The Dow Industrial Average
($INDU), +3.29%, pulled back into the base it launched from last week and left a bullish tail.

The S&P 500
($SPX), +1.96%, came within kissing distance to a new high as it traded mostly sideways above its major moving averages.

Nasdaq
($COMPQ), +1.17%, held a tight range for the week as price action wound itself into a triangle. Periods of low volatility often turn into periods of high volatility.

Russell 2000
($RUT), +2.81%, also held a tight range for the week as it flirted with new highs.

Volume indications gave us modest accumulation days for the major indexes, though two days of distribution for the Russell is a sign of caution.

Hi/Lo Ratio The NYSE and Nasdaq exchanges are not producing healthy numbers of highs to match what was achieved in January. An inability to produce strong numbers is a sign of weakness for this market.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The 10-year Note Yield
($tnx) remained in a tight range as it made five weeks in a row of consolidation.

The U.S. Dollar Index
($USD) was little changed as it has now retraced half the losses made since November.

The Gold Miners Index
($XAU) was little changed as it appears to remain in pullback mode since making highs three weeks ago.

The Dow Jones AIG Commodity Index
($DJAIG) was little changed as it attempts to rebound from over a two month low made last week.

Consumer Staples
($CMR) tip-toed to a new high as it creeps out of a year-long base.

Consumer Cyclicals
($CYC) lost modest ground for the week as it remains bound in a two-month range.

Technology
($DJUSTC) traded in a narrow range as it forms a triangle. To break out or break down?

The Semiconductor Index
($SOX) continued its modest slide as it flirts with the support level of the 50-day moving average.

Banks
($BKX) hit a new high for the week as it launched from a year-long base.

Broker Dealers
($XBD) hit another new high for the week.

Retail
($RLX) pulled back to its 50-day moving average as it continues to consolidate in a three-month base.

Healthcare
($HCX) flirted in year-high territory as it remains poised to come out of a base created for the last two months.

Biotech
($BTK) hit another new high.

REIT’s
($DJR) hit another new high for the week.

Homebuilders
($DJUSHB) rallied after hitting a two-month low last week.

Transportation
($TRAN) hit another new high for the week.

Airlines
($XAL) traded in a tight range as it trades just above its 50-day moving average.

Defense
($DFX) hit another new high for the week.

Energy
($IXE) rallied after hitting a six-week low last week. The index is trading on its 50-day average.

Utilities
($UTY) traded sideways in a narrow range just above its 50-day moving average.

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

  1. GOLD
  2. DRUG DELIVERY
  3. INVESTMNT BROKERAGE-NA
  4. PRINTED CIRCUIT BOARDS
  5. INVESTMNT BROKERAGE-RE
  6. NETWORKING COMMUN DVCS
  7. RAILROADS
  8. INTERNET SERVICE PROVI
  9. INDICES DOW TRANSPORTA
  10. ASSET MANAGEMENT

What Was Important About Last Week

STOCKS:

  • Medtronic (MDT) reported fiscal Q3 (Jan.) earnings of $0.55 per share, in-line with the Reuters Estimates consensus.
  • Express Scripts (ESRX) reported Q4 earnings of $0.77 per share, excluding non-recurring items, $0.03 ahead of the Reuters Estimates consensus.
  • With Q4 earnings of $0.37 per share, excluding non-recurring items, Viacom (VIA.B) checked in $0.09 below the Reuters Estimates consensus.
  • Salesforce.com (CRM) announced fiscal Q4 (Jan.) earnings of $0.05 per share, in-line with the Reuters Estimates consensus.
  • Matching analysts’ expectations, Gap (GPS) reported Q4 (Jan) earnings of $0.39 per share.
  • Marvell (MRVL) grew its bottom line 67% in Q4, reporting EPS of $0.42 which was a penny better than the consensus after backing out non-recurring items.
  • Nordstrom (JWN) reported Q4 (Jan) earnings of $0.69 per share, two cents better than the Reuters Estimates consensus of $0.67.
  • BEA Systems (BEAS) reported Q4 (Jan) earnings of $0.12 per share, excluding non-recurring items, in-line with the Reuters Estimates consensus.

ECONOMY:

  • The Consumer Price Index (CPI) rose a more-than-expected 0.7% in January following a 0.1% decline in December. The YOY gain in the CPI accelerated to 4.0% last month from 3.4% in December.
  • New orders for durable goods fell 10.2% in January – the largest decline since July 2000. Durable goods orders are up 5.4% in the past year.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: Cablevision Systems Corp. (CVC), Giant Industries(GI), Lowe’s Companies (LOW), Newmont Mining Corporation (NEM), Universal Health Services (UHS), ValueClick, Inc. (VCLK).
  • TUESDAY: Autodesk, Inc. (ADSK), BJ’s Wholesale Club (BJ), Cal Dive International (CDIS), Dynamic Materials (BOOM), Southwestern Energy (SWN).
  • WEDNESDAY: American Eagle Outfitters Inc (AEOS), AutoZone Inc. (AZO), Chico’s FAS, Inc. (CHS), PetsMart (PETM), Vivendi Universal (V), Walter Industries (WLT), William Lyon Homes (WLS).
  • THURSDAY: Costco Wholesale Corporation (COST), Del Monte Foods (DLM).
  • FRIDAY: Compania de Minas Buenaventura (BVN).

On the economic front we have potential market movers with:

  • MONDAY: New Home Sales
  • TUESDAY: Chain Deflator-Prel., GDP-Prel., Chicago PMI, Consumer Confidence, Existing Home Sales
  • WEDNESDAY: Auto Sales, Truck Sales, Personal Income, Personal Spending, Construction Spending, ISM Index, Crude Inventories
  • THURSDAY: Initial Claims
  • FRIDAY: Mich Sentiment-Rev., ISM Services

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“Knowing is not enough, we must apply. Willing is not enough, we must do.” – Johann Wolfgang von Goethe

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Follow the leader

Traders,

Atom secrets, secret leaflet

Have the boys found the leak yet?

The molehill sets the wheel in motion

His downfall picks up locomotion

The Clash, The Leader

Our current position:

BUYER’S 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 are on our home site:

Where We Are:

Taking a look at the broader market:

A vote of confidence for chairman Bernanke?

The broader market made an encouraging move for the bulls.

With the Dow Industrial Average popping out of a year-long base and the market appearing to have heard what it wanted from our new fed boss, there’s much to be bullish about.

Accumulation of buyers ratcheted on the major indexes proves there is serious commitment, but heavy selling punctuating the move is a concern.

New highs were made in Biotech, Broker Dealers, Defense, REITs and Transportation.

The Technology sector was sluggish, and will be a major concern if it fails to find traction and head higher from the support levels it continues to rub on.

Heavy distribution from AAPL and GOOG over the past month seems to have put a damper on optimism.

Despite this, there is no evident weakness from action in the sectors.

The Semiconductor and Computer Hardware sectors are cocked in bullish cup-and-handles, and the Disk Drives remain in a solid trend.

The overall market looks good, but vulnerable if tech won’t follow the Dow.

If the market were to turn trend-down it would need a leader.

The only real weakness qualifying right now is Homebuilders, which needs to consolidate or rally at these levels before becoming more of a concern with a continued slide.

Now more than ever is the time to follow the leaders.

Technically speaking:

The Dow Industrial Average
($INDU), +1.80%, broke out of a year-long base. Bulls would prefer to see heavier volume on the move.

The S&P 500
($SPX), +1.60%, put in a nice rally and is above all its major moving averages.

Nasdaq
($COMPQ), +0.91%, was sluggish, though closed above all its major moving averages.

Russell 2000
($RUT), +1.93%, put in an attractive move as it remains trend up above all its major moving averages.

Volume indications gave us two accumulation days followed by one distribution day on the Dow and Nasdaq 100. The scale is tipped to the bulls, but we wanted to see declines on light volume.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The 10-year Note Yield
($tnx) was little changed as it trades in a three-week consolidation.

The U.S. Dollar Index
($USD) edged higher, and is trading above its major moving averages, though is no-bias territory with a lack of trend in place.

The Gold Miners Index
($XAU) declined to its 50-day average which now serves as support. The index remains in a technical uptrend.

The Dow Jones AIG Commodity Index
($DJAIG) declined with conviction to below its 200-day moving average. The index found support at a multi-year channel line.

Consumer Staples
($CMR) broke out to a new high.

Consumer Cyclicals
($CYC) rallied for the week, though is showing weakness vs. the staples.

Technology
($DJUSTC) edged past last week’s high, though was a relative strength loser.

The Semiconductor Index
($SOX) were sluggish, though are set in a two-year cup-and-handle position.

Banks
($BKX) put in a nice move higher and is now above its major moving averages, despite struggling for the past few months.

Broker Dealers
($XBD) hit a new high.

Retail
($RLX) rallied to close above its major moving averages.

Healthcare
($HCX) shot higher and is just shy of a new high.

Biotech
($BTK) hit a new high.

REIT’s
($DJR) hit a new high.

Homebuilders
($DJUSHB) continues to struggle below its major moving averages.

Transportation
($TRAN) hit a new high.

Airlines
($XAL) pressed higher along the upper line of its triangle.

Defense
($DFX) hit a new high.

Energy
($IXE) is attempting to rebound as it trades below its 50-dy average and above its 200-day average.

Oil Services
($OSX)

Utilities
($UTY) spiked below its multi-year trend-line before reversing to close with a decent gain on the session.

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

  1. GOLD
  2. DRUG DELIVERY
  3. INVESTMNT BROKERAGE-NA
  4. PRINTED CIRCUIT BOARDS
  5. INVESTMNT BROKERAGE-RE
  6. NETWORKING COMMUN DVCS
  7. SEMICONDUCTOR EQUIP MA
  8. FARM CONSTRUCTION MACH
  9. ASSET MANAGEMENT
  10. RAILROADS

What Was Important About Last Week

STOCKS:

  • Dell Computer (DELL) topped Q4 estimates but issued disappointing guidance
  • Hewlett-Packard (HPQ), Deere (DE), and Target (TGT) posted good reports.

ECONOMY:

  • January retail sales surged 2.3%.
  • January housing starts jumped 14.5%.
  • January PPI was reported up 0.3%.
  • Core PPI was up 0.4%. This was the largest gain in a year.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: none
  • TUESDAY: PrePaid Legal (PPD), Baidu (BIDU), Clear Channel Communications (CCU), Federated Department Stores Inc. (FD), Fossil, Inc. (FOSL), Home Depot Inc (HD), LAMAR ADVERTISING Co, LoJack (LOJN), Option Care, Inc. (OPTN), Wal-Mart Stores Inc. (WMT),.
  • WEDNESDAY: Barrick Gold (ABX), Cell Genesys (CEGE), Ctrip.com International, Ltd. (CTRP), Dollar Tree Stores (DLTR), Express Scripts, Inc. (ESRX), Garmin Ltd. (GRMN), Harrah’s Entertainment (HET), OfficeMax (OMX), Taser International, Inc. (TASR).
  • THURSDAY: BioMarin Pharmaceutical Inc. (BMRN), Gap Inc. (GPS), Kohl’s (KSS), Kos Pharmaceuticals (KOSP), Limited Brands (LTD), Marvell Semiconductor, Inc (MRVL), Midway Games (MDY), Netease.com Inc (NTES), Pan American Silver (PAAS), Patterson Dental (PDCO), Quanex (NX), Safeway, Inc. (SWY), Toll Brothers (TOL), Tuesday Morning Corporation (TUES), WebMD Health (WBMD),
  • FRIDAY: Westwood One (WON).

On the economic front we have potential market movers with:

  • MONDAY: none
  • TUESDAY: Leading Indicators, FOMC Minutes.
  • WEDNESDAY: Core CPI, CPI, Crude Inventories
  • THURSDAY: Initial Claims, Help-Wanted Index
  • FRIDAY: Durable Orders

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“Discipline is not a nasty word. ” – Pat Riley

Unfocused hatred seeks a victim

Traders,

Unfocused hatred seeks a victim

Outside, I’m looking in, I’m uncertain

The world is black

The world is white

Why think one way

Why see the light

(spoken stuf that is lost)

Operation Ivy, Uncertain

Our current position:

BUYER BEWARE

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 are on our home site:

Where We Are:

Taking a look at the broader market:

The power of the Federal Reserve on markets goes without question.

What this market questions is what the new fed chairman, Ben Bernanke, has in mind.

As earnings season winds down, this market seems focused on the absence of suggestive comments from Bernanke.

Markets in the past have sold off with new fed chairmen in place. In ’87 the market crashed two months after Greenspan took over.

Market players need to have an idea of fed policy to feel confident. Without confidence markets wallow.

This past week the year’s breakout trend in energy stocks fell a part.

Momentum on the major indexes has been struggling.

Success and opportunity for buyers has been rare.

Despite lack of general strength, strong up-trends in biotech, broker dealers, defense, REITs, semiconductors, telecoms and transportation are clear positives.

We are always encouraged by strength in the semiconductor and broker dealer indexes.

For the intermediate-term timeframe, we keep a tight watch on the positions of the 50-day and 200-day averages.

As the 50-day averages on the indexes continue to be in play, we want to see them serve as support, not resistance.

If we begin to see 50-day averages slip below 200-day averages, we will interpret it as a new change in trend.

Until then, we see this market as one that continues to struggle in an environment of uncertainty. What happens next week is beyond us.

Technically speaking:

The Dow Industrial Average
($INDU), +1.16%, closed above its 50-day average in a two and a half month consolidation.

The S&P 500
($SPX), +0.23%, closed just below its 50-day average with a technical uptrend intact.

Nasdaq
($COMPQ),-0.03 %, closed just below its 50-day average with a technical uptrend intact.

Russell 2000
($RUT), -0.98%, closed on its 20-day average, as its technical uptrend remains strong.

Volume indications on the Nasdaq and Russell indexes notched in two distributions a piece, showing signs of institutional selling. This is not alarming – yet.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The 10-year Note Yield
($tnx) remains poise to breakout of a year and a half long base. Such a move may prove significant in a change of direction for bond prices, which is often a precursor to movement in the equities market,

The U.S. Dollar Index
($USD) pushed higher for the third week in a row, and is now just above its 50-day average.

The Gold Miners Index
($XAU) was slammed with selling action for the week. The violence of the move suggests recent highs may be tough to regain.

The Dow Jones AIG Commodity Index
($DJAIG) slid to its 200-day moving average as the lower line in an upward channel comes into play.

Consumer Staples
($CMR) bounced off its 200-day average to resistance at its 50-day average.

Consumer Cyclicals
($CYC) closed just below its 50-day average.

Technology
($DJUSTC) closed just below its 50-day average on an upward trend line.

The Semiconductor Index
($SOX) remains in a solid uptrend above its major moving averages in a show of relative strength dominance.

Banks
($BKX) are trading above the 200-day average and below the 50-day average.

Broker Dealers
($XBD) remain in a solid uptrend above all the major moving averages.

Retail
($RLX) found support at its 200-day average, and resistance at its 50-day average. The index has yet to challenge highs made last summer.

Healthcare
($HCX) closed above its 50-day average in a month long consolidation.

Biotech
($BTK) remains in a strong technical uptrend.

REIT’s
($DJR) remains in a strong technical uptrend.

Homebuilders
($DJUSHB) continue to be a popular sector for sellers.

Transportation
($TRAN) remains in a strong technical uptrend.

Airlines
($XAL) continues in a triangle formation, poised to breakout of a multi-year downtrend.

Defense
($DFX) remains in a strong technical uptrend.

Energy
($IXE) experienced heavy selling as a the year’s breakout moved collapsed.

Utilities
($UTY) are sandwiched between its major moving averages as it finds support on a two-year trend line.

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

  1. GOLD
  2. DRUG DELIVERY
  3. NETWORKING COMMUN DVCS
  4. INVESTMNT BROKERAGE-NA
  5. SEMICONDUCTOR EQUIP MA
  6. PRINTED CIRCUIT BOARDS
  7. BUILDING MATRLS WHOLES
  8. INSURANCE BROKERS
  9. SEMICONDUCTOR-INTGRTD
  10. GENERAL ENTERTAINMENT

What Was Important About Last Week

STOCKS:

  • Yum Brands Inc.(YUM) , owner of the KFC, Pizza Hut and Taco Bell fast food chains, said Monday that its fourth-quarter profit fell 4 percent, despite an increase in revenue, and it predicted higher U.S. same-store sales in 2006.
  • Ryanair Holdings PLC(RYAAY) reported lower third-quarter net earnings despite higher revenues Monday, citing the soaring cost of fuel.
  • Video game publisher Activision Inc. (ATVI) on Monday said its fiscal third-quarter earnings slid 30 percent due to weak industry conditions in the U.S. and Europe. The company also forecast a fourth-quarter loss and slashed its earnings expectations for the year.
  • Earnings reports upbeat overall (e.g. AET, NWS.A, PRU, CCE, MET, FNF, MAR),

ECONOMY:

  • Lack of catalysts rests market’s focus back on Fed policy uncertainty.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: Glamis Gold Ltd (GLG), Harmony Gold Mining (HMY), iVillage (IVIL), WellCare Health Plans, Inc. (WCG).
  • TUESDAY: Abercrombie & Fitch Co. (ANF), Accredited Home Lenders Holding Co. (LEND), Bankrate, Inc. (RATE), Blue Coat Systems (BCSI), Cephalon, Inc. (CEPH), Deere & Company (DE), Qwest Communications (Q), TradeStation Group, Inc. (TRAD), Waste Management (WMI).
  • WEDNESDAY: Aftermarket Technology (ATAC), Applied Materials (AMAT), Biogen Idec Inc. (BIIB), Career Education (CECO), Caremark Rx, Inc. (CMX), Genzyme Corporation (GENZ), Hewlett-Packard (HPQ), Mittal Steel Company (MT), Network Appliance (NTAP), Olympic Steel (ZEUS), P.F. Chang’s China Bistro, Inc. (PFCB), Placer Dome (PDG), Synopsys (SNPS).
  • THURSDAY: DaimlerChrysler (DCX), Dell, Inc. (DELL), Intuit (INTU), JCPenney (JCP), Merge Technologies Incorporated (MRGE), NETGEAR (NTGR), Paxar Corporation (PXR), Reliance Steel (RS), Target Corporation (TGT), Wild Oats Markets (OATS).
  • FRIDAY: Campbell Soup (CPB), RadioShack Corporation (RSH).

On the economic front we have potential market movers with:

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“Your own mind is a sacred enclosure into which nothing harmful can enter except by your promotion.” – Ralph Waldo Emerson <a href=”http://en.wikipedia.org/wiki/Ralph_Waldo_Emerson

Just a test..??

Traders,

Like a flag at half mast as frames click fast

Not a thing will last as past is past

Like stacks of thoughts that got played and worn

Used over and over till they were tired and torn

Like a broken clock that can’t tell time

Like a thick ass book that’s filled with wack rhymes

Like a scorching blaze that burned the sand

Like a band that planned and planned and planned

And flew down like a raven in the dark of night

And snatched up the worm helpless to fight

And brought it back to the nest singing microphone check

One two one two this is just a test

— Beastie Boys , Just A Test

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 are on our home site:

Where We Are:

Taking a look at the broader market:

It feels great to be back writing this blog.

Price action over the past few weeks is telling us the up trend for the year is sputtering out.

With the Technology index pushing the lower levels of a channel that has provided a nice ride up, any clear break below may be a precursor for the rest of the market to follow.

Semiconductors have been an encouraging area, and with relative strength we have confidence it will help tech turn around.

Banks are an eyesore, as is Retail and the Bond Market.

With an inverted yield curve, one can’t help but believe the market will respond with lower prices. But we will let the market speak for itself.

Given recent choppy price action, and clear weakness settled in, it would be typical to see bullishness tested to some degree.

Institutional money flow suggests we’re in a well supported market.

We have responded with the green flag, and will continue to buy top stocks that meet our criteria.

Energy, Biotechnology, and select Tech areas pose buying opportunities.

Lower prices on the major indexes may be a reality in the coming weeks, but until we see a broader market breakdown we’re sticking with the buys.

It’s the individual Growth Stocks that keep the profits humming, not the greater market.

Technically speaking:

The Dow Industrial Average ($INDU),-1.04%, bullish pullback or bearish head-and-shoulders forming? The dominant trend is up with a nice consolidation present on the weekly chart.

The S&P 500 ($SPX), -1.53%, with a close below the 50-day average for the first time since last October, the bulls want this important low to be a new bottom on its dominant trend up. Further deterioration below the 50-day average will create clear technical weakness.

Nasdaq ($COMPQ), -1.81%, closing below its 50-day average for the first time in two-and-a-half months, the technical picture is on the cusp of becoming precarious.

Russell 2000 ($RUT), -1.09%, with a solid trend above its major moving averages, this is our leading major index and has a healthy look about it.

Volume indications over the past week shed light on modest distribution which is no big deal.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The 10-year Note Yield ($tnx) is flirting with a five year downward trend line, if broken it will signal a significant change in trend for bonds that may be a precursor for equities.

The U.S. Dollar Index ($USD) is in bounce mode as it retraces to its 50-day moving average. The trend remains down.

The Gold Miners Index ($XAU) pulls back after an explosive run north.

The Dow Jones AIG Commodity Index ($DJAIG) is struggling to stay above its 50-day average to create a trend up.

Consumer Staples ($CMR) has broken a consolidation range to the downside and is challenging its 200-day average.

Consumer Cyclicals ($CYC) is trading under the 50-dau average, as it struggles with new highs on the year.

Technology ($DJUSTC) is challenging a lower channel line, which if clearly broken may be the first step in a new trend down.

The Semiconductor Index ($SOX) remain in a solid up trend.

Banks ($BKX) continues to trend down for the year and is trading below the 50 and above the 200-day averages.

Broker Dealers ($XBD) hit a new high for the week. Trend up.

Retail ($RLX) continues to slide for the year, and is trading below the 50 and above the 200-day averages.

Healthcare ($HCX) is attempting to establish a solid trend up. While above its 50 and 200 day averages, it remains below its 20-day.

Biotech ($BTK) pulled back modestly for the week while its trend remains up.

REIT’s ($DJR) continued to trend up for the week.

Homebuilders ($DJUSHB) are a clear pocket of weakness, below all its major moving averages.

Transportation ($TRAN) pulled back for the week though remains trend up.

Airlines ($XAL) struggles to come out of a multi-year lower base.

Defense ($DFX) hit a new high for the week.

Energy ($IXE) hit a new high. Trend up.

Oil Services ($OSX)

Utilities ($UTY) continue to slide, and are challenging a lower, multi-year channel line.

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

What Was Important About Last Week

STOCKS:

  • AMZN delivered disappointing Q4 earnings.
  • WMT announced preliminary January same-store sales growth of 4.7%, which is at the high end of its 3-5% forecast.
  • SYY, TSN, CMI, EK, and SGP fell short of earnings expectations.
  • XOM reported record Q4 profit; SII, JBHT, and MAT also exceeded expectations.

ECONOMY:

  • Fed raises rates 25 bp to 4.50%; statement drops “measured” language but says some further policy firming may be needed
  • The unemployment rate was 4.7% in January (consensus 4.9%).
  • January non-farm payrolls rose 193K (consensus 250K), and is consistent with expectations of 3.5% Q1 real GDP growth.
  • Hourly earnings rose 0.4% (consensus 0.3%) in January; December was revised to 0.4% from 0.3%.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: Activision (ATVI), CNET Networks, Inc. (CNET), Hasbro, Inc. (HAS), j2 Global Communications (JCOM), LifePoint Hospitals, Inc. (LPNT), Randgold Resources Limited (GOLD), Ryanair Holdings (RYAAY), SOHU.com (SOHU), Walt Disney (DIS), Yum! Brands, Inc. (YUM).
  • TUESDAY: Alcan Inc. (AL), Barr Pharmaceuticals, Inc. (BRL), Boston Scientific Corporation (BSX), Cisco Systems (CSCO), Fortune Brands (FO), Occidental Petroleum Corporation (OXY), The Cheesecake Factory (CAKE), The Coca-Cola Company (KO), Ultra Petroleum Corp (UPL), Yell Group (YELL).
  • WEDNESDAY: Akamai Technologies Inc. (AKAM), Applebee’s International (APPB), Cell Genesys (CEGE), Charles River Laboratories, Inc. (CRL), CIGNA (CI), Dean Foods (DF), InterActiveCorp (IACI), PepsiCo (PEP), Prudential Financial, Inc. (PRU), Quest Software Inc. (QSFT), Swift Energy (SFY), Whole Foods Market (WFMI), Zoom Technologies Inc. (ZOOM).
  • THURSDAY: Aetna Inc. (AET), Biosite Incorporated (BSTE), Cognizant Technology Solutions (CTSH), Marriott International (MAR), TheStreet.com (TSCM), UTStarcom (UTSI).
  • FRIDAY: Anglogold Ashanti Limited (AU), ARCH COAL INC (ACI), Coventry Health Care, Inc (CVH).

On the economic front we have potential market movers with:

  • MONDAY: none
  • TUESDAY: Consumer Credit
  • WEDNESDAY: Crude Inventories
  • THURSDAY: Initial Claims, Wholesale Inventories
  • FRIDAY: Trade Balance, Treasury Budget

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This Week’s Word On Discipline:

“The discipline of desire is the background of character.” – John Locke <a href=”http://en.wikipedia.org/wiki/John_Locke