Archive for November, 2006|Monthly archive page

Bustin' Out

Traders,

Bustin’ out (Ow, girl)
Bustin’ out (Sing it again)
Bustin’ out (Sing it, sing it, sing it, well)
— Rick James “Bustin Out”

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:

With the indexes busting out to new highs for the week, we imagine the record amount of short sellers on the NYSE are feeling the heat.

But it’s usually when things look this good that the trend ends. This market continues to wait for a significant correction.

The Technology Index breaking out to new highs gives further confirmation of the bull’s dominance in this environment.

As the Cyclical Index also breaks out of a cup-and-handle, we still see it’s relatively weaker than its Consumer Index counterpart. This means the buying is still going mostly to defensive issues that tend to hold up better in weaker economies.

We also have new highs from the Retail , Internet and Biotechnology Indexes.

Airlines also broke north of a lower base to hit a two year high.

On the cusp of breaking out of a cup-and-handle patterns are the Broker Dealers, Defense Index and Transportation Indexes.

The key sectors of Banking, which is consolidating near new highs, and Semiconductors, which has regained its northbound direction, look good – but pose a threat for bull’s durability if they fall a part.

Energy is stumbling its way back to recent highs in what may end up being a new bullish cup-and-handle pattern – it’s too hard to say.

Meanwhile, the Gold Mining Index and US Dollar Index are wound up, and threaten to trend sideways as new money is sucked in.

Technically speaking:

The Dow Industrial Average

($INDU), 1.9 %, blasted its way to another new high.

The S&P 500

($SPX), 1.5 %, also hit another new high.

Nasdaq

($COMPQ), 2.3 %, rallied for the second week in a row from its base breakout point.

Russell 2000

($RUT), 2.5 %, broke out into new high territory.

Volume indications for the week gave us three accumulation days apiece for the Dow, Naz and Russell 2K.

Key chart action for the week:

Charts courtesy of Stockcharts.com

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

  1. TOYS GAMES
  2. REIT HEALTHCARE FACILI
  3. MOVIE PRODUCTION THEAT
  4. MEDICAL LABS RESEARCH
  5. CATV SYSTEMS
  6. DRUG RELATED PRODUCTS
  7. REIT – DIVERSIFIED
  8. REGIONAL AIRLINES
  9. PACKAGING CONTAINERS
  10. PERSONAL SERVICES

What Was Important About Last Week

STOCKS:

  • Home Depot (HD) blamed a “very challenging” housing environment on lesser earnings.
  • Bob Evans (BOBE) posted earnings .03 below expectations at 0.36 per share. Revenue rose 5.2% from a year ago.
  • Analog Devices (ADI) missed expectations by 0.01 with earnings of 0.39 per share. Revenues declined 2.9% from a year ago.
  • Borland Software (BORL) beat by 0.01 with a loss posted at 0.06 per share. Revenue was up more than 21% from a year ago.
  • Applied Materials (AMAT) missed earnings expectations by 0.01 at 0.30 per share. Revenues were up 46.7% from a year ago.
  • Gymboree (GYMB) beat earnings estimated by 0.02 with profits of 0.19 per share. Revenues were up 21.8% from a year ago.
  • PetSmart (PETM) beat earnings estimates by 0.01 with profits of 0.22 per share.
  • Tyson (TSN) said an oversupply of meat attributed to its quarterly loss.
  • Gap (GPS) beat earnings estimates by 0.01 with profits of 0.23 per share. Revenue was down 0.1% fom a year ago.
  • Hewlett Packard (HPQ) beat estimates by 0.04 with profits of 0.68 per share. Revenue was up 7.4% from a year ago.
  • Starbux (SBUX) posted earnings of 0.17 per share with revenue up more than 20% from a year ago.

ECONOMY:

  • Housing Starts fell 14.6% in October, and is now at its lowest level since July 2000.
  • The Consumer Price Index declined 0.5% for October, its second consecutive drop.
  • Industrial Production was up 0.2% for October, on the heels of September’s 0.6% decline.
  • The Producer Price Index slid 1.6% in October, following a 1.3% drop in September.
  • Retail Sales dipped just 0.2% for October, less than expected.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: Campbell Soup (CPB), Lowe’s Companies (LOW), Medtronic Inc. (MDT), Nordstrom (JWN)
  • TUESDAY: Dollar Tree Stores (DLTR), Jack in the Box (JBX)
  • WEDNESDAY: none
  • THURSDAY: none
  • FRIDAY: none

On the economic front we have potential market movers with:

  • MONDAY: Leading Indicators
  • TUESDAY: none
  • WEDNESDAY: Initial Claims, Mich Sentiment-Rev., Crude Inventories
  • THURSDAY: Initial Claims
  • FRIDAY: none

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“When things are steep, remember to stay level-headed.” – Horace

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Curve Ball

Traders,

I love it when you hit those switches

A curve ball’s what my pitch is
So here we here we comeLike dum ditty dum
— Beastie Boys “The Negotiation Lymerick File”

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:

Last week’s theme of well-bid Technology shares gives us further confirmation of the strength of this bull market – but as usual, the market gave us a curve ball with Thursday’s heavy distribution, which threatens the institutional sponsorship for this environment.

The Naz’s cup-and-handle breakout into new highs represents an important hurdle for broad market advancement.

But as Cyclicals and Transportation stand next in line to make similar moves, the strength of buyers is on the cusp of cracking.

With many key sectors now drifting lower to the support of their 50-day averages, how well they handle the key zones will likely give us a new hand in leaders and lagers to sort through..

We’re also keeping an eye on Energy, which is forming what could be the beginning of a new handle for a base to launch from.

Biotech is also trading in new high territory, but its Healthcare and Drug cousins have been banged up after two heavy days of selling.

Technically speaking:

The Dow Industrial Average
($INDU), 1.0%, formed its third week in a tight trading range.

The S&P 500
($SPX), 1.2%, also put in its third week in a tight range.

Nasdaq
($COMPQ), 2.5%, broke out to new highs for the year.

Russell 2000
($RUT), 2.2%,

Volume indications continues to favor buyers.

Key chart action for the week:

Charts courtesy of Stockcharts.com

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

  1. REIT HEALTHCARE FACILI
  2. TOYS GAMES
  3. MOVIE PRODUCTION THEAT
  4. MEDICAL LABS RESEARCH
  5. REIT – DIVERSIFIED
  6. PERSONAL SERVICES
  7. CATV SYSTEMS
  8. PACKAGING CONTAINERS
  9. GAS UTILITIES
  10. HOSPITALS

What Was Important About Last Week

STOCKS:

  • Kohl’s (KSS) reported Q3 revenues up 16.6% from a year ago, beating estimates by .04 with 0.68 per share reported.
  • Walt Disney (DIS) reported fourth quarter earnings of $0.36 per share, $0.03 better than the Reuters estimates consensus of $0.33.
  • Cisco (CSCO) beat Reuters estimates by 0.02 at 0.31 per share. Revenues up 24.9% from a year ago.
  • Priceline (PCLN) bet earnings by 0.05 at 0.72 per share. Revenues up 21.1% from a year ago.
  • Wynn Resorts (WYNN) fell short of Reuters estimates by 0.07 with a loss of 0.07 per share. Revenues were up 26.5% from a year ago.
  • Fluor Corp. (FLR) posted revenue down 1.6% from a year ago with earnings of 0.31 per share.

ECONOMY:

  • Import prices fell 2% in October.
  • Export prices fell 0.4% in October
  • The ISM Index increases to 57.1 in October for the strongest reading in 5 months.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: Tyson Foods (TSN)
  • TUESDAY: Abercrombie & Fitch Co. (ANF), American Eagle Outfitters Inc (AEOS), Goldcorp (GG), Home Depot Inc (HD), Ross Stores, Inc. (ROST), Staples, Inc. (SPLS), Wal-Mart Stores Inc. (WMT)
  • WEDNESDAY: Applied Materials (AMAT), Hot Topic (HOTT), Limited Brands (LTD), Men’s Wearhouse (MW), Tyco International (TYC)
  • THURSDAY: Dell, Inc. (DELL), Hewlett-Packard (HPQ), Marvell Technology Group Ltd. (MRVL), Sears Holdings Corp (SHLD), Williams-Sonoma (WSM)
  • FRIDAY: AnnTaylor Stores (ANN), Foot Locker, Inc. (FL)

On the economic front we have potential market movers with:

  • MONDAY: Treasury Budget
  • TUESDAY: Business Inventories, Core PPI, PPI, Retail Sales, Retail Sales ex-auto
  • WEDNESDAY: NY Empire State Index, Crude Inventories, FOMC Minutes,
  • THURSDAY: Core CPI, CPI, Initial Claims, Net Foreign Purchases, Capacity Utilization, Industrial Production, iladelphia Fed
  • FRIDAY: Building Permits, Housing Starts, Building Permits, Mich Sentiment-Prel.

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“Success isn’t measured by money or power or social rank. Success is measured by your discipline and inner peace.” – Mike Ditka