Topsy-Turvy

Traders,

Shake your pockets out
Pass it on, pass it down
Topsy turvy town, topsy turvy town
Radiohead “Down Is The New Up”

Market Bias:

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:

A topsy-turvy start to the new year marked by heavy distribution gave us doubts over this bull.

But with institutional buying slamming bids this week, we’ve once again hoisted our Green Flag.

In this business it pays to be flexible. We simply let the market dictate our actions and leave any stubborn desire to be right aside.

The Dow hit all-time closing high, the Nasdaq a 6-year high, and the S&P 500 a 5-year high. If this is the prelude to a climax, there’s nothing to be seen of yet.

Bellwether Technology stocks are leading the way. Its key Semiconductor component begins to inch out of a technically bearish trading pattern it held for nearly all last year.

Broker Dealers busted out of a bullish cup-and-handle pattern, a major positive for the broader market.

Airlines and Defense rally out of base patterns, a strong vote of confidence for the Transportation Index which is newly poised to follow suit.

CANSLIM stock new highs also pick up.

A Critical fight between the Dollar and Gold will likely set a new tone once resolved. A collapsing dollar will have consequences for U.S. equities.

Economic data comes in strong. Employment, unemployment claims, car and truck production, construction, and the ISM indexes for both manufacturing and services all posted above expectations.

Weakness in housing has so far not spilled over to other areas of the economy.

The Fed’s next move will likely be a biggie.

Technically speaking:

The Dow Industrial Average

($INDU), +1.27%, hit an all-time closing high.

The S&P 500

($SPX), +1.49%, hit a 5-year high.

Nasdaq

($COMPQ), 2.82%, hit a 6-year high.

Russell 2000

($RUT), 2.37%, lags the major indexes.

Volume indications show institutional buying for the new year.

Key chart action for the week:

Charts courtesy of Stockcharts.com

Consumer Staples and Cyclical stocks both achieved new highs with no clear bias for either apparent in the New Year.

Banking stocks maintain their uptrend.

Health Care stocks hit new highs.

Biotechnology rallies convincingly from a key technical low.

REITs hold on to a strong uptrend.

Home Builders inch higher from the key resistance zone of a 50-day and 200-day crossing.

Energy holds a bearish bias after faltering from a base breakout.

What Was Important About Last Week

STOCKS:

  • Alcoa (AA) said Q406 earnings rose 60% revenue surged to $7.84 billion from $6.54 billion a year ago.
  • Genentech (DNA) reported Q406 earnings up 75% to 55 cents a share from 31 cents a share a year earlier as revenue rose 43%.

ECONOMY:

  • December retail sales rose 0.9% versus a consensus expected 0.7%.
  • Retail sales are up 5.4% versus December 2005. Gas stations, restaurants, and bars posted strong increases. Gas station sales increased 3.8% in December. Electronics and appliance sales were also strong, up 3% in December after a 5.8% gain in November due to sales of flat screen TV’s.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: none
  • TUESDAY: Ameritrade Holding Corp. (AMTD), Forest Laboratories, Inc. (FRX), FreeportMcMoRan Copper & Gold (FCX), Intel Corporation (INTC), Wells Fargo & Company (WFC)
  • WEDNESDAY: Apple Inc. (AAPL), J.P. Morgan Chase & Co (JPM), Lennar Corporation (LEN), Southwest Airlines (LUV), Washington Mutual (WM)
  • THURSDAY: Capital One Financial Corp. (COF), Harley-Davidson (HOG), Merrill Lynch (MER), The Bank of New York (BK), UnitedHealth Group Inc. (UNH), Xilinx, Inc. (XLNX)
  • FRIDAY: Citigroup Inc. (C), General Electric (GE), Motorola Inc. (MOT), Schlumberger (SLB)

On the economic front we have potential market movers with:

  • MONDAY: none
  • TUESDAY: NY Empire State Index
  • WEDNESDAY: Core PPI, PPI, Net Foreign Purchases, Capacity Utilization, Industrial Production, Crude Inventories, Fed’s Beige Book
  • THURSDAY: Building Permits, Core CPI, CPI, Housing Starts, Initial Claims, Core CPI, Housing Starts, Building Permits, Initial Claims, Leading Indicators, Philadelphia Fed
  • FRIDAY: Mich Sentiment-Prel.

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“Concentration can be cultivated. One can learn to exercise will power, discipline one’s body and train one’s mind.” – Anil Ambani

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