Bear Turns Up Volume

Traders,

hey energy sucker i’m a goddess, not your mother
– Luscious Jackson, Energy Sucker”

Market Bias:

SELLERS’ 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

CANSLIM SETUPS

Where We Are:

Bears roar back with vigor.

Heavy selling coupled with positive economic news usually makes for a difficult environement for the Bulls.

We have no choice but to hoist the Red Flag – again. This is trading, it pays to be flexible. We listen to nothing other than price and volume to command us.

Energy stocks bolster whatever bullishness exists in the market.

While every Bull needs its leadership, Energy bull markets have historically put a damper on broad market earnings.

Should selling persist, we look forward to the technical breakdown of sectors.

Should the buyers come back in force, we look forward to more breakouts.

Taking a look at the broader market:

Technically speaking:

The Dow Industrial Average

($INDU), -2.05%, retreats to just above its 50-day SMA.

The S&P 500

($SPX), -1.98%, closes on its 50-day SMA.

Nasdaq

($COMPQ), -1.44%, retreats to just above its 50-day SMA.

Russell 2000

($RUT), -1.58%, closes just above its 50-day SMA.

Volume indications go the Bears with the Dow, S&P 500 and Nasdaq each collecting two days of distribution.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The U.S. Dolar Index ($DXC) remains in a downtrend as it trades under its 200-day SMA and above its 50-day SMA.

The Gold & Silver Miners Index ($XAU) consolidates while trading with its sideways trending MA’s.

The Consumer Index ($CMR) drops furhter below tis 50-day SMA.

The Cyclical Index ($CYC) consolidates just under its highs.

The Technology Index ($DJUSTC) hits a new high for the week.

The Semiconductor ($SOX) hits a new high for the year.

The Software Index ($GSO) consolidates on its 50-day SMA.

Telecom Index ($XTC) consolidates as it shows relative strength above its 50-day SMA.

The Banking Index ($BKX) falls below its 200-day SMA.

The Broker Dealer Index ($XBD) drops to its 50-day SMA.

The Retail Index ($RLX) consolidates on its 50-day SMA.

The Healthcare Index ($HCX) falls further below its 50-day SMA.

Biotechnology Index ($BKX) falls to its 200-day SMA.

Pharmaceutical Index ($DRG) falls below its 200-day SMA.

The REIT Index ($DJR) falls further below its major SMA’s.

The Transportation Index ($TRAN) consolidates just under its 50-day SMA.

The Airline Index ($XAL) consolidates under its 50-day SMA, which is trending below its 200-day SMA.

The Defense Index ($DFX) hits a new high as it holds a steady uptrend above its major SMA’s.

The Energy Index ($IXE) also hits a new high as it holds a steady uptrend above its major SMA’s.

What Was Important About Last Week

STOCKS:

  • Cognos (COGN) reported Q1 (May) earnings of $0.32 per share, excluding non-recurring items, in line with the Reuters Estimates consensus of $0.32. Revenues rose 9.1% year/year to $236.7 mln vs the $237.1 mln consensus.
  • Jabil Circuit (JBL) reported Q3 (May) core earnings of $0.23 per share, excluding non-recurring items and excluding stock based compensation that analysts are also excluding, $0.03 better than the Reuters Estimates consensus of $0.20.
  • Darden Restaurants (DRI) reported Q4 (May) earnings of $0.67 per share, $0.04 worse than the Reuters Estimates consensus of $0.71. Revenues rose 3.2% year/year to $1.46 bln vs the $1.54 bln consensus.

ECONOMY:

  • Housing starts declined 2.1% in May to 1.474 million units at an annual rate, matching consensus expectations. Starts are down 24.2% versus a year ago.The drop in starts was all due to single-family units, which declined 3.4% in May. Multiple-unit starts increased 3.1%. By region, starts declined in the South and West but rose in the Northeast and Midwest.
  • New building permits increased 3.0% in May to 1.501 million units at an annual rate, faster than the consensus expected 1.473 million rate. The rise was all due to multiple-unit permits. Permits to build single-family units declined 1.8% and are down 27.7% versus a year ago.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: Walgreen (WAG)
  • TUESDAY: Lennar Corporation (LEN), Nike (NKE)
  • WEDNESDAY: Bed Bath & Beyond Inc. (BBBY), ConAgra Foods (CAG), Paychex (PAYX), Red Hat, Inc. (RHT)
  • THURSDAY: 3Com Corp (COMS), Christopher & Banks (CBK), Family Dollar (FDO), General Mills, Inc. (GIS), KB Home (KBH), Micron Technology (MU), Monsanto Company (MON), Palm, Inc. (PALM)
  • FRIDAY: 99 CENTS Only (NDN)

On the economic front we have potential market movers with:

  • MONDAY: Existing Home Sales,
  • TUESDAY: Consumer Confidence, New Home Sales,
  • WEDNESDAY: Durable Orders, Crude Inventories
  • THURSDAY: GDP-Final, Chain Deflator-Final, Initial Claims, Help-Wanted Index, FOMC policy statement
  • FRIDAY: Personal Income, Personal Spending, Core PCE Inflation, Chicago PMI, Construction Spending, Mich Sentiment-Rev.

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“There is a certain combination of anarchy and discipline in the way I work.”– Robert de Niro

CANSLIM SETUPS

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