Archive for August, 2007|Monthly archive page

Tech Bull Stands Up

Traders,

Walked the dog with a real short leash
Turned around saw the dog walk me
— Operation Ivy “Caution”

Market Bias:

BUYERS’ CAUTION

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:

Taking a look at the broader market:

A strong Technology sector attempts to pull the broader market higher.

But as we head into the market’s historically weakest month most sectors remain mired in bearish conditions.

A Follow Through Day on the Nasdaq suggests institutions are stepping up to support these price levels.

Strength from RIMM, INTC, BSCI and SYNA are suggestive of this.

We’re willing to buy into the Bull, but with a Yellow Flag of caution we’re not going to risk a whole lot.

If the Bull does pick up traction here we suspect it will be Tech names that continue to shine.

Should evidence of the Bear return via high volume selling and further deterioration of the all important Financial and Retail sectors, we’ll be quick to protect ourselves and stalk short opportunities.

Technically speaking:

The Dow Industrial Average

($INDU), -0.2%, advances to just under its 50-day moving average.

The S&P 500

($SPX), -0.4%, matches last week’s high which is just under its 50-day moving average.

Nasdaq

($COMPQ), 0.8%, advances to close on its 50-day moving average.

Russell 2000

($RUT), -0.8%, continues to consolidate under its major moving averages.

Volume indications show a bullish Follow Through Day for the Nasdaq, but a bearish environment dominates the past few weeks on the major indexes.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The U.S. Dolar Index ($DXC) consolidates under its 50-day moving average which is trending below its 200-day average.

The Gold & Silver Miners Index ($XAU) advances to close between amidst its sideways trending moving agerages.

The Consumer Index ($CMR) consolidates on its 200-day moving average which is just beneath iyts 50-dya average.

The Cyclical Index ($CYC) consolidates between its major moving averages.

The Technology Index ($DJUSTC) rallies to close above its 50-day moving average.

The Semiconductor ($SOX) closes between its major moving average.

The Software Index ($GSO) also closes between its major moving averages.

Telecom Index ($XTC) closes just under its 50-day average.

The Banking Index ($BKX) posts a loss as it trades below its major moving averages.

The Broker Dealer Index ($XBD) consolidates below its major moving averages.

The Retail Index ($RLX) rallies to close on its 50-day average, which is trending below its 200-day average.

The Healthcare Index ($HCX) consolidates below its major moving averages.

Biotechnology Index ($BKX) consolidates just under its major moving averages.

Pharmaceutical Index ($DRG) consolidates below its major moving averages.

The REIT Index ($DJR) consolidates just under its 50-day average, which is trending below its 200-day average.

The Transportation Index ($TRAN) consolidates below its major moving averages.

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

The Defense Index ($DFX) rallies to close above its 500-day average.

The Energy Index ($IXE) closes just under its 50-day average.

What Was Important About Last Week

STOCKS:

  • Dell, Inc. (DELL) reported Q2 (Jul) earnings of $0.32 per share, $0.02 better than the consensus of $0.30. Revenues rose 1.2% year over year to $14.8 billion vs. the $14.62 billion consensus.
  • Wind River Systems, Inc. (WIND) reported Q2 (Jul) earnings of $0.12 per share, excluding non-recurring items, $0.08 better than the consensus of $0.04. Revenues rose 14.8% year over year to $84.6 million vs. the $78.9 million consensus.
  • Chico’s FAS, Inc. (CHS) reported Q2 (Jul) earnings of $0.22 per share, $0.04 worse than the consensus of $0.26. Revenues rose 8.1% year over year to $436 million vs. the $443.2 million consensus estimate.
  • Shanda Interactive Ent. Ltd. (SNDA) reported Q2 (Jun) earnings of $0.42 per share, excluding non-recurring items. The results were $0.06 better than the Reuters consensus of $0.36.

ECONOMY:

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: Holiday
  • TUESDAY: Guess (GES)
  • WEDNESDAY: J. Crew Group, Inc. (JCG)
  • THURSDAY: Hovnanian Enterprises, Inc. (HOV)
  • FRIDAY: none

On the economic front we have potential market movers with:

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“ I believed in studying just because I knew education was a privilege. It was the discipline of study, to get into the habit of doing something that you don’t want to do. ” – Wynton Marsalis

CANSLIM SETUPS

Advertisements

Bull Lacks Punch

Traders,

All that I heard
Was It’s Not Enough
— The Who “It’s Not Enough”

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:

Taking a look at the broader market:

Shorts feel the pressure as the major indexes move off their lows.

But we can’t say it’s over for heavy selling.

The broad market rally suggests buyers may be drying up as volume decreases.

Major indexes remain under their 50-day averages.

Though we had one day of accumulation, the price moves on the indexes were not big enough to suggest strong institutional support.

We’ll be on the watch again this week.

Leadership from Tech with new highs from BSCI and RIMM are exactly what the Bulls need.

As the market digests and anticipates Subprime carnage, Technology is distant from the problem.

We are also seeing Big Caps favored over Small Caps, leaving names like INTC and IBM in good positions.

We leave the Red Flag until price and volume indications lead us to do otherwise.

Technically speaking:

The Dow Industrial Average

($INDU), 2.3%, makes its move north of its 200-day average, just shy of its 50-day average.

The S&P 500

($SPX), 2.3%, closes above its 200-day average, still below its 50-day average.

Nasdaq

($COMPQ), 2.9%, also closes above its 200-day average and below its 50-day average.

Russell 2000

($RUT), 1.6%, rallies, thogh closes below its major moving averages.

Volume indications remain in the Bears favor as decreasing volume supports the market’s rally.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The U.S. Dolar Index ($DXC) holds its downtrend and closes below its 50-day average.

The Gold & Silver Miners Index ($XAU) rallies to close just under its major moving averages.

The Consumer Index ($CMR) rallies to close above its 200-day average, though below its 50day average.

The Cyclical Index ($CYC) also rallies to close above its 200-day average, though below its 50-day average.

The Technology Index ($DJUSTC) extends its rally above its 200-day average and closes just under its 50-day average.

The Semiconductor ($SOX) posts a modest rally to close between its major averages.

The Software Index ($GSO) rallies to close just above its 200-day average.

Telecom Index ($XTC) extends its rally above its 200-day average and closes below its 50-day average.

The Banking Index ($BKX) consolidates below its 50-day average.

The Broker Dealer Index ($XBD) rallies, though remains below its major moving averages.

The Retail Index ($RLX) also rallies, though remains below its major moving averages.

The Healthcare Index ($HCX) also rallies, though remains below its major moving averages.

Biotechnology Index ($BKX) also rallies, though remains below its major moving averages.

Pharmaceutical Index ($DRG) also rallies, though remains below its major moving averages.

The REIT Index ($DJR) rallied to close just under its 50-day average which is trending below its 50-day average.

The Transportation Index ($TRAN) rallied to close just under its 200-day average.

The Airline Index ($XAL) rallies to close just below its 50-day average.

The Defense Index ($DFX) rallies to close just above its 50-day average.

The Energy Index ($IXE) extends its rally off its 200-day average though closes below its 50-day average.

What Was Important About Last Week

STOCKS:

  • Aeropostale (ARO) reported Q2 (Jul) earnings of $0.19 per share, $0.01 better than the Reuters Estimates consensus of $0.18. Revenues rose 13.3% year/year to $311.2 mln vs the $326.2 mln consensus.
  • Brocade Communications Systems (BRCD) reported Q3 (Jul) earnings of $0.13 per share, excluding non-recurring items, $0.02 better than the Reuters Estimates consensus of $0.11. Revenues rose 73.4% year/year to $327.5 mln vs the $326.3 mln consensus.
  • Gap (GPS) reported Q2 (Jul) earnings of $0.21 per share, excluding non-recurring items, $0.02 better than the Reuters Estimates consensus of $0.19. Revenues fell 0.6% year/year to $3.69 bln vs the $3.71 bln consensus.
  • Marvell Technology Group (MRVL) reported Q2 (Jul) earnings of $0.06 per share, excluding non-recurring items, in line with the Reuters Estimates consensus of $0.06. Revenues rose 14.4% year/year to $656.7 mln vs the $645.5 mln consensus.
  • Abercrombie & Fitch (ANF) reported Q2 (Jul) earnings of $0.88 per share, compared to 08/09 guidance of $0.87-0.88 which includes $0.03 related to the favorable settlement of a state tax audit, may not be comparable to the Reuters Estimates consensus of $0.87.
  • Hot Topic (HOTT) reported Q2 (Jul) loss of $0.04 per share, $0.01 worse than the Reuters Estimates consensus of ($0.03). Revenues rose 0.9% year/year to $161.7 mln vs the $160.2 mln consensus.
  • Men’s Wearhouse (MW) reported Q2 (Jul) earnings of $1.00 per share, $0.07 better than the Reuters Estimates consensus of $0.93. Revenues rose 23.6% year/year to $569.3 mln vs the $580 mln consensus.
  • Medtronic (MDT) reported Q1 (Jul) earnings of $0.62 per share, excluding non-recurring items, in line with the Reuters Estimates consensus of $0.62.
  • Analog Devices (ADI) reported Q3 (Jul) earnings of $0.37 per share, including charges, at least $0.01 better the Reuters Estimates consensus of $0.36. Revenues rose 2.5% year/year to $680.3 mln vs the $672.9 mln consensus.

ECONOMY:

  • New orders for durable goods rose 5.9% in July versus a consensus expected gain of 1.0%. Excluding transportation, orders rose 3.7% versus a consensus expected gain of 0.6%. Over the past three months, new orders excluding transportation are up 9.1% at an annual rate.
  • New single-family home sales increased 2.8% in July to an annual rate of 870,000. The consensus expected an annual rate of 820,000. By region, sales in the West accounted for almost all the increase nationwide. Sales fell in the Northeast and were roughly unchanged in the Midwest and South.
  • The median price of new homes sold was $239,500 in July, up 0.6% versus a year ago. The average price of new homes sold declined to $300,800, down 3.4% versus last year.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: Harmony Gold Mining (HMY)
  • TUESDAY: China Medical Technologies, Inc. (CMED)
  • WEDNESDAY: Dollar Tree Stores (DLTR), Layne Christensen (LAYN), Williams-Sonoma (WSM)
  • THURSDAY: Dell, Inc. (DELL), H&R Block, Inc. (HRB), Wind River Systems (WIND)
  • FRIDAY: none

On the economic front we have potential market movers with:

  • MONDAY: Existing Home Sales
  • TUESDAY: Consumer Confidence, FOMC Minutes
  • WEDNESDAY: Crude Inventories
  • THURSDAY: GDP-Prel., Chain DeflatorPrel., Initial Claims, Help-Wanted Index
  • FRIDAY: Personal Income, Personal Spending, Core PCE Inflation, Chicago PMI, Factory Orders, Mich Sentiment-Rev.

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“Ali was a guy that had a lot of discipline. If you hung around him, you’d be able to get some of that discipline that he had. And I learned from that. He was a sweet man. ” – Larry Holmes

CANSLIM SETUPS

Bull Snaps Back

Traders,

The clock’s run out, time’s up, over BLOW!
Snap back to reality, oh there goes gravity
Eminem “Lose Yourself”

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:

Taking a look at the broader market:

The strong rallies off Thursday’s lows give the major indexes an appearance of a durable bottom.

But appearance means little if it’s not backed by substance.

The market’s rubber band of price-action was stretched so far south, a strong rally was inevitable.

The Fed’s move on Friday to lower the discount rate is hoped to provide banks the necessary liquidity to keep business humming.

Only time will tell to see how effective the Fed’s measures are. The momentum of bad news from the credit industry is unlikely to pull a sharp u-turn.

From the trader’s standpoint, watching volume on the indexes becomes very crucial.

Should we rally, we can’t be Bulls unless strong buy-volume suggests institutions are in favor of Thursday’s low.

We won’t raise the Yellow or Green Flag until we have a Follow Through Day (strong buy-volume that supports a major upside day after four days of a low).

If we see buy-volume dry up we will be suspect of the rally, and potentially have some decent shorting opportunities.

Technology has been a relative strength winner, and we see a number of issues that have yet to show topping action: INTC, IBM and CSCO.

But the bellwether in Tech to watch is HPQ, which is consolidating after posting stellar earnings.

These names are candidates for Leadership to pave the way up for another Bull leg.

Technically speaking:

The Dow Industrial Average

($INDU), -1.2%, undercuts its 200-day average before staging a sharp rally.

The S&P 500

($SPX), -0.5%, sinks well below its 200-day average before retracing to just under this important mark.

Nasdaq

($COMPQ), -1.6%, also sinks well below its 200-day average, but retraces to just above this important mark.

Russell 2000

($RUT), -0.3%, sinks well below its 200-day average before retracing to just under this important mark.

Volume indications

Key chart action for the week:

Charts courtesy of Stockcharts.com

The U.S. Dolar Index ($DXC) regains ground above its 50-day average, yet remains in a downtrend with both averages in decline.

The Gold & Silver Miners Index ($XAU) craters to the bottom of its 18-month range.

The Consumer Index ($CMR) sinks below its 200-day average before retracing to just under this important mark.

The Cyclical Index ($CYC) also sinks below its 200-day average, but retraces to just above this important mark.

The Technology Index ($DJUSTC) attempts to rally off its 200-day average.

The Semiconductor ($SOX) also attempts to rally off its 200-day average.

The Software Index ($GSO) slides and closes below its 200-day average.

Telecom Index ($XTC) attempts to bounce off its 200-day average.

The Banking Index ($BKX) rallies for the second week in a row and closes just below its 50-day average.

The Broker Dealer Index ($XBD) rallies off lows, yet remains well below its averages.

The Retail Index ($RLX) also rallies off lows, yet remains well below its averages.

The Healthcare Index ($HCX) also rallies off lows, yet remains well below its averages.

Biotechnology Index ($BKX) consolidates below its major moving averages.

Pharmaceutical Index ($DRG) rallies off lows, yet remains well below its averages.

The REIT Index ($DJR) consolidates near yearly lows.

The Transportation Index ($TRAN) rallies off lows, yet remains well below its averages.

The Airline Index ($XAL) also rallies off lows, yet remains well below its averages.

The Defense Index ($DFX) bounces off its 200-day average.

The Energy Index ($IXE) also bounces off its 200-day average.

What Was Important About Last Week

STOCKS:

  • Hewlett-Packard Co. (HPQ) reported Q3 (Jul) earnings of $0.71 per share, excluding non-recurring items, which was $0.05 better than the Reuters consensus. Revenues climbed 15.9% year/year to $25.38 bln vs. the $24.13 bln consensus.
  • Kohl’s Corp. (KSS) reported Q2 (Jul) earnings of $0.83 per share, $0.01 better than the Reuters consensus. Revenues rose 189.6% year/year to $3.59 bln vs. the $3.62 bln consensus. Notably, the company issued downside guidance for Q3, seeing EPS of $0.67-0.71 vs. $0.75 consensus.
  • Nordstrom Inc. (JWN) reported Q2 (Jul) earnings of $0.70 per share, excluding items, which is even to the Reuters consensus of $0.70. Revenues rose 5.2% year/year to $2.39 bln vs. the $2.35 bln consensus.
  • Network Appliance Inc. (NTAP) reported Q1 (Jul) earnings of $0.20 per share, excluding non-recurring items, $0.01 better than the consensus of $0.19. Revenues rose 10.9% year/year to $689.2 mln vs. the $686.4 mln consensus. Company also issued in-line EPS guidance for Q2; it sees EPS of $0.24-0.26, ex-items, vs. $0.25 consensus.
  • Applied Materials, Inc. (AMAT) reported Q3 (Jul) earnings of $0.35 per share, excluding non-recurring items, but including $0.02 of option expense, which is $0.03 better than the Reuters estimate of $0.32. Revenues rose 0.7% year over year to $2.56 bln vs. the $2.53 bln consensus.
  • Agilent Technologies Inc. (A) reported Q3 (Jul) earnings of $0.45 per share, including charges and stock based compensation expense, which may not be comparable to the Reuters consensus of $0.43 (Briefing.com note: Agilent also reported non-GAAP EPS of $0.48, which is not comparable to consensus as it excludes stock based compensation expense, but is included in consensus).

ECONOMY:

  • Housing starts declined 6.1% in July to 1.381 million units at an annual rate, below consensus expectations of a 1.400 million rate. Starts are down 20.9% versus a year ago.
    The decline in starts in June was due to both single-family homes (down 7.3%) and multi-family units (down 1.6%). By region, the drop in starts was concentrated in the South (down 11.0%). Starts also declined in the West but were up in the Midwest and close to unchanged in the Northeast.
  • New building permits declined 2.8% in July to 1.373 million units at an annual rate, slower than the consensus expected 1.400 million rate. Permits are down 22.6% versus last year, 24.0% for single-family units.
  • Industrial production was up 0.3% in July, as the consensus expected. In the past three months, industrial production is up at a 2.9% annual rate.
    Manufacturing production increased 0.6% in July and is up at a 5.0% annual rate in the past three months. The production of high-tech equipment grew 1.5% in July and is up 17.5% versus a year ago.
  • Capacity utilization increased to 81.9% versus a consensus forecast of 81.7%. In the manufacturing sector, capacity utilization rose to 80.7%.
  • The Consumer Price Index (CPI) increased 0.1% in July, as the consensus expected. The CPI is up 2.4% versus a year ago.
  • Energy prices declined 1.0% in July. Excluding food and energy, the core CPI was up 0.2%, as the consensus expected. The core CPI is up 2.2% versus a year ago.
  • The Producer Price Index (PPI) increased 0.6% in July versus a consensus expected gain of 0.2%. The PPI is up 3.9% in the past twelve months (seasonally adjusted) and has climbed at an annual rate of 5.2% in the past three months.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: Lowe’s Companies (LOW)
  • TUESDAY: American Eagle Outfitters Inc (AEO), Analog Devices Inc. (ADI), BJ‘s Wholesale Club (BJS), Target Corporation (TGT)
  • WEDNESDAY: Abercrombie & Fitch Co. (ANF), Blue Coat Systems (BCSI), Foot Locker, Inc. (FL), Hot Topic (HOTT), Limited Brands (LTD), Ross Stores, Inc. (ROST), Toll Brothers (TOL)
  • THURSDAY: Brocade Communications Systems, Inc. (BRCD), Gap Inc. (GPS)
  • FRIDAY: AnnTaylor Stores (ANN)

On the economic front we have potential market movers with:

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“Simulated disorder postulates perfect discipline; simulated fear postulates courage; simulated weakness postulates strength.” – Lao Tzu

Bear Feigns Attack

Traders,

well it goes like this the fourth, the fifth
the minor fall and the major lift
— Jeff Buckley “Hallelujah”

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:

Taking a look at the broader market:

It’s almost hard to believe the major indexes were higher for the week with all the dismal headlines and heavy selling.

More often than not, the news is just noise.

Bears are hot on the idea that bad loans made to people with poor credit histories will continue to cause funds to fail, putting the breaks on other areas of business as Banks tighten their lending.

Bulls look to the strength of the booming global economy, unshakable and unlikely to stumble over the growing problems of Banks.

Both arguments are good, and the outcome may fall somewhere in the middle. It’s very possible that the Financial sector will suffer for another 18 months as more bad loans and future lawsuits pile in.

Should Banks remain weak, areas such as Technology and Healthcare could attract money.

But trading for us is not an economic argument we’re trying to resolve. All we need to know is anything is possible.

Our reality is based on the analysis of the market’s price and volume, which over the long run has not failed us.

The 200-day moving average is in-play as support for the S&P 500. We are not going to raise the Yellow or Green flag until we see more accumulation from institutional buyers.

Big-cap Tech names like Cisco, Intel and IBM have held up just fine. It’s hard to see the broader market fall apart with their uptrends solidly intact.

As beat-up as the Financials have been over the past three weeks, there are signs that the selling volume is drying up.

Of course we have no idea what kind of market we’ll see next week, but from where we stand now, this market has a real shot at heading higher.

We keep the Red Flag until it’s safe for breakout buying.

Technically speaking:

The Dow Industrial Average

($INDU), 0.4%, hit a new low while treading below its 50-day moving average.

The S&P 500

($SPX), 1.4%, hovers on its 200-day moving average.

Nasdaq

($COMPQ), 1.3%, consolidates below its 50-day average and above its 200-day average.

Russell 2000

($RUT), 4.4%, bounced to the resistance of its 200-day average.

Volume indications are mixed for the week, yet ultimately bearish over the past three weeks.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The U.S. Dolar Index ($DXC) consolidates below its major moving averages.

The Gold & Silver Miners Index ($XAU) chops on its major moving averages.

The Consumer Index ($CMR) holds the support of its 200-day average.

The Cyclical Index ($CYC) slides further below its 50-day average, yet still above its 200-day average.

The Technology Index ($DJUSTC) consolidates just below its 50-day average.

The Semiconductor ($SOX) also consolidates just below its 50-day average.

The Software Index ($GSO) trades on its 200-day average.

Telecom Index ($XTC) slid to its 200-day average.

The Banking Index ($BKX) bounced off its lows, still below its major moving averages.

The Broker Dealer Index ($XBD) also bounced off its lows, still below its major moving averages.

The Retail Index ($RLX) hit a new low as it falls further south of its moving averages.

The Healthcare Index ($HCX) consolidates below its 200-day average.

Biotechnology Index ($BKX) also consolidates below its 200-day average.

Pharmaceutical Index ($DRG) trades just off the lows of the year, below its major moving averages.

The REIT Index ($DJR) bounced off the lows of the year, still below its major moving averages.

The Transportation Index ($TRAN) trades at the support of its 200-day moving average.

The Airline Index ($XAL) bounced off the low of the year, still below its major moving averages.

The Defense Index ($DFX) consolidates on its 50-day average.

The Energy Index ($IXE) consolidates below its 50-day average.

What Was Important About Last Week

STOCKS:

  • NVIDIA (NVDA) reported Q2 (Jul) GAAP earnings of $0.43 per share, $0.09 better than the GAAP Reuters Estimates consensus of $0.34. Excluding stock based compensation and the associated tax impact, non-GAAP earnings were $0.51 per share, $0.08 better than the non-GAAP First Call consensus of $0.43.
  • AIG (AIG) reported Q2 (Jun) earnings of $1.64 per share, $0.02 better than the Reuters Estimate of $1.62. Revenues were unchanged from the year-ago period at $1 mln.
  • Cisco Systems (CSCO) reported Q4 (Jul) earnings of $0.36 per share, excluding non-recurring items, $0.01 better than the Reuters Estimates consensus of $0.35. Revenues rose 18.1% year/year to $9.43 bln vs. the $9.27 bln consensus.
  • Fluor Corp (FLR) reported Q2 (Jun) earnings of $1.05 per share, $0.10 better than the Reuters Estimates consensus of $0.95. Revenues rose 22.1% year/year to $4.22 bln vs. the $3.79 bln consensus.

ECONOMY:

  • Non-farm productivity (output per hour) increased at a 1.8% annual rate in the second quarter, slightly less than the 2% rate the consensus expected. Non-farm productivity is up 0.6% versus a year ago.

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: Bob Evans Farms (BOBE), Petrobras (PBR)
  • TUESDAY: Agilent Technologies Inc. (A), Applied Materials (AMAT), Home Depot Inc (HD), UBS (UBS), Wal-Mart Stores Inc. (WMT)
  • WEDNESDAY: Deere & Company (DE)
  • THURSDAY: Autodesk, Inc. (ADSK), Hewlett-Packard (HPQ), Kohl’s (KSS), Nordstrom (JWN)
  • FRIDAY: none

On the economic front we have potential market movers with:

  • MONDAY: Retail Sales, Business Inventories
  • TUESDAY: PPI, Trade Balance
  • WEDNESDAY: CPI, NY Empire State Index, Net Foreign Purchases, Industrial Production, Capacity Utilization, Crude Inventories
  • THURSDAY: Housing Starts, Building Permits, Initial Claims, Philadelphia Fed
  • FRIDAY: Mich Sentiment-Prel.

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“ It is one thing to praise discipline, and another to submit to it.” – Benjamin Disraeli

CANSLIM SETUPS

Bears Command The Field

Traders,

You ask me where we’re goin‘-Well I don’t know
Let’s just sit back and dig the radio
— The Rembrandts “Rollin’ Down The Hill ”

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:

Taking a look at the broader market:

More blood for the Bears bath.

The S&P 500 sunk below its 200-day moving average.

Financials lead the charge down.

The 200-day average serves as support for the majority of sectors.

Despite all the carnage, we still see a number of issues holding uptrends, most of them in tech.

It’s not our job to predict where and when a bounce or return of the Bull returns.

As breakout players all we need to know is now is not the time to buy.

Technically speaking:

The Dow Industrial Average

($INDU), -0.6%, hits a new three-month low and closes below its 50-day moving average.

The S&P 500

($SPX), -1.8%, hits a new three-month low and closes below its 50 and 200-day moving averages.

Nasdaq

($COMPQ), -2.0%, hits a new three-month low and closes below its 50-day moving average.

Russell 2000

($RUT), -2.9%, comes just shy of a new low for the year as it leads to the downside.

Volume indications stay tipped to the Bears with two more distribution days added to the major indexes.

Key chart action for the week:

Charts courtesy of Stockcharts.com

The U.S. Dolar Index ($DXC) holds a downtrend below its major moving averages.

The Gold & Silver Miners Index ($XAU) consolidates just above its major moving averages.

The Consumer Index ($CMR) consolidates on its 200-day moving average, which is below its 50-day average.

The Cyclical Index ($CYC) consolidates below its 50-day moving average and above its 200-day average.

The Technology Index ($DJUSTC) closes just below its 50-day average.

The Semiconductor ($SOX) also closes just below its 50-day average.

The Software Index ($GSO) bounces off its 200-day average, closing below its 50-day average.

Telecom Index ($XTC) trades just below its 50-day average as it trades above its 200-day average.

The Banking Index ($BKX) falls further below its major moving averages.

The Broker Dealer Index ($XBD) also falls further below its major moving averages.

The Retail Index ($RLX) also falls further below its major moving averages.

The Healthcare Index ($HCX) consolidates below its 200-day average.

Biotechnology Index ($BKX) falls further below its major moving averages.

Pharmaceutical Index ($DRG) also falls further below its major moving averages.

The REIT Index ($DJR) also falls further below its major moving averages.

The Transportation Index ($TRAN) closes below its 200-day moving average for the first time since spring.

The Airline Index ($XAL) falls further below its major moving averages.

The Defense Index ($DFX) consolidates on its 50-day moving average.

The Energy Index ($IXE) drifts below its 50-day moving average.

What Was Important About Last Week

STOCKS:

  • Activision (ATVI) reports Q1 (Jun) earnings of $0.11 per share, $0.03 better than the Reuters Estimates consensus of $0.08. Revenues rose 163.4% year/year to $495.5 mln vs the $454.1 mln consensus. Co issued downside guidance for Q2, sees loss of -$0.03 vs. -$0.01 consensus.
  • Network Appliance (NTAP) lowers Q1 revs and EPS guidance. Revenues are expected to be in the range of $684-688 mln, Reuters consensus is $751, prior guidance was $745-753 mln.
  • Take-Two Interactive (TTWO) announced it reducing its fiscal 2007 guidance primarily to reflect the movement of the launch of Grand Theft Auto IV for the PlayStation3 computer entertainment system and the Xbox 360 video game and entertainment system from the fourth quarter of fiscal 2007 to fiscal 2008, due to additional development time required to complete the title.
  • Walt Disney (DIS) reported Q3 (Jun) earnings of $0.58 per share, $0.03 better than the Reuters Estimates consensus of $0.55. Revenues rose 6.7% year/year to $9.04 bln vs the $9.05 bln consensus.
  • Las Vegas Sand (LVS) reported Q2 (Jun) earnings of $0.23 per share, $0.02 worse than the Reuters Estimates consensus of $0.25. Revenues rose 18.5% year/year to $612.9 mln vs the $566 mln consensus.
  • Electronic Arts (ERTS) reported Q1 (Jun) loss of $0.22 per share, excluding non-recurring items, $0.12 better than the Reuters Estimates consensus of ($0.34).
  • Starbucks (SBUX) reported Q3 (Jun) earnings of $0.21 per share, in line with the Reuters Estimates consensus of $0.21. Revenues rose 142008.4% year/year to $2.36 bln vs the $2.39 bln consensus.
  • Chipotle Mexican Grill (CMG) reported Q2 (Jun) earnings of $0.60 per share, $0.16 better than the Reuters Estimates consensus of $0.44. Revenues rose 34.3% year/year to $274.3 mln vs the $262.9 mln consensus.

ECONOMY:

  • Non-farm payrolls increased 92,000 in July while revisions to May and June subtracted 8,000 from payroll growth. The consensus expected a gain of 127,000.
  • Private sector payrolls increased 120,000 in July with upward revisions to May and June adding another 33,000. This means private sector payrolls were 153,000 higher in July than reported in June.
  • The unemployment rate increased to 4.6% (4.647% un-rounded), the highest level since August 2006.
  • The ISM non-manufacturing business barometer (a measure of production growth in the services sector) declined to 55.8 in July. The consensus expected a decline to 59.0 from the June level of 60.7. Levels above 50 signal expansion and levels below 50 signal contraction in the services sector.
  • The ISM Manufacturing index declined to 53.8 in July from 56.0 in June. The consensus expected the index to drop to 55.0. (Levels higher than 50 signal expansion; levels below 50 signal contraction.)

What We’re Looking For This Week

Key earnings releases:

  • MONDAY: j2 Global Communications (JCOM)
  • TUESDAY: BioMarin Pharmaceutical Inc. (BMRN), Cell Genesys (CEGE), Dean Foods (DF), Harrah’s Entertainment (HET), King Pharmaceuticals (KG)
  • WEDNESDAY: American International Group (AIG), Barr Pharmaceuticals, Inc. (BRL), Goodrich Petroleum (GDP), Hansen Natural (HANS), Toll Brothers (TOL)
  • THURSDAY: California Pizza Kitchen (CPKI), Infocrossing (IFOX), Urban Outfitters (URBN)
  • FRIDAY: none

On the economic front we have potential market movers with:

The Following Sections Are On Our Home Site:

This Week’s Word On Discipline:

“Knowledge comes, but wisdom lingers. It may not be difficult to store up in the mind a vast quantity of face within a comparatively short time, but the ability to form judgments requires the severe discipline of hard work and the tempering heat of experience and maturity. ” – Calvin Coolidge

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