Monday, March 1, 2004
Issue Contents:
| 08:59 | This Morning Changes. |
| 09:13 | Market Sentiment CBOE equity put/call ratio. |
| 09:22 | Market Internals $VIX, $VXN and high/low statistics. |
| 15:09 | Intraday Strategy ES, NQ, DJ, T notes/bonds. |
| 16:16 | Active Trader Transcript Real time forum log. |
| 16:21 | Economic Data Roundup of today's releases. |
| 16:29 | The Day Ahead U.S. market calendar for Tuesday. |
| 16:42 | Volume Leaders NASDAQ and NYSE. |
| 16:53 | Stock Index Strategy $INDU, DIA, $SPX, SPY. |
| 17:07 | Stock Index Strategy $NDX, QQQ, $SOX, SMH. |
| 17:25 | Forex Strategy EURUSD, USDJPY, GBPUSD, USDCHF, EURJPY, USDCAD. |
It's the first day of March. Almost spring.
Now that we've released the TrendVue Classic Swing indicator, we are proceeding directly to the task of reorganizing the newsletter.
I spent today putting together a sample of an "ideal newsletter" that I hope you'll like. I'm also shooting for consistency, getting half of it done the night before, and the balance by 8:30AM Eastern.
We start up again with our stock picks tomorrow morning, and will introduce some work that we've been doing on sectors for investors.
Equity put/call ratio in mid-range. No extremes to report.
$VIX pushes down into the lower Bollinger Band while the 5-day RSI goes under the 30-line. We are now on the lookout for the Connors VIX Reversal sell setup on the daily chart of the S&P 500 index.
$VXN pushes down into the lower Bollinger Band while the 5-day RSI goes under the 30-line. We are also on the lookout for the Connors VIX Reversal sell setup on the daily chart of the NASDAQ 100 index.
This section will feature daily charts of ES, NQ, DJ, ZN, and ZB. Analysis will be uploaded around 8:30AM Eastern on a daily basis.
Real time forum log.
Click on the title above to expand this document.
Personal Income +0.2%
Consumer Spending +0.1%
(Econoday.com) - Personal income, hurt by a sharp fall in rental income, rose a lower than expected 0.2 percent in January, the smallest rise since August and compared with a revised 0.3 gain in December.
But wages and salaries rose a healthy 0.5 percent due in part to lower taxes. Lower taxes also helped disposable income, which rose 0.8 percent.
Personal outlays rose a moderate and as-expected 0.4 percent in the month. Consumption of durable goods was down due largely to weak vehicle sales during the month. Consumption of non-durables and services was stronger.
The PCE price index (chained 2000 dollars) rose a mild 0.3 percent in January compared with a 0.2 percent gain in December and a 0.1 percent decline in November. The core PCE inched 0.1 higher in January. The savings rate came in at 1.8 percent vs. 1.4 percent in December and a 1.6 percent average over the prior months.
ISM Manufacturing Index 61.4%
(Econoday.com) - The ISM manufacturing index decreased roughly two points in February to 61.4 percent after recording a high level of 63.6 percent in January. The February level was about in line with expectations and should be neutral on today's market activity in the equity and bond markets. There is no question that the overall pace of manufacturing activity remained healthy for the month despite declines in the February index components from January levels. While new orders and production both decreased, employment jumped more than 3 points in February to 56.3 from a level of 52.9. It was the fourth month in a row in which the employment index stood well above the 50 percent mark which points to growth. We still haven't seen this translate into factory payroll gains however. The supplier delivery index, a component of the index of leading indicators, rose nearly two points in February. The sharpest gain came in the price index which gained 6 points to 81.5 in February! The price index now stands 20 percentage points above year ago levels.
Construction Spending -0.3%
(Econoday.com) - Construction expenditures fell 0.3 percent in January after an upward revised gain of 0.6 percent in December. This was slightly weaker than expected and could viewed in a negative light by equity investors, but could be friendly news for bond investors. Total private construction spending decreased 0.5 percent for the month, with no change in the residential sector, but a sharp 1.7 percent decline in non-residential construction. Declines were particularly sharp for office and commercial buildings. In the public sector, construction spending rose 0.2 percent as construction of educational buildings decreased 2.2 percent, but highway and street construction jumped 1.7 percent.
3-Month Bill Treasury Rate 0.940%
(Econoday.com) - The high rate for the 3-month bill auction edged up 1 basis to 0.940 percent, the highest rate of the quarter. The bid/cover ratio was a firm 2.09 vs. 2.14 last week (both $19 billion auctions).
6-Month Bill Treasury Rate 0.990%
(Econoday.com) - The high rate for the 6-month bill auction edged down 1/2 basis point to 0.990 percent but still at the upper end the quarter's range. The bid/cover ratio was a firm 2.23 vs. 2.46 last week (both $17 billion auctions). Modest pressure on the 6-month bill rate, and more so the 3-month rate, perhaps reflects an increasing risk of less accommodative Federal Reserve policy.
Tuesday, March 2
- 7:45AM ICSC-UBS Store Sales
- 8:55AM Redbook
- 9:00AM Bank of Canada Interest Rate Announcement
- 10:00AM Challenger Job-Cut Report
- 12:30PM FOMC Chairman Greenspan addresses the Economics Club of New York.
- 1:00PM 4-Week Treasury Bill Auction
- 4:00PM Motor Vehicle Sales
- 7:30PM Federal Reserve Governor Ben Bernanke speaks about money, gold and the great depression at Washington and Lee University in Lexington, Virginia.
Highlights on today's Earnings Calendar include Biogen.
These were today's NASDAQ volume leaders:
| INTC |
| MSFT |
| ORCL |
| SEPR |
| SIRI |
| CSCO |
| AMAT |
| JDSU |
| SUNW |
| MEDI |
| BRCD |
| SNDK |
| NXTL |
| YHOO |
| CNXT |
| DELL |
| SONS |
| CIEN |
| QCOM |
| JNPR |
| NOVL |
| CORV |
| IDSA |
| ATML |
| AAII |
These were today's NYSE volume leaders:
| PCS |
| NT |
| LU |
| AWE |
| FON |
| TWX |
| XOM |
| GE |
| PFE |
| MOT |
| C |
| AMD |
| ELN |
| WMT |
| HCA |
| EP |
| JPM |
| DIS |
| EMC |
| L |
| CPN |
| SGP |
| MDR |
| HPQ |
| SBC |
We will review this list overnight to see if there are any swing trade opportunities for tomorrow.
When we last looked at the broad market indices, we discussed why we needed to add a line above the recent price action in case there are wedges forming on the daily charts.
The upside target is the top of the wedge. On a swing basis, the trade has already been triggered, so if it continues to the upside, look for intraday opportunities.
We have to watch the price action carefully at the upper edge of these patterns, as it is also a test of recent highs. Since the only thing we know about the $INDU 10750ish and $SPX 1158ish area is that this is where sellers showed up before, we will be on the lookout for them in case they come out again.
We note that the NASDAQ 100 Index and the Semiconductor Sector Index are both weaker relative to the Dow Industrials and the S&P 500 Index. For one, both the $NDX and the $SOX pulled back below the 50-day MA before finding any buyers.
On this move up, the first upside target is the upper edge of the pattern, around $NDX 1500 and $SOX 525. The 20-day EMA and 50-day MA are lurking at around the same point, and we have to be mindful that sellers may be lurking.
Out of the six pairs, I think the two that require our attention is EURUSD and USDCHF. You can see how I've drawn the lines to show you the trading range. What we know is that eventually price action will leave this trading range. Exactly when, we do not know.
While it's chopping, buyers will tend to show up at the lower end of the range, while sellers will tend to show up at the upper end of the range until the breakout. Our job is to watch bounces off the lower part of the range for weak ones that might set up selling for a downside breakout on the EURUSD. Today's up day needs to be followed up by confirmation on the upside; otherwise, traders will look at any weakness as a potential downside break. This is Bar 1 of a potential stealth bear flag, and a break of Monday's low signals a likely test of the recent low in the 1.2373 area.
The USDCHF is the same chart but in reverse, and you'll see that today was a small down day that needs to be followed by confirmation on the downside; otherwise, traders will look at the lack of a thrust downwards as a sign of strength on Bar 1 of a potential stealth bull flag. Break of Monday's high signals a likely test of the recent high in the 1.2757 area.