Thursday, May 6, 2004
Issue Contents:
| 09:25 | US Market Review Premarket Overview. |
| 09:29 | Canadian Market Review Premarket Overview. |
| 14:00 | Economic Data Summary of Today's Releases |
| 14:06 | Focus on Broad Market Indexes Dow, S&P 500, NASDAQ 100 |
| 16:16 | TrendVue Active Trader Today's transcript. |
| 16:16 | TrendVue Trader Talk Today's transcript. |
| 17:08 | Focus on $XOI AMEX Oil Index |
| 22:21 | Stock Watch Lists Most Actives and Volume Surges |
Index futures indicate that US major indexes are poised to break bear flags which have built up over three or four days.
The initial target for a bear flag break is the base of the flag.
Remember, the Jobs Report tomorrow morning is likely to move the market strongly. Early morning commentary seems to indicate that more analysts believe this mornings jobless claims and productivity numbers point the way to a strengthening Jobs number tomorrow, however, as with last months surprise, no one really knows until the report comes out.
Where's Mr. Beeks when you need him? /Mike
All eyes remain on previous tests of bottom or overhead resistance in the case of the small cap index. /Mike
With crude oil poised to crack $40 a barrel, one suspects all the real action will be in resource stocks today. We should also keep our eye on Gold - the commodity is down ~ $3 overnight which brings the Gold Contract closer to retesting the prior test of bottom.
MBA Purchase Applications Index 482.5
(Econoday.com) - The Mortgage Bankers purchase index rose 4.1 percent in the April 30 week to 482.5, its fourth straight rise and the best reading since mid-January.
The data suggest that rising interest rates may be stimulating housing demand, encouraging home shoppers to lock in rates now before they move yet higher. The results may confound early estimates for April's housing data, which begin with the housing starts report at mid-month.
The MBA refinancing index also rose, up 4.7 percent to 2,516.0. But the index remains about half as strong as in March, a less surprising effect of the recent rise in mortgage rates.
Thirty-year fixed rate mortgages rose to 6.01 percent last week, now up 63 basis points from the year's low in mid-March.
ISM Business Activity Index 68.4%
(Econoday.com) - The business activity index from the ISM non-manufacturing survey increased nearly three points in April to 68.4 percent, boosting the already high level even more than expected. The ISM survey showed strength among the various components. New orders increased nearly three points to 65.6; supplier deliveries were up to 58 percent; inventories jumped five points to 56.5 percent and even employment increased to 54.5 in April from 53.9 in March. The price index jumped three points to 68.6 percent in April from 65.7 percent. The rising price index may not suggest that inflationary pressures are percolating today, but it certainly indicates that inflation could become a concern if this index continues to rise in coming months.
Once a potential congestion area has been identified, it is often tempting for me to just watch and wait. After all, my philosophy calls for no trading when there is no setup in the time frame observed. It's been exactly the case over the past few weeks.
I identified and marked out big patterns on the broad indexes on April 20. On April 23, there was a test of the upper edge of the pattern on the [$INDU], [$SPX.X] and [$NDX.X] and I stated that I did not want to play the breakout in order to avoid getting trapped in a fake out.
The tendenacy is for price to move to the other edge of a pattern once a fake breakout has taken place, but this is by no means certain, and therefore, I took bits and pieces out of the move down on an intraday basis, but did not swing trade it.
Let's update the indexes now as they near the lower edge of the pattern.
You can see that for the Dow Industrials, the S&P 500 and the NASDAQ 100, the lower edge of the pattern is calling, and people are scared that there is going to be a downside breakout, just like they were hopeful that there would be an upside breakout only a couple of weeks ago.
From the trader's standpoint, we simply say that the price is "near target". As for the potential breakout, we'll believe it when we see it because we know that there is always the possibility that the congestion continues and it chops for days and weeks from here. That is the scenario that typical investors do not ever entertain. /Teresa
Today's transcript.
Click on the title above to expand this document.
Today's transcript.
Click on the title above to expand this document.
I wrote a piece on Crude Oil in April that sketched out the big picture sentiment cycle. Let's take a look at the daily chart of the AMEX Oil Index itself.
The [$XOI.X] has formed a rising wedge on the daily chart. What is interesting is that the 20-day average true range is also at the peak value on this chart, plus the underlying, the OIH did a huge volume spike yesterday. All these are typically signs of a climax top.
The monthly [@CL] chart remains above the point of the wedge, so the parabolic move up is still intact so long as it stays above the upper pink dotted line. What is interesting is that if the analogy in gold/gold stock trading is applicable, i.e. the stocks typically lead the commodity, then what we have here is a case there the stocks are not leading the commodity. For all we know there is a big short squeeze in the pit or something, so that is another sign of near climax conditions. /Teresa
Here are the most active list and the volume surge list.