Market Talk / July 30 - Aug 5

Spaf

Honorary Hall of Fame Member
The Kingdom of TSP
Sunday-Weekly
Early Edition
July 30, 2006

Fortuneteller.gif

Yak, Doodles, Tea Leaves & The Tin Box

Kingdom Yak:
Pro-Yak.................................The bull shute should be at about 1280 [$SPX - pivot point]. Momentum increasing. Vestors yak about good week if earnings continue and hopes that Fed will pause rate increases.

Con-Yak.................................The bear den should be at about 1260 [$SPX]. Vestors still somewhat nervous over factors of M.E., rates, oil, off-season, and spendings.

Jester-Yak..............................Maybe Lube has peaked? Syria critical to any peace plans!

Doodles:
Socks [$SPX] Closed at.............1,278.55, up +38.26 for the week.
Volume (CMF) (money flow)........-0.101, decreasing.
Averages (MACD) (trend)...........+1.755, increasing.
Momentum (S-STO) (signal)........86.09, increasing.
Strength (RSI) Overbought/sold...[70]....58.07....[30]

Lube (NYM) Closed at................73.24, dn -1.19, for the week.
Oil Markers..............................<70= ok, 70-75= worry, >75= panic.

Tea Leaves:
Charts & Stuff..........................Yellow / Yellow [Doodles +4-1 / Lube > 70].

Tin Box:
Position..................................100% socks.
Stops [$SPX]...........................Alert: 1267. Trail: 1254.

TSP (week ending)......G=11.47..F=10.74..C=14.02..S=16.69..I=19.59
....(1 week past)........G=11.46..F=10.68..C=13.60..S=16.11..I=18.76
....(2 week past)........G=11.45..F=10.65..C=13.55..S=16.38..I=18.59
....(3 week past)........G=11.44..F=10.61..C=13.87..S=16.96..I=19.36
....(4 week past)........G=11.43..F=10.60..C=13.91..S=17.21..I=19.39

SP5000728g.gif
 
Sunday, July 30, 2006

Bear Market Rally, or Something More Significant?
The rally last week which followed our scheduled cycle low impressed quite a few folks. Unfortunately, bear market rallies tend to do that. It's why bear markets fall on a "Slope of Hope" (the obverse of bull markets, which rise on a "Wall of Worry"). It's important to distinguish between a true bull market rise and a bear market rally because the latter often leads to tears.

Kickoff rallies in bull markets exhibit some signs which distinguish them from bear market rallies. Unfortunately, last week's spirited rise exhibited few of those signs. Thus, while the market may have put in its low of the year already as we anticipated would likely be the case, we're not out of the woods just yet. When will it be time to buy for investment purposes?
 
I've been buying for the last two weeks - plan to do more when I find some money. Have 44 names lined up on my buy list - the wall flowers are plentiful this summer. This bullmeister is ready.
 
Birchtree said:
I've been buying for the last two weeks - plan to do more when I find some money. Have 44 names lined up on my buy list - the wall flowers are plentiful this summer. This bullmeister is ready.

Do you ever sell?
 
I thought maybe the escalated violence in Lebanon would cause a big sell-off in the morning, but now that Israel has said they will not use air power for 48 hours, that will probably give the markets a 1 or 2 day reprieve. If so, I will likely use any strength to sell.

Dave
<><
 
Sunday, July 30, 2006
Whatever Happened to the Last Hour of Trading?

What does it mean when traders are buying or selling stocks in the last hour of the day? Some have suggested that this might be a "smart money" indicator, in that institutions that want to position themselves for anticipated moves will do so prior to the close to take advantage of overseas strength or weakness. Another way to view trading in the last hour is as a sentiment gauge. Heavy buying (selling) in the last hour means that bulls (bears) are so convinced of their positions that they're not willing to wait until the next day's open to place their orders.

Yet another view is that buying/selling in the last hour reflects risk-taking (willingness to assume overnight risk), while avoidance of buying/selling reflects risk aversion.

Whatever the explanation, we can see that a cumulative index of price changes in the Dow over the last hour of trading has failed to keep up with the Dow's price advance since the end of 2004. Early in the bull market, traders were buying during the last hour. Since 2005, this has not been the case. Even on Friday and over the past two weeks, when we had a nice pop in the Dow, there was no push to buy in the last hour.

Is smart money avoiding the market? Is sentiment bearish? Are traders behaving in a risk-averse fashion? Perhaps all the above. What we can see for certain is that willingness to step up and buy in the last hour has essentially vanished from this market.


http://traderfeed.blogspot.com/

posted by Brett Steenbarger, Ph.D. @ 8:58 AM
 
Wheels said:
I thought maybe the escalated violence in Lebanon would cause a big sell-off in the morning, but now that Israel has said they will not use air power for 48 hours, that will probably give the markets a 1 or 2 day reprieve. If so, I will likely use any strength to sell.

Dave
<><

Was that before of after this strike?

UN Security Council shocked by Israeli air strike
Updated Sun. Jul. 30 2006 9:50 PM ET

CTV.ca News Staff

The UN Security Council said it was shocked by Israel's attack on the southern Lebanese village of Qana, while UN Secretary-General Kofi Annan repeated calls for a ceasefire.


The Sunday morning air strike left at least 56 people dead, most of them women and children.
 
Irregardless, I do not think Israel is going to take any orders/suggestions from the UN or anyone else for that matter. Can't say I blame them. They have been turning the other cheek for a very long time.
 
Wheels said:
After. Israel agreed to a 48 hour halt to air strikes so that humanitarian aid could get in and help.

Dave
<><

Good! The people that suffer the most are those that are just trying to live. Those animals in Hezbollah will use anyone to their advantage.
 
Yahoo's Market Update

09:40 am : Stocks struggle out of the gate as last-week's impressive rally prompts some early profit-taking. Heading into what is expected to be a busy week of economic data, especially with the next FOMC meeting only eight days away, the sluggish start has not been helped by early commentary from Fed President Poole, who sees a 50% chance of another rate hike on August 8. Since that's more hawkish than the 35% chance being priced in by fed funds futures, coupled with commentary from voting Fed President Yellen hitting the wires around 11:45 ET today and the core PCE out tomorrow, investors are using such uncertainty as an excuse to consolidate recent gains. DJ30 -30.02 NASDAQ -7.76 SP500 -2.54 NASDAQ Vol 74 mln NYSE Vol 76 mln
 
Daily Yak

The Kingdom of TSP
Daily Edition
July 31, 2006 Closing

Yak, Doodles, Tea Leaves & The Tin Box

Kingdom Yak:
Pro-Yak...................................Socks pull back for breather!

Con-Yak..................................Lube climbs as vestors worry over growth and M.E.!

Doodles:
Socks [$SPX] Closed at..............1276.66, dn -1.89
Volume (CMF) (money flow).........-0.042, increasing.
Averages (MACD) (trend)............+2.895, increasing.
Momentum (S-STO) (signal).........88.42, increasing.
Strength (RSI) Overbought/sold....[70] 57.18 [30]

Lube (NYM) Closed at..................74.40, up +1.16
Oil Markers................................<70= ok, 70-75= worry, >75= panic.

Tea Leaves:
Charts & Stuff............................Yellow / Yellow [doodles +4-1 / Lube > 70]

Tin Box:
Position....................................100% socks
Stops [$SPX].............................Alert: 1267. Trail: 1254.
 
Re: Daily Yak

I dunno about you Spaf...but I'm looking 2.5% drop in the C and S funds right in the eyeball......what worse, a 5% drop in the I......and the F appears overextended for the time being......she shaken and a leaning a bit to the port I'd say skipper.....
 
Stocks: Those Lazy, Hazy Days Are Here


The market just ran out of gas on a hot summer's day across the Northern Hemisphere. While the market Down Under put in an small advance on Monday, it was little more than a knee-jerk reaction to the up day on Friday on Wall Street. The trading range continues there on Tuesday morning.

In Europe and North America, the order of the day was a dreary march sideways as the major indices were bound in a narrow range all day. Given the fact that the last trading day of the month is an up day 70% of the time, the poor performance of the market can only be attributed to the fact that we are in an intermission in the bear market -- that period of time between big legs to the downside.

Sentiment shifted enormously, though, to the bullish case. Short term traders expect the rally to continue. They may be right, but only on the very, very short term. That's why they call it a Slope of Hope. It's the flip side of the Wall of Worry which bull markets climb. It's a slippery slope, indeed!


Most TA's I follow currently in cash.... A Few longs and 2 new buy signals last week only 1 short...
 
Re: Daily Yak

The_Technician said:
I dunno about you Spaf...but I'm looking 2.5% drop in the C and S funds right in the eyeball......what worse, a 5% drop in the I......and the F appears overextended for the time being......she shaken and a leaning a bit to the port I'd say skipper.....

Whats this dunno? My last yak was Yellow / Yellow for the doodles! As long as we stay in the 1280-1260 range there is no clear signal! You know me, I tend to be bullish, and you are as we know bearish. The Mideast thing throws a bucket of uncertainity on things. USS Market is trying to get to open waters (IMHO) but dang the coast is full of mines!........:worried: .......Do we turn back, or try to get clear?....:confused:
 
FYI - excerpt from a Schwab newsletter:

Corporations: trouble under the hood

For the first time in five years, corporate debt is growing at an above-average rate. It was up 8.9% year-over-year in the first quarter vs. a 53-year average of 8.5%. Meanwhile, capital spending is exceeding corporate cash flow, as indicated by the “corporate financing gap,” which dipped into negative territory in the first quarter of this year. True, profit margins and return on capital continue to increase. But any further deterioration in corporate balance sheets could begin to affect earnings growth. We believe analysts’ forward-looking forecasts could be a bit too optimistic. Also, let’s not forget the connection between consumer and corporate spending. If consumers pull back sharply, companies are apt to get stingy.
 
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