Brigitte
10.11.2000, 12:40
* * * *
11/9/00 Investment House Daily
* * * *
Investment House Daily Subscribers:
*
TONIGHT:
- Tough rhetoric tanks the markets, but they fight to come back.
- Indexes rallied from the low, but there was distribution on all
averages.
- PPI up overall, but the core slides negative.
- Tough trading right now with the external forces on our backs.
- Team Trades
*
Tricky waters in front of us with the election wildcard, and no one knows
how deep they are. As always that makes it best to look at the market
itself for guidance.
*
Looking to the market, we saw all major indexes dive in the early
afternoon as the Democrats indicated they were going to judicially
challenge the results in Florida. When the press conference was over,
they staged a remarkable recovery, the Nasdaq regaining 113 points from
its session low. The Dow took back 216 points. The S&P 500, 30 points.
*
Impressive recoveries, but we do not think anyone believes that the
indexes have touched bottom and again reversed. We do not believe that
the indexes can absorb worsening news on this situation without taking
further hits.
THE ECONOMY
*
PPI higher and lower.
*
Producer prices climbed 0.4% overall, well above the 0.1% expected. That
was due to energy rising 1.4% even with lower oil prices, and food prices
rising 0.8%. The core was down 0.1%, giving us the decline we forecast,
versus the 0.1% rise anticipated by other economists. Many conclude the
numbers show the slowing that the Fed wants.
*
The energy numbers are also viewed as troublesome by some. No one likes
higher energy costs, but we need to review these in perspective of what
Alan Greenspan is looking at. Mr. Greenspan has earlier indicated he was
concerned that rising energy prices would impact consumer spending in an
already slowing economy. This could be the best of both worlds from the
markets' perspective. We have a falling core PPI, meaning prices for
producers are falling. That means less pressure, if any, on consumer
prices in the future. Combine that with Mr. Greenspan's concern over
slackening consumer demand because of energy prices, and we see very
favorable intonations for future interest rate policies.
*
Jobless claims shoot up.
*
First-time jobless claims shot up to a 22-month high of 344,000 versus
310,000 expected and 309,000 for the prior week (revised higher from
308,000). Remember back when everyone was complaining about a 'tight'
labor market when these numbers were hovering right above and below
300,000? As we have said over and over, when changes are occurring in
markets or economies, there is up and down action. Then it breaks open by
a much wider margin. We are seeing this in many areas in the economy, GDP
for one. Now jobless claims are rising dramatically. The signs just keep
piling up that things are rapidly cooling off.
*
Tomorrow we have the Michigan consumer sentiment numbers. That will show
us more about how energy prices and the economic future are going to play
into the consumer-side of the equation.
*
THE MARKETS
*
Overall market stats:
*
VIX: 29.64; +1.36. Volatility spiked to 31.70 today on the run south,
putting over that 30 level that marks a high enough VIX reading to lead to
a reversal. The markets did reverse intraday, but with all of the
uncertainty in front of us we would not focus on this as the key
indicator.
*
Put/Call ratio: 0.78; +0.10. Rising again another one-tenth, a strong
move up. We look to the closing level, not the intraday highs on this
indicator as that has been historically more accurate. It needs to climb
over 1.0 on the close to mean a reversal could be coming. This level
shows high anxiety. Again, however, this is not the key indicator right
now with the other dominant news events.
*
With the overriding political concerns, these indicators do not mean as
much right now. They are sentiment indicators, and presume more or less
'normal' external pressures. We do not have 'normal' external pressures
right now.
*
NASDAQ: Tech stocks really do not like uncertainty. When it was clearly
stated that we were looking at a court fight to determine the President,
the techs tanked 144.64 points on their low (3087.06). That took it much
closer to its year low of 3026.11. For the moment, we do not think it is
finished testing this level because of the political ramifications. That
will, however, present buying opportunities once the dread wears off or
investors reach the saturation point regarding the election.
*
Stats: Down 31.35 points (-1.0%) to close at 3200.35.
Volume: 1.921 billion shares (+14.4%). This was a real spike in volume,
indicating that we are getting selling by the big institutions. That
always pressures stocks, and is a sign of further selling to come as
institutions unload shares. Down volume actually fell from Wednesday's
selling (1.228 billion) while up volume tripled to 659 million shares.
Our fear of the higher volume selling of the leaders on Wednesday became
reality.
A/D and Hi/Lo: Decliners continued their run on advancing issues, just
over 2 to 1 (2.06 to 1). New highs limped home at 33 (59 on Wednesday);
new lows shot up to 190 (96 on Wednesday).
*
The Chart: http://www.investmenthouse.com/ch/nasdaq.html
*
The Nasdaq gapped below its April intraday low (3227.04), rallied back to
almost flat, and then tanked to 3087.06 during the Democratic press
conference. That was a 'v' bottom on the day, however, as the index shot
back up from there. That does show us something: this is indeed a very
political event. That is good in the sense stocks will bounce back from
this type of news when it hits the saturation point. Don't know where
that is yet as the markets just started selling on strong volume. Perhaps
now that the lay of the land has been staked out more or less, there won't
be anymore real surprises and stocks will again start reacting to earnings
and the like. We know no official count will come from Florida until
11-17, so things just may settle down in the markets before then.
*
That gives the Nasdaq a chance to move up off of this test of the year
low. We may have to see what the initial 'final' count in Florida will be
before it starts that move. We thought that would be out tonight, but
thus far it is not. If we get that small level of certainty, the techs may
be able to move up from here. As we noted last night, however, we are in
uncharted territory, and the indexes have again changed character.
*
Dow/NYSE: The Dow's chart matched the Nasdaq's. It sold on higher volume
as well for the second straight session. It did manage a recovery that
closed it above the recent low on the consolidation from the recent move
up.
*
Stats: Down 72.81 points (-0.7%) to close at 10,834.25.
Volume: NYSE volume climbed back above average at 1.112 billion shares
(+23.9%) on selling. A significant jump showing institutions were selling
shares. Down volume topped up volume 735 million to 328 million shares.
A/D and Hi/Lo: NYSE decliners beat advancing issues again, 1.59 to 1.
New highs came in at 57 (-31) versus 58 new lows (+20). These numbers
show the shift in the selling pressure.
*
The Chart: http://www.investmenthouse.com/ch/djia.html
*
Again, the Dow's intraday chart mimicked the Nasdaq's, selling in the
early afternoon, then rallying back to cut its losses. The intraday low
(10,618.49) sent the index below its 200 day moving average, tapping at
the bottom of the late-September consolidation range. It rebounded
sharply to close above the recent closing low (10,817.95) afte
11/9/00 Investment House Daily
* * * *
Investment House Daily Subscribers:
*
TONIGHT:
- Tough rhetoric tanks the markets, but they fight to come back.
- Indexes rallied from the low, but there was distribution on all
averages.
- PPI up overall, but the core slides negative.
- Tough trading right now with the external forces on our backs.
- Team Trades
*
Tricky waters in front of us with the election wildcard, and no one knows
how deep they are. As always that makes it best to look at the market
itself for guidance.
*
Looking to the market, we saw all major indexes dive in the early
afternoon as the Democrats indicated they were going to judicially
challenge the results in Florida. When the press conference was over,
they staged a remarkable recovery, the Nasdaq regaining 113 points from
its session low. The Dow took back 216 points. The S&P 500, 30 points.
*
Impressive recoveries, but we do not think anyone believes that the
indexes have touched bottom and again reversed. We do not believe that
the indexes can absorb worsening news on this situation without taking
further hits.
THE ECONOMY
*
PPI higher and lower.
*
Producer prices climbed 0.4% overall, well above the 0.1% expected. That
was due to energy rising 1.4% even with lower oil prices, and food prices
rising 0.8%. The core was down 0.1%, giving us the decline we forecast,
versus the 0.1% rise anticipated by other economists. Many conclude the
numbers show the slowing that the Fed wants.
*
The energy numbers are also viewed as troublesome by some. No one likes
higher energy costs, but we need to review these in perspective of what
Alan Greenspan is looking at. Mr. Greenspan has earlier indicated he was
concerned that rising energy prices would impact consumer spending in an
already slowing economy. This could be the best of both worlds from the
markets' perspective. We have a falling core PPI, meaning prices for
producers are falling. That means less pressure, if any, on consumer
prices in the future. Combine that with Mr. Greenspan's concern over
slackening consumer demand because of energy prices, and we see very
favorable intonations for future interest rate policies.
*
Jobless claims shoot up.
*
First-time jobless claims shot up to a 22-month high of 344,000 versus
310,000 expected and 309,000 for the prior week (revised higher from
308,000). Remember back when everyone was complaining about a 'tight'
labor market when these numbers were hovering right above and below
300,000? As we have said over and over, when changes are occurring in
markets or economies, there is up and down action. Then it breaks open by
a much wider margin. We are seeing this in many areas in the economy, GDP
for one. Now jobless claims are rising dramatically. The signs just keep
piling up that things are rapidly cooling off.
*
Tomorrow we have the Michigan consumer sentiment numbers. That will show
us more about how energy prices and the economic future are going to play
into the consumer-side of the equation.
*
THE MARKETS
*
Overall market stats:
*
VIX: 29.64; +1.36. Volatility spiked to 31.70 today on the run south,
putting over that 30 level that marks a high enough VIX reading to lead to
a reversal. The markets did reverse intraday, but with all of the
uncertainty in front of us we would not focus on this as the key
indicator.
*
Put/Call ratio: 0.78; +0.10. Rising again another one-tenth, a strong
move up. We look to the closing level, not the intraday highs on this
indicator as that has been historically more accurate. It needs to climb
over 1.0 on the close to mean a reversal could be coming. This level
shows high anxiety. Again, however, this is not the key indicator right
now with the other dominant news events.
*
With the overriding political concerns, these indicators do not mean as
much right now. They are sentiment indicators, and presume more or less
'normal' external pressures. We do not have 'normal' external pressures
right now.
*
NASDAQ: Tech stocks really do not like uncertainty. When it was clearly
stated that we were looking at a court fight to determine the President,
the techs tanked 144.64 points on their low (3087.06). That took it much
closer to its year low of 3026.11. For the moment, we do not think it is
finished testing this level because of the political ramifications. That
will, however, present buying opportunities once the dread wears off or
investors reach the saturation point regarding the election.
*
Stats: Down 31.35 points (-1.0%) to close at 3200.35.
Volume: 1.921 billion shares (+14.4%). This was a real spike in volume,
indicating that we are getting selling by the big institutions. That
always pressures stocks, and is a sign of further selling to come as
institutions unload shares. Down volume actually fell from Wednesday's
selling (1.228 billion) while up volume tripled to 659 million shares.
Our fear of the higher volume selling of the leaders on Wednesday became
reality.
A/D and Hi/Lo: Decliners continued their run on advancing issues, just
over 2 to 1 (2.06 to 1). New highs limped home at 33 (59 on Wednesday);
new lows shot up to 190 (96 on Wednesday).
*
The Chart: http://www.investmenthouse.com/ch/nasdaq.html
*
The Nasdaq gapped below its April intraday low (3227.04), rallied back to
almost flat, and then tanked to 3087.06 during the Democratic press
conference. That was a 'v' bottom on the day, however, as the index shot
back up from there. That does show us something: this is indeed a very
political event. That is good in the sense stocks will bounce back from
this type of news when it hits the saturation point. Don't know where
that is yet as the markets just started selling on strong volume. Perhaps
now that the lay of the land has been staked out more or less, there won't
be anymore real surprises and stocks will again start reacting to earnings
and the like. We know no official count will come from Florida until
11-17, so things just may settle down in the markets before then.
*
That gives the Nasdaq a chance to move up off of this test of the year
low. We may have to see what the initial 'final' count in Florida will be
before it starts that move. We thought that would be out tonight, but
thus far it is not. If we get that small level of certainty, the techs may
be able to move up from here. As we noted last night, however, we are in
uncharted territory, and the indexes have again changed character.
*
Dow/NYSE: The Dow's chart matched the Nasdaq's. It sold on higher volume
as well for the second straight session. It did manage a recovery that
closed it above the recent low on the consolidation from the recent move
up.
*
Stats: Down 72.81 points (-0.7%) to close at 10,834.25.
Volume: NYSE volume climbed back above average at 1.112 billion shares
(+23.9%) on selling. A significant jump showing institutions were selling
shares. Down volume topped up volume 735 million to 328 million shares.
A/D and Hi/Lo: NYSE decliners beat advancing issues again, 1.59 to 1.
New highs came in at 57 (-31) versus 58 new lows (+20). These numbers
show the shift in the selling pressure.
*
The Chart: http://www.investmenthouse.com/ch/djia.html
*
Again, the Dow's intraday chart mimicked the Nasdaq's, selling in the
early afternoon, then rallying back to cut its losses. The intraday low
(10,618.49) sent the index below its 200 day moving average, tapping at
the bottom of the late-September consolidation range. It rebounded
sharply to close above the recent closing low (10,817.95) afte