Brigitte
16.11.2000, 12:06
* * * *
11/15/00 Investment House Daily
* * * *
Investment House Daily Subscribers:
*
TONIGHT:
- The rally continued until the Fed spoke. The market recovered a bit,
but it lost its luster.
- The rally does not have a lot of steam. Watch those resistance points.
- CPI out tomorrow.
- Subscriber Questions
- Team Trades
*
The indexes were performing quite well, overcoming some selling in the
first half hour to mount a solid move up toward the 1:15 p.m. CT FOMC
announcement. The Nasdaq was up 70 points and looking decent. Volume was
light, however, again telling us that this rally was weak and that any bad
news could derail it. You always hope that this time it won't happen, but
with this volume and investor psychology, that is a pretty thin hope.
*
Fed holds pat.
*
Investors were looking for a bone from the Fed in the form of a shift of
the bias to neutral. The Fed decided to keep its foot firmly on the
market's throat and kept its hawkish view. It based this on the available
worker pool being perceived as still too tight as well as oil prices
perhaps keeping the embers of inflation glowing. As we noted last night,
these points are really non-issues at this point. The Fed was just using
the focus on the election to run its strategy a bit further. This was not
leadership, but a ducking of the issues for another month. Of course, if
we have to look to the FOMC for leadership, we are in trouble.
*
It was not all bad news. Investors were looking for more up front from
the Fed. What they got were some more hints that the Fed is softening its
approach. The Fed acknowledged that the continued slowdown in the
economy, most notably softening business and household demand. It also
stated that it was aware of the possible impact of the decline in the
equity markets on the economy. At least it admitted as much after
Broaddus made his usual ass of himself last month when he said the economy
showed no discernable signs of slowing.
*
The acknowledgement of these factors, however, was not enough to make
investors feel good about what the Fed is going to do in the future. They
are already pulverizing stocks over the future, and the Fed is giving
little measurable hope of helping to rectify that situation. By
maintaining an inflation bias the reasoning is that these rogues will
continue to kick the market in the stomach whenever it shows the
inclination to get up off of the mat. Too much employment is basically
what they said today. For goodness sakes, we heard that back when the
economy was at least giving the appearance of trying to keep on expanding.
We are beyond that point now boys. Jobless claims jumped 44,000 last
week, WELL above the level where the market is considered to be tight.
Moreover, the jobs that are keeping unemployment at 3.9% are not the
quality of jobs that were being created just nine months ago. Those jobs
are going to be the first to go when things get rougher. Indeed, the
jobless claims spike we saw last week indicates that these jobs are
already being wound down even as we head into the seasonal employment peak
of the year in the next month. Markets are pretty shrewd judges of where
things are heading (after initial overreaction), and they have been
telling us that the economy is heading down faster than we are being told,
and that the Fed needs to get off the stump and start taking some positive
action to run the economy up as opposed to running it down. Jobs mean a
lot to workers. We try very hard to get enough jobs for those who can
work. To set a goal of reducing jobs and throwing people out of work is
incredible, especially when the motivation is preventing some evil that
continues to lurk only in the shadows.
*
THE MARKETS
*
Up, down, back up a bit. Not a great move, but the indexes did recover
after the Fed dumped on the market. Not great volume, and stocks are
approaching resistance levels. Without rising volume, it is harder for
stocks to clear resistance. We will be watching closely to see if they
stall at those points and give us yet another turn at plays to the
downside.
*
Overall market stats:
*
VIX: 28.77; -1.47. Volatility fell on today's gains. It jumped after
the Fed's pronouncement, but that was a mild rise. As we have said
before, the VIX has hit reversal levels, but there are other factors
outweighing this indicator at this time.
*
Put/Call ratio: 0.62; -0.06. Put buyers continued to decline with the
rally. With such a small move off of Monday's low, put buyers are losing
pretty rapidly from their ranks. Again, the indicator never broached that
1.0 level on the close that is indicative of a potential reversal.
*
As previously noted, given the other factors hanging over the market, we
have to keep these secondary indicators in that category. As we noted
last night, they were giving us signs of a relief rally, and that started
today. Again, what happens from here depends upon other factors such as
the economy and earnings.
*
NASDAQ: The techs made more headway, but could not recover to their highs
on the session after the Fed announcement. Volume declined even further
on today's gain, another sign that this rally is not picking up steam as
it moves on. We have to be ready for it to turn back down.
*
Stats: Up 27.22 points (+0.9%) to close at 3165.49.
Volume: 1.707 billion shares (-2.8%), again below average volume. Up
volume led 956 million to 709 million shares to the downside. The up/down
ratio shrank considerably, another sign that the rally is showing some
wear after just a short move up. Again, volume does not show that the
institutions are stepping in to buy heavily.
A/D and Hi/Lo: Advancing issues slipped back below declining issues, 1.12
to 1. New highs rose to 55 (+19) versus 154 new lows (+27). Again, other
signs of a weakening move.
*
The Chart: http://www.investmenthouse.com/ch/nasdaq.html
*
Today's move was not stronger than Tuesday. It did not bring in more big
buyers. On its high it tapped the April low (3232.94) and pulled back.
That may act as resistance for this move. It is not strong resistance or
support, but it could be enough to stop this move. We need to be ready
for that.
*
Dow/NYSE: The Dow was raging ahead today, up 118.31 points on its high
(10,799.37). The Fed spoke and the index dropped 163 points to the
session low (10,635.94). It rebounded from that level 71 points to the
close. Again, a recovery, but on low volume.
*
Stats: 26.54 points (0.2%) to close at 10,707.60.
Volume: NYSE volume was down once again, falling to 1.072 billion shares
(-4.2%), and once again below average. Up volume outpaced down volume 604
million to 428 million shares, but as with the Nasdaq, the margin
narrowed.
A/D and Hi/Lo: Advancing issues on the NYSE led decliners 1.39 to 1. New
highs rose to 74 (+17) versus 62 new lows (+24).
*
The Chart: http://www.investmenthouse.com/ch/djia.html
*
On its high the Dow tapped at 10,800, a level just below the top of the
September consolidation level that ranges from 10,800 to 10,900. It
retreated sharply from that level, hanging on to close above the 50 and
200 day moving averages (10,686.35 and 10,689.40, respectively). Again
volume dropped on a move that could not hold its high. It does not look
strong, but anything can happen in this market. The Dow overall still
looks decent, but there is a lot of resistance right here where it has to
cross over to continue to move up. It needs more strength to clear this
area.
*
S&P 500: The big caps made the best recovery today after the Fed's
ann
11/15/00 Investment House Daily
* * * *
Investment House Daily Subscribers:
*
TONIGHT:
- The rally continued until the Fed spoke. The market recovered a bit,
but it lost its luster.
- The rally does not have a lot of steam. Watch those resistance points.
- CPI out tomorrow.
- Subscriber Questions
- Team Trades
*
The indexes were performing quite well, overcoming some selling in the
first half hour to mount a solid move up toward the 1:15 p.m. CT FOMC
announcement. The Nasdaq was up 70 points and looking decent. Volume was
light, however, again telling us that this rally was weak and that any bad
news could derail it. You always hope that this time it won't happen, but
with this volume and investor psychology, that is a pretty thin hope.
*
Fed holds pat.
*
Investors were looking for a bone from the Fed in the form of a shift of
the bias to neutral. The Fed decided to keep its foot firmly on the
market's throat and kept its hawkish view. It based this on the available
worker pool being perceived as still too tight as well as oil prices
perhaps keeping the embers of inflation glowing. As we noted last night,
these points are really non-issues at this point. The Fed was just using
the focus on the election to run its strategy a bit further. This was not
leadership, but a ducking of the issues for another month. Of course, if
we have to look to the FOMC for leadership, we are in trouble.
*
It was not all bad news. Investors were looking for more up front from
the Fed. What they got were some more hints that the Fed is softening its
approach. The Fed acknowledged that the continued slowdown in the
economy, most notably softening business and household demand. It also
stated that it was aware of the possible impact of the decline in the
equity markets on the economy. At least it admitted as much after
Broaddus made his usual ass of himself last month when he said the economy
showed no discernable signs of slowing.
*
The acknowledgement of these factors, however, was not enough to make
investors feel good about what the Fed is going to do in the future. They
are already pulverizing stocks over the future, and the Fed is giving
little measurable hope of helping to rectify that situation. By
maintaining an inflation bias the reasoning is that these rogues will
continue to kick the market in the stomach whenever it shows the
inclination to get up off of the mat. Too much employment is basically
what they said today. For goodness sakes, we heard that back when the
economy was at least giving the appearance of trying to keep on expanding.
We are beyond that point now boys. Jobless claims jumped 44,000 last
week, WELL above the level where the market is considered to be tight.
Moreover, the jobs that are keeping unemployment at 3.9% are not the
quality of jobs that were being created just nine months ago. Those jobs
are going to be the first to go when things get rougher. Indeed, the
jobless claims spike we saw last week indicates that these jobs are
already being wound down even as we head into the seasonal employment peak
of the year in the next month. Markets are pretty shrewd judges of where
things are heading (after initial overreaction), and they have been
telling us that the economy is heading down faster than we are being told,
and that the Fed needs to get off the stump and start taking some positive
action to run the economy up as opposed to running it down. Jobs mean a
lot to workers. We try very hard to get enough jobs for those who can
work. To set a goal of reducing jobs and throwing people out of work is
incredible, especially when the motivation is preventing some evil that
continues to lurk only in the shadows.
*
THE MARKETS
*
Up, down, back up a bit. Not a great move, but the indexes did recover
after the Fed dumped on the market. Not great volume, and stocks are
approaching resistance levels. Without rising volume, it is harder for
stocks to clear resistance. We will be watching closely to see if they
stall at those points and give us yet another turn at plays to the
downside.
*
Overall market stats:
*
VIX: 28.77; -1.47. Volatility fell on today's gains. It jumped after
the Fed's pronouncement, but that was a mild rise. As we have said
before, the VIX has hit reversal levels, but there are other factors
outweighing this indicator at this time.
*
Put/Call ratio: 0.62; -0.06. Put buyers continued to decline with the
rally. With such a small move off of Monday's low, put buyers are losing
pretty rapidly from their ranks. Again, the indicator never broached that
1.0 level on the close that is indicative of a potential reversal.
*
As previously noted, given the other factors hanging over the market, we
have to keep these secondary indicators in that category. As we noted
last night, they were giving us signs of a relief rally, and that started
today. Again, what happens from here depends upon other factors such as
the economy and earnings.
*
NASDAQ: The techs made more headway, but could not recover to their highs
on the session after the Fed announcement. Volume declined even further
on today's gain, another sign that this rally is not picking up steam as
it moves on. We have to be ready for it to turn back down.
*
Stats: Up 27.22 points (+0.9%) to close at 3165.49.
Volume: 1.707 billion shares (-2.8%), again below average volume. Up
volume led 956 million to 709 million shares to the downside. The up/down
ratio shrank considerably, another sign that the rally is showing some
wear after just a short move up. Again, volume does not show that the
institutions are stepping in to buy heavily.
A/D and Hi/Lo: Advancing issues slipped back below declining issues, 1.12
to 1. New highs rose to 55 (+19) versus 154 new lows (+27). Again, other
signs of a weakening move.
*
The Chart: http://www.investmenthouse.com/ch/nasdaq.html
*
Today's move was not stronger than Tuesday. It did not bring in more big
buyers. On its high it tapped the April low (3232.94) and pulled back.
That may act as resistance for this move. It is not strong resistance or
support, but it could be enough to stop this move. We need to be ready
for that.
*
Dow/NYSE: The Dow was raging ahead today, up 118.31 points on its high
(10,799.37). The Fed spoke and the index dropped 163 points to the
session low (10,635.94). It rebounded from that level 71 points to the
close. Again, a recovery, but on low volume.
*
Stats: 26.54 points (0.2%) to close at 10,707.60.
Volume: NYSE volume was down once again, falling to 1.072 billion shares
(-4.2%), and once again below average. Up volume outpaced down volume 604
million to 428 million shares, but as with the Nasdaq, the margin
narrowed.
A/D and Hi/Lo: Advancing issues on the NYSE led decliners 1.39 to 1. New
highs rose to 74 (+17) versus 62 new lows (+24).
*
The Chart: http://www.investmenthouse.com/ch/djia.html
*
On its high the Dow tapped at 10,800, a level just below the top of the
September consolidation level that ranges from 10,800 to 10,900. It
retreated sharply from that level, hanging on to close above the 50 and
200 day moving averages (10,686.35 and 10,689.40, respectively). Again
volume dropped on a move that could not hold its high. It does not look
strong, but anything can happen in this market. The Dow overall still
looks decent, but there is a lot of resistance right here where it has to
cross over to continue to move up. It needs more strength to clear this
area.
*
S&P 500: The big caps made the best recovery today after the Fed's
ann