Weekly Analysis

[Office rat]

Review of the US stock market by July, 3

When major indexes experience a strong decline, it causes serious concerns about the market prospectives.

But when this decline happens in a low volume with slight losses among leading growth stocks, it tells about the possibility of a false alert.

Stocks sharply rebounded on Thursday, but the volume was typically low for a session before a long weekend.

NYSE index was leading with its 3% decline; S&P 500 sank below for 2.9%; NASDAQ lost 2.7% and Dow – 2.6%.

The volume was below NYSE for 25% even after the exchange decided to prolong its trading for 15 minutes. NYSE referred to a poor order execution. NASDAQ volume decreased slightly.

On Thursday IBD 100 experienced a decline as of 2.9 %. The week's index of growth stocks lost 2.3% - similarly to week's loss of NASDAQ.

The week closed with the 2.2% decline of NYSE index; S&P 500 lost 2.5% and Dow lost 1.9%.

Negative news established the background in the beginning of the day before the opening of the market. Labor Department with the reference to payroll journal reported about occupation decline as of 467 000, which strongly exceeds the forecast. This report supposes tough problems with consumer expenditures.

Labor report caused movement to protective assets. US dollar consolidated. Gold, which often moves against USD, declined. The value of August gold futures fell for 10,30$, or 1.1 %, up to 931$ per ounce.

Simultaneously, oil price went down approximately for 4% within a day.

Oil, car manufacturing, mechanic engineering and retails stocks declined the most. Data about work positions created a steadily negative mood, even after a surprisingly strong report of factory contracts.
In May factory contracts increased for 1.2% and easily overrun analytics' forecasts. It was the most serious increase in the year and third growth for four months.

But the market neglected this news.

Though leading growth stocks performed steadily.

Green Mountain Coffee Roasters (GMCR) lost 1.61% and got down to 58.45. Other factors reduced a negative effect: the volume was lower than average for 17%; the share stayed above its day's moving average value.

One of the share worthing monitoring is probably Chinese American Dairy (ADY). Though on Thursday it decreased for 1.8% in the volume under average, it builds the main profile of a high, outlined flag – pattern which sometimes causes enhanced increase. Potential entrance point is 44.10.

[Office rat]

The review of the US market by July, 10


If the rule is true that the market clams down before reversal starts, then, Friday's behavior of stocks gives us a hope for a growth.

Major indexes closed in a combined way. The volume fell down and was languid for two major exchanges on Thursday. Trading on NASDAQ was even less dynamic than it was during a preholiday session on July 2.

Leading growth stocks did not move up or down notably.

In general price movement was very slight on the market.

On Friday NASDAQ grew for 0.2 %. Dow and S&P 500 each added 0.4 % whereas NYSE declined for 0.7 %.

IBD 100 added 0.4 %. According to the results of the first July week, the index of growth stocks fell down for 2.4 % and thus it followed broad indexes.

All major indexes stayed lower than its 50-days' average value. S&P 500 and NYSE are still very close to their 200 days' average value. Dow got lower than its 200 days' average value whereas NASDAQ was definitely higher.

NASDAQ is still a leader among indexes in 2009 year; its growth amounts to 11 % for the year. Technologies contributed to its leadership position. It is proved by the fact that Philadelphia semiconductor index grew for 22% this year.

On Friday the value of technology-containing stocks were pushed by Goldman Sachs' forecast. Reuters reported that David C. Bailey from Goldman Sachs raised the evaluation of the US computer manufacturers' segment by changing “neutral” estimation into “attractive”.

In the “note for Client” Bailey emphasized that hardware segment which is depressed now will be No 1 for investments when economy recovers.

He raised the estimation of Dell (DELL) and Seagate Technology (STX) from “neutral” to “buy”.

Due to the news, Dell (DELL) slowly grew for 0.07 up to 13.22 in a double volume. Seagate added 0.47 up to 10 with the volume grow as of 37%.

These two shares have EPS rank lower than 35 which means that the profit of around two of every three shares grow with higher rates.

It was a successful day for many lagging members of the market.

IBD toolmaker was leading among 197 industry groups.

The stocks which are fuel oil price-sensitive - air companies and carriers - were successful as well.

Oil prices closed the week below $60, the first time ever for around two months.

On Friday Chevron (CVX) warned about its decline in revenue.

The last days of the week the market was calm and upward trend is still under pressure.

Investors are recommended to be as careful as possible until the situation is clear rather than to guess the future movement of the market.
As for now, upward tendency will be renewed or the market will move to correction.

[Office rat]

Stock markets demonstrated the third week of growth in succession, but the growth is getting down

Whereas economic news was better than it was expected on Friday, the market did not make profit upon this news.

The stocks stayed within the narrow trading range and closed the session in a combined way.

NYSE was leading for the second day in succession and added 0.6 %. Dow and S&P 500 slightly changed for 0.2 % and 0.1 % respectively. Nasdaq lost 0.3 %.

NYSE volume grew whereas Nasdaq volume lost.

A dull trading allowed NASDAQ to avoid a “distribution day”.

On Friday IBD 100 declined for 0.1 %. According to the week results, the index of growth stocks with the highest ranking fell down for 0.4 % and was behind the major indexes which grew a little.
For the last time upward trend continued on a weak basis because economic data indicated decline but weaker than “it was expected”.
Until a certain moment it seemed to be enough.
Though on Friday NASDAQ bulls demanded something more significant: what about signs of authentic growth?

The answer of economy was languid enough.

Decline of GDP in the second quarter was “less than expected”.

Chicago Purchasing Manager’s Index demonstrated the highest level starting from September but this message was only regarded as warning call given prior to publishing ISM index. On Monday ISM index will be published.

According to GDP and government data, consumer expenses declined below the expectations.

Market analysts believe that a languid recovering is more probable than an acute recovering of V-type.

Among industry groups the stocks of regional auto dealers demonstrated a serious increase on Friday whereas the stocks of gold-mining sector consolidated growth.

The stocks of RV (auto company) traditionally used to be early drivers prior to recovering of the economy but a tough pressure of credit and petrol prices conduce to a negative environment.
Drew Industries (DW), the manufacturer of RV components, added 24 % in a triple volume on Friday. They also reported about the profit of 12 cents per share against a supposed loss in 6 cents. The sales were also above the forecast.

Thor Industries (THO) — the manufacturer of buses and auto parts – added 11 % in the volume above average more than in four times.

Both shares have weak EPS ratings but the group can perform as economic barometer and demonstrate signs of recovering.

On the bottom side, medical shares were negative leaders among main losers of the day.

Several shares of IBD 100 were winning reports back.

HMS Holdings (HMSY) declined for 6% notwithstanding its report on Q2 level.

Two shares, which reported on late Thursday, declined within Friday session. Vistaprint (VPRT) lost 4 % and Synaptics (SYNA) fell down for 33 %.

McAfee (MFE) software manufacturer won the most part of Thursday loss and its growth amounted almost to 5%.
Summing up: Friday, 13 of July, was an extremely hard day for the market and analysis – closing of month, week and crucial data for the USA GDP for the second quarter – all this enhanced market uncertainty sharply.
It is important that the last 5 months (starting from March 9) – we have a continuous growth of stock market. June correction was not successful because 10% is not the figure. Though the basis is still very weak - but it is still declining.
A deep correction is still vital, current rates of purchasing are not attractive.

[Office rat]

The market demonstrated a strong growth of volume over the week closure. Up-trend of the market is seen again
On Friday the market canceled transfer to correction and returned to up-trend state; broad indices showed new 10-months' maximum values.

S&P 500 and NYSE were leaders of growth and each added 1.9%. Dow index followed them with the growth 1.7% and NASDAQ with 1.6%.

The index of the best growth stocks, IBD 100, grew for 1.7% on Friday and 1.2% according to the results of the week.

The volume of major indices sharply increased because of mass expiry of options enhanced trading volume.

Up-ward trend has renewed its movement. According to our system of analysis, buying of growth stocks is quite acceptable, when they leave correct basis or other key points (for example, after bouncing from 10weeks' average value)
Still there are the reasons to be careful. As we told the last week, last bull markets which directly followed large bear markets, resulted in large deep corrections lasting longer than the last current up-ward tendency.

S&P 500 still has five distribution days last weeks though Friday took one day away for NYSE.
Stocks started their increase at once on Friday's opening in the list of all four major indexes.
Positive news about real estate market pushed the share.

National Association of real estate agents informed that after market sales of houses moved up for 7.2% in July. It was the fourth growth in succession. News was above estimations which went around 2% growth.

Stocks of house-building industry sharply increased and the growth amounted to 5% approximately. While shares with weak fundamental properties such as Toll Bros. (TOL) and KB Home (KBH) each added around 3%; the stocks made it in the volume under average.

The best performance was demonstrated by the member of IBD 100 list – Brazil company Gafisa(GFA). It made a beeline in volume for 10%, twice as higher as average. The whole rating of this company is 99 – the best possible rating.

Though stocks are far from the point of correct entrance.

The market was also supported by speech of Federal Reserve Chairman. According to him, economy's return to growth within the nearest time is quite probable.

Oil prices went up to highs of 2009 year.

Expectations and forecast

Despite an extensive growth and optimism of Friday, general market situation is evaluated in terms of instability and high volatility. A considerable 2days' decline followed by a strong growth – all this often points its vicinity to the market's peak and as a result, to reversal.

I still expect a durable deep correction. Next week trace how market behaves as strong news is published – in particular, books of durable goods and consumer trust.

[Office rat]

October 17, 2009. Energy Market Weekly Review

On Friday, oil prices reached their maximum level, of the last 12 months, on Friday the price of the barrel of oil rose by $0.95 to the level of $78.53 per barrel on the New York Mercantile Exchange, so oil prices over the past eight trading days have increased by 12,9%, thus for the past week by 9,4%.

If we consider the fundamental factors carefully, we can see that they show that the energy market instruments are gaining strength. US dollar falls rapidly against the basic currencies basket, investors seek refuge from possible and further decline of the US dollar purchasing power and find it, in particular, in oil.

Investors express extremely high optimism due to emerging of macro-economic data. On Friday, the Federal Reserve reported an increase in industrial production in September by 0.7%, the rate exceeded the experts consensus forecast.

Industrial production growth has given confidence to traders, because this field of business consumes about 65% of raw materials in the country. The Ministry of Energy has given information on commercial stocks of crude oil and petroleum products on Thursday, they can be characterized as fairly positive. For the week that ended on October the 9th, commercial crude oil stocks increased by 0.4 million barrels, whereas petrol stocks have decreased by 5.2 million barrels; the Ministry data showed the most significant decrease in petrol stocks over a year. Petroleum processing sector's capacity declined from 85% to 80.9%, due to scheduled maintenance of part of US oil refineries. Perhaps the declining trend in petroleum and distillate will persist for several weeks, which would also support price levels.

US Banks oil traders show rather aggressive interest in oil over the last months of this year. In their opinion the price of a barrel could go up to $ 95 by the end of 2009, if the US government, Europe and Asia continue to stimulate national economies. Yet OPEC is not going to increase production volumes of raw materials after significant cuts, that will also support prices. Nearest OPEC cartel meeting is scheduled for December 22 in Angola, it is clear that by this date, we can see a few more bursts of buyers activity.

Oil found support level around $ 75 and due to the unusually low temperature in October settled in the north-eastern part of the United States, oil traders expect increased demand for heating oil by US consumers as well as speculators. DTN-Meteorlogix predicts storms coming in the north of the US in the beginning of a new week, that would support the speculators. In the short-term period Brent crude oil will stay below $76.2 with a possible rebound to $72.0 and further to $79.98.


Dmitry Stepanov, GK Broco analyst

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[brownsfan019]

This 'weekly' analysis isn't quite weekly.

[Office rat]

you are right, but we will fix that so it will be weekly

[Office rat]

EUR – growing potential waning

In the first three weeks of the year the single currency lost 1.2% against USD. EUR/USD decline is a consequence of US market weakness, which is a leading indicator of the economic recovery pace. World markets remained pessimistic in the third week of the current year. Asian markets are falling for over ten days, oil and metal prices go down. Company reports of many firms and banks for the fourth quarter of 2009 does not inspire market participants either.
Results and Current Situation
Technical picture of EUR trading in the last quarter of 2009 showed that market participants were not ready to buy EUR above1.47-1.48 area. As a result, the fourth quarter trend signaled January EUR/USD decline towards 1.4150-1.4250 area. Following the results of the last year we see, that buying of currencies dependant on raw materials export has brought AUD/USD and NZD/USD to the levels, above which growth could not be objectively justified . Last week AUD/USD could not break through the 0.92-0.93 area, which would open way towards 0.95 level, the market sank till 0.90 instead. NZD/USD has not passed 0.72-0.73 area and finished the week below 0.71 near 0.70.
In the end of the year GBP/USD had support of GBP buying for EUR, which was reflected in the EUR/GBP trend Nevertheless, last week EUR/GBP could not get hold above 1.62-1.63, this would propel the market toward the 1.65. The market closed at 1.61 USD/CAD has not fallen relative of the1.0300 level, which would signal further way down to 1.0200 and 1.0150. The market has grown above 1.0550 on oil market decline.
Still the tendency of major currencies decline had more to do with JPY appreciation, rather than with USD growth. The 1 quarter of the year is a traditional repatriation period of for the JPY. JPY has growth against all currencies in the market. For the week USD/JPY has fallen from 0.91 below 0.90, EUR/JPY sank from 130.50 till 127.00, and GBP/JPY from 147.60 below 145.00. AUD/JPY, NZD/JPY, and CAD/JPY also lowered.

Expectations, Prognosis

In the January 25-29 period currency market will remain pressured through JPY strengthening and doubts concerning EUR growth. Corporate reports will continue to play the role of an expectations factor on the market. In the beginning of the new trading week we can see some potential for EUR/USD recovery, still in second half of the week further decline is most probable.

Major currency pairs range:

EUR/USD – 1.3850-1.4188 potential decline
GBP/USD – 1.5888-1.6231 potential decline
USD/CHF – 1.0331-1.0688 potential decline
USD/JPY – 0.8831-0.9188 potential decline
AUD/USD – 0.8831-0.9131 potential decline
USD/CAD – 1.0450-1.0731 potential decline
Brent – 69.88-73.88, potential decline

Broco Group chief analyst Vladislav Gurov

[brownsfan019]

Originally Posted by Office rat you are right, but we will fix that so it will be weekly

So when you said on 10/20 that you would fix that, what exactly did you mean?

Maybe quarterly is what you meant to say and not weekly?

I really don't see the point of saying to expect this weekly and then you just randomly (and I stress randomly) appear with some text.

[Office rat]

EUR below 2008 closing level

In January currency market was focused on financial problems of European countries and their budget deficits on the first place. Late last week we have learnt that Standard & Poor's does not count British banks among the most low risks banking systems / Weakness of major American stock indexes and oil prices below $75 a barrel boosted USD growth by the end of the third week of January . US fourth quarter GDP data also contributed to dollar's advance. GDP has growth 5,7% against the third quarter of 2009 year on year, US Bureau of Economic Analysis, Department of Commerce reported. This numbers turned out much better, than analysts expected.

Results and Current Situation

In 2009 the major trend was appreciation of currencies dependant of raw materials export (AUD and NZD) and USD decline. This tendency has created a misleading picture of EUR strength. In fact AUD and NZD were also often bought for EUR. Absence of objective basis for EUR/USD growth in November resulted in market going below 1.50. Technical trend of the last quarter of 2009 - lowering from 1.4350 - sent EUR/USD towards the 2008 closing - 1.40. It was only owing to EUR/GBP cross rate trade against EUR, that GBP/USD held near the 1.6150 -1.6350 area in January . EUR/GBP decline dynamics did not reflect the USD growth, but was a EUR depreciation factor, this allowed GBP/USD to stay at 1.60 by the end of January trade.
Currencies dependant on raw materials export - AUD and NZD - declined from key levels. AUD closed below 0.90 at 0. 8835, аnd NZD finished the month at 0.70. Closing above 0.88 and 0.70 came as a result of EUR/AUD EUR/NZD cross rate lowering and gold sinking below 1100 an ounce. USD/CAD grew to 1.0705 on oil decline.
January EUR/USD closing shows, that for the period from the beginning of 2009 USD added 0,78%, from 1.3960 to 1.3850. USD appreciation is not yet big enough for EUR/USD to fall substantially in the first February week.

Expectations, Prognosis

In the February 1-5 period currency market will have a hard time choosing further direction. Market participant might wish to take profit on some long USD positions in the beginning of the month. Fourth quarter financial statements of banks and companies will become a major factor influencing trading decisions. Traders will pay special attention to JPY movements. In January USD/JPY kept moving downward and closed in 0.90 filter between 0.9012 and 0.9031.

Major currency pairs range:

EUR/USD – 1.3788-1.4095, attempts to grow, potential decline
GBP/USD – 1.3788-1.4095, attempts to grow, potential decline
USD/CHF – 1.0431-1.0712, attempts to decline, potential growth
USD/JPY – 0.8731-0.9188 attempts to grow, potential decline
AUD/USD – 8750-9088 attempts to grow, potential decline
USD/CAD – 1.0431-1.0712, attempts to decline, potential growth
Brent – 68.88-73.50 consolidation