Semiconductor Index-Earnings-Market Overview

This is a chart comparing the NDX(Nasdaq 100 Index) and the SOX(Philadelphia Semiconductor Index). Over the past couple years the SOX has been pretty much range bound and not in any way a leading sector for the Nasdaq. If the overall market is going to continue this upward march, this sector is going to have to start participating. This week's earnings in some semiconductor stocks could give some clarity to where things are in the cycle and if in the future these stocks will have any wind behind them.

Altera Corp. ALTR 20.17 4.29%
Applied Materials, Inc. AMAT 19.08 4.06%
Advanced Micro Devices AMD 13.57 2.88%
Broadcom Corporation BRCM 32.74 6.96%
Infineon Technologies AG IFX 15.74 3.35%
Intel Corp. INTC 20.46 4.35%
KLA-Tencor Corp. KLAC 54.72 11.63%
Linear Technology Corp. LLTC 31.65 6.73%
Marvell Technology Group MRVL 16.83 3.58%
Micron Technology, Inc. MU 11.26 2.39%
Maxim Integrated Products, Inc MXIM 28.99 6.16%
National Semiconductor Corp. NSM 24.46 5.20%
Novellus Systems, Inc. NVLS 33.00 7.01%
SanDisk Corporation SNDK 43.35 9.21%
STMicroelectronics NV STM 20.37 4.33%
Teradyne, Inc. TER 16.35 3.48%
Taiwan Semiconductor TSM 10.70 2.27%
Texas Instruments, Inc. TXN 30.83 6.55%
Xilinx, Inc. XLNX 26.19 5.57%

This list shows the components of the SOX and their weightings. This week is packed with earnings and there are a few that will effect this index. Below is a partial list.

Tuesday
INTC,IBM,LLTC

Wednesday
ASML,ISIL,MOT,NVLS,TER

Thurday
AMD,CREE,FCS,SIRF,UTEK



This chart shows the range the SMH, the Holders Semiconductors EFT, has been locked in. Any break above the $36 area with volume could carry a lot of the technology market along with it. Inside this index, there have been some nice preforming stocks, but also some real laggards. For anything substantive to take place, they all need to participate and row the boat in the same direction.



Novellus has been moving steadily upwards and reports earnings on Wednesday after the close. It needs to hold the lower trend line in this channel.





Broadcom is a stock that when in rally mode can definitely provide some carry over momentum to other chip stocks.



Analog Devices has a great pattern. It has held its gap and is waiting for the next move higher. A few good earnings reports from some other chip stocks could be enough to start the second climb.

------------------------------------------------

Another area to watch this week the bank sector.

Tuesday
CMA-Comerica
KEY-Key Bank
MTB-M&T Bank
STI-Suntrust
WM-Washington Mutual
WFC-Wells Fargo
MEL-Mellon
STT-State Street
NTRS-Northern Trust

Wednesday
CBH-Commerce Bank
JPM-JP Morgan
PNC-PNC Financial
BK-Bank of New York

Thursday
AXP-American Express
BAC-Bank of America
BBT-BB&T
COF-Capital One
FITB-Fifth Third
UB-Union Bank

These earnings are important to watch. It is also important to listen to the comments that might relate to mortgages. There will probably not be much of a surprise this quarter, but it should be interesting to hear the conference calls about what these institutions see on the horizon.

Among these banks;STT,BK,MEL,and NTRS are also worth watching. These banks offer a wide range of products and services to institutional investors.

STT-State Street Corporation, through its subsidiaries, provides a range of products and services for institutional investors worldwide. It operates in two divisions, Investment Servicing and Investment Management. The Investment Servicing division provides various services for mutual funds and collective investment funds, corporate and public retirement plans, insurance companies, foundations, endowments, and other investment pools. Its products include custody, product-and-participant-level accounting, daily pricing, and administration; master trust and master custody; recordkeeping; foreign exchange, brokerage, and other trading services; securities finance; deposit and short-term investment facilities; loans and lease financing; investment manager and hedge fund manager operations outsourcing; and performance, risk, and compliance analytics to support institutional investors. Investment Management division offers a range of services for managing financial assets, including investment management and investment research services primarily for institutional investors. Its services include the passive and active U.S. and non-U.S. equity and fixed income strategies, and other related services, such as securities finance. State Street Corporation was founded in 1832 and is headquartered in Boston, Massachusetts.



This is an example of all the things these types of banks are involved in. The level of activity over the past few quarters should bode well for earnings in these banks. Any warning flags talked about during conference calls should be noted. Things should be going well for this sub-group.

State Street


________________________________________________

Railroads

CSX


Union Pacific


------------------------------------------------



The S&P500 had a great day. It is attempting to get back into the up channel that was broken when the 9% China sell off caused things to be re-evaluated. In this chart there is a box showing a pattern from back in 2005-06. This pattern could be forming again. A boost in volume this week would go a long way to restoring faith. Until volume confirms this rally, it is best to choose stocks carefully and not try to trade the market as a whole.



Goldman Sachs
Great barometer for what is going on. Nice volume on a great +8pt day. It is hard to erase this day, it could be followed by a small range day, but should spur more up days ahead.

Earnings Week and Some Things to Watch...Oil Trading Scan Continued

This is the start of earnings season, and for the next two weeks chances are your favorite companies will be announcing earnings. There is a lot to follow and the only thing that can be guaranteed is there will be surprises and disappointments. Below are a few charts of the NYSE Composite, Nasdaq Composite and, the S&P 500 Index.

(Click Charts To Enlarge)







The indexes have recovered pretty well from the 24hour Chinese flu that went around the end of February. The moves have been nice on a percentage basis, but the volume on up days has been less than the volume on down days; this can be troubling. The NYSE has made a new high while the S&P 500 and the Nasdaq Composite are still trying to get there. If the rally is going to continue, a new channel is going to have to be formed above the triangle in the S&P 500. This new channel will have to require an up day with volume greater than what we have seen as of late. If this area turns into a stalling point, it will serve as a throw-over pattern and a quick drop should be in the cards.

A couple other charts to watch to confirm this new channel forming above this triangle are below. The first chart is of the Dow Jones Transportation Index. This chart is forming a nice triangle, and with the support of the Warren Buffett news in taking positions in the railroads, there could be support upon any weakness.



The next area to watch is the bond market and the rate of the US Dollar. Below are two charts that track each. If there is any increase in downside momentum, this will carry over into the stock market. This might be masked during earnings season, but after its over and traders begin to look around at what to focus on next, this will be a factor.





The April 4th post went over a spread trade between two coal companies. There again has been a jump in the spread between Arch Coal(ACI) and Massey Energy(MEE). It might be worth looking at.



With dollar weakness, it is worth following commodities and the companies that deal in oil, metal, or other basic materials. If demand in the United States slows, it does not mean that demand around the globe will slow down. Below is a chart of the XLB which is forming a triangle. Look for volume to confirm a new high price, and follow metal companies in New Zealand and Australia;both currencies are doing pretty well. New Zealand bonds pay 7.5% and their currency is appreciating against the US Dollar;not a bad investment.



In an earlier post, canary in a coal mine, it was mentioned that watching the major brokerage stocks is helpful in gaining some insight into the health the market. Below are charts of Goldman Sachs and Morgan Stanley. On Friday Morgan Stanley opened up nicely, but finished the day on the low. The Goldman Sachs chart has been very quite also. These,along with Lehman Brothers, are worth keeping an eye on this week. They might give clues to what is ahead.





---------------------------------------------

In the previous post from last week, a scan was created to find stocks in the oil sector that performed well. The scan was this:

1.Close > (High+Low+Close)/3
2.Volume >AvgxV20
3.(High+Low+Close)/3 > (High1+Low1+Close1)/3

We ran this scan on our universe of 76 oil companies, and 11 fit the criteria that day. They performed pretty well on Thursday and Friday.

Below is what would happen in we took our list of 76 stocks, and ran this scan every day and bought the ones that met our requirements. In selling these stocks, a simple system was employed.

1.5% risk from our initial buy price.
2.30% target price.

Below are the results:(Click To Enlarge)







This exit strategy is an example of how important money management can be in any system. This system could have used a great custom made indicator or a combination of many widely known indicators to build the better mouse trap. Some of them might have made the system better, but seeing the results of just using a 5% stop loss and a 30% profit target, shows clearly the roll of money management in any system. The results are from only 2 years of data, but if any one wants to see the results over a longer time frame, just click the contact button at the top of the blog and explain what time period you are looking for information on.

More on systems in a future post. Have a great trading week!

Searching Oil Stocks And Scanning For Trading Ideas

Note: All charts and lists can be clicked to enlarge.







This is a partial list of the major stocks in the oil sector. This might be hard to view, so the spreadsheet can be downloaded here. This list is broken down in to basic categories, and it can be organized even further into subgroups, but for this discussion it will suffice. The list has some basic information about the companies as of the market close today. There is endless amounts of fundamental data that can be added for more analysis, but today the focus will stay with scanning this list of stocks for which ones performed well today.

This next list is the same as above, except the data fields are filled with data taken from the trading of the individual companies. It shows the close,moving averages, volume, pivots, changes in volume, and changes between close and pivots.





This list can also be viewed and downloaded here.

This is just an example of all the technical data available. A list can be customized to include just about any indicator, including custom indicators. Once we have the data in an orderly format, we can look through it to see what stands out as something that might be worthy of further investigation. In looking at this list, it might be helpful to scan the information for stocks that closed above their daily pivot today,that had greater than average volume, and whose daily pivot today is greater than the pivot of yesterday.

1.Close > (High+Low+Close)/3
2.Volume >AvgxV20
3.(High+Low+Close)/3 > (High1+Low1+Close1)/3

So in a day in which oil was down, the oil service index was negative, and other energy indexes were negative, there were some positive stocks with some decent looking charts.

The results of this scan produced a list of 11 stocks out of our list of 76.

Baker Hughes Inc.(BHI)
Cimarax Energy Inc.(XEC)
Giant Industries Inc.(GI)
Nabors Industries Inc.(NBR)
Oceaneering International(OII)
Precision Drilling Corp.(PDS)
RPC Inc.(RES)
Suncor Energy(SU)
Tesoro Corp.(TSO)
TGC Industries Inc.(TGE)
Unit Corp(UNT)

Of this list, some of the charts have been moving pretty strong for a while, but a few have just started to poke their heads up with some volume.

Click charts to enlarge.























The next post will deal with creating a simple system to apply to this entire group of oil stocks. If anyone has any thoughts or ideas they want back tested, feel free to use the email button at the top of the blog and share your thoughts.

__________________________



This is an updated chart of the S&P 500. It includes the advance decline moving average in the top pane. A 50% re-tracement of the last part of the rally is 1428.82. That should be a good area to watch if this down move continues. The market has made a good move after that China 9% down day a while back. With earnings season starting in full force next week, it should not be a surprise if the market consolidates or sells off some. The key is if it is an orderly sell off or something triggered by an event.

Federal Reserve Minutes and Oil

Today at 2pm the Federal Reserve will release the minutes from its March meeting. This has been an anticipated release, and it should give some needed information to what other thoughts the Fed had at the last meeting. This information should move the market one way or the other, because lately interest rates and their direction, seem to be the topic of interest. The chart above of the S&P500 shows that the rally of late has been on decreasing volume. This is also confirmed by the moving average of the advance/decline line. The market has had a good move off the lows of a few weeks back, and with earnings ahead, there could be some profit taking.



The chart of the Nasdaq Composite is very similar to the S&P500 except that the volume as of late has been increasing. This doesn't mean that there could not be profit taking, but it could be a sign of rotation into technology. Time will tell, and with a heavy dose of earnings over the next few weeks, volatility is a given.



Juniper Networks has made a decent move out of its previous channel. The volume yesterday was pretty strong. Can this move continue into its earnings release,April 23?



Goldman Sachs is an interesting chart. Is it a cup with handle formation or is it just retracing some of its down move? This stock never sits still for long and its hard to bet against Goldman Sachs. It will not take too much volume to make any shorts cover positions if it starts moving again. Hopefully it can come down to a nice level, and a lot of money can be made on the next run up.

_________________________________________________



Today oil stopped going down after the news last week that the tensions with Iran were lessening with the release of the British soldiers. As oil came down, the oil stocks held pretty strong. This is because only the current month futures contract of oil came down, the forward contracts were bought. These deals with more futures trading, but the bets that oil is going higher are still there, global demand and hurricane season are on the horizon.







Global Santafe, Dril-Quip, and Ensco International are a few charts that are similar to the OIH index. The do look they are going to go higher.

Monday Baker Hughes(BHI) announced that March rig counts worldwide had gone up 2% compared to March a year ago. This might not seem like much, but the international rig count was up over 10% and the US rig count was 2.2%. Canada's rig count dropped. It is worth digging into the global growth of rigs and that will be a topic for the post tomorrow. It will include some sites for research and how to locate all of this information.

Below are a couple charts that have lagged the sector, but had some nice volume
today.





__________________________________

A couple things to watch on the macro picture. The dollar index is getting to a point where it could make a move to test a previous low. This could lead to an increased focus on the exchange rates versus various parts of the world and who it is good for and who it isn't. The direction of interest rates is key to this. If the dollar breaks to a new low with any momentum, it might be hard for the market to shrug off the news.