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(Will be updated for Monday)
Friday was a traditional, slow, holiday trading day.
Nasdaq started with a little negative sentiment, but recovered nicely.
Nasdaq volume was light (704 million shares), even for a half-day. Breadth was moderately positive, with 1.42 gainers for each loser. This was just a slow holiday session.
According to Thomson Financial I-Watch, institutional investors were net sellers of Oracle (ORCL), Microsoft (MSFT), EMC (EMC), and ADC Telecom (ADCT), but net buyers of Sun (SUNW), Intel (INTC), Applied Materials (AMAT), AMD (AMD), and Cisco (CSCO). Volume was too low for institutional trading to have any real significance.
There were no economic reports on Friday.
NOTICE: I am still using the “old” VIX even though CBOE began offering the “new” VIX on September 22nd. The old VIX is based on options for the S&P 100 index whereas the new VIX is based on options for the more popular S&P 500 index. I’m still investigating how to switch over to the new VIX and how that relates to historical data.
The old CBOE Market Volatility Index (VIX), which measures the level of anxiety in the market, rose by 5.03% on Friday to 16.71, which is moderately below the midpoint of the low anxiety (moderate complacency) zone (15 to 20). There was nothing significant here due to the slow holiday trading. The bears will continue to beat their drums about the market being filled with the kind of excessive complacency that frequently presages a dramatic market decline. I wouldn’t bet the farm on that outcome, but it is a yellow flag.
The new VIX rose by 0.55% on Friday to 16.32. New VIX reverted to closing below old VIX.
The Nasdaq-100 VIX (VXN) was unchanged on Friday at 25.63.
The Nasdaq-100 After Hours Indicator had a positive tone for the Friday evening session, closing up 0.29 points. People remain clueless about what direction the market will head next.
[11/29/03] The fed funds futures market suggests that the Fed will leave the fed funds target rate unchanged for the rest of the year, but possibly raise the fed funds target rate by a quarter-point in April or May. Fed funds futures are at best accurate no more than six weeks out, so those longer-term moves are purely speculative, at best.
The dollar rose moderately against the yen and fell moderately sharply against the euro. Trading was a bit exaggerated due to the thin holiday trading. The dollar is quite sound and no true investor should lose any sleep worrying about whether the dollar is ‘weak’ or ‘strong’ on any given day, week, month, quarter, or year.
NYMEX was closed on Friday for the holiday.
NYMEX was closed on Friday for the holiday.
[7/29/03] The relative calm continues. Investors should always be prepared to buy any dip caused by panicky reactions by traders to any incidents.
[7/29/03] The eerie calm continues. There may continue to be attacks or alleged attacks abroad, but the U.S. “homeland” may be relatively immune, at least for now. Investors should always be prepared to buy any dip caused by panicky reactions by traders to any incidents or rumors of incidents.
[7/29/03] As messy as the mopping-up phase of the war continues to be, great progress is indeed being made and there is little need for true investors to fret over the negative news that so captivates the media. Over time, the economic impact of the war will be a large net positive, even if there is some short-term negative impact.
There was no CFTC Commitments of Traders report on Friday due to the holiday.
[6/25/03] I have suspended my dollar-cost averaging investment plan since my exposure to the market is now about where I want it to be.
It’s the start of a new month on Monday. Sometimes trading can be a bit exaggerated during the first couple of days in the new month.
My forecast for Monday is that Nasdaq will close in the range -40 to +50. Nasdaq came in at +7 on Friday, modestly above the midpoint of my range of -40 to +50.
The confirmed bull market for Nasdaq that began on October 9, 2002 (and was confirmed on June 16, 2003) has run for 286 days (1 year and 36 days). The market now has a longer-term upwards bias despite near-term volatility. The path of the market through the end of the year is of course uncertain, but Nasdaq will most likely be moderately higher at the end of December than where it was at the beginning of November. Nasdaq should break above the 2,000 level within the next few weeks, so the question is whether we hit 2,100, 2,250, or even 2,500 by the end of the year. The important thing is that we continue to see inflows into equity mutual funds while the economy, revenues, and earnings continue to incrementally improve.
Nasdaq is 14 days off its 52-week intra-day high of 1,992.27 on November 7.
The confirmed up-leg for Nasdaq that began with the intraday low of 1,253.22 on March 12 (and was confirmed Monday, March 17) has run for 179 days. Nasdaq is 15 days off its closing peak of 1,976.37 on November 6 for the up-leg and for the overall post-October bull market. That closing peak is also the current 52-week closing high.
The confirmed minor up-leg of the Nasdaq advance that started on Friday, August 8 with an intra-day low of 1,640.88 is now 78 days old and 15 days off its closing peak. This is a minor leg nested within the larger leg that started on March 12 which is itself nested in the larger advance that started on October 9, 2002.
The confirmed minor up-leg of the Nasdaq advance that started on Friday, October 24 with an intra-day low of 1,841.62 is now 25 days old and 15 days off its closing peak. This is a minor leg nested within the larger leg that started on August 8 which is itself nested in the larger advance that started on March 12. Multiple nested up-legs are a sign of deep strength in the market. This leg is clearly ‘broken’, but not completely dead. It won’t be ‘recovered’ until it closes above the previous peak for at least three days and sets a new closing peak at least 1% above the old peak.
The correction off the intra-day high of 1,992.27 on November 7 is now 14 days old. It reached an intra-day low of 1,878.07 on Friday, November 21, a decline of 114 points or 5.73%. It may be over, but we won’t know for sure until we either confirm a new up-leg or run up above the previous intra-day high.
We have a potential new up-leg of the Nasdaq advance that started on Friday, November 21 with an intra-day low of 1,878.07 and a bounce of 16 points off that low into the close. Monday was Day 2 with a fairly strong rally (53 points, but only moderate volume), but it doesn’t matter what happens on Days 2 and 3 other than to not set a new intra-day low. Tuesday was Day 3 with a modest decline, but that’s okay since a new intra-day low was not set. Wednesday was Day 4, but the point gain was too meager and volume too light to constitute confirmation. Friday was Day 5, but the point gain was too modest and volume too light to be a confirmation. Monday is Day 6. On Days 4 through 10 we look for a gain of at least 1% on heavy volume higher than the previous day as confirmation of the up-leg.
The fact that Nasdaq is still 32 points off its recent 52-week intra-day high is a moderate yellow flag and suggests that Nasdaq still hasn’t broken out of its near-term ‘consolidation’ phase. That does not mean that a full-blown correction is necessarily likely. We may still be in a short-term trading range. There may have been as much as 125 points of ‘trading froth’ at the peak, so we could see up to another 93 points of decline before a true correction might be indicated. Note that we’re still 119 points above the starting level of the most recent minor up-leg that started on October 24. The big wildcard remains mutual fund money flows – which were inflows of $2.1 billion in the most recent week and $3.5 billion in each of the two weeks before that.
[11/5/03] The latest economic data continues to support the thesis that the U.S. economy is solidly into a gradual, zigzag, underappreciated, stealth recovery. The Q3 GDP report certainly convinced a lot of people that the economy is stronger than previously thought, but the cynics continue to promote the idea that the recent strength was almost solely due to short-term fiscal stimulus. I disagree. I believe that the economy would have been reasonably strong without the stimulus (ala Q2) and that we will see incremental improvement (compared to Q2) over the next four quarters. Some people will be shocked or raise alarm when Q4 comes in ‘weaker’ than the ‘artificially sweetened’ Q3, but there is no reason for alarm. That’s part of the zigzag process. The two key factors driving the pace of the recovery will continue to be the ongoing process of shutting down or restructuring ‘problem’ businesses and the pace of the formation of new businesses which will create new jobs.
[9/1/03] Our Tech Stock ‘Safe’ Signal is still stuck at 0.00 (no safety) since none of the big tech companies are even hinting that they are seeing any significant improvement in demand. There does seem to be some sense of stabilization and a modest hint of improvement, but no clear and decisive indication of a dependable ramp up in revenues and earnings.
[5/25/02] DISCLAIMER: I cannot and do not offer any recommendations of stocks to buy or sell. I may on occasion discuss companies that I am considering or myself have bought or sold, but the reader must do their own research before making their own purchase or sale decision. It is never a good idea to buy a stock just because someone else tells you to or even merely mentions a company in a favorable light.
Jack Krupansky -- The Unrepentant Optimist (Click here for Jack's Bio)
Updated: November 29, 2003 12:26:13 AM -0500
Copyright © 2003 John W. Krupansky d/b/a Base Technology