McHugh's Daily Market Briefing
|Summary of Index Daily Closings for Tuesday April 4, 2006|
|30 Yr Treas
|Summary of McHugh's Proprietary DJIA/S&P 500/NASDAQ Buy/Sell Signals|
of Index Move
|Purchasing Power Indicator||DJIA/S&P||Short||Buy||Feb 16, 2006||DJIA Up 214 Points|
|DJIA 14 Day Stochastic||DJIA||Short||Buy||Apr 4, 2006||New Signal|
|Secondary Trend Indicator||DJIA/S&P||Interm||Neutral||Oct 31, 2005||DJIA Up 764 Points|
|NDX 14 Day Stochastic||NASDAQ 100||Short||Buy||Mar 29, 2006||NDX UP 19 Points|
|NDX Purchase Power Indic||NASDAQ 100||Short||Buy||Mar 14, 2006||NDX Up 42 Points|
|RUT Purchase Power Indic||RUT||Short||Buy||Mar 14, 2006||RUT Up 34 Points|
|HUI 30 Day Stochastic||HUI||Short||Buy||Mar 24, 2006||HUI Up 32 Points|
|HUI Purchasing Power Indic||HUI||Short||Buy||Mar 14, 2006||HUI Up 46 Points|
We now have all of our short-term signals on "buys." Liquidity is lifting all boats higher, including precious metals. Only Bonds and the Dollar are struggling, which would make sense if monetary inflation is the driving force behind nominal valuation rallies. Nevertheless, we can profit handsomely playing call options even if the gains are strictly due to fiat currency expansion. Tonight the Dow Industrials have generated a new "buy" signal in our blue chip key trend-finder indicators. The DJIA 14 day Stochastic Fast measure rose sharply, we might add, to 53.33 from 26.67, and blew past the Slow reading at 34.00. This new "buy" signal confirms the "buy" from February 16th, 2006 in the Purchasing Power Indicator, which rose to a new high of 92.72 Tuesday. What this is telling us is that the forces of supply and demand have favored higher prices since February 16th, and now breadth momentum has turned positive and is rising sharply, what we normally see at the start of rallies. We have no way of knowing how long this blue chip equity rally will last, or how far up it will go. Usually we see at least 200 points after these signals first agree on a new trend.
|SUMMARY DAILY STATISTICS|
|Blue Chips S&P 500/DJIA|
|Mar 28||Down 4 to 395||Up 4 to 395||Down 1 to 90||Down 7 to + 1|
|Mar 29||Up 7 to 402||Down 6 to 389||Up 2 to 92||Up 7 to + 8|
|Mar 30||Down 2 to 400||Up 2 to 391||Flat 0 at 92||Down 4 to + 4|
|Mar 31||Down 1 to 399||Up 1 to 392||Down 1 to 91||Flat 0 at + 4|
|Apr 3||Up 2 to 401||Up 1 to 393||Flat 0 at 91||Flat 0 at + 4|
|Apr 4||Up 3 to 404||Down 3 to 390||Up 2 to 93||Up 3 to + 7|
|PPT Risk Indicator
(Above +18% Means High
Risk of a Short-covering Rally)
|Mar 28||Down 2 to 401||Up 2 to 401||Down 1 to 107||+ 1.3|
|Mar 29||Up 7 to 408||Down 5 to 396||Up 7 to 114||( 0.1 )|
|Mar 30||Flat 0 at 408||Flat 0 at 396||Up 1 to 115||( 0.3 )|
|Mar 31||Down 3 to 405||Up 1 to 397||Down 1 to 114||( 9.0 )|
|Apr 3||Down 2 to 403||Up 1 to 398||Flat 0 at 114||(10.63)|
|Apr 4||Up 1 to 404||Down 1 to 397||Up 2 to 116||(12.41)|
That said, we are staring into the face of another phi mate turn date around April 10th +/- 3 days, so it could be this will be a small thrust up into that turn window.
While we got that "buy" signal tonight in the S&P 500/DJIA, we must note that volume was average at 98 percent, and upside volume and breadth were mediocre at 66 percent and 58 percent respectively. What did have a lot of positive implications was S&P 500 upside points, coming in Tuesday at a strong 84 percent. Demand Power rose 3 points to 404, while Supply Pressure fell 3 points to 390. What often happens in lackluster rallies is, if selling pressure doesn't kick in, then buyers decide it is safe to get back in again, and that is what has happened. There just isn't any real selling pressure right now. Until it comes, this market can drift higher. The periodic short-covering intervention induced rallies are being masterfully interspersed just as supply starts to appear, killing supply with the buying from those covering their short positions, and creating an overall unwillingness to sell.
The percent of DJIA stocks above their 30 day moving average remained at 56.56, while the percent above 10 day rose to 56.67 from 30.00, and the 5 day rose to a near short-term overbought 76.67. Our Intermediate-term trend identifier, the Secondary Trend Indicator, rose 3 points to +7 Tuesday.
Trannies hit another new all-time high Tuesday, at 4,686.25 intraday, and 4,681.81 on a closing basis. That means we need the Industrials to rally and close above their recent high of 11,317.43 on March 22nd in order to confirm the Dow Theory rising Secondary Trend.
NYSE New 52 week Highs fell to 209, while New Lows fell to 39. The McClellan Oscillator remains negative at minus -4.55. The S&P 500 10 day average Advance/Decline line "buy" signal remains in play, its reading rising to +221.8 from +15.1.
The Russell 2000 small caps index rose 3.10 points Tuesday to close at 762.32. Volume was 105 percent of its 10 day average, with upside volume only 50 percent and advancing issues only 51 percent. The RUT Purchasing Power Indicator rose to 114.14, and the "buy" from March 14th remains in play. It would have to drop under 109.94 to trigger a "sell." The 10 day average Advance/Decline reading shown over the weekend rose to +252.3, and its "buy" signal remains effective.
The NASDAQ 100 rose 9.78 points to 1,716.55, on volume that was 96 percent of its 10 day average. Upside volume was only 47 percent and 65 percent of stocks advanced. However, upside points were strong at 83 percent. Both NDX key trend-finder indicators remain on a "buy" signal Tuesday evening, the NDX 14 day Stochastic Fast measure coming in at 72.00, above the Slow at 68.80, and its "buy" from March 29th is intact. The NDX PPI indicator rose to 115.83, a new high for the move, and its "buy" from March 14th is in force. The NDX 10 day average Advance/Decline measure rose to +8.9 from + 0.6, and it also remains on a "buy." For an explanation of how this signal works, read the weekend issue, no. 300.
NASDAQ 100 Demand Power rose a point to 404, while Supply Pressure fell 1 to 397. Today's rally floated up, it was not driven up. That is important to know, because it means once selling shows up, this index is vulnerable to a significant sell-off. It means longs cannot get too cocky here.
Both HUI Amex Gold Bugs Index key trend-finder indicators remain on a "buy" signal Tuesday. The HUI rose 2.97 points to 341.10. Volume was light at 88 percent, and we had our second consecutive mixed breadth day, with 67 percent advancing. Mixed breadth days serve as a warning that a short-term trend change could be close at hand. Usually the vast majority (over 90 percent) of HUI stocks move in tandem, either up or down. If the HUI is rallying, however we see a declining day, but over 90 percent of the issues fell together, that usually means the rising trend is safe, and we simply saw a correction. Mixed breadth tells us the trend in force is in jeopardy. The HUI 30 day Stochastic Fast measure rose to 100.00 from 88.89, remaining above the Slow at 82.10, thus the "buy" from March 14th continues. The HUI Purchasing Power Indicator rose to 223.61, and would need to drop under 218.33 to trigger a new "sell."
Our Plunge Protection Team Risk Intervention Indicator fell further to negative -12.41 Tuesday, indicating that any short-covering rally here does not likely have multi-week potential. When it rises to positive +18.00ish, it does. However, interestingly, we note that at this particular negative level, we often see small rallies commence, rising about 200 points or so in the Industrials, and lasting a few days to a week. You can see this correlation on our chart in the weekend issue, no. 300. This jives with our other indicators tonight.
Gold fell a hair, down $1.3 to $586.8, Silver was unchanged Tuesday, as were Bonds. Oil fell 37 cents to 66.37, the VIX fell .43 to 11.14, and the Dollar had a bad day, down a huge 0.77 t0 88.86.
|Key Economic Statistics|
|Date||VIX||Dec U.S. $||Euro||CRB||Gold||Silver||Crude Oil||1 Week Avg. M-3|
|Note: VIX, Dollar, CRB and Oil down; Gold and Silver are up.|
Bottom Line: Looks like we could see another 200 points +/- mini rally over the next week in the Dow Industrials, perhaps into our phi mate turn date of April 10th +/- 3 days. All this market is waiting for is supply to hit hard. Demand is tepid, and rallies are rising with the tide, with quiet waves, not the sort of power needed to catapult markets the next 1,000 points higher. Caution is warranted.
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Tonight's newsletter is a market update to highlight today's market action in light of our full expanded analysis, published over the weekend, issue no. 300, available by clicking on the weekend button at our home page at www.technicalindicatorindex.com.