Daily Market Newsletter
Thursday, May 24, 2007
SUMMARY OF INDEX DAILY CLOSINGS FOR THURSDAY MAY 24th, 2007
|30 Yr Treas
Status of Demand Power/Supply Pressure Key Trend-finder Indicator
Date of Signal
|Fullest Extent of
Index Move Since Signal
|S&P 500/DJIA||Short||Exit Long||5/24/2007||392||396||SPX No Position|
|NDX||Short||No Position||5/15/2007||399||406||No Position|
|* We consider a new entry point for a signal the day when one measure crosses more than 10 points above the other. We like to exit when (or before if conservative) the two measures return to an intersection.|
|Summary of McHugh's Proprietary Index Key Trend-finder
New Signals Tonight
|Index||Term||Signal||Date Current Signal||Fullest Extent of
Index Move Since Signal
|Purchasing Power Indicator||DJIA/S&P||Short||Buy||March 20th, 2007||DJIA Rose 1,336 Points (10.9 %)|
|DJIA 14 Day Stochastic||DJIA||Short||Sell||May 24th, 2007||New Signal|
|DJIA 30 Day Stochastic||DJIA||Short||Buy||April 3rd, 2007||DJIA Rose 1,114 Points (8.9 %)|
|DJIA Primary Trend Indicator||DJIA||Long||Buy||October 31st, 2003||DJIA Rose 3,823 Points (39.0 %)|
|Secondary Trend Indicator||DJIA/S&P||Interm||Neutral||February 8th, 2007||DJIA Up 803 Points|
|NDX 14 Day Stochastic||NASDAQ 100||Short||Sell||May 24th, 2007||New Signal|
|NDX Purchase Power Indic||NASDAQ 100||Short||Sell||May 24th, 2007||New Signal|
|RUT Purchase Power Indic||RUT||Short||Sell||May 24th, 2007||New Signal|
|HUI 30 Day Stochastic||HUI||Short||Sell||April 24th, 2007||HUI Fell 30 Points (8.6 %)|
|HUI Purchasing Power Indic||HUI||Short||Sell||May 10th, 2007||HUI Fell 14 Points (4.2 %)|
As Bill Murray would say, "Something is different. Anything that's different is good." Or at least we can all agree, more interesting.
The Dow Industrials gave up 84.52 points, closing at 13,441.13. Should this correction be about over, it means our current phi mate turn date could be a bottom. We will lean upon our DP/SP indicator for the best indication a tradable top is in. It did give us a warning today. NYSE volume was 113 percent of its 10 day average, with downside volume leading at 82 percent, declining issues at 81 percent, and with S&P 500 downside points leading at 92 percent. S&P 500 Demand Power fell 8 points to 392, with Supply Pressure rising 12 points to 396, telling us a wall of supply hit markets today, more than buyers chose to absorb. These indicators generated a new "exit long positions" signal Thursday. That is not the same as an enter short signal, which would require the Supply Pressure measure to rise more than 10 points above Demand Power.
NYSE New 52 week Highs fell to 115, with New Lows rising to 41, which is a lot at these lofty price levels. We continue to remind bears that New Lows is important to watch, as any major top should be accompanied by both New Highs and New Lows coming in around 75 or higher. The McClellan Oscillator worsened to negative -166.68. The Summation Index fell to positive + 2,942.
The percent of DJIA stocks above their 30 day moving average fell to a still overbought 80.00 from 90.00. The percent above 10 day fell to 46.67 from 76.67. The percent above 5 day fell to 20.00 from 53.33.
Cycles: We have another phi mate turn date period from yesterday, May 23rd, through Friday, May 25th, +/- a few days. Whether a top or bottom is hard to call while happening. It could've been the closing top on Friday, May 18th, a few days early, or it could be the bottom of this small correction since then, should prices bottom around here. Holidays, and ends of month, usually see prices rise.
SUMMARY PAST WEEK'S DEMAND POWER/SUPPLY PRESSURE STATISTICS
|Blue Chips S&P 500/DJIA|
|May 17||Down 9 to 402||Down 2 to 387||Flat 0 at 137||Down 4 to + 6|
|May 18||Up 1 to 403||Down 4 to 383||Up 2 to 139||Up 8 to + 14|
|May 21||Up 1 to 404||Down 2 to 381||Flat 0 at 139||Up 2 to + 16|
|May 22||Down 1 to 403||Up 1 to 382||Flat 0 at 139||Flat 0 at + 16|
|May 23||Down 3 to 400||Up 2 to 384||Flat 0 at 139||Down 4 to + 12|
|May 24||Down 8 to 392||Up 12 to 396||Down 4 to 135||Down 9 to + 3|
|PPT Risk Indicator
(Above +18% Means High
Risk of a Short-covering Rally)
|May 17||Down 2 to 401||Up 2 to 404||Down 1 to 147||+ 4.24|
|May 18||Up 2 to 403||Down 2 to 402||Up 2 to 149||+ 5.83|
|May 21||Up 2 to 405||Down 3 to 399||Up 2 to 151||+ 8.17|
|May 22||Flat 0 at 405||Flat 0 at 399||Up 1 to 152||+ 9.40|
|May 23||Down 2 to 403||Flat 0 at 399||Down 1 to 151||+ 9.30|
|May 24||Down 4 to 399||Up 7 to 406||Down 8 to 143||+ 8.42|
|10 Day Average Short-term Advance/Decline Signals|
|Signal||Date of Signal||Fullest Extent of
Index Move Since Signal
|NYSE/S&P 500||- 80.8||Buy||May 3rd, 2007||SPX Rose 20.3 Points (1.4 %)|
|NASDAQ 100||+ 3.9||Sell||May 10th, 2007||NDX Fell 8.2 Points (0.4 %)|
|Russell 2000||- 16.8||Sell||Apr 27th, 2007||RUT Fell 22.0 Points (2.7 %)|
Our three Blue Chip key trend-finder indicators (other than the Demand Power/Supply Pressure Indicator) moved to a "sideways" signal Thursday. The DJIA 30 day Stochastic Fast came in at 80.00, below the Slow at 87.33, but not decisively below, remaining on a "buy" signal from April 3rd. The Fast would have to drop more than 10 points below the Slow for a new "sell." The DJIA 14 day Stochastic Fast fell sharply to 56.67, below the Slow at 79.44, triggering a new "sell" signal. The S&P 500 Purchasing Power Indicator fell 4 points to 134.74, remaining on its "buy" from March 20th. It would need to drop below 133.80 for a new "sell." When these indicators are at odds with one another, this is a "sideways" signal, suggesting either a trend change is coming, or a protracted sideways move is likely. The stochastic indicators measure breadth momentum, and the PPI measures supply/demand momentum.
Our other Blue Chip indicator, the NYSE 10 day average Advance/Decline Line Indicator came in at negative -80.8, remaining on its "buy" signal from May 3rd, needing to fall under negative -120.0 for a new "sell."
The Plunge Protection Team Intervention Risk Indicator came in at positive + 8.42 percent, below the positive + 20.00 threshold that would suggest a short-covering rally would likely lead to a multi-week rally. Within the range of minus -16.00 to positive +20.00, we sometimes see declines, so we are in the territory where a decline can occur. Readings outside the extremes of this range often lead to rallies. The DJIA Call/Put Ratio came in at 1.03, remaining on a "buy" signal from April 18th (moving below 1.00 and above 1.40 is neutral, while rising decisively above 1.00 (above 1.10) triggers a new "buy"). The Secondary Trend Indicator fell 9 points to positive + 3, remaining in neutral territory. A rise above + 30 would trigger an intermediate term "buy." A drop below negative -30.00 would trigger an intermediate term "sell."
The NASDAQ 100 fell 29.81 points to close at 1,874.60. Volume was113 percent of its 10 day average, with downside volume leading at 82 percent, declining issues at 81 percent, and with downside points at 92 percent. NDX Demand Power fell 4 points to 399, with Supply Pressure rising 7 to 406, telling us supply hit the market hard today, more than could be absorbed by willing buyers. We remain on the sidelines at this time. Should the Demand Power measure rise 10 points above the Supply Pressure measure, we will get an entry signal to go long again. Should Supply Pressure rise more than 10 points above Demand Power, we would get an "enter short positions" signal. Our key trend-finder indicators generated a new "sell" signal Thursday. The NDX 14 day Stochastic Fast fell to 37.00, below the Slow at 52.20, triggering a new "sell" signal. The NDX Purchasing Power Indicator fell 8 points to 143.52, triggering a new "sell" signal. The NDX 10 day average Advance/Decline Line Indicator rose to positive +3.9, remaining on a "sell" signal from May 10th, needing to rise above positive + 5.0 for a new "buy."
The Russell 2000 fell 12.74 points, closing at 823.80. Volume was 106 percent of its 10 day average, with downside volume leading at 82 percent, and declining issues leading at 84 percent. The RUT Purchasing Power Indicator fell 7 points to 113.89, generating a new "sell" signal. The RUT 10 day average Advance/Decline Line Indicator rose to negative -16.8 , remaining on a "sell" signal from April 27th, needing to rise above positive + 80.00 for a new "buy."
The HUI Amex Gold Bugs Index fell 10.67 points, to close at 318.74. Volume was 114 percent of its 10 day average, with all issues declining. Our key trend-finder indicators remain on a "sell" signal Thursday. The HUI 30 day Stochastic Fast came in at 5.26, below the Slow at 9.94, remaining on a "sell" signal from April 24th. The Fast must cross more than 20 points above the Slow for a new "buy." The HUI Purchasing Power Indicator fell 4 points to 155.88, remaining on a "sell" signal from May 10th, needing to rise above + 163.88 for a new "buy." Gold closed down at 653.0. Silver closed down at 12.85, and Oil closed down at 64.34. The Dollar rose 0.12 to 82.42. Bonds were unchanged at 109^09, and the VIX was up 0.84 to 14.08.
Australia's SPASX200 fell 76.00 points, or 1.20 percent Thursday, May
24th, with several signal
changes. For expanded coverage, click on the Weekend button.
Bottom Line: Major trend reversals are expected, by mid-2007, if not
sooner. Down in equities,
and up in precious metals. Also later in 2007, Bonds should rally hard.
Charts are updated on the next page for six indices.
"And do not judge and you will not be judged; and do
condemn, and you will not be condemned; pardon, and you will
be pardoned. Give, and it will be given to you; good measure,
pressed down, shaken together, running over,
they will pour unto your lap.
For by your standard of measure it will be measured to you in return.
Luke 6:37, 38
For a FREE 30 Day Trial Subscription, go to www.technicalindicatorindex.com and click on the button at the upper right of the Home Page MCHUGH'S DAILY MARKET BRIEFING Thursday May 24th, 2007
|Key Economic Statistics|
|Date||VIX||U.S. $||Euro||CRB||Gold||Silver||Crude Oil||1 Week Avg.
|Note: VIX and Dollar are up; Inflation assets are down.|
Conservative Balanced Portfolio Transactions Thursday May 24th, 2007
* We purchased a $10,000 par Treasury Note, coupon 4.625%, Maturing October
31st, 2011, at a price of
100:03, yielding 4.60%, on Wednesday, April 18th, 2007.
* We purchased a $10,000 par Treasury Note, coupon 4.75%, Maturing January 31st, 2012, at a price of 100:20, yielding 4.60%, on Wednesday, April 18th, 2007.
* We purchased a $10,000 par Treasury Note, coupon 4.25%, Maturing August
15th, 2012, at a price of 97.16,
yielding 4.65%, on Wednesday, April 18th, 2007.
* We purchased a $100,000 par Treasury Bill, no coupon, Maturing July 5th,
2007, at a price of 98.94, yielding
4.97%, on Wednesday, April 18th, 2007.
We posted an updated Balances/Market
Value Portfolio as of April 30th, 2007, available in the Guest Articles
If you are enjoying your subscription, please tell a friend. Let them know about our free — one time — 30 day trial subscription.
Here are the symbols for Exchange Traded Funds for the Major Indices:
|SPY||S&P 500||GDX||HUI Amex Gold Bugs*|
* Note: The GDX actually tracks the GDM, a grouping of 45 mining stocks, but the GDX has very high correlation to the HUI so we mention that as a suitable ETF for the HUI.