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[转贴] Weekly outlook (07/20/09 -- 07/24/09)

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发表于 2009-7-20 02:23 AM | 显示全部楼层 |阅读模式


Monday Morning Outlook: Market Could Be Due for Breather this Week
Bulls enjoyed a 7 percent mid-July joy ride
by Ryan Detrick 7/18/2009 12:52 PM

A solid round of better-than-expected corporate earnings, plus around of so-so to decent economic data, helped Wall Street end afour-week losing streak. Strong quarterly reports from Goldman SachsGroup (GS), Intel Corp. (INTC), and JPMorgan Chase & Co. (JPM)provided the spark, while an upwardly revised forecast for U.S. grossdomestic product by the Fed and a prediction for the end of therecession by New York University professor Nouriel Roubini helped toseal the deal. Looking ahead to next week, Ryan Detrick, SeniorTechnical Strategist, examines support and resistance levels for theS&P 500 Index (SPX), a pair of head-and-shoulders patterns for theindex, and the impact of the first week in a five-week expirationcycle. Then, Senior Quantitative Analyst Rocky White takes a closerlook at the CBOE Market Volatility Index (VIX), the growing spreadbetween near-term and long-term VIX futures, the rising preference forVIX call options, and the potential indications for the overall market.We wrap up with a look at some key economic and earnings reports slatedfor release this week.
Recap of the Previous Week: Corporate Earnings Season Pumps Life Back into Bulls
By Joseph Hargett, Senior Equities Analyst

        After four consecutive losing weeks, the Dow Jones IndustrialAverage (DJIA) roared back to life last week, largely on the coattailsof better-than-expected corporate earnings. On Monday, the Dow soared2.27%, with many market-watchers crediting a rare bullish note fromMeredith Whitney, as the well-known bank bear upgraded Goldman SachsGroup (GS) from "neutral" to "buy" ahead of earnings. The Goldmanupgrade provided a sufficient sentiment boost to offset dismaldevelopments from CIT Group (CIT), as the cash-strapped financialservices firm entered talks with lawyers regarding a potentialbankruptcy filing. The bullish GS note proved prophetic, as the companyTuesday posted a 65% jump in second-quarter profit. Adding to thatsentiment, Treasury Secretary Timothy Geithner, speaking in SaudiArabia, opined that he's beginning to see confidence return to thefinancial industry. However, lackluster June retail sales and asharper-than-expected jump in producer prices limited the DJIA to again of only 0.33%.
Traders were off to the races once again on Wednesday, as a round ofpositive economic data followed on the heels of better-than-expectedearnings from Intel Corp. (INTC). The semiconductor giant also issuedan optimistic outlook for the rest of the year. And if that wasn'tenough, the latest meeting minutes from the Federal Open MarketCommittee revealed that the Fed upped its 2009 gross domestic product(GDP) guidance to a range of -1.5% to -1%, from its previous predictionof -2% to -1.3%. The Dow soared more than 3% higher as a result. Solidearnings from JPMorgan Chase & Co. (JPM) and a decline in weeklyinitial jobless claims underpinned early action on Thursday, thoughcommentary from noted economist and New York University professorNouriel Roubini provided the gusto for a rally into the close. Roubini– who has been credited with forecasting parts of the credit crisis –predicted that the recession will end this year, revising his formerprojection for an economic recovery in 2010. Roubini subsequentlytempered those remarks somewhat, but the Dow still soared 1.11%.
The bulls were apparently ready for the weekend, as the DJIA added amere 0.37% on Friday. The Street was hit with a bevy of blue-chipearnings, with disappointing results from General Electric Co. (GE) andBank of America Corp. (BAC), while IBM (IBM) topped expectations.Encouraging housing stats from the Commerce Department helped tip thescales in the bulls' favor, as new home construction unexpectedlyadvanced in June, rising to the fastest pace since late 2008. For theweek, the Dow gained 7.3%, while the S&P 500 Index (SPX) added 7%.The tech-laden Nasdaq Composite (COMP) outperformed its Wall Streetbrethren with a week-over-week advance of 7.4%.
What the Trader Is Expecting in the Coming Week: A BustedHead-and Shoulders Pattern, and Weakness in the First Week of aFive-Week Expiration Cycle
By Ryan Detrick, Senior Technical Strategist

Todd Salamone, Schaeffer's Senior Vice President of Research, is outon vacation the next two weeks, so I'm stepping up while he's out.
What a week it was! First, Bernard Madoff was sent to a federalprison in Butner, N.C., for his role in history's largest Ponzi scheme.But before he arrived there, he made a short stop at the same Atlantafacility that once housed Charles Ponzi. When something like thathappens, you know it'll be an interesting week. After falling for fourstraight weeks, the bulls came back in near record-setting fashion,with the S&P 500 Index (SPX) gaining 7% for the week. The NasdaqComposite performed even better, extending its run higher to eightconsecutive days and gaining 7.4% for the week.
Following a weak June nonfarm payrolls report and a surprise drop inconsumer confidence, the bears took charge, convinced that the economywas headed straight for a double-dip recession. As it turns out, thesituation wasn't quite as bad as many feared. Second-quarter earningsseason is off to a solid start relative to expectations, with nearlyevery major corporation beating the consensus estimate thus far. And asyou know, at Schaeffer's Investment Research, it is all aboutexpectations. When Goldman Sachs Group (GS) turns in a record quarterlynet income of $3.44 billion and Intel Corp. (INTC) beats estimates andforecasts very strong demand for the next quarter, you have a recipefor a bounce in the market.
  Technically, the SPX found support from its 80-day moving averagelast week. This trendline, which has turned higher, served asresistance during the second half of last year, and could very well actas support going forward. You can't argue with how accurate this movingaverage has been in demarcating bull and bear markets.



   As Schaeffer's Senior Technical Strategist, I try to keep a closeeye out for any interesting technical developments. Along those lines,I noticed a pattern on the SPX that I find extremely worthwhile. Lastweek, the SPX formed what technicians like to call a"head-and-shoulders" top. You can see what I'm talking about in thechart below. The bottom line is that this is a bearish chart formationthat has been widely broadcast. I am often asked about the accuracy ofthese formations, and my only response is these technical patternsnailed the housing sector's implosion and the subsequent bursting ofthe housing bubble (check out a monthly chart of Lennar Corp. (LEN) ifyou want a better picture). Furthermore, these patterns are veryclosely watched, so there can be a bit of a self-fulfilling prophecy tothem. The pattern below was predicting an SPX move to the 820 area.



     As you might expect, the chart above had the bears dancing in thestreets in anticipation of a sharp decline for the SPX. Coupled withthe American Association of Individual Investors' highestbearish percentage since the March bottom, this technical formationcreated the potential for a massive "bear trap" in the event of anypositive news on Wall Street. And that is exactly what happened.
  


   As it turns out, the 875 level provided key support, making the"head-and-shoulders" top a major sucker sell signal. In the end, it wasnothing more than a return to the bottom of a trading range for theSPX, which resulted in the index rallying sharply back toward the upperrail of this range.
  Todd Salamone has been saying for quite some time now that there isa good chance the market will remain range bound for the remainder ofsummer. In other words, market oscillations between 950 and 875 couldstill be in the cards. And, after one of the best three-month ralliesin a generation, some sideways consolidation for a few months isn'treally that bad of a thing.
Speaking of "head-and-shoulders" patterns, below is a chart of aninverted pattern that I believe shows major promise. Is it perfect? No.But it clearly demonstrates how critical the 950 area is for the SPX.If we can break out above that level and get some separation, there's agood chance the rest of the year could be very strong.
  


   Looking at the week ahead, there's a better-than-average chance thatwe'll see lower prices. Now, following last week's gains, a period ofconsolidation makes sense. However, next week is also the first in afive-week expiration cycle. Since 2006, these weeks have been bearishfor the overall market. Our thinking is that this phenomenon is due toincreased index put accumulation early in the expiration cycle. Assuch, the market experiences additional downward pressure as the marketmakers short futures to hedge those bearish puts. As you can see in thetable below, the first week in a five-week expiration cycle hasreturned positive results only 29% of the time since 2006. The averagereturn for these weeks is a loss of 0.85%.



      I'll leave you with a final note this week. We all know that theemployment picture is bad and that it is not showing much of a pulse.Some economists view this as a reason to be bearish, because it meansconsumer spending isn't going to pick up. Others like to point out that"employment is a lagging indicator," and, as such, it doesn't matterquite as much as long as other areas of the economy are picking up.Well, if you look back at the early 1980s' recession, you'll find thatit began in the summer of 1981 and lasted until late 1982. However,employment didn't begin to pick up until August 1983 -- more than twoyears later. As for the stock market, it bottomed in August 1982 andproceeded to soar about 60% during the following 12 months. So, we hada 60% rally in the face of weak employment, while other signs of animproving economy were evident. Sound familiar? It's certainlysomething to think about in today's environment.


Indicator of the Week: The CBOE Market Volatility Index (VIX)
By Rocky White, Senior Quantitative Analyst

   Foreword: One index that is widely followed by traders is theChicago Board of Options Exchange (CBOE) Market Volatility Index (VIX).The VIX is calculated using the implied volatilities of S&P 500Index (SPX) call and put options, and measures expected volatility forthe next month. The VIX is also widely considered as a "fear gauge" forthe market due to the fact that as investors grow nervous, they have apropensity to buy SPX put options to hedge their portfolios. Thisactivity drives option prices and implied volatilities higher, thussending the VIX higher as a result. This is why the VIX tends to movein the opposite direction of the market.
  Below is a graph of the VIX dating back to July 2007. Note how theindex spiked to extreme highs in late 2008 as the market crashed. Sincethen (and since the March bottom especially), the VIX has declined.This development is to be expected, since the recent market gains anddecreasing volatility have calmed investors' fears.



                 VIX Futures: You can also trade futures contracts on the VIX.These contracts often indicate where futures traders expect the VIX tofinish on a specific expiration date. We have noticed that quite a fussis being made over the fact that VIX futures with expirations fourmonths away are trading at pretty high levels compared to thefront-month futures contracts. In other words, futures traders arepredicting an increase in volatility in the coming months. A fewpundits are currently stating that this is a bearish sign for themarket. Since the VIX usually moves in the opposite direction as themarket, these pundits claim that the higher skew for back-month VIXfutures is bearish for the market. As such, these pundits must believethat VIX futures traders represent smart money. We are a bit skepticalof this assumption.
Below is a graph of what I call the "futures spread." The "futuresspread" is the difference between the VIX futures contracts four monthsaway and the front-month VIX futures contract. When the reading ispositive, it means that futures traders are expecting a higher VIX.This spread recently reached a pretty high extreme, as VIX futures fourmonths out were trading 4.2 points higher than the front-monthcontract. The last time the spread was that high was May 2008, justbefore the market made a big move lower. So, the futures traders had itright that time. We think too much emphasis is being put on this onemove. The graph shows other times the "futures spread" reached thislevel, and not all of them are as predictive.



                   In fact, here is a table showing SPX average returns following a"futures spread" reading of 4.2, with comparisons to typical SPXreturns since late 2004. While futures traders are spot on for the 10days following such a signal, there is strong outperformance for thefollowing month. So, the high future spread is not necessarily bearish.I want to point out that there have been only six other "futuresspread" signals above 4.2, making it harder to draw conclusions.However, this data does show that the predicted big decline is not a"slam dunk" as it has been portrayed.



                         VIX Options: VIX futures traders are not the only investorspredicting more volatility. Option traders also foresee a VIX spike.Below is a graph of the average buy-to-open activity on VIX calls andputs during the past 10 trading days. Call buying has explodedrecently, reaching its highest level since March of 2008. In March, VIXcall buyers most likely lost money, as the market rallied sharplyfollowing the bottom, resulting in a sharp pullback in the VIX.However, there was also a significant spike in calls bought to open inSeptember 2008. The market crashed soon after, and those VIX callswould have profited handsomely.
   


                 Implications: The VIX has been declining for about fourmonths now. However, VIX futures and VIX options traders are bothforecasting a spike in volatility. Unfortunately, it's hard todetermine what this means for the market, since the track record forpredicting volatility by these indicators has been mixed. Some of thesebets have paid off, but others have not. Nevertheless, these VIX tradescould be the result of nervous investors preparing for another violentdecline. We contrarians can take some comfort in that heightened levelof fear.
                           This Week's Key Events: Earnings Season Picks up Steam
By Joseph Hargett, Senior Equities Analyst

Here is a brief list of some of the key events for the upcomingweek. All earnings dates listed below are tentative and subject tochange. Please check with each company's respective Web site forofficial reporting dates.
Monday

  • June's leading economic indicators is the lone reportslated for release Monday. On the earnings front, Halliburton Company(HAL), Hasbro Inc. (HAS), Boston Scientific Corp. (BSX), and TexasInstruments Inc. (TXN) are slated to release their quarterly reports.
Tuesday

  • There are no economic reports scheduled for release onTuesday. Elsewhere, AK Steel Holding Corp. (AKS), BJ Services Company(BJS), Caterpillar Inc. (CAT), The Coca-Cola Company (KO), DuPont (DD),Freeport-McMoRan Copper & Gold Inc. (FCX), Merck & Co. Inc.(MRK), Advanced Micro Devices Inc. (AMD), Starbucks Corp. (SBUX), andYahoo! Inc. (YHOO) are among those reporting earnings.
Wednesday

  • On Wednesday, the Street will be graced with the weeklyreport on U.S. petroleum supplies. Meanwhile, Altria Group Inc. (MO),The Boeing Company (BA), Delta Air Lines Inc. (DAL), Morgan Stanley(MS), PepsiCo Inc. (PEP), Pfizer Inc. (PFE), Wells Fargo & Company(WFC), E TRADE Financial Corp. (ETFC), eBay Inc. (EBAY), The MosaicCompany (MOS), Qualcomm Inc. (QCOM), SanDisk Corp. (SNDK), and VMwareInc. (VMW) are scheduled to report earnings.
Thursday

  • Weekly initial jobless claims and June's existing homesales are slated for release on Thursday. The earnings calendarincludes 3M Company (MMM), AT&T Inc. (T), Bristol-Myers Squibb Co.(BMY), EMC Corp. (EMC), Fifth Third Bancorp (FITB), Ford Motor Co. (F),Potash Corp. of Saskatchewan Inc. (POT), United Parcel Service Inc.(UPS), Amazon.com Inc. (AMZN), American Express Company (AXP),Baidu.com Inc. (BIDU), Broadcom Corp. (BRCM), Juniper Networks Inc.(JNPR), Microsoft Corp. (MSFT), Netflix Inc. (NFLX), and SunPower Corp.(SPWRA).
Friday

  • The economic calendar rounds out the week with therevised University of Michigan consumer sentiment index for June.Finally, The Black & Decker Corp. (BDK), Arch Coal Inc. (ACI),Fortune Brands Inc. (FO), and Schlumberger Limited (SLB) are slated forrelease on Friday.

And now a few sectors of note...
[size=+2]Dissecting The Sectors
Sector
[size=+1]Technology
Bullish

Outlook:  The technology sectorhas been hot in 2009, with the PowerShares QQQ Trust (QQQQ) gainingroughly 24% since the beginning of the year. Technically speaking, thetrust has drawn its 80-day and 200-day moving averages into a bullishcross. Despite this outperformance, investors continue to overlook andto bet against the shares. Specifically, a recent survey of 127institutional investors by TheMarkets.com revealed, "Surveyedinvestors expect that key sectors of focus over the next 12 months willbe energy, financials, healthcare and basic materials." We find itextremely odd that technology was not listed among those key sectors,especially given QQQQ's strong technical performance in 2009. Withinthe tech sector, our favorites include Palm Inc. (PALM), Synaptics Inc.(SYNA), Juniper Networks Inc. (JNPR), and priceline.com Inc. (PCLN).

Sector
[size=+1]Energy
Bearish

Outlook:   Economic troubles are once again takingtheir toll on the energy sector. Following a wave of less-than-stellarreports on the U.S. economy, including the June nonfarm payrollsreport, crude futures have taken a nosedive. Specifically, the price ofcrude oil has plummeted nearly 20% in less than a month, falling fromits June 11 high of $73.90 per barrel to $63.56 per barrel on July 17.What's more, the U.S. dollar has gained safe-haven strength amid thisrenewed economic uncertainty, further impacting dollar-denominatedcrude oil and energy prices. The Select Sector Energy Fund (XLE) alsorecently breached former support at its 50-day and 200-day movingaverages, slipping beneath the upper rail of its September2008-through-May 2009 trading range in the process. Furthermore, XLE's50-day buy-to-open call/put volume ratio has turned sharply higher,giving us the impression that hedge funds may be shorting the energysector following the September-June rally.
Sector
[size=+1]Treasurys
Bullish

Outlook:  Treasurys are gettingquite the bad rap lately. There has been talk in the financial media ofa bursting bubble, a sentiment that was recently highlighted by abearish Barron's cover story. Furthermore, a recent survey ofinvestment managers indicated that optimism in regard to governmentdebt is at its lowest level in quite some time. However, the iSharesBarclays 20+ Year Treasury Bond Fund (TLT) is currently in the processof rebounding off support near its 80-month moving average and theround-number 90 level. Meanwhile, Moody's Investors Service stated thatthe U.S. government's credit rating of "Aaa" is safe. Finally, the U.S.Dollar Index is holding support in the 80 region, which could bebullish for Treasurys. Should these support levels hold, we could seean unwinding of pessimism on both fronts, potentially sending bondssteadily higher.
发表于 2009-7-20 06:18 AM | 显示全部楼层
thx
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发表于 2009-7-20 04:32 PM | 显示全部楼层
and then?
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发表于 2009-7-20 06:34 PM | 显示全部楼层
thanks
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 楼主| 发表于 2009-7-20 09:51 PM | 显示全部楼层
and then?
wangbin1943 发表于 2009-7-20 17:32

?
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发表于 2009-7-21 10:23 AM | 显示全部楼层
thanks
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