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Daily Update Entry for August 10, 2007
MARKET STATS 
 
  • Up/Down volume ratio: NYSE 0.83, NASDAQ 0.63 and AMEX 0.74
  • NYSE decliners led advancers by a margin of 1.64 to 1
  • NASDAQ advancers led decliners by a margin of 2.17 to 1
  • S&P 500 points gained 273 vs 221 points lost
  • S&P 500 advancers led decliners by a margin of 1.1 to 1
  • S&P 500 Up/Down volume ratio 0.74
  • NASDAQ 100  points gained 23 vs 69 points lost
  • NASDAQ 100 decliners led advancers by a margin of 1.5 to 1
  • NASDAQ 100 Up/Down volume ratio 0.51
OVERALL MARKET PERFORMANCE
 
 
Index
Today's Close
20-day MA
50-day MA
200-day MA
S&P 100 Large Cap 675.62694.20
697.04670.61 
S&P 400 Mid Cap
851.44879.50
895.49 852.53 
S&P 600 Small Cap 413.39
421.52
430.38 414.52 
S&P 500
1453.64 1494.67
1509.18
1453.18 
NASDAQ Composite
2544.89 2612.54
2614.49 2497.40 
NASDAQ 100
1925.141984.45
1958.78 1842.00 
DJ Industrials
13239.54 13579.79
13549.38 12818.81 
DJ Utilities
491.32 496.59
 499.19484.34 
DJ Transports
4961.73 5155.78
5165.69 4957.82 
DJ AIG Commodity 167.60 170.16 171.46 169.32 
* MA = Moving Average 
** Cells in red mean that the closing price is below the listed moving average
*** Cells in green mean that the closing price is above the listed moving average
  
 
Top 5 Industry GroupsNet % Change
Paper & Paper Products 
2.15%
Oil Services
 1.93%
Integrated Oil
 1.62%
Natural Gas
 1.38%
Insurance
1.24%
 
 
Bottom 5 Industry Groups
Net % Change
REITs 
-2.97%
Biotech
-1.45%
Broker/Dealers
-1.22%
Wireless
-1.04%
Healthcare Products
-0.87%
 
 
DAILY SUMMARY
 
It has been nearly a month of declining stock prices and rising volatility.  After peaking on July 16th the S&P 500 declined nearly 130 points to its recent low established on August 6th or close to an 8.5% decline.  One would think that investors would be overly bearish and that price volatility would begin to stabilize in this environment.  Instead, our indicators of supply and demand show the complete opposite.
 
  • The latest American Association of Individual Investors sentiment poll shows the % bulls at 45.8%.  Bullish sentiment is unchanged from one week ago levels and it is still trading at five month highs.  In simple words, investors are eagerly buying into the decline in anticipation of a market bottom.  On a contrarian basis this is a negative sign.
  • The S&P 100 posted four 90% downside days since July 20th, while the S&P 500 posted two 90% downside days.  a 90% downside day occurs when points lost and down volume reach 90% + of total points and total volume.  this strong selling pressure is not being met with a reversal in the form of 90% upside days.. A lack of resurgence in buying pressure leaves the market vulnerable for further declines.
  • Our Rydex S&P 500 ratio of fund inflows between the double leveraged bull and bear fund is still hovering near high levels.  Investors show no strong urge to liquidate long positions or to at least hedge by means of the bear fund.
 
 

Chart #1: The chart above plots the 120-min price structure of the S&P 500 index.  The S&P 500 is currently retesting a prior pivot low shown by the yellow circle.  Also note that prices are forming a trading range below the lower horizontal green line.  A breakout from this range can take place either way.  An upside move, however, will find plenty of resistance levels shown by the horizontal green lines.
  
 
Chart #2: The chart above plots the relative strength ratio between the DJ US Large-Cap Growth index and the DJ Wilshire 5000 index.  A rising line indicates that large cap growth stocks are outperforming the overall market, and vice versa for a declining line.  We continue to alert investors about the positive outperformance of large-cap growth during the recent plunge in the overall market.  Note that the relative strength ratio broke above a major level of resistance shown by the horizontal green line.  Money managers should use major bouts of market weakness to reallocate equity exposure towards the large-cap growth segment.
  
 
Chart #3:  The chart above plots the S&P 500 index 20-day and 50-day moving averages of the intraday high to low range.  This indicator measures the price volatility in the S&P 500 on a longer-term basis that is used to detect major changes in volatility regimes in the S&P 500.  The recent rise in volatility caused both moving averages to surge to multi-year highs.  Volatility expansion from multi-year lows often indicates that a new regime is in place.  Investors and money managers should continue to expect a difficult investing environment in the months ahead.
 
 
Chart #4: The chart above plots the percentage of assets in the Rydex S&P 500 double-leveraged fund (bull fund) as a percentage of the total assets in the Rydex S&P 500 double-leveraged and the Rydex Inverse S&P 500 double-leveraged (bear fund) funds as shown by the blue line.  The orange line plots the daily price structure of the S&P 500 index.  A rising line indicates that investors are optimistic about the S&P 500 and vice-versa for a declining line.  Despite the 130 points plunge in the S&P 500 investors are still not too worried about the decline in stocks as the Rydex Dynamic ratio is still trading near the upper part of its trading range shown by the red arrow.
  
 
 
Chart #5: The chart above plots the daily price structure of the DJ AIG Commodity index.  This index tracks the overall performance of the commodity market.  The DJ AIG index is under short-term selling pressure and it is retesting a major level of support defined by the lower green horizontal line.  Note that prices already violated a key level of support shown by the yellow circle.  A break below the 165 level should be considered as a negative technical event.
  
 

Chart #6: The chart above plots the September Natural Gas continuous contract.  After a failed downside break below major support natural gas prices reversed to the upside as shown by the yellow circle.  A move above the current congestion zone defined by the parallel green lines would bode well for the bulls.  Individual investors can obtain exposure in this instrument by means of the ETF traded under the symbol UNG.
 
 
 
Chart #7:  The chart above plots the daily price structure of Medtronic (Symbol: MDT).  Investors should keep a close eye on this issue as it sits in the top quartile of our rankings and it shows good relative strength in the face of a weak overall market.  Prices are forming a narrow congestion zone below a major level of price resistance shown by the converging green lines.  Also note that volatility is reaching multi week lows as shown by the yellow circle on the ADX indicator.  An upside breakout from low volatility conditions and above major resistance ($54.60) would bode well for the bulls.
 
 
Chart #8: The chart above plots the daily price structure of Coca-Cola Co. (Symbol: KO).  We have alerted investors several times in our daily updates about the positive technical structure in this issue.  The stock broke above major resistance in the midst of a weak overall market shown by the yellow circle.  The technical outlook in this issue remains firmly in bullish territory.
 
 

Chart #9: The chart above plots the daily price structure of Procter & Gamble (Symbol: PG).  This stock is also displaying signs of relative strength against the overall market and it also sits in the top quartile of our rankings.  Prices broke above a minor base of accumulation shown by the horizontal red line.  Further price consolidation above this level and slightly below major resistance ($66.10) should be viewed as technically bullish. 
 
 
 
 
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