Oil Pops, Durables Shrugged-Off
The market moved lower this morning, but buyers protected yesterday's lows. Oil jumped over 1% and small caps led the indices higher.
Total volume increased for the second day in a row. We closed all our shorts down at 10:01. We noted buying yesterday and took half of our positions off (FAZ, EDZ), today we took the rest (BGZ, TZA) after a mild reaction to durable goods.
Today, durable goods were announced and that is a big number to watch. The analysts expected durables to increase 3% last month. The actual result was a 0.3% increase, which is better than the 1.2% drop in June. Analysts watch durables to get a sense of consumption. Consumers, or businesses, do not purchase large items frequently. Big items have a long life and are capital intensive. When people purchase large items it indicates that the consumer has extra money to spend, and for businesses, it means they are buying equipment to increase production.
Despite the horrible economic release and a late day decline, the bulls should own the rest of this week. The SPX will likely stay below 1085, but buying sentiment could get interesting if that resistance area is taken. The market will need a big catalyst to get back to the June/July highs, like stimulus or quantitative easing part two.
The indices need follow through buying tomorrow. Later, on Friday, we get second quarter GDP numbers. The economic data has been negative the entire month and the GDP should be revised lower. A revision is expected. Volume needs to stay up again tomorrow and the bulls need to challenge 1071 SPX.
The Chart of the Day
Barclay Treasury Bond Fund (NYSE: TLT)(CHART)
may have finally topped.
The yield on bonds is at historical lows. The etf tracks the price of bonds,
which moves opposite to yield. As such, the etf has made higher highs this
whole month. Today shares gapped higher but could not hang onto those gains.
Also, the price moved into yesterday's lows. The result is dark cloud cover
and its a reversal pattern. We had the same pattern in October, which led to
two months of declines. In the near term, the big gap from $102.50 should
hold. You can trade etf TMF or TMV, which could get you more leverage.
Watch List
The
TradeMaster Daily Stock Alerts' watch list was higher
today, much like the market.
Leading the way were big gains from Somaxon (Nasdaq: SOMX) which should be
reviewed closer, LookSmart (Nasdaq: LOOK), Value Click (Nasdaq: VCLK) Felcor
Lodging (NYSE: FCH) up 5%.
