The Market Direction…

>>>Market Condition Analysis>>> Bellweather companies reporting earnings have exceeded expectations, but the most impressive quarterly report came from Intel (INTC) today. It topped estimates and more importantly gave postive guidance for 3Q 2009. While it may not seem rational, INTC proved that it is possible for one stock to drive an entire market and it practically did.

In economic news, the the CPI came in higher than expected @ 0.7% while the NY manufacturing index gave investors one of its best reports - @ -0.55 - since April 2008. Capacity utilization also came in @ 68%.

A glance at the FOMC minutes indicates the Fed sees the economy heading towards greater stabilization in 2009 - 2010 while it remains committed to its quantitative easing via purchases of mortgages, agency debt, and treasuries before year end. In my opinion, this will leave the Fed light on ammunition for a while. Bond vigilantes and American taxpayers have had their fill of economic stimulants and anymore in the near-term just might cause the U.S. capital markets to keel over from a toxic overdose.

Volume was up on both major exchanges: NYSE volume +17% above average and Nasdaq Composite volume +21% above average.

This Wednesday, bulls overwhelmed the bears and sent them scurrying off like raped apes. Price volume analysis shows that 75% of today’s trading reflected bullish accumulation (price up & volume up ) of stocks.

Furthermore, almost 84% of stocks are trading above their volume weighted average price, another sign of institutional demand. Some of this may also be attributed to short-covering as @ 43% of stocks have a short interest ratio of 5 or higher.

In terms of being overbought or oversold the market is neither. The correction has been carried out in a somewhat orderly manner. As a result, the percentage of stocks oversold is @ 16% and overbought is @ 11%. In terms of industry breadth, @ 2% of industries are oversold and @ 3% of industries are overbought. This situtation gives the market a lot of room to bounce around over the next few weeks.

And again, I must reiterate that the primary catalyst for the market direction will be earnings and guidance. JP Morgan Chase (JPM) reports before tomorrow’s opening bell.

Market Summary

The DIA closed up +3.04% @ $86.20 and $0.16 below its high and $1.66 above its low. Volume  was -16% below average volume. Daily PMI* is @ 91.21 and weekly PMI* is @ 97.00.

The SPY closed up +2.92% @ 93.26 and $0.23 below its high and $2.60 above its low. Volume was +7% above average volume. Daily PMI* is @ 91.17 and weekly PMI* is @ 95.94.

The QQQQ closed up +3.36% @ 36.92 and $0.04 below its high and $0.75 above its low. Volume was +38% above average volume. Daily PMI* is @ 98.73 and weekly PMI* is @ 99.59.

The IWM closed up +3.85% @ 51.62 and $0.16 below its high and $1.20 above its low. Volume was +24% above average volume. Daily PMI* is @ 88.24 and weekly PMI* is @ 96.27.

(*PMI measures and indicates strength of the underylying security’s trading range on a scale of 1-100.)

Industry Summary–> Positive: 207; Negative: 2; Unchanged: 0

Leading Industries: toy & hobby stores; resorts & casinos; printed circuit boards; office supplies; foreign regional banks; steel & iron; aluminum; general entertainment; credit services; reit-hotel/motel

Lagging Industries: trucking; restaurants

Volume Movers

Stocks Moving Up on Surging Volume

• Large Caps: JNS; CIT; GCI; INTC; BMS; HAR; DYN; DELL; ALTR; NYT; TER; WPO; AMAT; ICE; AMD; KLAC; VRSN; EFTC
  

• Mid Caps: ADTN; RGS; FCS; DRIV; KFY; LZ; ADS; ACXM; NVE; OSK; KMX; HLX; PLCM; AFFX; VSH; RFMD
  

• Small Caps: AIR; TKTM; TLEO; KLIC; FINL; CELL; TXI; CY; VECO; SAM; WWW; SWSI; PTEC; RTEC; SMP; PKE; SKY; NEU; RHB; VSEA; STL; SMSC; MTEX; HOS; CALM; SMRT; TKLC
  

Stocks Moving Down on Surging Volume

• Large Caps: YUM; AIG; ABT; TSS
  

• Mid Caps: JBHT; WERN; WABC
  

• Small Caps: CPF; UCBH; LUFK; ABFS; HAFC; HUBG
  

Market Condition and Trend Analysis

Market Momentum (% of Stocks Above Moving Averages)

Technical Support & Resistance Levels for July-16-2009

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