Market Overview for 11/7 and the Week:
Friday 11/7, the Q’s finished flat to slightly lower while all the other asset class ETFs finished flat to higher. The exception to the flat finish is Gold (GLD) up 3% on the day and up just a tiny bit on the week.
Friday, S & P 500 Index (SPX) added less than 0.1 percent to 2,031.92 at 4 p.m. in New York. The Dow Jones Industrial Average climbed 19.46 points, or 0.1 percent, to 17,573.93. Both gauges closed at records. The Nasdaq Composite Index dropped 0.1 percent.
The monthly employment situation report showed companies hired fewer workers than forecast while the jobless rate dropped to a six-year low, supporting speculation the economy is withstanding an overseas slowdown.
The S&P 500 has rebounded more than 9 percent from a six-month low on Oct. 15 as companies beat analysts’ earnings estimates at the fastest pace in four years. Of the S&P 500 members that have reported their latest quarterly results, 80 percent topped profit projections, while 60 percent beat sales estimates, according to data compiled by Bloomberg.
S&P Sector Winners:
Lets look at the S&P sectors and sort them by the change over the last 5 days. Ten were up on the week and three declined. Oddly enough of the three decliners, two are sector leaders, Healthcare and Biotech. The Biotech is now in a short term down trend however, the longer term trends are fine.
Lets look at the XBI Daily Chart:
The definition I use for the short term trend is the issues position basis Welles Wilder Stop and Reverse (SAR) system. The SAR is defined by the dots on the chart above. The SAR exited or went short XBI on the 5th of November and the buy stop is now at 176.98. XBI is also at the bottom of a support area outlined by the lower white horizontal line.
One of the nice features about the SAR is how the stops follow price up and down. Using the SAR to buy this ETF is not a bad strategy. In fact you could buy half here and add at the SAR if you are so inclined.
If you are interested in this method, Stock Charts has a very good explanation including the calculations involved. GO: Parabolic SAR
Sector Watch:
Sorting the spreadsheet by column E (5-day or 1 week change), some surprises pop up. Well, at least to me. Remember click picture for a full size image.
Seven of the 10 are still down on the year. So even though they are up on the week the trends are still lower. A short term up trend however does exit for the first sector ETF – (URA) Global X Uranium ETF
I looked for news that might explain that move, did not find any. Perhaps it will come out later. These beaten down sectors or industries have been attracting buyers this past week. Again, probably a good deal of short covering but we will have to keep our eyes and ears open for any potential opportunities here.
The “50” Updates:
It was my mistake as to when the “50” are updated. The correct day is Friday, for Monday’s paper. The list will appear over the weekend and changes will appear in these notes on Monday.
This week adds nine new stocks. Here is a quick look at the new members. Remember just click the picture for a full sized image.
Using the parabolic SAR all new members are in long positions. However utilizing the Chandelier two are in cash. Click Chart for full size, notes if any are on the chart.
The Chandelier requires a close through the blue line. The SAR is an open stop during the day. Both of these methods give you before entry your risk from which to calculate position size.
Today’s Reports and Earnings:
Talking Points and Alessandra Orofino: It’s our city. Let’s fix it:
The Rise of Invisible Unemployment (Atlantic)
Dell’s Life After Wall Street (NY Times)
Solid Employment Report, Seasonal Retail Hiring at Record Level (Calculated Risk)
Better All the Time (New Yorker
Cracking the Code of Fixed-Income Investing (Barron’s)
Health Tip: Find Purpose in Life (The Atlantic)
A Strategy for Rich Countries: Absorb More Immigrants (NY Times)
Janet Yellen Can’t Say It, but the Republican Win Was Bad for Her (Businessweek)
Do you have what it takes to be a contrarian investor? (Cam Hui)
Sector Weightings: Another Financial Toolbox Gizmo (Investing Caffeine)
This billionaire thinks the Fed is missing the hyperinflation in the Hamptons (WonkBlog)
The Most Fascinating Profile You’ll Ever Read About a Guy and His Boring Startup (Wired)
Shareholder Value Maximization: The World’s Dumbest Idea? (CFA Institute)
The Birth of the Internet Troll (Gizmodo)
Alessandra Orofino: It’s our city. Let’s fix it
Have a Great Day!