______________________________________________________________________________
Issue No. 26 – May 16, 2005
Prescott, Arizona Systems@WiserTrader.com
______________________________________________________________________________
1.0
Trading
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1.1
Leaders
The market continued its up and down movement on
alternating days. Technology was the only bright spot this past week, as seen
in Table 1. Energy and Materials declined significantly.
Table 1
Selected Industry ETF's and Sector SPDR's 05/14/05
|
ETF & SPDR
|
1 month
|
1 wk ago
|
2 wks ago
|
3 wks ago
|
4 wks ago
|
|
GOLD
|
-1.1%
|
-1.3%
|
-1.9%
|
-0.1%
|
2.3%
|
|
Transportation
|
0.7%
|
-3.5%
|
3.0%
|
0.1%
|
1.3%
|
|
Telecommunications
|
-1.2%
|
-1.8%
|
-1.3%
|
1.2%
|
0.7%
|
|
Semiconductors
|
9.8%
|
2.5%
|
3.9%
|
0.6%
|
2.5%
|
|
Biotechnology
|
5.1%
|
1.2%
|
3.4%
|
-0.4%
|
0.8%
|
|
Banking
|
1.9%
|
-1.4%
|
0.3%
|
2.3%
|
0.7%
|
|
Real Estate
|
4.9%
|
-0.1%
|
0.6%
|
3.1%
|
1.2%
|
|
Oil
|
-4.0%
|
-6.2%
|
2.9%
|
-6.3%
|
6.2%
|
|
Financials
|
1.8%
|
-1.8%
|
1.1%
|
2.5%
|
0.0%
|
|
Utilities
|
0.6%
|
-2.2%
|
-0.8%
|
1.1%
|
2.4%
|
|
Healthcare
|
0.9%
|
-0.3%
|
0.9%
|
1.3%
|
-1.0%
|
|
Consumer
Staples
|
0.0%
|
-1.0%
|
1.3%
|
0.7%
|
-1.0%
|
|
Energy
|
-2.3%
|
-5.6%
|
1.4%
|
-3.5%
|
5.8%
|
|
Materials
|
-1.9%
|
-6.1%
|
2.7%
|
-0.2%
|
2.0%
|
|
Industrial
|
0.8%
|
-1.4%
|
0.9%
|
0.1%
|
1.2%
|
|
Technology
|
4.8%
|
1.2%
|
1.4%
|
0.3%
|
1.9%
|
|
Consumer
Discretionary
|
-0.2%
|
-1.3%
|
2.4%
|
-0.9%
|
-0.4%
|
© 2005 Desert Mountain Systems, LLC. Members of wisertrader.com are neither licensed
brokers nor licensed advisors. Trades discussed represent recommendations
made by the editor for the wisertrader.com portfolio. The newsletter and web
site are for information only and should not be considered as personal advice.
While it is believed that the posted information is factual, mistakes can be
made in transcription. Investors should trade stocks only after verifying all
information and consulting with a licensed broker or adviser. Desert Mountain Systems markets third party trading systems but has no other affiliation
with trading system companies.
Semiconductors rose based
on favorable earnings reports from Dell, Cisco and Nvidia with positive
outlooks for the rest of the year. It will be interesting to see if Technology
continues its up tick shown in Figure 1 as the week progresses.
FIGURE 1
Six
leading ETF’s for the past week appear with the S&P500 in Figure 2. The
chart shows that all 6 have gained over the past month. However, based on
their MACD, only one of these is in an established up trend, namely TLT, the
iShares Lehman 20+ Year Treasury Bond ETF. The Williams %R triggered on May 6th
through 9th with a 7 day SMA confirmation occurring on May 10th.
The other ETF’s in Figure 2
are in the very earliest stages of a possible up trend. The MACD indicates an
up trend when both the fast and the slow lines are both consistently above the
zero reference. Long entry points also occur with an increasing MACD histogram
that indicates an increasing gap between the fast line and the slow line, as is
the case for IGN, IGW and SMH. Long entry points can be indicated before that when
the fast line first crosses above the slow line. Although BDH and MTK look
impressive, their MACD’s do not indicate rising histograms and they trade at
lower volumes. . . . Watch your trailing stops . . .
FIGURE 2
2.0 Market Analysis
Industry leaders in Table 2
rank from highest to lowest.
Table 2 - Market
Summary - Week Ending 05/14/05
Major Indices:
Dow Jones -2.0%
NASDAQ +0.5%
S&P500 Index -1.5%
Russell 2000 -2.4%
30 Year Bond 4.484%
10 Year Note 4.121%
Industry Leaders
For the Past Week:
Telecommunications Equipment
Semiconductors
Biotechnology
Aerospace & Defense
Technology Hardware & Equip
Specialized Consumer Services
Computer Hardware
Technology
Electrical Components & Equip
Software
Industry Leaders
For the Past Month:
Internet
Biotechnology
Semiconductors
Telecommunications Equipment
Tires
Soft Drinks
Real Estate Holding & Develop
Technology Hardware & Equip
Real Estate Investment Trusts
Beverages
Crude Oil $48.67
Gold for the past 30 days:
USD -0.83%
CAD +0.93%
CHF +0.01%
GBP +0.78%
EUR +0.61%
JPY -1.62%
Strong retail sales, a
lower trade deficit, strong employment figures and falling oil prices were
positives for the economy. Unchanging inflation expectations, lower consumer
confidence and possible hedge fund liquidity problems are negatives.
The market ended its
three-week winning streak despite bullish economic, earnings, and oil
news. This reflects the underlying nervousness that is leading to an
increased risk premium on stocks. The price/earnings multiple on
operating earnings for the S&P 500 has plunged over the past six months
from 20.2 to 16.8. That has produced talk that blue chips stocks are
reaching excellent valuation levels. Yet, until some of the nervousness
subsides, this value will not be realized. It will take better inflation
numbers and continued solid economic numbers for that to happen. PPI data are
due on Tuesday and CPI data on Wednesday.
The 5 day RSI for the DOW
is over sold and is neutral for the S&P500 and NASDAQ. The 5 week RSI is neutral
for all three major indices. Other sentiment indicators are in Table 3.
Table 3
VTO Report on Market Sentiment
Indicators
|
Sentiment Indicator
|
Value
|
Last Week
|
2 Weeks Ago
|
Complacent
|
Cautious
|
|
VIX *
|
16.32
|
14.05
|
15.31
|
< 20
|
> 50
|
|
VXN **
|
18.41
|
17.58
|
18.54
|
< 30
|
> 70
|
|
Put/Call Ratio
|
0.722
|
0.802
|
0.738
|
< 0.6
|
> 0.7
|
|
%Bulls - %Bears
|
18.2%
|
13.1%
|
14.3%
|
> 29
|
< 20
|
|
* VIX
is above its 20 day SMA – a sell signal
** VXN
is below its 20 day SMA – a buy signal
|
3.0 Procedure
The following watch lists contain
stock candidates for consideration. They are not necessarily recommended
trades. The “Reference” is the date that a stock was added to the list. The “%
Change” is how the price has changed since a stock was added to the list. Stocks
that are down 10% or more after being listed are removed. The “% from Max” is
the last price relative to the maximum price reached after a stock was added to
the list. Stocks that are down 8% from their highs after being listed are
flagged in yellow. Stocks that are down 15% from their highs after being
listed are removed. More information on each of these filters is available on
the web site. Send me an email
if you want more details on a filter.
Key
Companies that have
experienced net insider buying within the past 6 months of 5% or more of issued
stock are listed in Table 3A. CNST, IPSU, IRN, MERCS and CSTA declined more
than 10% since being listed and were removed.
Table 3A
Net Insider Buying Stock Filter
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
|
ACAD
|
04/29/05
|
-3.6%
|
ACADIA
Pharmaceuticals Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-6.6%
|
|
FTD
|
04/08/05
|
-6.1%
|
FTD Group,
Inc.
|
Services
|
Retail
(Catalog & Mail Order)
|
-6.3%
|
|
FVRL
|
04/22/05
|
-1.0%
|
Favrille,
Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-8.0%
|
|
INHX
|
04/08/05
|
-1.5%
|
Inhibitex,
Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-7.0%
|
|
IPXLE
|
04/29/05
|
1.7%
|
Impax
Laboratories Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-2.5%
|
|
ITMN
|
04/08/05
|
0.6%
|
InterMune,
Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-0.4%
|
|
OSHC
|
04/08/05
|
-2.7%
|
Ocean
Shore Holding Co.
|
Financial
|
S&Ls/Savings
Banks
|
-2.9%
|
|
THLD
|
05/06/05
|
-7.1%
|
Threshold
Pharmaceuticals, Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-7.1%
|
|
TRCA
|
04/29/05
|
23.3%
|
Tercica,
Inc.
|
Health
Care
|
Biotechnology
& Drugs
|
-3.0%
|
|
ZHNE
|
05/06/05
|
5.5%
|
Zhone
Technologies, Inc.
|
Technology
|
Communications
Equipment
|
-1.2%
|
Companies with net cash
positions that comprise at least 40% of their share price are listed in Table
3B.
Table 3B
Capital Rich Companies Filter
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
|
ACP
|
04/08/05
|
4.0%
|
American
Real Estate Partners, L.P.
|
Services
|
Casinos
& Gaming
|
-0.6%
|
|
ADZA
|
04/08/05
|
10.6%
|
Adeza
Biomedical Corporation
|
Health
Care
|
Biotechnology
& Drugs
|
-3.8%
|
|
BCGI
|
05/06/05
|
0.0%
|
Boston
Communications Group Inc
|
Services
|
Communications
Services
|
-6.9%
|
|
CDCO
|
04/22/05
|
1.5%
|
COMDISCO
HLDG CO INC
|
Services
|
Rental
& Leasing
|
-0.3%
|
|
CFNB
|
05/13/05
|
0.0%
|
California First National Bancorp
|
Services
|
Rental
& Leasing
|
0.0%
|
|
EXAR
|
04/29/05
|
0.9%
|
Exar
Corporation
|
Technology
|
Semiconductors
|
-2.7%
|
|
FDRY
|
04/29/05
|
-1.7%
|
Foundry
Networks, Inc.
|
Technology
|
Communications
Equipment
|
-1.7%
|
|
KEYN
|
05/13/05
|
0.0%
|
Keynote
Systems, Inc.
|
Technology
|
Computer
Services
|
0.0%
|
|
MFW
|
05/13/05
|
0.0%
|
M & F
Worldwide Corp.
|
Consumer
Non-Cyclical
|
Beverages
(Non-Alcoholic)
|
0.0%
|
|
NCTY
|
04/08/05
|
20.4%
|
The9
Limited
|
Services
|
Business
Services
|
-11.2%
|
|
VNUS
|
05/06/05
|
5.7%
|
VNUS Medical
Technologies, Inc.
|
Health
Care
|
Medical
Equipment & Supplies
|
-4.6%
|
|
WSC
|
04/08/05
|
-6.8%
|
Wesco
Financial Corp.
|
Conglomerates
|
Conglomerates
|
-8.1%
|
|
WZEN
|
04/22/05
|
-3.8%
|
Webzen
Inc. (ADR)
|
Technology
|
Computer
Services
|
-5.7%
|
For the screen in
Table 3C, the number of selections is reduced by eliminating stocks having
P/E’s greater than 30.
Table 3C
Growth Momentum Watch
List
|
Stock
|
Reference
|
% Chg
|
Company
|
Sector
|
Industry
|
% from Max
|
|
BDK
|
04/29/05
|
-2.8%
|
The Black
& Decker Corporation
|
Consumer
Cyclical
|
Appliances
& Tools
|
-3.6%
|
|
CHE
|
05/06/05
|
3.8%
|
Chemed
Corporation
|
Services
|
Business
Services
|
-0.4%
|