Wiser Trader Stocks and Options Newsletter
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Issue No. 106 December 25, 2006 Prescott, Arizona Systems@WiserTrader.com
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1.0 Trading
The major indices declined an average of 1.32% this week.
|
Index |
Last Week |
This Week |
% Change |
|
DOW |
12445.50 |
12343.22 |
-0.8% |
|
NASDAQ |
2457.20 |
2401.18 |
-2.3% |
|
S&P 500 |
1427.09 |
1410.76 |
-1.1% |
|
Russell 2K |
792.71 |
780.82 |
-1.5% |
|
NYSE |
9140.39 |
9062.13 |
-0.9% |
|
Average |
|
|
-1.32% |
1.1 Low Volume
The S&P 500 in Figure 1A declined 1.1% this week. Volume was light as many traders called it a wrap for the season. Precious metals and banks gained slightly while all other sectors fell. Oil and energy were the largest decliners, followed by semiconductors, home construction and technology. The average Williams-%R for the above five indices is -78 with a 200-day moving average of -39.
FIGURE 1A
The NASDAQ in Figure 1B lost 2.3% for the week, still hugging its upper trend line. The sideways movement for the past month is clearly apparent. The NYSE, S&P 500 and DOW have all outpaced the NASDAQ and Russell 2000 over the past month.
FIGURE 1B
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2.0 Market Analysis
Key industry ETF’s in Table 2A are Biotech and Semiconductors, which confirm the NASDAQ. Transportation confirms the Dow Jones Industrial Average according to Dow Theory. Banking and Financials are confirming indicators for the S&P 500. Gold and Housing are respective indicators for the inverse health of the currency (inflation) and the capacity for consumer spending.
Table 2A
Indices, Key Industry ETF’s and Sector SPDR’s
|
|
1 month |
1 wk ago |
2 wks ago |
3 wks ago |
4 wks ago |
|
Dow Jones Industrial Index |
0.5% |
-0.8% |
1.1% |
0.9% |
-0.7% |
|
NASDAQ Composite Index |
-2.4% |
-2.3% |
0.8% |
1.0% |
-1.9% |
|
S & P 500 Index |
0.7% |
-1.1% |
1.2% |
0.9% |
-0.3% |
|
NYSE Composite Index |
1.4% |
-0.9% |
1.1% |
1.0% |
0.2% |
|
Russell 2000 Index |
-1.4% |
-1.5% |
0.0% |
1.5% |
-1.4% |
|
HGX, Phil. Housing Index |
3.2% |
-2.5% |
1.3% |
1.4% |
3.0% |
|
IYR, Real Estate |
-4.7% |
-3.2% |
-0.9% |
-0.6% |
-0.1% |
|
GLD, GOLD |
-2.9% |
1.1% |
-1.7% |
-3.2% |
1.0% |
|
RKH, Banking |
3.0% |
0.4% |
2.7% |
1.2% |
-1.2% |
|
IYT, Transportation |
-7.0% |
-4.3% |
-0.2% |
0.0% |
-2.7% |
|
SMH, Semiconductors |
-5.8% |
-2.8% |
0.2% |
0.5% |
-3.7% |
|
BBH, Biotechnology |
-2.2% |
-1.3% |
-1.0% |
0.4% |
-0.3% |
|
OIH, Oil Infrastructure |
0.7% |
-5.5% |
2.0% |
-0.7% |
5.2% |
|
XLE, Energy |
1.8% |
-4.0% |
1.2% |
-0.7% |
5.5% |
|
XLU, Utilities |
1.0% |
-1.0% |
0.5% |
0.1% |
1.4% |
|
XLB, Materials |
-1.7% |
-2.5% |
-0.5% |
2.4% |
-1.0% |
|
XLI, Industrial |
-1.3% |
-0.5% |
-0.3% |
1.1% |
-1.6% |
|
XLK, Technology |
-2.9% |
-2.2% |
0.7% |
0.3% |
-1.9% |
|
XLV, Healthcare |
1.3% |
0.1% |
0.5% |
0.0% |
0.6% |
|
XLF, Financials |
1.4% |
-0.2% |
1.1% |
2.1% |
-1.6% |
|
XLP, Consumer Staples |
1.3% |
0.0% |
0.0% |
2.1% |
-0.8% |
|
XLY, Consumer Discretionary |
0.7% |
-0.6% |
0.6% |
1.6% |
-0.8% |
The volatility indexes and put/call ratio are listed in Table 2B.
Table 2B
Sentiment
|
Indicator |
Current |
Last Week |
2 Weeks Ago |
Complacent |
Cautious |
|
VIX ** |
11.4 |
10.1 |
12.1 |
< 20 |
> 50 |
|
VXN *** |
17.2 |
15.2 |
17.1 |
< 30 |
> 70 |
|
CBOE Index Put/Call Ratio |
2.01 |
1.20 |
1.42 |
- |
- |
|
CBOE Equity Put/Call Ratio |
0.66 |
0.56 |
0.56 |
< 0.55 |
> 0.70 |
|
** Above 20 day SMA = Short-term sell signal. *** Above 20 day SMA = Short-term sell signal. |
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Figure 2A compares the major averages with key ETF’s and Sector SPDR’s.
FIGURE 2A
Table 2C
Market Summary
Industry performance is based on the Yahoo Industry Classification System
Major Indices For the Past Week: Dow Jones -0.8% NASDAQ -2.3% S&P500 Index -1.1% Russell 2000 -1.5% NYSE -0.9% 30 Year Bond 4.763% 10 Year Note 4.624% FOMC Rate 5.250% Leading Industries For the Past Week: Lagging Industries For the Past Week: |
Leading Industries For the Past Month: Lagging Industries For the Past Month: Crude Oil $62.31 Gold for the past 30 days: USD -1.73% CAD -0.31% CHF -1.95% GBP -3.78% EUR -3.06% JPY +0.60% |
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3.0 Procedure
The following watch lists contain stock candidates for consideration. They are not necessarily trades. Categories include checklists for insider buying and cash rich companies, as well as, filters that employ stock picking methods used by master traders. The information is not meant to imply any endorsement or sponsorship by these master traders.
Current stock rankings are based on the degree to which stocks are overbought or over sold based on the 28-period Williams %R for the past two trading days. Two columns are labeled “%R1” and “%R2” with “%R2” indicating the Williams %R for the most recent trading day. Of course, values more negative than -80 are oversold and those less negative than -20 are overbought.
One should keep in mind that oversold stocks are not necessarily ready to move upward. They could very well be in a condition of continuous decline. The lists are meant to serve as a starting point for further due diligence.
A column labeled “Monthly % Gain” was added to show the inverse relationship between price action over the past month and the Williams %R. The change from a 10-period Williams %R with a weekly percent change to a 28-period Williams %R with a monthly percent change was done to reflect a longer term view.
Watchlist performance is based on weekly closing prices on Friday. The “Reference” is the date that a stock passed the indicated filter and was first added to or returned to the list. The “% Change” is how the price has changed since the reference date. Stocks that are down 10% or more after being listed are removed for a period of about two months. The “% from Max” is the percentage the price has declined from the maximum price reached since the reference date. 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 for two months. More information on filters is available on the web site.
A performance summary of filtering techniques for checklists and master trader selection methods is given in Table 3A.
Table 3A
Stock Filter Summary
|
Filter |
Avg. % Change Since Listed |
Avg. % Change Friday |
1 Month |
1 Week Ago |
2 weeks Ago |
3 Weeks Ago |
4 Weeks Ago |
|
Net Insider Buying |
12.2% |
0.2% |
7.3% |
0.0% |
3.1% |
3.3% |
0.7% |
|
Cash Rich Companies |
0.5% |
-1.0% |
-5.4% |
-2.9% |
1.4% |
-1.6% |
-2.4% |
|
Price to Free Cash Flow |
12.4% |
-1.3% |
2.0% |
-0.2% |
1.9% |
0.8% |
-0.5% |
|
Growth Momentum |
8.9% |
-0.6% |
-0.3% |
-2.3% |
0.6% |
1.8% |
-0.5% |
|
Lynch |
27.2% |
-0.7% |
0.8% |
-1.7% |
-0.3% |
1.9% |
0.8% |
|
Buffett |
12.3% |
-0.5% |
-0.1% |
-3.1% |
-0.1% |
1.6% |
1.8% |
|
Graham |
22.4% |
-0.2% |
1.2% |
-1.8% |
1.2% |
1.3% |
0.6% |
|
Templeton |
12.4% |
-0.6% |
-1.1% |
-2.0% |
-0.1% |
0.5% |