Wiser Trader Stocks and Options Newsletter

______________________________________________________________________________

 

Issue No. 106   December 25, 2006                 Prescott, Arizona                       Systems@WiserTrader.com

______________________________________________________________________________

 

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

 

 

 

 

 

__________________________________________________________________________________

 

 

Recommended for Excel Users

Automatic stock updates in Excel spreadsheets

 

 

XLQPlus

 

Download for a 45-day free evaluation.

Order  a 1-year license for $114

Data is continuously updated.  Create dynamic live charts.  Manipulate live market data with all the power of Excel.  Free advanced spreadsheets are available to get you started.  XLQPlus is recommended by The Oxford Club, Investment U e-letter and The American Association of Individual Investors.  It is simple to install.

 

__________________________________________________________________________________

 

 

 

 

 

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.

 

 

 

      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:

Specialized Health Services

Auto Manufacturers - Major

Processing Systems & Products

Drug Stores

Health Care Plans

Management Services

Life Insurance

Hospitals

General Entertainment

Auto Dealerships

 
 Lagging Industries
 For the Past Week:

Air Delivery & Freight Services

Sporting Goods Stores

Aluminum

Home Furnishing Stores

Apparel Stores

Personal Computers

Oil & Gas Equipment & Services

Music & Video Stores

Printed Circuit Boards

Copper

 
 
 
 Leading Industries
 For the Past Month:

Specialized Health Services

Drug Stores

Tobacco Products, Other

Health Care Plans

Hospitals

Auto Manufacturers - Major

Marketing Services

Life Insurance

Beverages - Brewers

Resorts & Casinos

 
 Lagging Industries
 For the Past Month:

Semiconductor - Broad Line

Music & Video Stores

Air Delivery & Freight Services

Semiconductor - Specialized

Internet Software & Services

Multimedia & Graphics Software

Printed Circuit Boards

Internet Information Providers

Personal Computers

Toy & Hobby Stores

 
 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%
 
 
 
 

 

 

_________________________________________________________________________

 

 

 

 

Buy One ~ Give One Free

Buy One Annual License for Only $279.00
Give One To The Trader On Your List Free!

This package is valued at about $1198.00
Click Here to Order Today

This offer expires soon.

Current Stock Picker RT Users can contact Investing Systems to extend their license at this great price as well and they'll ship the GIFT one too!.  E-mail info@Investing-Systems.com

 

_________________________________________________________________________

 

 

 

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%