Stockscom Report for
Publisher: Colin Alexander Editor: Ken Wilson (450-691-4617)
Subscriptions and Administration: Pierre Fichaud (toll-free:
·
Employment report includes
121K new jobs
Market Synopsis
Confusion would be the best description of
how the week ended in stock markets. The release of the much anticipated June
employment report was either disappointing or rewarding depending on whom one
spoke to. The Labor Department signaled that another 121K jobs were created and
fully one quarter of them were in government (which some might argue sounds
suspiciously like
In terms of sheer numbers then, the jobs figure was akin to a North Korean missile launch - a terrible disappointment that came up distinctly short of its target. But other analysts pointed to this weakness as a reason for the Federal Reserve to relax its series of interest rate hikes when it meets again in August. Unfortunately, the Fed will undoubtedly notice that in the jobs report, mention was also made that wages increased 0.5% pushing the annual rate to 3.9%, the highest rate since June 2001. Wages increasing by 3.9% could provoke inflation and the Fed is keen to avoid that scenario. Heretofore, the Fed has only needed to consider price inflation for wages were barely keeping pace with the inflation rate.
Regardless of how it was perceived by analysts, investors opted to give the jobs report a collective thumbs down. The end result being that Friday’s market action was heavily bearish with few stocks rising in an environment that was strongly negative.
Technically Speaking
Friday’s stock market action was characterized by a return to the negativity that marked the past two months. While the broader markets have tended to remain more positive with charts that show solid rebounds from the lows of June, the tech sector appears ready to mark new lows with drops below its own respective lows.
Specifically, the S&P 500 closed Friday just above its 200-day moving average and in the top half of the intraday range of last Thursday when shares received a boost from the Fed announcement on interest rates. For now support must be found at the 1255 level if stocks are to continue this rebound. A failure here would probably entail a new lower low and given the timing, much of this future price action will be triggered by the fast approaching second quarter earnings season. Similarly, the Dow Jones would find its support at around the 11,000 level ensuring that it retains a glimmer of hope for bulls otherwise a cross through the 200-day moving average would imply a further drop and a probable new low.
Only the tech sector as represented by Nasdaq displays a distinctive bearish appearance. Friday’s close was in the lower half of the intraday range from last Thursday and a test of the 2100 level appears imminent. In characteristically bearish fashion, trading volume on down days since the beginning of May has been generally greater than volume on up days and consequently, the likelihood of new lows has increased appreciably.
New Buy Recommendations (in order of preference):
None.
New Short Sales
Ebay (EBAY) – Ebay hit its peak in early 2005 and has been in a decline since that time. Technically, the fall through support at $30 and the recent drop through the 200-week moving average prove that the bears are firmly in control and that a move toward $17.50 is likely.
Getty Images Inc (GYI) – Steadily since the beginning of the year, this stock has been declining. In its most recent action, the months of May and June while demonstrating promise for the remaining bulls, were nullified over the past two sessions reconfirming the bears superiority with strong dips in price on increasing volume.
Laureate Education Inc (LAUR) – The decline for this stock began at the end of April and a feeble attempt to reach the 200-day moving average failed in June. Wednesday’s move touched a low not seen since 2004 and there is every reason to believe that the share price will once more test this level and others below.
Stock Positions to Sell/Exit:
First
Portfolio Comments:
New stops have been added to the list while others have been modified. Those that have blanks, are being carried unstopped for now. Please see our complete list of stops in the table below.
List of Current Stock Recommendations:
Action Ratings. The following is the legend for designating immediate action
for our stock recommendations. The first is B, meaning the stock is timely
to buy but the case for doing so right here is not overwhelming. Either the
stock may have gotten ahead of itself and may be vulnerable to a retracement or
else the stock has been performing disappointingly but may simply be
regrouping. B+ and B++ indicate stocks for which there is a technical case
to buy now, with plusses adding weight according to how many there are, up
to a maximum of two. Stocks rated H are ones to hold, awaiting confirmation
to buy more or to sell. SELL, of course, means what it says. It seldom pays
to override this designation. In the case of stocks held short, the rating is S
where positions should be retained. S+ and S++ indicate stocks for which there
is a technical case to add to the positions with plusses adding weight similar
to long positions. The maximum number of plus signs is 2.
N.B. There are no longer restrictions on foreign stocks held in Canadian retirement savings accounts.
|
Date of Entry |
Name |
Symbol |
Entry Price |
Current Price |
Stop |
Action Rating |
|
06/12/06 |
First Marblehead |
FMD |
48.85 |
50.00 |
50.00 |
SOLD |
|
07/03/06 |
Seabridge Gold |
SA |
12.11 |
12.01 |
10.00 |
|
|
07/03/06 |
Titanium Metals |
TIE |
34.50 |
31.30 |
29.50 |
|
|
07/03/06 |
Zumiez Inc |
ZUMZ |
38.00 |
35.28 |
32.00 |
|
New stops in BOLD
* Stop on a closing basis
** Buy if above entry price
*** Split-adjusted price