Schaeffer's Trading Floor Blog

Readers Respond - TXU?

by 5/5/2005 12:10 PM
Stocks quoted in this article:

Stuart says - "Nick, What's your take on TXU please?"

My response - As you can see below, TXU has taken a hit recently...


Created with SuperCharts by Omega Research

This weekly chart shows the strong intermediate-term uptrend (red channel) that has seen the shares bounce along their 10-week moving average. The recent pullback, however, has the shares pushing below this trendline. Meanwhile, a check of the equity scorecard shows a relatively healthy reading of 8.

The break of the 10-week trendline may mean the near-term action is going to get sloppy. However, the longer-term uptrend has not yet been broken and the scorecard is still encouraging.

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Stocks quoted in this article:

Joe says - "Hey Nick, how ya doin'? Could you or would you elaborate on Bernie's most recent comment pertaining to the II poll. Specifically I'm not sure about the terms "going negative" and 10 percent situation. Thank you . I understand that you can't answer me directly but maybe some of the other blog readers feel the same way."

My response - For those who didn't see it yesterday, Bernie touched on the Investors Intelligence data in his Gold Dust column.

The phrases "going negative" and "10 percent" refer to the degree that the bullish percent has been greater than the bearish percent. Recently, however, the bullish percent has been declining while the bearish percent has been rising. Currently the bullish percent stands at 43.5 while the bearish percent stands at 30.4. The difference between these two is 13.1. The last time the difference between these two reading was this close was last year in September - around the time the market stabilized.

In the last few years, this "10 percent" difference is as close as these two reading have come and the current reading may lead some to argue that sentiment has shifted enough to spur a rally. However, a closer examination of the indicator reveals some subtle differences in how they are moving compared to what we are used to seeing. In the recent past, this "10 percent" difference has been achieved via quick spikes but the current situation has shown a "drift" or "trend".

Quick spikes tend to signal capitulation that shakes out the weak hands in the market. However, that is not what we have seen and this current "trending behavior" may suggest that a more extreme reading may be needed to signal a buy. This may mean that the bullish percent may have to drop below the bearish percent - a.k.a. going negative.

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Question Overload

by 5/5/2005 10:33 AM
Stocks quoted in this article:

I have a number of questions sitting in my inbox and I will try to address some of those today...Actually, I was hoping to have already started on these, but my alert for NYSE net ticks hit just before 10:00 AM and I have watching the action to see if this buying was able to gain traction. So far, that bit of buying marked the high as there was no follow-through and the SPX has slowly drifted back to breakeven.


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Stocks quoted in this article:

As usual, this table lists stocks that have at least 10 percent of their float sold short and then shows the top ten based on the previous day's gain. The last field shows how the stock is performing in today's session. This can be a useful tool for finding situations where stocks with heavy short interest have begun to move. All returns are shown in percentages.

Note - more information on short interest can be found by clicking here.

Company Yesterday's
Gain
Percent of Float
Sold Short
Yesterday's
Close
Today's
Return
United Online, Inc. (UNTD) 34.8 10.6 11.94 -2.93
Digene Corporation (DIGE) 22.6 15.1 23.29 0.77
WMS Industries Inc. (WMS) 21.2 35.4 30.00 2.10
Jupitermedia Corporation (JUPM) 21.1 16.4 15.85 1.33
General Cable Corporation (BGC) 20.0 11.1 14.15 -0.35
General Motors Corporation (GM) 18.1 16.9 32.80 -1.68
aQuantive, Inc. (AQNT) 17.9 10.8 12.61 9.44
Trinity Industries, Inc. (TRN) 14.1 24.8 27.47 -1.24
DHB INDUSTRIES INC (DHB) 13.2 12.3 8.33 7.32
Ryerson Tull, Inc. (RT) 11.3 19.5 14.75 3.59

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At the Open

by 5/5/2005 9:48 AM
Stocks quoted in this article:

As indicated by the pre-open futures action...

The major indices opened slightly lower. Overall we see a mixed picture as many groups trade near breakeven. Semis are trying to mount a rally as are housing stocks. Oil is leading the upside movers and oil related stocks are following closely behind. Gold stocks are resting after two strong days of bouncing.

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