Why The Market May Strengthen This Afternoon…
After yesterday’s dismal trading experience,
the markets opened up positive, but became progressively weaker as they reached
the midpoint. Some of the sectors that have been helping buoy the market are
Networking, Telecom, Wireless Communications, Software,
Computer Hardware, Drug and Broker/Dealer.
The Homebuilding sector is strong today thanks to Hovnanian Enterprises
(
HOV |
Quote |
Chart |
News |
PowerRating).
HOV blew away the earnings estimates today. Third
quarter earnings were $1.20 per fully diluted share, a record for any quarter in the
company’s history. These results are well ahead of analysts’ estimates and a 69%
increase over last year’s third quarter earnings per share. HOV has a
TradingMarkets.com RS3 rating of 90. HOV had pulled back to test its
20-day moving average at 29.78, but this morning gapped up at the opening
and is trading strong. Some other homebuilders that could benefit from this
news are Beazer Homes
(
BZH |
Quote |
Chart |
News |
PowerRating), Centex
(
CTX |
Quote |
Chart |
News |
PowerRating), D.R. Horton
(
DHI |
Quote |
Chart |
News |
PowerRating), KB Home
(
KBH |
Quote |
Chart |
News |
PowerRating), Lennar
(
LEN |
Quote |
Chart |
News |
PowerRating), Pulte Home
(
PHM |
Quote |
Chart |
News |
PowerRating), Ryland
(
RYL |
Quote |
Chart |
News |
PowerRating), Standard Pacific
(
SPF |
Quote |
Chart |
News |
PowerRating) and
Toll Brothers
(
TOL |
Quote |
Chart |
News |
PowerRating).
On the negative side of trading, the Phlx
Semiconductor Index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) is dragging on the Nasdaq. The SOX has
dropped to a 52-week low and is in an area that has not been seen since 1998.
Other weak sectors are Gold
(
$XAU.X |
Quote |
Chart |
News |
PowerRating), Airlines
(
$XAL.X |
Quote |
Chart |
News |
PowerRating),
Retail Drug, OIL Service
(
$OSX.X |
Quote |
Chart |
News |
PowerRating) and Utility.
Take-Two Interactive Software
(
TTWO |
Quote |
Chart |
News |
PowerRating)
is forming a cup-and-handle on the daily chart. Resistance is at 26.00.
TTWO has a
TradingMarkets.com RS3 rating of 96 and an uptrending
ADX of 32. A break above 26.00 with strong volume would be a sign of a
new leg up.
Fossil
(
FOSL |
Quote |
Chart |
News |
PowerRating)
is rallying from a pullback from the high with increasing volume. FOSL has a
TradingMarkets.com RS3 rating of 97 and an uptrending
ADX
of 34.
Open Text Corp.
(
OTEX |
Quote |
Chart |
News |
PowerRating) is testing
its 20-day moving average at 22.53. OTEX has a
TradingMarkets.com RS3 rating of 94 and an uptrending
ADX of 31.
Isle of Capris Casinos Inc.
(
ISLE |
Quote |
Chart |
News |
PowerRating)
is rallying higher after testing its 20-day moving average (20.85) on the daily
chart. Volume is very strong today and ISLE has a
TradingMarkets.com RS3 rating of 97.
Merit Medical Systems
(
MMSI |
Quote |
Chart |
News |
PowerRating) is
forming a symmetrical triangle. A break above 19.00 with increasing volume could
signal another leg up. So far in today’s session, MMSI has unusually strong
volume for this time of the day.
Borgwarner
(
BWA |
Quote |
Chart |
News |
PowerRating)
is rebounding off the
20-day moving average and could be setting up for a retest of its prior high.
BWA is holding a
3-month
relative strength rank of 80 from TradingMarkets.com.
Apache Corp. (APA)
appears to be gathering support at two 50% retracements and the 50-day moving
average. APA carries a
3-month
relative strength rank of 82 from TradingMarkets.com.
Nasdaq Breadth
Adv: 1522 UpVol: 3456631
Dec: 1545 DnVol: 3696584
Net: -23 Net: -239953
NYSE Breadth
Adv: 1692 UpVol: 37342962
Dec: 1435 DnVol: 33431810
Net: +257 Net: +3911152