Recapping 2003 To Prepare For 2004
The average daily range for
the SPX last week of 5 points and
a total weekly range of 12.3 points tells the trading story.The most significant
thing about last week is the muted reaction to the terrorist alert, etc. The SPX
and Dow made more new highs at +0.5% and 0.7% on the week, with the SPX closing
at 1098.47 and the Dow at 10325. Both the SPX and Dow bottomed in 10/02 and are
+43% and +44% low to high off those lows as of 12/26. The big returns have been
made primarily in technology, biotechs, the brokers and also the small cap stocks.
The Semiconductors also bottomed in 10/02 and advanced +158%, hitting its high
of 44.70 on 11/7/03 and has retraced -14.1% to 38.41 as of 12/16 and closing at
40.92 on 12/26, which is just below that 41.10 resistance which is the trough
of the 44.70 and 44.39 double tops in that zone of confluence that you anticipated.
We will worry about higher levels only if the SMH breaks the double top. The 38.41
retracement has fulfilled the 38.24, .236 retracement to the 17.32, 10/7/2002
bear market low. Any more retracement could see the SMH trade to at least the
35 to 35.50 zone, which is the .382 retracement to the 20.36 February retracement
to the 10/02 17.32 low.
The next biggest gainer has been the biotechs with
the BBH advancing 113% low to high, which was 140.30 on 9/19/03, closing Fridy
at 135.49. FYI, the BBHs were the first to bottom on 7/11/02 followed by the
XLE, PPH, XLV, OIH , BKX, and XLF, all on 7/24.
Following the biotechs, the brokers were the next
big mover at +110% from its 10/02 bottom. Most of the big percentage gainers
all bottomed in 10/02, such as the SWH, +90%, QQQ, +83%, Nasdaq, +81%, XLK,
+78%, and IWM (Russell 2000) +73%. The XLB, +60%, XLI, +25%, SPX, +43% and the
Dow +44% also bottomed in 10/02.
Suffice to say looking at the extent of the current
percentage technology weakness with the shorter term negative divergence in
momentum is really not that significant relative to the percentage gains since
the retracement lows following the 10/02 lows. The last major sectors to bottom
in the bear market were the RTH on 2/13/02, which is now +58% The XLP (consumer
staples) 3/10/03, +21%, and the XLY (consumer discretionary) on 3/12/03, +51%,
and then made new highs last week above its 12/1/99 high.
This commentary is the first part of a 2003
summary which will assist you in identifying any early weakness in the sectors
which might precede topping patterns later on next year in the major indices.
We will also look to various early business cycle indicators like interest
rates, to name just one, and other cycle time frames which keep you from
reacting emotionally to normal retracements and daily noise. Under normal
business cycle time frames, I don’t expect a top until late 2004 or early 2005,
with the next bear market trough in late 2006 or early 2007.
The current terrorist situation is very dangerous
and I am very surprised and worried about the complacency in the markets. This
calls for a guarded approach going forward into 2004 because of the disruption
to the markets that can occur. Because of the current weekly trading range
positions, the XLK and QQQ could move into year-end and into the early January
new money period if the Generals get aggressive.
Have a good trading day
Kevin Haggerty
| size=2> |
Monday
12/22 |
Tuesday
12/23 |
Wednesday
12/24 |
Thursday
12/25 |
Friday
12/26 |
Net
|
| color=#0000ff>Index | ||||||
| color=#0000ff>SPX | ||||||
| color=#0000ff>High |
1092.94
|
1096.95
|
1096.40
|
H
|
1098.47
|
1098.47
|
| color=#0000ff>Low |
1086.14
|
1091.73
|
1092.73
|
1094.04
|
1086.14
|
|
| color=#0000ff>Close |
1092.94
|
1096.02
|
1094.04
|
O
|
1095.89
|
1095.89
|
| color=#0000ff>% |
+0.4
|
+0.3
|
-0.4
|
+0.2
|
+0.5
|
|
| color=#0000ff>Range |
6.8
|
5.2
|
3.7
|
L
|
4.4
|
12.3
|
| color=#0000ff>% Range |
100
|
83
|
35
|
42
|
79
|
|
| color=#0000ff>INDU |
10338
|
10341
|
10305
|
I
|
10325
|
|
| color=#0000ff>% |
+0.6
|
+.03
|
-0.4
|
+0.2
|
+0.7
|
|
| color=#0000ff>Nasdaq |
1956
|
1975
|
1969
|
D
|
1973
|
|
| color=#0000ff>% |
+0.3
|
+1.0
|
-0.3
|
+0.2
|
+0.3
|
|
| color=#0000ff>QQQ |
35.59
|
35.86
|
35.90
|
A
|
35.85
|
|
| color=#0000ff>% |
+0.4
|
+0.8
|
+0.2
|
-0.1
|
+1.3
|
|
| color=#0000ff>NYSE |
Y
|
|||||
| color=#0000ff>T. VOL |
1.24
|
1.15
|
517
|
358
|
816
|
|
| color=#0000ff>U. VOL |
824
|
707
|
224
|
241
|
499
|
|
| color=#0000ff>D. VOL |
405
|
423
|
279
|
108
|
304
|
|
| color=#0000ff>VR |
67
|
62
|
44
|
69
|
||
| color=#0000ff>4 MA |
65
|
66
|
56
|
61
|
||
| color=#0000ff>5 RSI |
81
|
83
|
76
|
78
|
||
| color=#0000ff>ADV |
2041
|
2043
|
1613
|
1983
|
1920
|
|
| color=#0000ff>DEC |
1223
|
1193
|
1494
|
1084
|
1248
|
|
| color=#0000ff>A-D |
+818
|
+850
|
+119
|
+899
|
+2686
|
|
| color=#0000ff>4 MA |
+791
|
+848
|
+474
|
+672
|
||
| color=#0000ff>SECTORS | ||||||
| color=#0000ff>SMH |
+.07
|
+1.9
|
-0.2
|
0
|
+2.4
|
|
| color=#0000ff>BKX |
+0.2
|
+0.1
|
-0.2
|
+0.2
|
+0.3
|
|
| color=#0000ff>XBD |
+1.4
|
+0.6
|
-0.5
|
+.04
|
+2.3
|
|
| color=#0000ff>RTH |
+0.2
|
+0.1
|
-0.3
|
+0.6
|
+0.6
|
|
| color=#0000ff>CYC |
+1.1
|
+0.2
|
-0.2
|
+0.5
|
+1.6
|
|
| color=#0000ff>PPH |
-0.1
|
+.09
|
+0.5
|
+0.1
|
+1.4
|
|
| color=#0000ff>OIH |
+1.0
|
-1.9
|
+1.4
|
+.06
|
+0.2
|
|
| color=#0000ff>BBH |
-.07
|
+0.9
|
+0.4
|
-.30
|
+0.9
|
|
| color=#0000ff>TLT |
-0.3
|
-1.1
|
+0.9
|
+0.4
|
-0.1
|
|
|
color=#0000ff size=”2″ face=”Arial, Helvetica, sans-serif”>XAU |
+0.5
|
+0.8
|
+0.4
|
+2.5
|
+4.2
|
