Investment Planning Consultants, Inc.

Similar to how many communities and small business owner’s act when WMT enters their market; Wall Street was cringing yesterday, following the release of WMT’s sales figures and the company reducing their outlook for Q4. Consequently, the DJIA recorded its intraday low within the first hour of trading, down 118 points. By the close, however, the DJIA and the broad market recovered nicely. The DJIA fell 27 points as WMT, down $4.16 at the close, accounted for 33 “negative” points in the final calculation of the DJIA. The NASDAQ gained 18 points as its short-term relative strength trend, versus the SPX, moves higher.

On the NYSE volume contracted to 1.18 billion shares. There were 766 net advancing issues, which is an excellent number relative to the DJIA. New 52-week lows (9) lead new 52-week highs (1) on the NYSE, but over on the NASDAQ, new 52-week highs (12) beat new 52-week lows (9). The Oversold Overbought Oscillator ended its fourth consecutive day in “overbought” territory, closing yesterday at plus 8.0; expect more “pause / pullback” action.

Conclusion

On a short-term basis, in terms of making trading decisions, a technical analyst is far more concerned about “reaction to news, then news itself.” Today’s employment report and the upcoming earnings reports will be a good example of such. So far, the stock market has shaken off bad news from INTC, WMT, and a host of other companies, not withstanding some of the worst economic news I can remember, over the past few months.

An ability to absorb and contain bad news is a bullish short-term event. Otherwise, please use the support levels shown yesterday for the SPX accordingly, specifically 875 (trend line) and between 857 and 851.

Having said that let me share some thoughts and / or charts that I will be discussing later this morning, in a conference call:

This is a tough one. Net-net, I would be increasing my exposure to International markets. Is this a function of an increasing appetite for risk???

Small Cap has marginally wrestled control from Large Cap. The relationship, based on relative strength analysis, is close.

If your business is dominated by mutual funds, until I see a change in the relative strength trends of the indices that represent these style sizes, I would marginally lean first towards the Small Cap universe, closely followed by the Large Cap universe!

Bullish: Utility, Consumer Discretionary, Health Care (losing a little “oomph”), Technology (short-term has just turned bullish. Long-term RS trend is still blasé).

Improving: Materials, Energy (certain energy stocks are acting better than the commodity)

Weakening: Consumer Staples, Telecommunication (Long-term RS trend is still bullish).

Intermediate-term is negative. Short-term is good. Short-term pivot points = $892ish (resistance) and $830 (support).

Let’s say that $35.13 to $34.65 represents a major support area, as defined by the trend line and price low.

Crude needs to get over $50 on a closing basis before I can even think about higher prices. Let’s hope a base continues to develop.

Thursday Morning 01/08

News related weakness in DJIA components INTC and AA plus another bad economic report (ADP National Employment Report, which wasn’t discounted), lead to downside gaps at the open yesterday, by the major stock market indices. Selling pressure persisted throughout the day and by the close the DJIA lost 245 points and the NASDAQ fell 53 points.

On the NYSE volume contracted to 1.22 billion shares. Even with yesterday’s decline the Oversold Overbought Oscillator (a proprietary indicator) closed at plus 7.1, still relatively far above the beginning point of being considered overbought, which occurs at plus 5.00. There were zero stocks making new 52-week highs and 7 new 52-week lows. While a number of stocks have created low level basing patterns (bullish), any sustainable rally requires a growing list of new leaders, defined by hitting a new 52-week high! There were 1886 net declining issues. To put the recent breadth figures into context, in the past three days the DJIA has fallen 265 points yet there has been 927 net advancing issues.

Unless 1) the “Breadth - DJIA relationship” dramatically weakens, 2) the Volatility Index (VIX/43.39) trades dramatically over resistance at 46.24 or 3) support shown on the following page is broken (I admit these are a lot of variables to follow), I dont think the current “pause / pullback” period discussed yesterday, while it will continue, gets out of hand.

Conclusion

The three major stock market indices (SPX, DJIA, and NASDAQ) have fallen below their breakout levels from a few days ago. Thus, they officially recorded very short-term “false breakouts,” which is negative.

However, neither the “false breakouts” nor the downside gaps from yesterday have broken the short-term uptrend that is in place. Please use trend line support, which will marginally change each day, and the 857 to 851 support range, accordingly.

Wednesday Morning 01/07

Despite the Fed’s concern about the economy (see front page of The Wall Street Journal - from a trading and investment perspective, to put this in context, please remember that after an approximate 5000 point decline by the DJIA and one-year later, the National Bureau of Economic Research (NBER) told us the U.S. economy had officially entered a recession) and a series of reports that showed the U.S. economy ended 2008 in a steep decline, most stock market indices closed higher yesterday. Despite a number of large intraday swings, the DJIA ended with a gain of 62 points. The NASDAQ outperformed again, gaining 24 points.

Conclusion

On the NYSE volume expanded to 1.32 billion shares. While total exchange volume remains low, volume did expand on an “up” day. Also, advancing volume lead declining volume by a ratio of more than 3-to-1. There were 1770 net advancing issues. While there are still very few new 52-week highs (8), new highs are outnumbering new 52-week lows (5). Net-net, the internals were strong again yesterday.

I want to come back to the Oversold Overbought Oscillator, a proprietary indicator. The oscillator closed at plus 7.5 yesterday, moving deeper into “overbought” territory. While a market that moves this quickly into overbought territory can be very bullish, it can also signify the need for some type of “pause / pullback” period.

Within the context that I still believe the SPX and DJIA will make a stair-case move (2-steps up, 1-step back, etc.), towards their next levels of resistance (SPX resistance = 1007, DJIA resistance = 9265 and 9600), I think the overbought condition will produce some type of pause / pullback.

During such a time, how the “internals” respond will dictate the degree of such.

Consequently, initial support for the DJIA = 8600 and 8475 (both are minor uptrend lines, which will marginally change each day), followed then by the December lows.

Let me please reiterate a comment from yesterday, namely “tighten trading stops or take some trading profits and raise your stops on the balance.”

Tuesday Morning 01/06

In light of upcoming earnings reports and a downgrade of telecom giants and DJIA components VZ and T, market indices snapped their recent winning streak yesterday. VZ, T, and JPM combined accounted for nearly 42 of the almost 82-point decline by the DJIA (8952.84). The NASDAQ (1628.03), aided by news from AAPL, outperformed, only losing 4 points.

I read this morning on the website “Commodityonline” that some index rebalancing is going on in the Gold market. This rebalancing plays a part in yesterday’s, today’s, and maybe tomorrow’s sharp sell-off in Gold ($857.80). It would take a move beneath short-term support at $829.80 to break Golds current short-term uptrend. At the same time, this rebalancing is helping Crude Oil. Speaking of Crude Oil ($48.81), following crude’s recent move down to within less than $1.00 of a multi-year uptrend line drawn off its 1998 low (see 12/19/08 report), the commodity has bounced nicely. Short-term resistance for Crude Oil exists between $50 and $51. A move above a downtrend line drawn off its July 2008 high, currently at approximately $57, would turn the intermediate-term trend bullish, in my opinion.

Under the “Positive” column, I am seeing bullish action coming from a number of emerging markets, more to follow in upcoming reports.

Conclusion

On the NYSE volume expanded to 1.31 billion shares. However, since yesterday’s volume figure is being compared to a holiday session, I will dismiss it. In light of this, it is “positive” to see Advancing volume lead Declining volume and a net reading of 1042 advancing issues. There were eight new 52-week highs and one new 52-week low. Relative to the stock market indices, the market’s internals were bullish yesterday.

The only “fly in the ointment” is that the Oversold Overbought oscillator officially entered overbought territory, as it closed last night at plus 6.2. Consistent with this indicator, please tighten trading stops or take some trading profits and raise your stops on the balance. Also, trading positions should be established on a partial basis only.

However, having discussed my target for the SPX (927.45) yesterday, in terms of the DJIA, selling pressure exists at approximately 9265 and 9600. I think both levels will eventually get tested. Please trade and invest accordingly.

Monday Morning 01/05

In what is becoming a trend, poor economic reports (ISM Manufacturing Index and global semiconductor chip sales) were chewed up and spit out last Friday. The market indices opened the new year sharply higher, its best first-day rally since 2003, as the DJIA gained 258 points and NASDAQ rallied 55 points. Both indices recorded bullish, short-term, topside breakout and look higher! On the flipside, the U.S. government fixed income market was slammed for the second consecutive day. My suggestions to hedge what had been a parabolic move in this market a month ago, while early, still feels like the right thing to do. I say this because the 10-year note and 30-year bond have established at least a short-term top of significance and could pull back to their 50-DMA, at a minimum. Let me please reiterate calling the Closed End Fund Department in order to take advantage of this observation!

Sector wise, bullish short-term price action can be gleaned in the Energy complex. Specifically, by looking at a chart of the respective Exchange Traded Fund (listed just after the sub-sector name), you can see this in the Solar, Nuclear, and Wind area.

On the NYSE volume contracted to 1.03 billion shares. There were 2057 net advancing issues and for the second consecutive trading sessions, more new 52-week highs (12) than new 52-week lows (2).

Within the context that last Friday’s volume reading was dismal and that it will be critical to see expanding volume on “up” days and contracting volume on “downers,” the short-term price structure of the SPX indicates further short-term upside probing ahead.

More Contact Points About 2008 - Following are two tables that show the top 20 point gains and the top 20 point losses since 1980 in the S&P 500. For the point gainers table, 10 of the top 20 came in 2008 and for the greatest point losers, 12 of the top 20 came in 2008.

The report on this page is not a complete description of the securities, markets or developments herein. All expressions of opinion reflect the judgment of the Research Department of Raymond James & Associates, Inc. (RJA) as of the date stated above and are subject to change. Information has been obtained from third-party sources we consider reliable, but we do not guarantee that the facts cited in the foregoing report are accurate or complete. Other department of RJA may have information that is not available to the Research Department about companies mentioned in this report. RJA or its affiliates may execute transactions in the securities mentioned in this report that may not be consistent with the report’s conclusions.

Company Name

Ticker

Priced as of

01/08/09

RJ&A Rating

(if Applicable)

ALCOA, Inc.

$11.36

Apple Computer Inc.

AAPL

$92.70

AT&T Inc.

$27.18

Outperform

Intel Corporation

INTC

$14.55

Strong Buy

JPMorgan Chase & Co.

JPM

$27.22

Verizon Communications

$32.39

Market Perform

Wal-Mart Stores, Inc.

WMT

$51.38

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Weekly Technical Commentary by Art Huprich

Friday Morning 01/09

Conclusion

Thursday Morning 01/08

Conclusion

Wednesday Morning 01/07

Conclusion

Tuesday Morning 01/06

Conclusion

Monday Morning 01/05