degraaf’s daily · degraaf’s daily monday august 1, 2011 industry group technical rankings...
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deGraaf’s Daily
Monday August 1, 2011
Intermediate Term BarometerIndustry Group Technical Rankings
Jeffrey deGraaf, CMT, CFA Rob Ginsberg Alex Meintel [email protected] Important disclosure on page 17
Strongest WeakestMarine Construction Materials
Auto Components Automobiles
Oil, Gas & Consumable Fuels Thrifts & Mortgage Finance
Energy Equipment & Services Airlines
Health Care Technology Diversified Financial Services
With all eyes are on the U.S. debt ceiling, fixed income and equity markets seem to be more focused on the deteriorating economy. While yields at the short‐end of the curve have skyrocketed on the political rhetoric coming out of Washington, the longer‐end seems more concerned with the flagging U.S. economy. On the heels of Friday’s disappointing GDP report, 10‐year yields broke to a new cycle low, with the bull‐flattening of the yield curve accelerating to the downside. Over the years, action that has been associated with challenging times for the economy and financial markets.
We have discussed over the past few weeks the rapid decline of the internal strength of the equity markets, using the percent of stocks with their 50‐day moving average over their 200‐day moving average as a proxy. Last week provided further evidence of the markets corrosion, as 9% (45 stocks) of the S&P 500 posted fresh breakdowns, trading down to their lowest price levels in 3‐months.
Resolution of the debt ceiling will surely be embraced bullishly by the markets, an opportunity we would use to reduce risk and rotate towards safety.
Rob Ginsberg
Created in MetaStock from Equis International
July August September October November December 2011 February March April May June July August980
990
1000
1010
1020
1030
1040
1050
1060
1070
1080
1090
1100
1110
1120
1130
1140
1150
1160
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1180
1190
1200
1210
1220
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1250
1260
1270
1280
1290
1300
1310
1320
1330
1340
1350
1360
1370
1380
1390
1400
20-day low
65-day high
S&P 500 Index, Price Channel, Price Channel
Violation of near-term support. Next level resides at 1260
2
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11
700
800
900
1,000
1,100
1,200
1,300
1,400
S&P 500 (SP50)Price - Close or Current Intraday
Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
Renaissance Macro Research - Technical Analysis
7/29/2011 = -29.40%65 DAY NEW HIGHS - NEW LOWS AS A % OF ISSUES
65-day highs expanding. Another sign of deteriorating internals.
Capitulation at lows Early indication of additional weakness
3
Created in MetaStock from Equis International
2010 Jul Aug Sep Oct Nov Dec 2011 Mar Apr MayJun Jul A
0.30
0.35
0.40
0.45
0.50
0.55
0.60
0.65
0.70
0.75
0.800.850.900.951.001.052 Year U.S. Treasury Bond Yield
Jul Aug Sep Oct Nov Dec 2011 Mar Apr May Jun Jul Au
0.010.020.030.040.050.060.070.080.090.100.110.120.130.140.150.160.170.180.190.200.210.220.23
U.S. 6 Month T-Bill Yield
Aug Sep Oct Nov Dec 2011 Mar Apr May Jun Jul Au
2.252.302.352.402.452.502.552.602.652.702.752.802.852.902.953.003.053.103.153.203.253.303.353.403.453.503.553.603.653.703.753.803.85U.S. Treasury 10 Year Yield
Aug Sep Oct Nov Dec 2011 Mar Apr May Jun Jul Au
3.403.453.503.553.603.653.703.753.803.853.903.954.004.054.104.154.204.254.304.354.404.454.504.554.604.654.704.754.804.85
U.S. Treasury 30 Year Yield
Aug Sep Oct Nov Dec 2011 Mar Apr May Jun Jul Au0.900.951.001.051.101.151.201.251.301.351.401.451.501.551.601.651.701.751.801.851.901.952.002.052.102.152.202.252.302.352.402.452.50U.S. Treasury 5 Year Yield
Aug Sep Oct Nov Dec 2011 Mar Apr May Jun Jul Au
-0.01
0.00
0.01
0.02
0.03
0.04
0.05
0.06
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0.08
0.09
0.10
0.11
0.12
0.13
0.14
0.15
0.16
0.17
0.18U.S. 3 Month T-Bill Yield
While action in the short-end of the curve reflected concerns from Washington, the longer-end seems to be focused on the weakening economy
New cycle lows in 5, 10 & 30-year yields
4
Created in MetaStock from Equis International
y Jun Jul Aug Sep Oct Nov Dec 2009 Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2010 Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2011 Mar Apr May Jun Jul Au
-50-40-30-20-10
0102030405060708040 Day RoC
1.11.21.31.41.51.61.71.81.92.02.12.22.32.42.52.62.72.82.9U.S. Yield Curve: 10 Year Treasury Yield vs. 2 Year Treasury Yield
650
700
750
800
850
900
950
1000
1050
1100
11501200125013001350140014501500S&P 500 Index
Spread in 10s-2s accelerating to the downside. Bull-flatteners have historically been bearish for the economy and financial markets
5
Neutral positions by large speculators in the 10-year
6
Historically, bullish positioning by large speculators in gold should NOT be played contrarily, as momentum continues
7
Silver bulls inching higher, but still relatively quiet
8
55
60
65
70
75
80
85
90
95
1003M Co. (MMM-US) Technical Ranking: 2 Industrial Conglomerates
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
96
100
104108
112Relative Strength to S&P 500
20
25
30
35
40
45
5055
Agilent Technologies Inc. (A-US) Technical Ranking: 2 Life Sciences Tools & ServicesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11100
120
140
160Relative Strength to S&P 500
55
60
65
70
75
80
85
90
95
100Air Products & Chemicals Inc. (APD-US) Technical Ranking: 1 Chemicals
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
85
9095
100
105Relative Strength to S&P 500
50
52
54
56
58
60
62
64
66Amgen Inc. (AMGN-US) Technical Ranking: 2 Biotechnology
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1160
70
80
90
100Relative Strength to S&P 500
24
25
26
27
28
29
30
31
32
AT&T Inc. (T-US) Technical Ranking: 3 Diversified Telecommunication ServicesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
8085
90
95
100Relative Strength to S&P 500
22
24
26
28
30
32
34
36
38Avon Products Inc. (AVP-US) Technical Ranking: 4 Personal Products
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
70
80
90
100
110Relative Strength to S&P 500
45 Fresh 65-day breakdowns in the S&P 500 last week
9
30
35
40
45
50Best Buy Co. Inc. (BBY-US) Technical Ranking: 4 Specialty Retail
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
60708090100110Relative Strength to S&P 500
30
35
40
45
50
55
BMC Software Inc. (BMC-US) Technical Ranking: 2 SoftwarePrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/119095100105110115120Relative Strength to S&P 500
50
55
60
65
70
75
80
85C.H. Robinson Worldwide Inc. (CHRW-US) Technical Ranking: 3 Air Freight & Logistics
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
90
100
110Relative Strength to S&P 500
30
40
50
60
70
80
90
Citrix Systems Inc. (CTXS-US) Technical Ranking: 2 SoftwarePrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100
120
140160
180Relative Strength to S&P 500
35
40
45
50
55
60Covidien PLC (COV-US) Technical Ranking: 2 Health Care Equipment & Supplies
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1180
90
100
110
120Relative Strength to S&P 500
30
35
40
45
50
55
Danaher Corp. (DHR-US) Technical Ranking: 2 Industrial ConglomeratesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100
110
120
130Relative Strength to S&P 500
More S&P 500 breakdowns...
10
30
35
40
45
50
55
60
6570
Dover Corp. (DOV-US) Technical Ranking: 2 MachineryPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100110120130140150Relative Strength to S&P 500
20
25
30
35
40
45Dr Pepper Snapple Group Inc. (DPS-US) Technical Ranking: 3 Beverages
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1190100110120130140150Relative Strength to S&P 500
20
40
60
80
100
120140160
F5 Networks Inc. (FFIV-US) Technical Ranking: 4 Communications EquipmentPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100
150200
250
300Relative Strength to S&P 500
35
40
45
50
55
60
65
Fortune Brands Inc. (FO-US) Technical Ranking: 3 Household DurablesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
90
100
110
120
130Relative Strength to S&P 500
30
35
40
45
50
55
60
65Honeywell International Inc. (HON-US) Technical Ranking: 2 Aerospace & Defense
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100
110
120
130Relative Strength to S&P 500
35
40
45
50
55
60Illinois Tool Works Inc. (ITW-US) Technical Ranking: 2 Machinery
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
95
100
105
110Relative Strength to S&P 500
More S&P 500 breakdowns...
11
5
6
7
8
9
1011121314
Interpublic Group Of Cos. (IPG-US) Technical Ranking: 2 MediaPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11100
120
140
160180Relative Strength to S&P 500
60
65
70
75
80
85
90
95
100
Laboratory Corp. of America Holdings (LH-US)Technical Ranking: 2 Health Care Providers & ServicesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11859095100105110Relative Strength to S&P 500
14
16
18
20
22
24
26
28Leggett & Platt Inc. (LEG-US) Technical Ranking: 3 Household Durables
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1195100105110115120125Relative Strength to S&P 500
40
50
60
70
80
90McKesson Corp. (MCK-US) Technical Ranking: 2 Health Care Providers & Services
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100105110115120125Relative Strength to S&P 500
20
30
40
50
60
NetApp Inc. (NTAP-US) Technical Ranking: 4 Computers & PeripheralsPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1180100120140160180200Relative Strength to S&P 500
40
45
50
55
60
65
70
Northrop Grumman Corp. (NOC-US) Technical Ranking: 3 Aerospace & DefensePrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100105110115120125Relative Strength to S&P 500
S&P 500 Breakdowns...
12
25
30
35
40
45
50
55
60
Pall Corp. (PLL-US) Technical Ranking: 2 MachineryPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100110120130140
Relative Strength to S&P 500
40
50
60
70
80
90
100
Parker Hannifin Corp. (PH-US) Technical Ranking: 2 MachineryPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1190100110120130140150Relative Strength to S&P 500
20
22
24
26
28
30
32343638
Patterson Cos. Inc. (PDCO-US) Technical Ranking: 2 Health Care Providers & ServicesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1190
95
100
105
110Relative Strength to S&P 500
13
14
15
16
17
18
19
20
Pepco Holdings Inc. (POM-US) Technical Ranking: 3 Electric UtilitiesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/119095100105110115120Relative Strength to S&P 500
14
16
18
20
22
24
26
28
30PerkinElmer Inc. (PKI-US) Technical Ranking: 2 Life Sciences Tools & Services
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11859095100105110Relative Strength to S&P 500
14
15
16
17
18
19
20
21
22Pfizer Inc. (PFE-US) Technical Ranking: 1 Pharmaceuticals
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1180859095100105110Relative Strength to S&P 500
S&P 500 Breakdowns...
13
28
30
32
34
36
38
40
42
44
46
Pinnacle West Capital Corp. (PNW-US) Technical Ranking: 2 Electric UtilitiesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/119095100105110115Relative Strength to S&P 500
40
45
50
55
60
65
70Procter & Gamble Co. (PG-US) Technical Ranking: 2 Household Products
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/118085
90
95
100Relative Strength to S&P 500
40
45
50
55
60
65Quest Diagnostics Inc. (DGX-US) Technical Ranking: 2 Health Care Providers & Services
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11707580859095100Relative Strength to S&P 500
22
24
26
28
30
32
34Republic Services Inc. (RSG-US) Technical Ranking: 3 Commercial Services & Supplies
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1180859095100105110Relative Strength to S&P 500
44
46
48
50
52
54
56
58Sempra Energy (SRE-US) Technical Ranking: 3 Multi-Utilities
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
7580859095100Relative Strength to S&P 500
3
3.5
4
4.5
5
5.5
66.5
Sprint Nextel Corp. (S-US) Technical Ranking: 3 Wireless Telecommunication ServicesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
708090100110120Relative Strength to S&P 500
S&P 500 Breakdowns...
14
50
60
70
80
90
100Stericycle Inc. (SRCL-US) Technical Ranking: 2 Commercial Services & Supplies
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
90100110120130Relative Strength to S&P 500
40
45
50
55
60
65
Stryker Corp. (SYK-US) Technical Ranking: 2 Health Care Equipment & SuppliesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100105110115120125Relative Strength to S&P 500
40
45
50
55
60
65Travelers Cos. Inc. (TRV-US) Technical Ranking: 3 Insurance
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1196100104
108112Relative Strength to S&P 500
25
30
35
40
45
50
55Tyco International Ltd. (TYC-US) Technical Ranking: 2 Industrial Conglomerates
Price 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11100
110
120
130Relative Strength to S&P 500
35
40
45
50
55
60
65
7075
Varian Medical Systems Inc. (VAR-US) Technical Ranking: 2 Health Care Equipment & SuppliesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100110120130140150Relative Strength to S&P 500
40
50
60
70
80
90
100
Waters Corp. (WAT-US) Technical Ranking: 2 Life Sciences Tools & ServicesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100110120130140Relative Strength to S&P 500
S&P 500 Breakdowns...
15
40
45
50
55
60
65
70
75
8085
WellPoint Inc. (WLP-US) Technical Ranking: 2 Health Care Providers & ServicesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1180
90
100
110Relative Strength to S&P 500
6
7
8
9
10
11
12131415
Windstream Corp. (WIN-US) Technical Ranking: 3 Diversified Telecommunication ServicesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
100
110
120
130Relative Strength to S&P 500
40
45
50
55
60
65
70
Zimmer Holdings Inc. (ZMH-US) Technical Ranking: 2 Health Care Equipment & SuppliesPrice 50 Day Moving Average 200 Day Moving Average
10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11
90
100
110Relative Strength to S&P 500
S&P 500 Breakdowns
16
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Additional�information�available�upon�request.
Additional�Significant�Risk�Factors�and�Investment�Considerations:������The�securities�or�trading�strategies�discussed�in�this�report�may�not�be�suitable�for�some�investors.��Investors�must�independently�evaluate�each�issuer,�security,�or�instrument�discussed�in�this�report�and�consult�independent�advisors�where�necessary.��
1. Past�Performance�is�not�indicative�of�future�results.2. Market�Risk:��Securities�may�decline�in�value�due�to�factors�affecting�securities�markets�generally�or�particular�industries.��The�value�of�a�security�may�be�worth�less�than�the�original�investment.3. Concentration�risk:��Investing�a�substantial�portion�of�assets�in�securities�within�a�single�industry�or�sector�of�the�economy�may�be�subject�to�greater�price�volatility�or�adversely�affected�by�the�
performance�of�securities�in�that�particular�sector�or�industry.4. Leverage�Risk:��Fluctuations�in�interest�rates�on�borrowings�or�the�dividend�rates�on�preferred�shares�as�a�result�of�changes�in�short�term�interest�rates�may�reduce�the�return�to�common�shareholders�or�
result�in�fluctuations�in�the�dividends�paid�on�the�common�shares.��There�is�no�assurance�that�a�leverage�strategy�will�be�successful.5. Foreign�Investment�Risk:��Investment�in�foreign�securities�(both�governmental�and�corporate)�may�involve�a�high�degree�of�risk.��In�regards�to�debt�securities,�such�risks�may�impair�the�timely�payment�of�
principal�and/or�interest.6. Short�selling�involves�an�inordinate�amount�of�risk�including�the�theoretical�potential�for�unlimited�losses�and�losses�that�can�greatly�exceed�the�principal�amount�invested.��In�contrast,�the�potential�gain�
from�short�selling�is�generally�limited�to�the�principal�amount�invested.��Short�sellers�can�have�their�stock�called�away�by�the lender�of�the�shares�shorted,�subjecting�the�short�seller�to�incremental�risk.��Short�sellers�by�definition�must�borrow�shares,�subjecting�short�sellers�to�margin�risk.��The�risks�cited�here�with�respect�to�short�selling�are�not�all�inclusive�and�investors�should�consult�with�their�independent�advisors�prior�to�engaging�in�any�recommended�short�selling�strategies,�including,�if�applicable,�the�short�sale�recommended�in�this�report.
The�risks�detailed�above�are�not�inclusive.��Other�significant�risk�factors�not�identified�here�may�be�equally�or�more�important to�any�particular�investor�in�terms�of�assessing�the�overall�risks�associated�with�these�securities.��The�information�contained�herein�is�illustrative�and�is�not�intended�to�predict�actual�results,�which�may�differ�substantially�from�those�reflected�herein.�� Investors�should�consider�this�report�as�only�a�single�factor�in�making�their�investment�decision.
Copyright�©�Renaissance�Macro�Research,�LLC.�2011.���All�rights�reserved.��All�material�presented�in�this�document,�unless�specifically�indicated�otherwise,�is�under�copyright�to Renaissance�Macro�Research,�LLC.��None�of�the�material,�nor�its�content,�nor�any�copy�of�it,�may�be�altered�in�any�way,�or�transmitted�to�or�distributed�to�any�other�party,�without�the�prior�express�written�permission�of�Renaissance�Marco�Research,�LLC.����
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