Long Weekend Discussion

[mmoy]

As many know, I've been watching the little-followed IXCO for some time.

 

IXCO (called ^IXK on Yahoo!) is the Nardsaq Computer Index. It is the largest subsector of the Nardsaq with 547 components, including all the bigcraps like MSFT, AAPL, BRCM, DELL, GOOG, etc. Where IXCO goes, so goes the Nardsaq since the NDX/QQQQ is 55% technology.

 

Since I've had higher targets on the IXCO, I've felt that the Nasdaq and the broader markets could continue to work higher until the key l/t resistance area on the IXCO is tagged.

 

On the L/T chart, it's quite clear that key long-term resistance on IXCO is 1151-1177 (the neckline of the 99-00 bubble.)

 

Ultimately, a move above those levels would be very bullish, for the techsters, the Nardsaq and likely the broader market in general. But first it has to get there and move above it. I think that will be quite difficult to do the first time around, at minimum. In fact, the 1151-1177 zone might be the target for the entire rally off the 2002 lows.

 

The IXCO has taken its sweet time to test this critical level. The boner rally in 2003 moved the IXCO from 495 to 1016, basically a 100% move after the -84% decline from 2000-2002. But since the Jan04 high, the IXCO has only been able to gain 9% as it crawls its way to the important test at 1151-1177. In fact, the move has been so halting that, at the March 2007 lows a few weeks ago, the IXCO was actually -1% below where it was at the Jan04 high. Now that's a slow move.

 

Not only is the long-term picture quite clear, the intermed-term chart might be instructive as well. Notice how the IXCO broke its uptrend line off the 8/04 lows (767) in May 2006. Instead of completing the breakdown all the way back to 767, it was stick-saved in July 2006 at the April 2005 low of 845ish.

 

Since recovering in July 2006, the IXCO has made its way all the way back to the "scene of the crime" and re-tested the underside of the broken trendline in January 2007. It was unable to break through.

 

If the current rally off the March 2007 lows continues, the IXCO might just try and kiss the broken trendline again. Only this time, a secondary "kiss" would also likely coincide with a tag of the much-more-important, long-term resistance zone of 1151-1177.

 

Based on the 4/6/07 close at 1069, a move up to tag L/T resistance at 1151-1177 would represent an additional rally of 7.6%-10.1%. This would put the NDX in the vicinity of 1950-2000, the QQQQs at 47.94-49.06 and the Nardsaq itself at 2660-2720. What this would mean for the SPX is unclear. Obviously, if the SPX matches the IXCO tick for tick, a 7.6%-10.1% rally would put the Spoozer at 1553-1590 (yes, the low end would mean an exact hit on the 2000 ATH.) But if the rally was "Nardsaq-led", then we might only see the SPX move up 50-60% as much, i.e., 4%-6%, taking it to 1501-1530.

 

No doubt a move like this would set bulls hearts a-flutter and we would be hearing screams of joy that "the Nardsaq is leading the market again!" However, if the IXCO runs up to key L/T resistance and is unable to recapture the broken trendline off the 8/04 lows, this "Nardsaq-led" rally would be a Pyrhhic victory at best and could likely set up an intermed high of some significance.

 

If the IXCO rallies to the aforementioned resistance and is stopped, then the NDX/QQQQs would be stopped, the Nardsaq itself would be stopped, and no doubt the broader market would be stopped.

 

I have a great deal of confidence that these higher levels will prove key. Until they are tested, I would assume the market will continue higher. If they fail, the much-anticipated "boner rally" will have to wait for another day. If/when they are exceeded, Weimar here we come.

574392[/snapback]

 

Do you have a list of the components of this index? I spent about 10 minutes looking for the list but didn't come up with anything.

 

I'd like to get more of an intuitive feel for the companies and weightings of the index.

[LeeWhee]

As many know, I've been watching the little-followed IXCO for some time.

 

IXCO (called ^IXK on Yahoo!) is the Nardsaq Computer Index. It is the largest subsector of the Nardsaq with 547 components, including all the bigcraps like MSFT, AAPL, BRCM, DELL, GOOG, etc. Where IXCO goes, so goes the Nardsaq since the NDX/QQQQ is 55% technology.

 

Since I've had higher targets on the IXCO, I've felt that the Nasdaq and the broader markets could continue to work higher until the key l/t resistance area on the IXCO is tagged.

 

On the L/T chart, it's quite clear that key long-term resistance on IXCO is 1151-1177 (the neckline of the 99-00 bubble.)

 

Ultimately, a move above those levels would be very bullish, for the techsters, the Nardsaq and likely the broader market in general. But first it has to get there and move above it. I think that will be quite difficult to do the first time around, at minimum. In fact, the 1151-1177 zone might be the target for the entire rally off the 2002 lows.

 

The IXCO has taken its sweet time to test this critical level. The boner rally in 2003 moved the IXCO from 495 to 1016, basically a 100% move after the -84% decline from 2000-2002. But since the Jan04 high, the IXCO has only been able to gain 9% as it crawls its way to the important test at 1151-1177. In fact, the move has been so halting that, at the March 2007 lows a few weeks ago, the IXCO was actually -1% below where it was at the Jan04 high. Now that's a slow move.

 

Not only is the long-term picture quite clear, the intermed-term chart might be instructive as well. Notice how the IXCO broke its uptrend line off the 8/04 lows (767) in May 2006. Instead of completing the breakdown all the way back to 767, it was stick-saved in July 2006 at the April 2005 low of 845ish.

 

Since recovering in July 2006, the IXCO has made its way all the way back to the "scene of the crime" and re-tested the underside of the broken trendline in January 2007. It was unable to break through.

 

If the current rally off the March 2007 lows continues, the IXCO might just try and kiss the broken trendline again. Only this time, a secondary "kiss" would also likely coincide with a tag of the much-more-important, long-term resistance zone of 1151-1177.

 

Based on the 4/6/07 close at 1069, a move up to tag L/T resistance at 1151-1177 would represent an additional rally of 7.6%-10.1%. This would put the NDX in the vicinity of 1950-2000, the QQQQs at 47.94-49.06 and the Nardsaq itself at 2660-2720. What this would mean for the SPX is unclear. Obviously, if the SPX matches the IXCO tick for tick, a 7.6%-10.1% rally would put the Spoozer at 1553-1590 (yes, the low end would mean an exact hit on the 2000 ATH.) But if the rally was "Nardsaq-led", then we might only see the SPX move up 50-60% as much, i.e., 4%-6%, taking it to 1501-1530.

 

No doubt a move like this would set bulls hearts a-flutter and we would be hearing screams of joy that "the Nardsaq is leading the market again!" However, if the IXCO runs up to key L/T resistance and is unable to recapture the broken trendline off the 8/04 lows, this "Nardsaq-led" rally would be a Pyrhhic victory at best and could likely set up an intermed high of some significance.

 

If the IXCO rallies to the aforementioned resistance and is stopped, then the NDX/QQQQs would be stopped, the Nardsaq itself would be stopped, and no doubt the broader market would be stopped.

 

I have a great deal of confidence that these higher levels will prove key. Until they are tested, I would assume the market will continue higher. If they fail, the much-anticipated "boner rally" will have to wait for another day. If/when they are exceeded, Weimar here we come.

574392[/snapback]

 

Do you have a list of the components of this index? I spent about 10 minutes looking for the list but didn't come up with anything.

 

I'd like to get more of an intuitive feel for the companies and weightings of the index.

574394[/snapback]

 

Go to Yahoo! Finance and type in ^IXCO or ^IXK

 

I don't know the weightings, but there are 574 components. Would imagine MSFT is #1. It is cap-weighted.

[mmoy]

Go to Yahoo! Finance and type in ^IXCO or ^IXK

 

I don't know the weightings, but there are 574 components. Would imagine MSFT is #1. It is cap-weighted.

574395[/snapback]

 

Pretty oddball collection of companies. Offhand, I think that a collection of smaller indexes would be a little easier to generally digest.

[Big Doo Doo]

 

Drano,

 

 

Biopure's Hemopure referenced by Dr. Rosenfeld:

 

 

http://www.foxnews.com/health/drrosenfeld/index.html#

 

 

[Drano]

 

 

Drano,

 

 

Biopure's Hemopure referenced by Dr. Rosenfeld:

 

 

http://www.foxnews.com/health/drrosenfeld/index.html#

 

 

 

574397[/snapback]

Is that supposed to play back? If so, I can't get it to do so.

 

What did he say?

 

Thanx, Dooo.....

[Big Doo Doo]

?

 

Drano,

 

 

Biopure's Hemopure referenced by Dr. Rosenfeld:

 

 

http://www.foxnews.com/health/drrosenfeld/index.html#

 

 

?

574397[/snapback]

Is that supposed to play back? If so, I can't get it to do so.

 

What did he say?

 

Thanx, Dooo.....

574398[/snapback]

 

 

Drano,

 

Dr. Rosenfeld on "Ask The Doctor" Sunday 10:30 am, Fox News, gave a lengthy commentary about a "new" "blood substitue" that he just heard about a few days ago, that is a small particle, highly perfusing, universal typed oxygen transport that may revolutionize "transfusion", now approved and used in South Africa. "Now being considered by the FDA."

 

He was obviously making reference to Hemopure.

 

The program video clips are down lower on the webpage.

 

Biopure's Oxyglobin is already approved for vet use.

 

 

 

 

[crazy_ate]

Tice gets a little play over in the NYT today.....

 

 

Mr. Tice forecasts a 50 percent to 60 percent decline in the market over the next two years. ?What we have is gross credit excess? on both the personal and national levels, he said, and credit excesses fuel the speculative manias of classic boom-bust cycles. ?Individuals are using their homes as an A.T.M. machine with home equity loans,? he added.

 

50% to 60% decline....WTF?!?!?!?!.....Is that a lot?

 

 

NYT Article

[jerboa]

The article "American Home Mortgage cuts profit forecast" was published by Marketwatch on Friday, April 6, when the markets were closed. It is still number 4 on their "most read" list, and is number 1 on their "most emailed" list.

 

It could be we're reaching a sudden and general realization that "it is only a sub-prime issue - no contagion" is either wishful thinking or an outright lie.

 

From the Marketwatch article (bold highlights by me)

 

But American Home isn't a subprime lender. In early March, the company issued a statement to clear up any "confusion" about the type of loans it offers. Most are adjustable-rate mortgages and so-called Alt-A loans, which often require less documentation. American Home even offers conventional fixed-rate home loans. Subprime mortgage are less than 1% of its total loan portfolio.

 

Still, American Home said Friday that earnings will be lower because investors in the secondary-mortgage market and the market for mortgage-backed securities (or MBS) offered to buy its loans at "materially lower" prices.

 

Lower prices for AA-, A-, BBB-rated MBS and riskier bits known as residual-mortgage securities also triggered losses in American Home's investment portfolio, the lender added 

 

Link to Marketwatch Article

 

 

And from the Company's News Release (bold highlights by me)

 

During March, conditions in the secondary mortgage and mortgage securities markets changed sharply. In particular, these markets were characterized by far few buyers offering materially lower prices, both for loan pools and for ?AA?, ?A?, ?BBB? and residual mortgage securities. These changes had a significant, adverse impact on our Company?s first quarter results, reducing our gain on sale revenue and causing mark-to- market losses in our portfolio.

 

The Company?s first quarter results will also be adversely affected by write-downs of its portfolio of low investment grade and residual securities. In particular, the Company?s approximately $484 million of securities rated ?AA?, ?A? or ?BBB? will be written down to account for an unusually large widening in the first quarter of the spread over LIBOR at which these securities trade.

 

Link to AHM news release

[Drano]

Thanks for the update, Dooo....

 

The video doesn't work for me, must need some program I don't have.

[try2win]

Tice gets a little play over in the NYT today.....

 

 

Mr. Tice forecasts a 50 percent to 60 percent decline in the market over the next two years. ?What we have is gross credit excess? on both the personal and national levels, he said, and credit excesses fuel the speculative manias of classic boom-bust cycles. ?Individuals are using their homes as an A.T.M. machine with home equity loans,? he added.

 

50% to 60% decline....WTF?!?!?!?!.....Is that a lot?

 

 

NYT Article

574400[/snapback]

 

the problem is 50-60% lower from where ? is he talking about dow 7000 ?

[try2win]

stocks are cheap ??

 

http://www.bloomberg.com/apps/news?pid=206...refer=exclusive

 

bears may need this!! i know i needed it

[shorty]

she hates bush for invading countries for cheap , consistent supply of oil.?

What?

 

Oil has TRIPLED since Bush started "invading countries."

 

I'm well aware that facts mean nothing to most people today; they believe whatever they want to believe.

 

Still, how hard is it to like, uh, read something maybe once every couple years?

[try2win]

she hates bush for invading countries for cheap , consistent supply of oil.?

What?

 

Oil has TRIPLED since Bush started "invading countries."

 

I'm well aware that facts mean nothing to most people today; they believe whatever they want to believe.

 

Still, how hard is it to like, uh, read something maybe once every couple years?

574405[/snapback]

 

but what if there was "no" oil coming from the mid east how expensive would it be ? i really meant cheap on a relative basis. relative to very limited mid east oil on the market.

[Dharmaeye]

David Petch has some interesting speculations.

http://www.safehaven.com/article-7319.htm

[Speakeasy]

Re LeeWhee's post above:

 

 

 

 

 

   

 

 

   

574393[/snapback]

 

Not to worry. Lee means well, is over-informed (I know, an oxymoron) and has fallen prey to the worship of the status quo that has pushed risk premiums to near zero, where the Fed has pushed rates. We will likely start down this week and not bottom until 2011 or 2012.