deGraaf’s Daily · deGraaf’s Daily Monday August 1, 2011 Industry Group Technical Rankings Intermediate Term Barometer Jeffrey deGraaf, CMT, CFA Rob Ginsberg Alex Meintel [email protected]

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

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1290

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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


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


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


-0.01

0.00

0.01

0.02

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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


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


55

60

65

70

75

80

85

90

95

100Air Products & Chemicals Inc. (APD-US) Technical Ranking: 1 Chemicals


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11

85

9095

100


50

52

54

56

58

60

62

64

66Amgen Inc. (AMGN-US) Technical Ranking: 2 Biotechnology


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1160

70

80

90


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


22

24

26

28

30

32

34

36

38Avon Products Inc. (AVP-US) Technical Ranking: 4 Personal Products


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11

70

80

90

100


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


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11


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


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11

90

100


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


35

40

45

50

55

60Covidien PLC (COV-US) Technical Ranking: 2 Health Care Equipment & Supplies


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1180

90

100

110


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


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


20

25

30

35

40

45Dr Pepper Snapple Group Inc. (DPS-US) Technical Ranking: 3 Beverages



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


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


30

35

40

45

50

55

60

65Honeywell International Inc. (HON-US) Technical Ranking: 2 Aerospace & Defense


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11

100

110

120


35

40

45

50

55

60Illinois Tool Works Inc. (ITW-US) Technical Ranking: 2 Machinery


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11

95

100

105


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


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


14

16

18

20

22

24

26

28Leggett & Platt Inc. (LEG-US) Technical Ranking: 3 Household Durables



40

50

60

70

80

90McKesson Corp. (MCK-US) Technical Ranking: 2 Health Care Providers & Services


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11


20

30

40

50

60

NetApp Inc. (NTAP-US) Technical Ranking: 4 Computers & PeripheralsPrice 50 Day Moving Average 200 Day Moving Average


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


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


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


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


14

16

18

20

22

24

26

28

30PerkinElmer Inc. (PKI-US) Technical Ranking: 2 Life Sciences Tools & Services



14

15

16

17

18

19

20

21

22Pfizer Inc. (PFE-US) Technical Ranking: 1 Pharmaceuticals




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


40

45

50

55

60

65

70Procter & Gamble Co. (PG-US) Technical Ranking: 2 Household Products


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/118085

90

95


40

45

50

55

60

65Quest Diagnostics Inc. (DGX-US) Technical Ranking: 2 Health Care Providers & Services



22

24

26

28

30

32

34Republic Services Inc. (RSG-US) Technical Ranking: 3 Commercial Services & Supplies



44

46

48

50

52

54

56

58Sempra Energy (SRE-US) Technical Ranking: 3 Multi-Utilities


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11


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



14

50

60

70

80

90

100Stericycle Inc. (SRCL-US) Technical Ranking: 2 Commercial Services & Supplies


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11


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


40

45

50

55

60

65Travelers Cos. Inc. (TRV-US) Technical Ranking: 3 Insurance


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/1196100104


25

30

35

40

45

50

55Tyco International Ltd. (TYC-US) Technical Ranking: 2 Industrial Conglomerates


10/09 1/10 4/10 7/10 10/10 1/11 4/11 7/11100

110

120


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


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



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


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


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


S&P 500 Breakdowns

16

Legal�DisclaimerAnalyst�Certification: The�analyst(s)�principally�responsible�for�the�preparation�of�this�research�report�certify�that�the�views�expressed�in�this�research�report�accurately�reflect�his/her�(their)�personal�views�about�the�subject�security�(ies)�or�issuer(s)�and�that�his/her�(their)�compensation�was�not,�is�not,�or�will�not�be�directly�or�indirectly�related�to�the�specific�recommendations�or�views�contained in�this�research�report.

Analyst: The�analyst�does�not�serve�as�an�officer,�director,�or�advisory�board�member�of�the�subject�company.The�analyst�or�a�member�of�the�analyst's�household�does�not�have�a�long�position�in�shares�or�derivatives�of�the�subject�company.The�analyst�or�a�member�of�the�analyst's�household�does�not�have�a�short�position�in�shares�or�derivatives�of�the�subject�company.

Pulse�has�not�acted�as�an�investment�banker�for�the�company(s)�mentioned�in�this�report�in�the�past�or�will�solicit�in�the�future.The�person(s)�responsible�for�preparing�this�report�regularly�trade�the�constituents�of�the�CRB�index,�currencies,�fixed�income�securities�and�stock�indices.

Receipt�of�Compensation:��The�research�analyst�responsible�for�preparation�of�this�report�has�not�received�any�compensation�from�the�subject�company�in�the past�12�months.�Pulse�Trading,�Inc.,�Member�SIPC,�FINRA,�(the�“Firm”)�does�not�make�markets�in�securities.�The�firm�does�not�perform�or�seek�to�perform�investment�banking�services�for�these�companies�in�the�future.�Analysts�receive�no�direct�compensation�in�connection�with�the�firm’s�investment�banking�business.�All�Pulse�employees,�including�the�analyst(s)�responsible�for�preparing�this�research�report,�may�be�eligible�to�receive�non�product�or�service�specific�monetary�bonus�compensation�that�is�based�upon�various�factors,�including�total�revenues�of�Pulse�and�its�affiliates�as�well�as�a�portion�of�the�proceeds�from�a�broad�pool�of�investment�vehicles�consisting�of�components�of�the�compensation�generated�by�directors,�analysts�or�employees�and�may�effect�transactions�in�and�have�long�or�short�positions�in�the�securities�(options�or�warrants�with�respect�thereto)�mentioned�herein.� Analysts�are�not�eligible�for�bonus�compensation.��Although�the�statements�of�fact�in�this�report�have�been�obtained�from�and�are�based�upon�recognized�statistical�services,�issuer�reports�or�communications,�or�other�sources�that�the�firm�believes�to�be�reliable,�we cannot�guarantee�their�accuracy.� All�opinions�and�estimates�included�constitute�the�analyst’s�judgment�as�of�the�date�of�this�report�and�are�subject�to�change�without�notice.�The�firm�may�effect�transactions�as�agent�in�the�securities�mentioned�herein.� This�report�is�offered�for�information�purposes�only,�and�does�not�constitute�an�offer�or�solicitation�to�buy�or�sell�any�securities�discussed�herein�in�any�jurisdiction�where�such�would�be�prohibited.�

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.��

17

Documents

deGraaf’s Daily · deGraaf’s Daily Monday August 1, 2011 Industry Group Technical Rankings Intermediate Term Barometer Jeffrey deGraaf, CMT, CFA Rob Ginsberg Alex Meintel [email protected]