2. Cluster Statisics: EPS Surprise and P/E are main difference between Longs and Shorts
3. Cluster Statistics Summary
4. Darkened Selection Area= High EPS Surprise %
5. Selected Stocks From Paper & Packaging Industry And Machinery
Rahul Mohinder Oscillator of International Paper
7. RMO of Meadwestvaco
8. RMO of Office Max
Explanation Page of Methodology and Terminology is at http://www.technifundamentals.com/2010/07/explanation-page.html
Again, it's a toss-up which way the market will go next week. But I would stick my neck out and say there won't be a melt-down, despite the ominous looking Rahul Mohinder Oscillator (RMO) in the S&P500 chart. Image 2 Cluster Statistics shows that in general the difference in length of bars of S2 (L cluster) and S3 (S cluster) is not great. The difference in Beta between S2 and S3 is also minimal [S2 Beta=1.80, S3 Beta= 1.66]. So the market has less anxiety.
EPS Surprise and good P/E will again be the dominant themes for investors. I used image 4 to select the high EPS nodes on the SOM, and the list of stocks in the selected area is in image 5. One piece of information stands out- and that is, four of the stocks are from the category Forest Products Industry or Chemicals. If we read the business profiles of MVW,IP, OMX and DOW, they are all Companies involved in the paper, packaging and wood-based specialty chemicals business. Now if we take a look at the RMO charts of MVW, IP and OMX, (images 6,7,8 above) we find that all three are still in the Bearish zone with the RMO (Green color top chart) below zero, though the charts also show some strengthening in the Price, as indicated by their Candlesticks. MVW is the strongest of the lot with a lower Beta of 1.77 versus 2.31 for IP and 2.68 for OMX.
Could our SOM and ValuEngine model be a leading indicator of whats in store for these stocks? We'll keep in mind their market price as at Friday, and see how they do next week, taking into account the market's direction.
As for Deere (DE) and Cummins (CMI), perhaps investors are beginning to realize that these Companies are increasingly export-oriented and their products are in demand by developing economies building up their infrastructure and their industries.
