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The Wilderhill Clean Energy Index looks to have stabilized, but has yet to return to itsprevious strength.
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The Philadelphia Oil Service Index (OSX) has continued to act well, but has run intoresistance near the 50 day moving average.
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The Amex Oil Index (XOI) is the strongest sector index in the energy complex at themoment. It is now within reach of its all time highs.
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Technical Summary
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It's A Head Scratcher
Weak volume and the Nasdaq looking like a wet noodle, is causing some serious headscratching amongst us momentum players.
Still, there are a few pockets of strength in the market, despite the recentdisappoinment.
Small stocks, the S & P 500 and the Dow Jones Industrial Average are still holding up,while the Nasdaq and the Nasdaq 100 are increasingly weak.
We are still in the bullish camp, as the June 29, momentum thrust has yet top play out.We're not ridiculously bullish by any means, as no indicator is foolproof. Yet, until somenew lows are made, we would be leaning toward the positive side.
The market remains oversold, and the Nasdaq is getting more oversold with each attemptednew low.
The strong sectors remain selected retailers, integrated oils, telecom, banking andbrokerage, and the real estate investment thrusts, suggesting that the market is bettingon an end to the Fed's rate hike cycle, a risky proposition, if the economy continues toheat up.
Even stronger has been theperformance of small to mid cap names in the strongest of sectors.
The major factor remains the recent momentum thrust on 6-29, as the up volume to downvolume ratio exceeded 9 to 1 on the NYSE for the second time since June 15th and the thirdtime for the Nasdaq.
This is what Martin Zweig described as a momentum thrust. Usually, two days of 9 to 1 upvolume to down volume are good enough to launch a bull market.
What's the down side risk? If you believe what the Fed says than bad data, or anythingthat suggests that inflation is persisting can derail this market.
Otherwise, in the post 9/11 world, geopolitical surprises can derail any rally.
Commodities Fail At Old Highs
Commodities have had a nice short term run, and are pulling back.
Crude oil is still testing the $75 area.
Gold has is still testing the $600-$650 area.
Check our energy section for bond, gold, dollar, and currency recommendations.
What To Do Now
See all our sections for new stock picks. The key remains to find the strong stocks in thestrong sectors.
Traders and investors should be scouring their shopping lists for signs of strength, andshould be building positions in strong stocks.
Investors should also start looking to build positions, albeit less aggressively,concentrating on strong stocks.
Our ETF trading systems have been adjusted accordingly. The Fallen Angels have newrecommendations as well.
Remember, our Fallen Angels portfolio is designed for those with a longer term time frame,and offers both long and short recommendations.
Check all our sections daily. See tech, biotech, Fallen Angels, and timing systems forthe latest adjustments. Our ETF trading systems for energy, Spyders, Small Caps, andtechnology have also been updated.
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