Yellow Jersey
The Dow bounced up 129 points while the Nasdaq NDX slipped 10 points in the short
week. The Institutional index XII and S&P 100 OEX are leading the flight to quality.
Action for the week was plus 332 which gives some hope for a bounce this week. 14
sectors were up while 18 were down.
Commodity prices and long term interest rates have begun to wane as the world economy
slows. The FOMC has gone far enough ! Blue chip based indices are trading just off the
floor established over the last six months. The Nasdaq and Small Cap indices made
recent lows last week and need to reverse the trend quickly. The up one day down the
next market keeps longer term investors on the sidelines.
Rydex funds- Cash. Took profits last week after the nice bounce Wednesday.
Short term - Neutral
INTERMEDIATE TERM TRENDS
SPX- Up, Dow- Up SML & NDX - Down
INTERMEDIATE OSCILLATOR
Oversold Buy June 13th
Utilities UTY- Number one this week benefiting from high dividends and possible inflation
hedge. Our Duke DUK holding is hitting relative highs. There is a growth component to
this sector and recent mergers should produce operating efficiencies in the coming years.
Pharmaceutical DRG- Rallied to second in our ranking led by Abbot ABT and Merck
MRK. These stocks are clearly out of the doldrums and can be purchased on pullbacks.
Oil Patch XOI, XNG, OSX- As the price of oil spikes up the oil patch has fallen off in
relative rank and price. While there are predictions of $100 oil out there market
participants are betting this is a top.
Transportation IYT- In the bottom ranking due to the spike in oil prices. This should be a
buying opportunity for the airlines and railroads.
Banking BKX- Now in the top ten ranking. BBT is our best buy in this sector.
Tech wreck- The tech sectors are in the bottom ranking and creating potholes in any
portfolio that owns any of these stocks. It will take a real sea change for these sectors to
rise from the dead.
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