Nothin’ Doin’
The Dow rallied 329 points for the week while the Nasdaq NDX gained 42 points and the
top rank for broad based indices. The Dow Jones had the best action. Overall Sector
Action for the week was plus 558 which is a fairly robust bounce ahead of the FOMC
meeting this coming week. 28 Sectors were up and 4 were down.
A quarter point cut is what the Dr. ordered. I feel like Bernanke would like to do nothing on
rates while jawboning the FOMC’s ability to react and respond to any upcoming crises.
Unfortunately this is a very sticky wicket and doing nothing would be a wrong decision.
Those calling for a half point cut are obviously unaware of the FOMC’s history of rationing
water even while Rome is burning. Besides Oil hit $80 bbl last week which some view as
inflationary. Personally I think it takes money out of the economy decreasing liquidity and
increasing the likelihood of a recession but that is using too much common sense for most
FOMC Governors to admit too.
Rydex Alerts- Bearish Russell. Flipping back and forth nearly every day.
Short term Trading indicator- Overbought.
INTERMEDIATE TERM TRENDS- Slightly Bullish
INTERMEDIATE OSCILLATOR - Dead flat neutral which is a good recovery from the
Oversold Buy on August 16th.
Defense DFI - Still Number one overall. Government spending is one thing you can count
on.
Gold XAU- Up a bit but with negative action. I would take profits before the FOMC
meeting Tuesday.
Utilities UTY - Holding up well in the top ranks and crossed into bullish territory with our
risk rating. Duke DUK is a strong buy and we have been doing well trading the Ultra ETF
UPW.
Retail IRH- Recovered nicely and seems poised to rally with a nod from the FOMC. Tis
the Season...
Financials XBD, KCE, BKX- Broker Dealer climbed out of the bottom ranks. Banks are
still in the wood shed but remember taking care of the Banks is job one for Bernanke. BBT
is our top buy.
Basic Materials XLB- The real economy. Chemicals, metals, Steel. We own the Ultra
Bullish ETF UYM. This sector will get a big boost if the FOMC rate decision and minutes
are “just right”.
Housing HGX- Dead last in our ranks. Probably the third or forth inning of the housing
bubble popping. As long as there is denial there is more downside to come.
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