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The Wilderhill Clean Energy Index is trying to form a bottom, and is starting tooutperform the traditional energy sector.
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The Philadelphia Oil Service Index (OSX) is now well below the 200 area, and its 200 daymoving average.
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The Amex Oil Index (XOI) has broken down, and could be in the early stages of asignificant correction.
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Key Technical Gauge Turns Positive
The New York Stock Exchange Advance-Decline line remains the key indicator for the stockmarket at this point, as the breadth gauge continues to make new highs on an almost dailybasis, predicting higher prices ahead.
Chart Courtesy of StockCharts.com
Yet, despite the performance on the NYSE, Nasdaq and the small stocks have remained lessrobust than the big board.
The key is that the market is still pricing in an economic slow down, which so far seemsto be on schedule, and barring a worsening of the data, could well be that elusive softlanding scenario that pundits and economists love to throw around.
If the soft landing does materialize, then traditionally, it is marked by steady growthand subdued consumer behavior that often favors consumer related stocks, such as drugscompanies, banking stocks, utilities and consumer non durable stocks.
And those are the groups that have kept the the S & P 500 above 1300, along with thetelecom sector.
Otherwise, the first five days of a new month, are usually a bullish time for the stockmarket, which means that Tuesday has a chance of being an up day.
What happens beyond Tuesday will be influenced by the perception of traders that arereturning from a long holiday and summer vacations, as well as the general tone of theFed, economic indicators, and the geopolitical climate.
In other words, there is no need to change our strategy. In the current market, all we cando is remain patient, stick with strength, and follow sound buy and sell rules.
Oil And Natural Gas In Focus
Natural gas has fallen below the $7 area, but the natural gas stocks have done quite welldespite the commodity's weakness.
Crude oil is straddling the $70 area, and is entering a period of seasonal weakness.
Gold is still trading inside the $600-$675 area, with prices responding to news reportsfrom Israel, but also responding to economic news.
Check our energy section for bond, gold, dollar, and currency recommendations.
What To Do Now
Stay with what's working. See all our sections for details.
The bond market remains interesting. See our bond trading model, on our energy page.
Our ETF trading systems have been adjusted with our utility trading model finally gettinga wake up call. See the energy section for details.
Remember, our Fallen Angels portfolio is designed for those seeking a potentiallydiversified portfolio with a longer term time frame, and offers both long and shortrecommendations.
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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