SectorVue weekend comments for Monday June 13th , 2011
Market Location and Horizon
Muddy Waters
The Market and our market indicators slipped into oversold territory last week with
disappointing economic news. Our Market indicators Summary , page 1, looks like a
bunch of red taillights fortelling congestion ahead. Prevailing Wind and Market Tide
fell off the shelf last week but are now very oversold looking for a bounce. Diamond
Jim confirmed a Sell signal Monday May 16th , rallied before Memorial day but has
continued down confirming this market down turn is not just a pause to refresh.
Diamond Jim had been a tail wind for the Bulls since last September but has
befriended the bears for the last 3 weeks.
Growth vs. Value made a hard turn toward Value last week and has been a good swing
indicator of the overall market. If we do get a sustainable bounce this week this
indicator will tilt back to Growth. If this indicator continues into Value territory the
bears are in charge and a defensive market posture is prudent. The Income
GPS portfolio is up 5.68% in appreciation year to date plus a projected dividend yield
of 10.84%. Something tells me most investors will be pleased with a non-volatilie 16%
return this year. We have more than 40% cash on hand after taking profits over the
last month and the bargains are getting better every day. This has also led to an even
tempered return unaffected by last weeks downturn.
Email incomegps@unrulydog.com for a sample of our high dividend paying stocks.
Muddy Waters
The Dow Jones finished the week down 199 points while the Nasdaq 100 NDX fell off
71 points. The Volatility index VIX rose to the top of the broad based ranks and the top of
its recent trading range but has not spiked up as expected with cathartic market bottoms.
Hard to believe the bottom will fall out while Bernanke stands by with an open
checkbook.
Sector Action for last week was plus 174 with all Sectors down . We normally see a
turn in Action just before a turn up or down in the market. The Market Barometer is
oversold poised for a bounce. (see graph on page 4)
Rydex Alerts- picked up bullish NDX and RUT on the big dip holding for a big bounce.
Short term Trading indicators- very oversold
Market Breadth - Cumulative Market Breadth took a nosedive however the trend is flat
and breadth oscillators are oversold. (see graphs p 4)
INTERMEDIATE TERM TRENDs- Bearish
INTERMEDIATE OSCILLATOR - Oversold
Still feels like a trading range with longer term trends flat and market oscillators currently
very oversold. The economy has not budged up or down. QE3 is likely in some variation.
Pharmaceutical DRG- Top of the Sector ranks led by Forest Labs FRX which is making
new highs. Johnson and Johnson JNJ is holding up well and Pfizer PFE is oversold
with a 3.9% dividend.
Consumer CMR- rising in rank as gasoline prices look toppy. McDonalds MCD was a
leader in the last six months rally and has pulled back dramatically in the last few weeks
and may be a bellwether for support this week. Walgreens WAG is another stock to
watch.
Ultra ETF’s- Ultra SP500 ETFs SSO and Bearish and Bullish NDX QID and QLD are
trading vehicles with nice daily ranges.
Financials KCE, BKX, XBD- are finding some support as they must if the overall market
is going to make a stand here.
Oil Patch XOI, XNG and OSX- fell off again last week hurting market indices. Hobson’s
choice of lower gas prices or slow world economy marked by low demand for oil.
Banks BKX- began to find some support last week as they must for the market to
advance.
Wireless WMH- Last in overall rank. Verizon VZ is the choice hook up with a 5.46%
dividend.
SectorVue and Rydex alerts are for educational purposes only and do not constitute 'investment advice'.
No representation is made that strategies will produce a profit.
There is risk of loss in all trading.
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