Yawn
The Dow finished the week up 34 points and the Nasdaq 100 NDX finished flat. Overall 15 sectors were up and 19 were down. Action for the week was plus 417. A boring week? Hardly. With several hundred point days in the Dow both up and down we look for other indicators like Action to act as a barometer of market direction. The last few weeks flip flops were a good test for market participants. If you fancy yourself as a trend follower buying the market on up days or selling the market after a down day you just lost a ton of money. If your market model is contrarion, selling on up days and buying on down days, you got really lucky and had a good year last month. We have found during times of extreme volatility you do best by taking a long term point of view and using indictors other than change for the day to garner some insight into the true direction. Our market oscillator bottomed out on April 18th and Cumulative Action has been positive since then so we have been in the bullish Rydex funds since that signal.
FOMC meeting Tuesday with focus on the word “measured” in the minutes.
Rydex funds- Still in the bullish NDX fund.
INTERMEDIATE TERM TRENDS
NDX Flat SPX Flat
INTERMEDIATE OSCILLATOR Oversold Buy April 18th
Utility UTY- The top ranked sector last week with a market view that interest rates will level out and the slow growth economy favors the steady earning utility companies. Our favorite in the sector is still Duke DUK.
Oil Service OSX- Cratered as oil fell below $50 bbl. We like to buy strong sectors on dips and BJ Services BJS is our top choice.
Biotech BTK- Caught up with the drug sector led by Affymetrix AFFY, Invitrogen IVGN and Vertex VRTX. We are coming into the golden age of biotech where the best discoveries will come from this sector.
Financials BKX, KIX, SMQ and XBD- A slow growth, low inflation, “measured” FOMC allows these sectors to blossom. Insurance stocks are on a roll with Chubb CB, Allstate ALL and Safeco SAFC hitting yearly highs. It appears AIG is at bargain prices and we believe their troubles will be fixed.
Housing HGX- Rallying on expectations of favorable mortgage rates. The housing price bubble is purely a function of low mortgage rates and interest only loans. There will be hell to pay for those. Reasonable buyers with standard loans are being priced out of the market.
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About David Shultz
| Broad Based | Symbol | Close | Wkly chg | %Ovrb/s | ||
| Volatility | VIX | 15.31 | -0.07 | 47 | ||
| Dow Commodities | &AIG | 152.29 | -5.39 | -13 | ||
| Thirty Year Rate | TYX | 45.19 | -0.61 | -37 | ||
| Institutional | XII | 573.75 | 2.79 | -43 | ||
| SP 100 | OEX | 552.74 | 1.34 | -44 | ||
| SP 500 | SPX | 1156.85 | 4.73 | -45 | ||
| Dow Jones Industrial | DJIA | 10192.51 | 34.80 | -49 | ||
| Midcap | MID | 632.76 | -1.78 | -58 | ||
| Nasdaq 100 | NDX | 1420.79 | -0.42 | -59 | ||
| Small Cap | SML | 303.08 | -5.21 | -73 | ||
| Rank | Sectors | Chg Rank | Symbol | Close | Wkly Chg | %Ovrb/s |
| 1 | Utility | 1 | UTY | 406.03 | 4.72 | 69 |
| 2 | Pharmaceutical | -1 | DRG | 331.42 | 4.83 | 61 |
| 3 | REIT | 4 | NLR | 118.84 | 3.41 | 44 |
| 4 | Biotech | -1 | BTK | 509.07 | -6.54 | -1 |
| 5 | Oil | -1 | XOI | 816.67 | -20.95 | -12 |
| 6 | Natural Gas | -1 | XNG | 312.37 | -7.10 | -14 |
| 7 | Defense Industry | 1 | DFI | 893 | 2.20 | -15 |
| 8 | Banking | 7 | BKX | 97.39 | 2.23 | -16 |
| 9 | Insurance | 14 | KIX | 131.26 | 4.11 | -20 |
| 10 | Dividend Yield | 0 | DVY | 59.55 | 0.35 | -24 |
| 11 | China | -2 | CZH | 95.76 | -0.20 | -28 |
| 12 | Consumer | 1 | CMR | 575.22 | 0.85 | -36 |
| 13 | Housing | 8 | HGX | 465.67 | 10.05 | -37 |
| 14 | Wireless | -2 | WMH | 52.99 | -0.11 | -41 |
| 15 | Investment Mgmt | 11 | SMQ | 404.44 | 4.64 | -46 |
| 16 | Telecom | 4 | XTC | 652.55 | -1.04 | -49 |
| 17 | Networking | 0 | NWX | 195.4 | -1.29 | -50 |
| 18 | Computer | 6 | XCI | 652.17 | 0.47 | -50 |
| 19 | Basic Materials | -1 | XLB | 28.01 | -0.07 | -51 |
| 20 | Transportation | 2 | IYT | 61.61 | 0.04 | -54 |
| 21 | Internet | -2 | DOT | 178.04 | -1.57 | -54 |
| 22 | Gaming | 8 | SGV | 141.2 | 1.53 | -56 |
| 23 | Semiconductor | -7 | SOX | 385.65 | -3.70 | -58 |
| 24 | Airline | -13 | XAL | 45.17 | -1.18 | -58 |
| 25 | Oil Service | -19 | OSX | 128.92 | -8.20 | -59 |
| 26 | Broker/Dealer | 7 | XBD | 137.42 | 1.70 | -60 |
| 27 | Computer Software | -2 | GSO | 148.48 | -2.02 | -64 |
| 28 | Service | 1 | GSV | 126.63 | -0.34 | -66 |
| 29 | Technology | 2 | TXX | 539.09 | -1.83 | -66 |
| 30 | Cyclical | -2 | CYC | 697.44 | -9.58 | -67 |
| 31 | Retail | 1 | IRH | 87.45 | 0.04 | -67 |
| 32 | Gold/Silver | -18 | XAU | 83.51 | -4.88 | -70 |
| 33 | Disk Drive | -6 | DDX | 99.07 | -4.44 | -75 |
| 34 | Cable | 0 | SCQ | 315.7 | -5.24 | -91 |
