Summer is Coming
The Dow gained 110 points while the Nasdaq 100 NDX rallied 17 points. 31 sectors were up and 3 were down. Action for the week was plus 697. A stunningly positive week given oil nearing $60 bbl.
With Oil and Housing sectors at the top of our ranking the list looks very much as it did at the start of the year which means there has been little change in leadership. At some point growth will outpace the price of oil and short term interest rates. In the 90’s the wave of new technology increased productivity which stayed in front of inflationary pressures. These days Greenspan speaks of the conundrum and economists are generally befuddled by extremely low long term interest rates (the cost of money) and lack of inflation in any sector. Even the prospect $60 oil is not causing a huge ripple. Our take is the core world economy is much stronger than currently recognized. A portion of that growth is going to fight terrorism on worldwide and to make up for things like decreased tourism and travel.
Rydex funds- Still in a long position on the NDX as trends are positive.
Short term - Overbought
INTERMEDIATE TERM TRENDS
NDX, DJIA & SPX Up
INTERMEDIATE OSCILLATOR
Overbought Sell June 6th
The SP500 and Dow have edged higher since then while the NDX is slighly lower.
A battle between the up trend and the overbought oscillators. So far the uptrends are winning.
Oil XOI- The top ranked sector which is usually not good for the rest of the market. Refiners like Conoco COP and Sunoco SUN are at the top of this sector. This sector has been in a trading range for the last six months tracking the daily price of Oil. We own XTO in the Natural Gas sector XNG and BJ Services BJS from Oil Service OSX but nothing in the XOI sector.
Telecom XTC- Led by Mexican mobile telephone giant America Movil AMX with Alltel AT and Nextel NXTL closing ranks this sector has been stronger than usual of late.
Networking NWX- Still the highest ranked technology sector led by Emulex ELX
reflecting the persistent strength in telecom.
Broker Dealer XBD- Moved up again in overall rank which is a very good sign for the market overall. Led by our Goldman Sachs GS holding with Ameritrade AMTD still in play.
Biotech BTK- Up dramatically last week in overall rank which is usually a good leading indicator for the Nasdaq. Genentech DNA, Gilead GILD and Vertex VRTX are hitting relative highs.
Overall the market is digesting the overbought condition keeping positive trends in place. To break out to higher levels the growth sectors need to get in gear and bump something like Oil out of the top ten rankings.
SUBSCRIPTION INFO
A sample copy of the entire SectorVue newsletter via email may be obtained by
calling 703/242 1076 or email sectorvue@cox.net . Requests for a sample
fax must include full name and voice phone number. Subscriptions are $500 per
quarter for individuals $750 per quarter for offices. Rydex alerts priced separately. This report is for educational purposes only and do not constitute "investment advice".
