Oops
The Dow fell 325 points while the Nasdaq 100 NDX got sacked for 38 points. 5 sectors were up and 29 were down. Action for the week was minus 706. The overbought condition finally hit an air pocket Thursday and the selling continued Friday. We are now oversold in the short term expecting a bounce early this week.
The broad market indices are down for the year fighting higher oil prices and interest rate hikes but the economy still edges upward. The surge in tech stocks last week was on news of good current earnings and expected higher earnings for the rest of the year. We are not looking for tech stocks to double this year but given continued earnings growth the stocks should outperform the broad market -- particularly the Oil stocks which had a huge run in the last six months. The most notable sector rotation last week was the Broker Dealer index XBD moving up to the top rank. We have never seen a Bear market when the XBD is rising in rank and price.
Rydex funds- Still in a long position on the NDX as we missed the two day drop in the Dow. We will see if we get a bounce this week.
Short term - Oversold
INTERMEDIATE TERM TRENDS
NDX, DJIA & SPX Down
INTERMEDIATE OSCILLATOR Overbought Sell June 6th
The SP500 and Dow finally succumb last week.
The market heeded the overbought oscillators last week now we will see if they heed the current oversold condition.
Broker Dealer XBD The top ranked sector which is usually very good for the market. The widely expected Ameritrade AMTD merger took place and a surprise spin off of
investment management assets to Legg Mason LM pointed out an undervalued situation in the overall sector.
Utility UTY- Moved up to second in overall rank which may be a vote for dividend paying stocks that can keep pace with inflationary economic pressures. We still like Duke Power DUK.
Housing HGX- Despite better earnings and higher stock price targets the Housing stocks pulled back in price and rank last week. This sector has been fighting expectations that sales will fall off a cliff sometime in the near future. Until we see the big builders dumping inventory the earnings engine is still in place and we would be buyers on dips.
Biotech BTK- Back into the top ten rankings which is a good bellwether for the Nasdaq growth stocks. The next big ‘cure’ will not care what the price of oil is.
Gold XAU - Rose in relative rank as other sectors fell in price. The XAU has been in a
fairly steady up trend since May and is no where near yearly highs. We still maintain a position in Nemont NEM in our sector portfolio but nearly any gold stock will do.
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