Fear Not
The Dow closed up 59 points while the Nasdaq NDX slipped 10 points. 18 sectors were up and 16 were down. Action for the week was plus 59. In the face of record high oil prices, rising interest rates and seemingly little interest in the stock market managed to hold its own and even make a little headway.
Trends are still positive but flat is still a more accurate description. With the end of
earnings season and most traders on vacation the market is subject to any news
headlines and frankly small buy or sell programs in the futures market.
Greenspan raised rates as expected and the intermediate target appears to be 4% which should boost the dollar and keep inflation at bay. The financial sectors did well last week which is comforting. We need the tech sectors to kick in for the market to close out the year on an up note.
Rydex funds- Long the NDX.
Short term - Neutral
INTERMEDIATE TERM TRENDS
NDX, DJIA, SPX -- Flat to Up
INTERMEDIATE OSCILLATOR
Oversold Buy August 10th
Looking for a good trade wind to carry this market upward.
China CZH- Still the leading sector but overbought and near its high limit target. I think the Semiconductors SOX are a better Asian growth play than the China stocks.
Oil patch XOI,OSX, XNG - The Oil patch is solidly in the top ten ranking. I have not heard anyone calling a top here which is the kind of frenzied one way thinking usually present in one.
Basic Materials XLB- We started tracking this sector when the Chemical index stopped trading and it is the chemical stocks leading now. This means there is strength in the economy and stocks like Praxair PX and Monsanto MON are solid performers.
Gold XAU - Broke out to relative highs last week. We think this is due to currency and worldwide security concerns rather than inflation. We would not chase these stocks here but wait for a pullback.
Housing HGX- This top performing sector is now in the bottom rankings and in a down trend. The shorts have only been able to nick these stocks from time to time as earnings and building backlogs continue. My sense is the housing market could pullback 20% and the big builders would still be making money although giving up the ‘windfall’ returns of the last few years.
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