Storm Surge
The Dow rallied 50 points while the Nasdaq NDX gained 14 points. 25 sectors were up and 8 were down. Action for the week was plus 1369. This is a pretty big number for what little move we got out of the indices and a sign of an oversold bounce rather than the beginning of a new up trend.
We said last week our market indicators were getting oversold and we did get the
expected bounce. Trend indicators began to turn positive Thursday but need to stay
above current levels to keep the optimism going. With Oil the leading sector and the
normal growth sectors lagging we doubt that will occur. The fallout from Katrina or more injurious, the flooding, has yet to be assessed and also exposed some Homeland Security issues.
We thought there would be a rally in the growth sectors after Labor Day but they did not set up that way last week as the Oil patch took center stage. We are taking profits on stocks in the oil patch but need to see the tech sectors get back in gear.
Rydex funds- Cash
Short term - Neutral
INTERMEDIATE TERM TRENDS
NDX, DJIA, SPX -- Flat to down
INTERMEDIATE OSCILLATOR
Neutral
Oil patch XOI,OSX, XNG - Oil XOI is the top ranked sector usually to the detriment of the rest of the market and economy. Oil Service OSX and Natural Gas XNG are in the top ten ranking but slipped overall. We are more inclined to take profits in these stocks than initiate new positions. We will reevaluate on any pullback.
Gold XAU- Rallied strongly as investors feel the FOMC will not be able to raise rates and fight inflation in the wake of Hurricane Katrina. Goldcorp GG has been the strongest stock. Once again we would not chase this sector.
Broker Dealer XBD- Not ready to give up the ghost yet and still optimistically in the top ten ranking. Lehman LEH and Ameritrade AMTD are the strongest stocks in this sector.
Semiconductors SOX- Eased off a bit in relative rank casting doubt on a Labor Day rally. Texas Instruments TXN is still the strongest stock in the sector and needs to show leadership to the upside Tuesday.
Pharmaceutical DRG- Rallied out of the bottom rankings with stocks like AstraZeneca AZN, Wyeth WYE and King Pharmaceutical KG leading the way. A good sector to keep an eye on in the coming weeks.
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