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The Amex Oil Index (XOI) is still off of its best levels, closing well below the 1000-1020area.
In the current market, we recommend a copy of "
Technical Summary:
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German Stocks Set Positive Tone In New Year
One day does not make a year. But it would be nice to see a rally last the whole day.
It's a new year, but the big question remains the same, though. Can Wall Street actuallyhold gains beyond 1:00 P.M. Eastern Time?
The old saying goes that the first week of January sets the tone for the rest of the year.But, if the market acts as it did in December, by mid day, we'll know if the overnightrally was just another fake out.
On a longer term basis, though, there are some things to keep an eye on from a sectorstandpoint.
The drug and biotech sector still has the potential to move higher, as the FDA is still inheavy approval mode, while there are some positive clinical trial results being announced.
To be sure, it's an uncertain year ahead, due to the Medicare drug plan and its unknownramifications.
Financial stocks stalled at the end of last year, while high tech might have broken downaltogether.
Gold and energy stocks are the wildcard, and should be watched carefully.
Alternative Markets At Tops Of Trading Ranges
Gold is picking up speed with the $510-520 area now being tested.
Oil is holding up with $56 providing fair support, but $60 being tough resistance.
The dollar is trying to put in a bottom, but is also struggling.
Check our energy section for bond, gold, dollar, and currency recommendations.
What To Do Now
Stick with the trend, but remain cautious. Look at your stocks individually. Keep closetabs on your sell stops. We update our sell stops daily, and recommend that you followclosely, updating yours as we update ours. Visit our sector pages at least once a day tokeep up, especially in a market that could start having more violent moves.
The trend is still up for stocks, but it is now being questioned. Visit all our sections,for further details. There is particular strength in mining, biotech and health relatedstocks, as in the financial and transportation sectors. See our biotech and Fallen Angelssections. Our sector ETFs in technology, biotech, and the QQQQ trading systems are alsodoing well.
Keep your options open, and continue cautiously build positions into stocks on our lists.
Check all our sections daily. See tech, biotech, Fallen Angels, and timing systems forthe latest adjustments. Our ETF trading systems for energy, Spyders, Small Caps, andtechnology have also been updated.
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Moderate Sentiment Still In Place
Options ended the year on a tame note.
The CBOE Put/Call ration checked in at 0.80 on 12-30, still below the 1.22 on 12-20. Theratio was 1.31 on 10-13, near the market's bottom. A consistent string of low readings canbe a sign of excessive optimism and often signals a top in the markets. Readings below 0.5are of concern, but not as serious as readings below 0.40. Readings above 1.0 are bullish.The numbers cited here are meant to be evaluated on a closing basis.
The CBOE P/C ratio for indexes checked in at 1.39 on 12-30 remaining below 2.37, therecent high that occurred on 12-20. The index closed at 2.37 on 11-29. The current rallywas preceded by readings of 2.26 on 10-13, but still below the 3.28, on 9-26. This wasclose to the 3.89 on 9-22. The index number rose to 3.01, on 9-2, a rare figure thatpreceded a rally in stocks. Readings below 0.9 suggest too much bullish sentiment, just asreadings above 2 are usually required to mark major bottoms.
The VIX and VXN had readings of 12.07 and 14.26 on 12-30, rising slightly. When theseindexes begin to rise, it is a sign of concern as rising volatility indexes suggest thatan acceleration of the prevalent trend is on its way. A fall near or below 20 on VIX and30-40 on VXN is considered negative, a fact that is usually confirmed when the volatilityindexes begin to rise. Readings above 40 and 50, respectively, are often signs that abottom may be close to developing.
The Duarte Overbought-Oversold gauge is at 45%, falling slightly, with 80 being overboughtand 40 and below being oversold.
NYSE insiders were moderate buyers for the week of 12-16-05. NYSE insider short sales arestill at very low levels. When NYSE specialists raise their short sales, and sell stocks,risk increases dramatically. There is a two week lag for these figures.
Market Vane's Bullish Consensus checked in at 69%, just shy of its recent reading of 70%,a sell signal. The UBS sentiment gauge, a fairly good sentiment survey in 2005, shot up to79 in December. It correctly called the rally in October with a reading of 47.
Market Moves
Sun Microsystems And Dell. Can They Recover?
Sun Microsystmes (Nasdaq: SUNW) is a penny stock. And Dell (Nasdaq: DELL) closed 2005 witha 27% loss.
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Sun Microsystems spent most of 2005 below $5, as it did starting in 2002. And no wonder;the company's lost money in 7 out of its last 10 quarters.
In fact, if it wasn't for two moderate sized acquisitions, Sun would have lost even moremoney, since the two buys kept revenues flat.
Dell, on the other hand, makes money, and is on track to make more money this fiscal yearthan it did the prior fiscal year.
And while Sun's numbers are mostly negative, Dell is still the world's number 1 PC maker.
What's cooking? The market is sending a clear message.
Sun is paying the price for its long battles with Microsoft, where CEO Scott Mc Nealy tookhis eye off the business and got personal.
Dell is in the early stages of the commoditization process for PCs, where just asrefrigerators and washing machines, everyone thinks that the product is great, and can'tlive without it. But, the growth prospects continue to shrink.
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The Amex Biotech Index (BTK) ended the year above 680, showing some relative strength.
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The Amex Pharmaceuticals Index (DRG) is trying to stabilize, and could rally in the shortterm. The index is showing signs of life, and may be groping for a bottom, although itstime may be running out. The index slid to a new low on 11-30. 299 is long term supportthat is being approached.
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The Philadelphia Semiconductor Index (SOX) is still testing the 480-500 area.
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Small stocks are increasingly volatile and have not made much headway of late. A weakdollar, and volatile energy prices are not helping.
Disclaimer: The financial markets are risky. Investing is risky. Past performance doesnot guarantee future performance. The foregoing has been prepared solely for informationalpurposes and is not a solicitation, or an offer to buy or sell any security. Opinions arebased on historical research and data believed reliable, but there is no guarantee thatfuture results will be profitable.
