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The Wilderhill Clean Energy index is composed of alternative energy stocks, such as carbonfiber manufacturer Zoltec (NNM: ZOLT) and some high tech stocks such as Energy ConversionDevices (NNM:ENER), whose chips and products are used in the energy industry.
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The Philadelphia Oil Service Index (OSX) seems to have found support near the 200 area,and is moving steadily higher.
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The Amex Oil Index (XOI) has bottomed and looks ready to challenge its all time highs.
Technical Summary:
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First Of The Month Buying Could Spur Rally For A few More Days
If the pre-market futures rally holds up, stocks could add another up day to the recentledger.
Analysts all over the place are calling for a top, although momentum indicators suggestotherwise.
The rally in stocks could move higher due to seasonal tendencies for stocks to rise at theend of the month and the start of a new month. The seasonally bullish period starts todayand runs until Wednesday, April 5th.
Nasdaq is on the verge of a major break out, if it can take out the 2350 resistance area.
Technology stocks are mixed with old names lagging, but smaller names acting well,
Energy, specially clean energy stocks, as the Wilderhill Clean Energy Index (ECO) continueto move reasonably well.
Brokerage stocks also moved higher, while biotech looks to have found support.
Commodities Still Range Bound
Gold looks to have delivered a break out.
May crude is near $67, while December crude is now near $70.
The dollar is increasingly volatile, despite higher interest rates.
Check our energy section for bond, gold, dollar, and currency recommendations.
What To Do Now
Traders and investors should be looking for strong stocks to own, while being vigilantabout trailing sell stops.
Remember, our Fallen Angels portfolio is designed for those with a longer term time frame,and offers both long and short recommendations.
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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SentimentSummary:
Fear Gauges Mixed
Option players remained calm, setting up the potential for a continuation of the currentrally.
Healthy advances rise on the back of worry warts who buy put options when the marketfalls. When the market falls and put option buyers are absent, it is often a sign thatmore selling is coming.
The CBOE Put/Call ratio checked in at 0.83 falling from the 1.05 on 3-28. A consistentstring of low readings can be a sign of excessive optimism and often signals a top in themarkets. Readings below 0.5 are 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 aclosing basis.
The CBOE P/C ratio for indexes checked in at 1.63. Numbers above 2.0 as the market sellsoff, often lead to rallies. 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 11.31 and 16.31 on 3-31, remaining stable. 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 remained at 57.5%. Readings of 80 are overbought and40 and below are oversold.
NYSE insiders mild sellers of stock for the week of 3-17-06. 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%. The UBS sentiment gauge, a fairly goodsentiment survey in 2005, fell to 80 after its reading of 93 the prior month. This remainsa very high reading, and is of concern. It correctly called the rally in October with areading of 47.
Market Moves
Steak Houses Sizzle
Ryan's Restaurant Group (Nasdaq: Ryan) and Ruth's Chris Steak House (Nasdaq: RUTH) arenear break outs.
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The restaurant group is doing well, as investors flock to smaller names with growthpotential, despite fears of Mad Cow disease, and competition between diet fads.
With Ryan's and Ruth's Chris, there is plenty to take care of the low carb, and the highcarb crowd, as meat and potatoes flow freely at both.
And so does money, as institutions are piling on. Ruth's Chris has three quarter ofearnings on the books, but it did make money, in all three quarters, and has delivered a14.55% revenue and a 123% earnings growth rate on a year over year basis.
Ryan's is showing less growth, but is also making money, and sells at 23 times earnings,which is not bad for a growth stock.
Restaurant stocks tend to be late cycle winners, as their growth rates are tied to periodsof high employment, when work pressures are rising and workers have less time to eat athome.
This was evident in the late period of the dot.com boom, when restaurant growth ratessoared.
Clearly, this is something to keep in mind when investing in the sector, and the overallmarket.
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The Amex Pharmaceuticals Index (DRG) is starting to weaken. 330-340 is key resistance.
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The Philadelphia Semiconductor Index (SOX) may have found support near 500, and looks tobe setting up for a rally. 550 is long term resistance.
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Small stocks made new highs on 3-29, and continue to gather strength.
Disclaimer: The financial markets are risky.Investing is risky. Past performance does not guarantee future performance. The foregoinghas been prepared solely for informational purposes and is not a solicitation, or an offerto buy or sell any security. Opinions are based on historical research and data believedreliable, but there is no guarantee that future results will be profitable.
