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The Wilderhill Clean Energy Index is trying to form a bottom, but continues to lag theoverall market.
Chart Courtesy of StockCharts.com
The Philadelphia Oil Service Index (OSX) is still testing the 200 area, and its 200 daymoving average.
Chart Courtesy of StockCharts.com
The Amex Oil Index (XOI) has retained an upward bias.
Technical Summary:
Chart Courtesy of StockCharts.com
Seasonality Approaches
Low volume is making this a difficult market to trade. Yet, under the surface, there issome improvement in the New York Stock Exchange, although not as much in the Nasdaq.
This improvement in the NYSE is mostly hidden from view, but is evident if you look at thenumber of stocks making new 52 week highs on the exchange. See the image below.
Chart Courtesy of StockCharts.com
Otherwise, there are some key seasonal trend to keep in mind. First, is the fact that theend of the month is approaching, with the last trading day of the month and the first fivedays of a new month tending to be positive for stocks.
Counteracting that is the fact that we are heading for the last week of Dog Days trading,as traders will sneak off for one more vacation week before returning after labor day.
That means that the economic news, and geopolitics, will likely play a key role in whathappens over the next few days, until Wall Street is fully repopulated after the holiday.
So, is still no reason to call the rally dead, although if volume starts to pick up asstocks slip it would be of concern.
All we can do is remain patient, stick with strength, and follow sound buy and sell rules.
The S & P 500, is still testing the 1300 area, as the Nasdaq is struggling with the2150 area.
Large drug company stocks have continued to position themselves as market leaders, whilebiotech looks poised to join the rally.
Oil And Natural Gas In Focus
Natural gas is trading near the $7 area.
Crude oil traded above the $70 area last week.
Gold is still trading inside the $600-$675 area, with prices responding to news reportsfrom Israel, but also responding to economic news.
Check our energy section for bond, gold, dollar, and currency recommendations.
What To Do Now
We have added several new candidates in the technology area. Also see the Fallen Angels,biotech, and energy areas for updated prices and new additions.
The bond market remains interesting. See our bond trading model, on our energy page.
Our ETF trading systems have been adjusted with our utility trading model finally gettinga wake up call. See the energy section for details.
Remember, our Fallen Angels portfolio is designed for those seeking a potentiallydiversified portfolio with a longer term time frame, and offers both long and shortrecommendations.
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.
Chart Courtesy of StockCharts.com
Sentiment Summary:
Fear Eased Off At Week's End
Option traders got a bit calmer on Friday than they had been all week.
We like to see a bit more tension in this area, as it is often a sign of a potential for astock rally.
The CBOE Put/Call ratio checked in at 0.81.. A consistent string of low readings can be asign of excessive optimism and often signals a top in the markets. Readings below 0.5 areof concern, but not as serious as readings below 0.40. Readings above 1.0 are bullish. Thenumbers cited here are meant to be evaluated on a closing basis.
The CBOE P/C ratio for indexes checked in at 1.51. 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 12.31 and 16.98. These two indicators have been fallinglately. A fall near or below 20 on VIX and 30-40 on VXN is considered negative, a factthat is usually confirmed when the volatility indexes begin to rise. Readings above 40 and50, respectively, are often signs that a bottom may be close to developing.
The Duarte Overbought-Oversold Gauge (DOOG) rose to 47.5 on 8-25. This remains a bullishreading, but is less bullish than it has been of late
NYSE insiders were sellers of stock for the week of 8-11-06. 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 rose to 66% on on 8-25-06, again remaining neutral afterseveral consecutive sell signal levels. This indicator has been calling for a pullback instocks for several weeks. Buy signals occurr when the indicator falls to 40% or less.
Market Moves
Intel Gets Upgrade
Intel (Nasdaq: INTC) got a Wall Street upgrade on Monday. Will Applied Materials (Nasdaq:AMAT) and Microsoft (Nasdaq: MSFT) follow?
Chart Courtesy of StockCharts.com
The Nasdaq Composite could get a boost if Wall Street decides to bid up the old technologysector, after Intel's upgrade on Monday morning.
But, much remains up in the air, as several crosswinds are hitting the market.
The global economy seems to be slowing, and there are still significant geopolitical andenergy risks to consider.
Making matters worse for traders is the fact that hurricane season is now in full swing,also raising uncertainty, and the potential for an energy price spike.
The key with Intel is to see what happens as the stock approaches the 20.50 area, near the200 day moving average.
If the stock can clear the area, and others follow, we may see a piling on effect asmutual funds begin to gravitate toward old momentum favorites.
But, that's a lot of potential ifs for now.
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The Amex Biotech Index (BTK) remains volatile and has lagged the current market. 650 istough resistance with 620 near term support.
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The Amex Pharmaceuticals Index (DRG) again closed above 340, but is consolidating.
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The Philadelphia Semiconductor Index (SOX) has been in rally mode and has delivered aclose above 440.
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Small stocks are keeping pace with the current advance.
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