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The Wilderhill Clean Energy Index remains weak with 180 being a tough resistance level.
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The Philadelphia Oil Service Index (OSX) is trading between 1280 and 200.
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The Amex Oil Index (XOI) has found support just below 1100.
Technical Summary:
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Market Shrugs Off Woodward Book.. So Far
Stocks are trying to balance between the risk of a political scandal and the tendency ofstocks to rally in the first week of a new month, as pension funds put new money to work.
An unspoken fear on Wall Street is that another Watergate like scandal could rock thestock market, especially as the U.S. economy shows signs of slowing.
So when the news broke about Bob Woodward's "State of Denial," an insiders'perspective of the Bush administration and its conduct of the war in Iraq, the market tooka wait and see attitude.
On Friday, stocks were sluggish, perhaps somewhat influenced by the potential problemsfrom the book.
But, so far, although the press was hot and heavy over the weekend, it looks as if themarkets are not going to respond negatively, at least until more is known.
So, until proven otherwise, momentum remains to the up side.
Aside from politics, the bond market and oil prices are still important. If the rally inoil fails, it would be a positive for stocks, while a bond market that keeps yield stablewould also be supportive of higher prices.
The NYSE advance decline line made a new weekly high on 9-29, suggesting that the rally isnot done yet.
The best strategy is to concentrate on what is working, while keeping an eye on signs of aweakening trend, of which there are none at this point.
One caveat is that momentum markets, though, can be very treachearous. And this one, likeeach and everyone of its predecessors, will fail. The key to success for all players is toremain vigilant, to concentrate on strong sectors, and to recognize the inevitableweakness as early as possible, when things eventually turn south.
Technology and financial stocks continued to do well, along with health care stocks, assmall stocks are clearly lagging. Energy stocks are trying to bounce back.
The bond market is due for a bit of consolidation, and energy stocks look ready for abounce.
Our strategy remains both stock oriented, as well as mindful of the overall trend in themarket.
Diversification remains important, between selected technology stocks, selected healthcare stocks, and the financial sector.
Oil Holds Steady
Commodities look ready to try another bounce, with oil making a stand at the $60 area.
Natural gas is still hugging the $5-$6 range.
Gold is still testing the $580-$600 band.
Check our energy section for bond, gold, dollar, and currency recommendations.
What To Do Now
Work within the premise that strong stocks are worth owning, at least on a trading basis,as long as each individual position continues to show strength.
Slow and steady position building remains the key to success. Look for opportunities infinancial and technology stocks.
Visit our technology and Fallen Angels areas for trading ideas everyday.
Active traders should have some open short positions in energy. See our energy section fordetails.
Stay patient, and see if the market can continue to right itself. See all our sections fordetails on new potential picks.
The bond market remains interesting. See our bond trading model, on our energy page.
Our ETF trading systems have been adjusted to reflect the current trends in the market.
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.
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Sentiment Summary:
No Sell Signal
Traders showed little fear going into the weekend.
The CBOE Put/Call ratio checked in at 0.79. 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 1.18. 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 11.98. and 17.68. A fall near or below 20 on VIX and 30-40on 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 (DOOG) rose to 67.5. This remains a neutral reading,and an improvement over last week's 47.5.
NYSE insiders were buyers of stock for the week of 9-15-06. 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 71% on on 9-29-06. This is the second week above70%, which is a sell signal.
Market Moves
Exxon In Trouble At 50-Day Line
Exxon Mobil (NYSE: XOM), bounced with crude oil last week, but ran into trouble at the $68area, its 50 day moving average.
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Exxon tends to be a bellwether for the oil sector, and its difficulties at the 50-daymoving average are important, as any failure in this stock could spread to the rest of thesector.
An increasingly important concpe tis the fact that the publicly traded majors, such asExxon, continue to lose their share of reserves around the world, as they face competitionfrom state owned oil companies, with larger amounts of resources.
Exxon has short term support at $65, and long term support at $62.
The key is to watch the interplay between Exxon and crude oil futures.
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The Amex Biotech Index (BTK) is still testing the 670 area, and showed some strength on9-27.
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The Amex Pharmaceuticals Index (DRG) broke out to a new high on 9-1 and has beenconsolidating ever since. 350-355 is the key range.
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The Philadelphia Semiconductor Index (SOX) is still testing the 450 area.
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Small stocks are moving along with the market, but are showing signs of improvement.
