Thar’ She Blows
The Dow rallied 110 points while the Nasdaq NDX gained 42 points. Action for the
week was plus 712. 29 sectors were up and 2 sectors were down. The Small Cap index
SML had the best action while the NDX is in the steepest up trend overtaking the blue
chip Dow and S&P indices.
The Intermediate term market risk measure popped up to a new high Thursday
indicating a possible blow off top. Overall risk is high. This week is expiration week
and the wall of worry is front and center.
Had to switch from short to long Thursday. I will not be fully invested and will be ready to
pull the plug on a moments notice. Blue chips look tired. GE closed down Friday despite
good earnings and good prospects.
Rydex funds- Bullish Russell RUT fund.
Short term - Overbought
Negative Breadth is the missing link for a Sell
INTERMEDIATE TERM TRENDS
SPX, NDX, Dow & SML All UP
INTERMEDIATE OSCILLATOR - Overbought
Oversold Buy June 13th
New high October 12th
Basic Materials XLB- Number one in overall rank led by Dupont DD. This sector benefits
from lower oil costs. Air Products APD and Monsanto MON are next in line.
Transportation IYT- Moved up into our top ranks led by Fedex FDX and the Airlines
XAL. Cost of fuel is one part of the story but delivering goods is a bigger part. FDX is the
bellwether for internet sales and the Holiday season.
Housing HGX- Still rising in rank but fell a few floors Friday as Centex CTX reported
increased cancellations on new homes. This sector is the bellwether for a hard or soft
landing. Locally in the Washington DC area, which has high turnover, there are about two
homes for sale on each block.
Semiconductor SOX- Could be the hot sector this week with earnings reports from LLTC
and Broadcom BRCM.
Oil Patch XOI, OSX, XNG- Showing signs of life but not moving up in relative rank. I view
this bunch as tradeable but will take quick profits expecting to buy back as recent lows are
retested as long as the ranking stays in the bottom.
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