Fasten Your Seatbelt
The Dow gained 41 points while the Nasdaq NDX fell 17 points. Action for the week was
minus 901. 15 sectors were up and 16 sectors were down. Action was negative for all
the broad based stock indices.
OurIntermediate term market risk measure topped out on Monday consistent with a
blow off top. Overall risk is high. Any kind of unwinding from expiration week will tip the
cards in the Bears favor this coming week. Even the Bulls are hoping for a pause to
refresh before the traditional end of October rally.
Rydex funds- Bearish (Inverse) Russell fund.
Sold the long position last week at a small profit and went short at the end of the day Friday.
Short term - Overbought
Bought Nov OEX 630 Puts Friday to trade Monday
Negative Breadth would give us a more lasting Sell
INTERMEDIATE TERM TRENDS
SPX, NDX, Dow & SML All UP Looking a bit parabolic.
INTERMEDIATE OSCILLATOR – Overbought Topped out October 16th
Utility UTY- Number one in overall rank led by our Duke DUK holding and Excel XEL.
Many of the stocks in this sector are at or approaching new highs. With healthy dividends
and assured profits this sector benefits from every facet of this economy and its
uncertainties. The sector is very overbought -- no new purchases here -- traders will want
to take profits this week.
Pharmaceutical DRG- Rose to second in overall rank with JNJ and Merck MRK hitting
highs. Drugs and Utilities are generally considered defensive sectors and not growth
sectors. Be aware some of this buying is to park money raised from the declining tech
sectors.
Airline XAL and Transportation IYT- Led by the Airlines XAL which we have already
taken profits on. CH Robinson CHRW earnings due out this week. Fedex FDX is our
bellwether going to year end for the overall economy and internet retail.
Consumer CMR- Coming out of the bottom ranks led by Coca Cola KO with JNJ and
MRK again. Too late to chase. Enjoy the ride and be ready to take profits.
Oil Patch XOI, OSX, XNG- Stocks are off recent lows however the sectors are still rock
bottom in ranking. $50 oil is the talk. Trade out looking to buy at lower levels as these
sectors are subject to selling pressure from window dressing.
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