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The Wilderhill Clean Energy Index seems to have bottomed with the 190 area being key priceresistance.
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The Philadelphia Oil Service Index (OSX) looks ready to test the 200 area.
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The Amex Oil Index (XOI) is back above 1100, and has reversed its recent down trend.
Technical Summary:
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Seasonally Bullish Period Approaches
The last trading day of the month, and the first five sessions of a new month have a biastoward rising prices, as institutions put new money to work.
There is no guarantee that all stocks will rise, but the odds do favor rising prices.
The market has been doing quite well of late, but now has to deal with a bearish forecastfor the technology sector, issued by Goldman Sachs on 10-27, as a potential reason to keepprices down.
Volume, though, has been acting well, as it has been rising on days in which the marketrises. That is an excellent sign and suggests that the rally could be extended.
Small stocks have recently made a new high for the current move, and are within strikingdistance of their all time highs.
The action, barring a sudden and violentreversal, remain very positive at the current time, as the market approached thetraditionally bullish period of November to January.
The NYSE advance decline line has recently made new high as the number of 52 week highs onthe NYSE has been rising., a sign that momentum remains intact.
The market could be looking for new leadership, though, as tech stocks look wobbly, anddrug and biotech stocks have come a long way.
The key is still to remain in areas of the market that are working, and to nimbly tradeout of those that aren't.
What this means is that every position still needs to be reviewed on its own merits. Sellstops should be meticulously adjusted. And sell rules should be observed with no deviationfrom comfort levels.
What To Do Now
Trading success in this market requires a daily review of each open position. If it’snot working, it’s time to sell it.
Weak stocks should be sold, and strong stocks should be monitored for growing signs ofweakness.
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:
Bears Awaken On Bad Tech Report And Low GDP
The bears jumped back into the market on 10-27, as the fear of an economic slow down,based on lower than expected GDP figures, and the Goldman Sachs report of slowing motherboard sales raised fear gauges.
Put/call ratios again rose nicely, suggesting that any good news from the Fed could leadto a rally in stocks.
The CBOE Put/Call ratio checked in at 1.03 returning to recent levels. A consistent stringof 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 2.49. 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 10.80 and 17.41. 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 77.5%. This remains an overboughtmarket, as the sell signal from 10-9 is still in play.
NYSE insiders were sellers of stock for the week of 10-6-06. 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 74% on on 10-27-06. This is the sixth weekabove 70%, which is a sell signal.
Market Moves
Google And CME Continue To Defy Gravity
Google (Nasdaq: GOOG) and the Chicago Mercantile Exchange (NYSE: CME) remain near all timehighs.
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Few stocks reach the century mark, much less rise to prices which are multiples of 100.
But Google and the Chicago Mercantile Exchange are trading above $400 and $500respectively, at least as of the close on 10-27.
The prices of both of these stocks are based largely on two factors. Both are leaders intheir sector, and investors remain confident in their ability to do so.
With Google delivering record earnings, and CME recently buying the Chicago Board ofTrade, both companies are clearly expanding their reach on their markets as well.
The question for investors, though, is whether these two increasingly large companies cancontinue to deliver.
If history is a guide, they are likely to deliver growth, now due to buying othercompanies, for a while longer.
General Electric, IBM, and other large companies have delivered growth by acquisitions fora long time, since they are unable to grow their own product lines beyond certainparameters.
Yet, all companies reach a point beyond which they can't grow. Google and CME are nowherenear that point, as far as we can tell.
But, at some point, the market will start to wonder. When that happens, things could getvery interesting for those that have grown comfortable with these two, which are clearlyat the top of their game right now.
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The Amex Biotech Index (BTK) is consolidating after its recent move to the up side.
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The Amex Pharmaceuticals Index (DRG) delivered a multi year break out on 10-18, closingabove 360.
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The Philadelphia Semiconductor Index (SOX) has been showing some weakness of late, with450 being a tough resistance level.
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Small stocks are starting to show signs of regaining momentum.
