Santa Baby
The Dow gained 138 points while the Nasdaq NDX gained 22 points. Action for the
week was plus 148. 21 Sectors were up while 13 were down. The Institutional Index XII
and other blue chip measures topped the charts last week. The Midcap MID and Russell
RUT small cap indices, normally strong this time of year had negative action. At this point
everyone is just hopping on the bandwagon and locking in market performance.
Sector rotation looks more defensive than Bullish as Dividend Yields DVY are in the top
ranks while technology sectors are in the bottom. The Volatility index VIX is extremely
low which means Put options for portfolio insurance are extremely cheap.
Rydex funds- Short the NDX expecting this train to make a rest stop at least.
Short term - Very Overbought
INTERMEDIATE TERM TRENDS - SPX, NDX, Dow & SML – UP
INTERMEDIATE OSCILLATOR - Overbought
High on October 26th
Has not entered Bearish territory since bottoming in July and is overdue to visit.
Banks BKX- Ramped up to number one in overall rank expecting a more favorable yield
curve. Citigroup C and State Street STT are the leading stocks and we would be taking
profits on the first sign of a pause.
Networking NWX- The leader as far as tech sectors are concerned. Cisco CSCO is
hitting relative highs and we already took profits on this stock. Luckily we bought Ciena
CIEN which was last weeks star performer.
Broker Dealer XBD- Slipped in overall rank as record earnings are being reported.
Goldman Sachs GS is the prime example nearly 5 points off its pre-earnings high and in
danger of breaking the up trend established in September. Be very aware of how this
stock performs over the next few weeks.
Gold XAU- Dropped into the bottom ranks. We have traded these stocks several times
this year and will sit back until they find support again.
Pharmaceutical DRG- Still last in overall rank and overdue for a big rally. Perhaps when
the new Congress is sworn in. We are buyers of Schering Plough SGP.
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