Wait 15 minutes
The Dow closed down 78 points and the Nasdaq NDX down 24 points. The Russell RUT
and Midcap MID indices managed a gain. Action for the shortened week was minus 415.
15 Sectors were up while 19 were down. The Commodities Index DJAIG continues to
make gains. Thirty year rates TYX continue to move higher. Based on last weeks action
Bernanke is more likely to raise rates to fight inflation than lower them to prevent a
recession. However because the FOMC is “data dependent” the rate forecast is more like
the weather and if you don’t like the weather-- wait 15 minutes.
Core economic growth appears to be strong with stocks like US Steel X hitting multi-year
highs. While technology sectors have been quite volatile overall market breadth has been
quite positive on both the NYSE and Nasdaq. Very simply more stocks are going up than
going down. The bellwether for the next move is the Russell index RUT of small cap
stocks. The RUT lagged other broad based indices as they hit relative highs over the last
month but managed to eke out a gain last week and the chart looks constructive.
Rydex funds- In the Bullish Russell and OTC fund.
Short term - Oversold Buy with the positive breadth Friday.
INTERMEDIATE TERM TRENDS - SPX, NDX, Dow & SML -- Flat
INTERMEDIATE OSCILLATOR - Rising avoiding a dip into Bearish territory for the time
being.
REIT IRH- Number one in overall rank led by Federal Realty Trust FRT and a covey of
others. Most of these issues are near relative highs.
Basic Materials XLB- Second overall led by Chemical stocks Dow DOW, Dupont DD,
Air Products APD and Monsanto MON. This and the Cyclical index CYC are best at
measuring core economic strength.
Airline XAL- I hope you took profits as we had indicated over the last two weeks.
China CZH- Back in the top ten led by Sina SINA. China Life LFC has been a go getter
too.
Semiconductor SOX - Still in our bottom rankings but moved up overall and appears to
have bottomed. Our Texas Instruments TXN got out of the rut it has been in the last
three months. KLA Tencor KLAC and Linear Tech LLTC bumped up a bit last week as
well.
Gold XAU- See Basic Materials buy Goldcorp GG.
Water PHO- We have been tracking this sector for a few months and should have jumped
in at the first opportunity. Nalco NLC, Roper ROP and Siemens SI are the leaders to buy
on pullbacks.
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