Chart Courtesy of StockCharts.com
The Wilderhill Clean Energy Index looks to have run into resistance at 210.
Chart Courtesy of StockCharts.com
Crude oil prices are still testing the $65 area.
Chart Courtesy of StockCharts.com
The Philadelphia Oil Service Index (OSX) has remained above 200.
Chart Courtesy of StockCharts.com
The Amex Oil Index (XOI) is now testing its all time highs.
Technical Summary:
Chart Courtesy of StockCharts.com
Back On Track
The cries for Dow 13,000 are of concern, given the somewhat wobbly market for part of last week, where there were some nonconfirmations of new highs.
By Friday, though, some repair work had taken place, as volume finally rose on a day in which the market rallied, easing some of our volume concerns.
Still, there is yet a broad consensus being expressed in the market, as only some sectors are rising while others are going nowhere.
Drugs and biotech are a perfect example, as some stocks are rising and others are falling, despite being in the same sector.
Energy and metals have been volatile as well, while the technology stocks may be showing some signs of improvement.
Nasdaq, although weaker than the Dow and the S & P 500, has remained above 2500, which is now important short term support, and there are some signs of improvement in the semiconductor sector. Yet, the current trading pattern is less than stellar, just five weeks into a new rally.
Perhaps most important is the return of the NYSE advance decline line to making new highs along with the major indexes, an event that took place on Friday, and puts the market on better footing.
It is a good time to look at individual stocks and to start cutting losses on any laggards, while taking profits in any big winners, and tightening stops on all positions, while looking at new areas in which to start adding stocks.
For now, the up trend remains intact, but it is getting more and more sluggish with each unconfirmed new high in the Dow.
From a longer term stand point, based on historical trends, this should be a positive year for stocks, given the fact that it's the third year of the Presidential Cycle, which calls for rallies in the third and fourth years of a presidency.
Our long term forecast remains upbeat, unless the major indexes fall convincingly below their 200 day moving averages.
What To Do Now
It's time to become a bit more cautious, at least in the sense of remaining patient and going for smaller positions and concentrating on very strong stocks.
Visit all our individual sections, both our ETF and individual stock picks daily for new ideas, and changes to open positions.
Be very methodical about monitoring portfolios, adhering to trading rules, and ratcheting up sell stops is clearly still here.
Second guessing decisions, and hoping that things will turn out o.k. in the long haul, is the recipe for disaster at a time like this in the market.
Check all our sections daily. See tech, biotech, Fallen Angels, and timing systems for the latest adjustments. Our ETF trading systems for energy, Spyders, Small Caps, and technology have also been updated.
Chart Courtesy of StockCharts.com
Sentiment Summary:
A Bit Too Comfortable
Option traders are starting to get a bit too comfortable with the market, as put/call ratios are starting to fall.
The CBOE Put/Call ratio checked in at 0.75 on 4-19, falling from 1.11 on 4-10. A consistent string of low readings can be a sign of excessive optimism and often signals a top in the markets. 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 a closing basis.
The CBOE P/C ratio for indexes checked in at 1.29. Numbers above 2.0 as the market sells off, often lead to rallies. Readings below 0.9 suggest too much bullish sentiment, just as readings above 2 are usually required to mark major bottoms.
The VIX and VXN had readings of 12.07 and 15.71. These readings are starting to drift lower. A fall near or below 20 on VIX and 30-40 on VXN is considered negative, a fact that is usually confirmed when the volatility indexes begin to rise. Readings above 40 and 50, respectively, are often signs that a bottom may be close to developing.
NYSE specialists were sellers of stock in the week ending 4-30, again selling after delivering a reversal of a three week selling spree and also showing that the insiders were buying at the market's bottom on 3-21. This is worth watching. At that time the market was starting to weaken. We'll see of this improves over the next couple of weeks. Specialist short selling remained at very low levels, though. Rising short selling from specialists is usually a very bearish sign.
Market Vane's Bullish Consensus was at 74% on 4-20 again giving a sell signal. The UBS sentiment index fell to 78 in March after registering a reading of 103, a downright scary number, and the highest one we've seen in January.
Market Moves
Schlumberger Holds Up As Halliburton Drifts
Schlumberger (NYSE: SLB) has been leading the oil service sector, as Halliburton has been fading.
Chart Courtesy of StockCharts.com
The oil service sector tends to trade tandem, meaning that when one of the major stocks in the sector rises, most of the sector tends to follow.
But lately, that has been less frequent. A case in point is the divergence between Halliburton and Schlumberger.
The former has been drifting lower, and has announced that it will be moving its corporate headquarters to the Middle East. The latter, on the other hand is within reach of a new high.
Halliburton trades at 14 times earnings, while Schlumberger trades at 19 times earnings, suggesting that the market is willing to take a chance on SLB, and not so much on HAL.
Halliburton has had problems with the U.S. government, due to questionable practices in obtaining Iraq related contracts, but business seems to be holding up fairly well.
At times like these, when stocks such as Halliburton, which reside in a strong group, are not acting well, it's usually a management problem, or some kind of bad news in the pipeline that the smart money knows is on the way.
The relationship between HAL and SLB is well worth watching.
Chart Courtesy of StockCharts.com
The Amex Biotech Index (BTK) cpmtomies to show strength. The buyout of Medimmune by Astra Zeneca should also add some life to the sector.
Chart Courtesy of StockCharts.com
The Amex Pharmaceuticals Index (DRG) seems to have bottomed near 340 and is now challenging the 370 area.
Chart Courtesy of StockCharts.com
The Philadelphia Semiconductor Index (SOX) has also been showing some strength.
Chart Courtesy of StockCharts.com
Small stocks are showing some relative strength.
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