Chart Courtesy of StockCharts.com
The Wilderhill Clean Energy Index is again testing the 210 area, after finding support near 200. This sector has been improving of late.
Chart Courtesy of StockCharts.com
Crude oil prices seem to have held above $65, but might be under pressure in the near term.
Chart Courtesy of StockCharts.com
The Philadelphia Oil Service Index (OSX) made a new high on 6-22.
Chart Courtesy of StockCharts.com
The Amex Oil Index (XOI) has been increasingly volatile, and is not acting as well as the oil service sector.
Technical Summary:
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Chart Courtesy of StockCharts.com
Volatility Makes For Tough Trading
Despite the general complancency in the air, this is not a very easy environment in which to make money, at least for trend followers.
The problem is the recent volatility, and its side effects, especially, the ability to give a position time to develop without sustaining large paper losses.
A successful trading program requires two things, risk management, and a sustainable trend.
A sustainable trend, up or down, allows for the steady adjustment of risk, meaning that sell stops, or buy stops if you're selling short, can be adjusted over time, giving the opportunity to reach a profit.
Volatile markets increase the chances of being stopped out prematurely, thus, making it difficult to make money.
In these types of markets, there is a need to be patient. And patience usually gives traders the feeling that they are missing opportunities to make money. When that happens, inexperience leads to over trading, which tends to increase the opportunity of losing money.
In other words, for now, the best strategy is to stick with what's working, and give this market time to work out its own kinks, without taking too much of our money away.
The S & P 500 is testing its 50 day moving average, and the 1500 area. A failure here could take the market to 1410, a six percent loss.
The NYSE advance decline line is still off of its recent highs, but the number of stocks making new highs on the NYSE and the Nasdaq has not broken down.
The number of stocks making new 52 week highs, on both the Nasdaq and the NYSE is also starting to shrink.
Still, there are some negatives, as NYSE specialists have been net sellers of stock since the Memorial Day weekend, while some are reporting that company insiders have also picked up their level of stock sales lately.
Think of alternatives to stocks, such as bonds and the dollar, which are still offering a unique trading opportunity, shorting bonds, and being long the dollar.
Otherwise, be patient. 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
Keep a lid on emotion, and stick to your trading rules.
Consider taking some profits where it makes sense, and consider tightening stops where appropriate. Use our individual sections for guidance.
Selectivity remains the key to success. Look for strength, either on a continued basis, or in turn around areas, such as the semiconductors.
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
Chart Courtesy of StockCharts.com
While the market has been looking tired, the chip equipment makers have been on the rise.
Clearly, there is something afoot here. And most likely it is the perception of value, as these leaders of the past have missed big chunks of the market's rally over the last few years.
More than anything else, it seems as if Applied Materials has found a new niche, solar power.
The company has recently reported that it has booked some $400 million worth of sales in the solar power arena, twice its expectations.
Applied Materials makes equipment that allows solar panel manufacturers to make solar panels for less than traditional methods.
From a technical standpoint, a sustained move above $20 for AMAT would be very bullish.
Chart Courtesy of StockCharts.com
Chart Courtesy of StockCharts.com
Chart Courtesy of StockCharts.com
Chart Courtesy of StockCharts.com
Small stocks remain range bound.
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Disclaimer: The financial markets are risky. Investing is risky. Past performance does not guarantee future performance. The foregoing has been prepared solely for informational purposes and is not a solicitation, or an offer to buy or sell any security. Opinions are based on historical research and data believed reliable, but there is no guarantee that future results will be profitable.
