See Saw
The Dow finished the shortened week off 244 points while the Nasdaq NDX fell 30 points.
All on Friday. The Commodities index &AIG had the best action. Overall Sector Action for
the week was minus 113. 8 Sectors were up and 24 were down.
With a sour Jobs Report Friday the consensus moved to the FOMC lowering interest
rates. This was good news until the stock market figured out they are lowering rates
because they need to rates with a slowing economy. Even without the sub-prime fallout
the Real Estate bubble was going to pop as prices were dependent on flipping profits not
household incomes. This is reminiscent of the Dotcom IPO bubble when trading profits
begat more trading profits until the music stopped. Retest and Recession are the concerns
this week.
The market needs to calm down first to build a base and we need to see small cap stocks
and the Russell index show some signs of life.
Rydex Alerts- Cash
Short term Trading indicator- Overbought Sell last week now getting oversold. Up one day
down the next.
INTERMEDIATE TERM TRENDS- Neutral to Bearish
INTERMEDIATE OSCILLATOR - Rallied to Neutral then turned down last week.
Defense DFI - Still Number one overall. Government spending is one thing you can count
on.
Gold XAU- Rallying in rank and price. Partly due to dollar safety concerns. If you own
Gold stocks enjoy the ride but be ready to take profits.
Biotech BTK - Moved up nicely to 4th in overall rank. These stocks can move
independently of the overall market with a cure for the common cold in the labs. Elan ELN
is still my best buy in this arena.
Retail IRH- Took a nose-dive with the jobs report despite increased sales at Walmart
and Target. Gas prices are the likely long term driver here not housing prices. Looking for
a stock or two to buy in this sector on this dip.
Financials XBD, KCE, BKX- Still in the bottom ranks but the stocks are finding support
and building a base. These might be good covered Call writes.
Oil Patch OSX, XNG, XOI- Big jump up in relative rank and price last week as we traded
the Ultra Bullish etf DIG. Expect some trading opportunities this week as they pull back in
price on economic slowdown fears.
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