Face Lift
The Dow rallied 377 points for the week while the Nasdaq NDX gained 48 points sparked
by FOMC action Tuesday. The Commodities index is on top of the broad based stock
rankings while interest rates TYX and Volatility VIX slipped in rank. Overall Sector Action
for the week was plus 722. All Sectors were up.
In a move to get ahead of the mortgage banking crises the FOMC did lower rates a half a
percent. My mortgage banking friends are expecting the train wreck to continue as ARM
resets do not peak until Q3 of 2008. Regardless this puts a band aid on the Banking
system and may help the rest of the economy avoid a recession. Cyclical stocks and
Commodities responded favorably. Housing and Banking stocks are still in the lower
ranks.
Rydex Alerts- Took profits on Bullish positions after the FOMC meeting. Now in Bearish
Russell. Flipping back and forth nearly every day.
Short term Trading indicator- Overbought. Negative breadth would confirm a Sell signal.
INTERMEDIATE TERM TRENDS- Bullish
INTERMEDIATE OSCILLATOR - Overbought after the FOMC face lift.
Oil Service OSX - Number one overall. We took profits on the bullish etf DIG. The oil
patch is tradeable but do not overweight them.
Gold XAU- The strongest sector after the FOMC rate cut. The stocks ran into some
prudent profit taking Friday and we would expect some sort of pullback this week which
will likely be met by more buying.
Cyclical CYC - Up the most in relative rank betting the recent lowering of interest rates
will avoid a recession and even boost the economy.
Basic Materials XLB- Moved up in relative rank and price. Looking to take the 20%
profit we have in UYM the Ultra Bullish Basic Materials etf.
Financials XBD, KCE, BKX- Still in the bottom ranks despite the interest rate fireworks
last week. Investors believe there is more bad news coming from these names and they
have not come clean yet.
Telecom XTC- Help by the rate cut and steady business most of these stocks were up
last week. A safe haven with growth potential.
Housing HGX- Still dead last in our ranks. Not even a dead cat bounce after the rate cut.
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