Jack Be Nimble...
The Dow gained 75 points for the week. The Nasdaq NDX shot up 45 points yet the
Russell RUT went down 7. We call this ‘divergence’. All the Broad based stock indices
had negative Action. The Russell RUT and Institutional Index XII had the worst Action.
This is a clear sign the wheels are slipping on the Bulls bus.
Sector Action for the week was minus 569.
15 Sectors were up while 17 were down.
September was stellar as the market rebounded from the August fall with help from
Bernanke. Unfortunately lowering interest rates just added fuel to positive momentum and
now even the momentum indicators are overbought. I said a few weeks ago for the market
to break out the Russell index RUT of small cap stocks must participate. They have not.
Chinese stocks have taken off. So have Gold stocks and other Commodities although they
are running into some prudent profit taking. Housing, Retail, Semiconductor and Financial
sectors are still in the bottom ranks. You would expect one or two of these to be leading a
move to new highs if that were the direction we are headed.
Rydex Alerts- Bearish Russell and Dow. You have to be willing to flip back and forth almost
daily with this market.
Short term Trading indicator- Overbought Sell.
INTERMEDIATE TERM TRENDS- Bullish.
INTERMEDIATE OSCILLATOR - Overbought and headed down.
China CZH - Number one overall and in a very steep uptrend. If you own a China stock it
is likely up a bunch. With the US dollar hitting new lows one has to wonder how high this
rocket can go. No signs of profit taking yet but keep you finger close to the Sell button.
Gold XAU- These stocks did run into prudent profit taking last week and declined in rank
although the XAU is still in the top ten.
Oil Service OSX - Showing signs of topping and I am looking to trade the Bearish etf
DUG.
Utilities UTY and Water PHO- Fell the most in relative rank which is a warning sign.
This money is either chasing growth or moving to cash. We should know more this coming
week.
Broker Dealers XBD and Banks BKX- Still in the bottom ranks which is a vote of no
confidence for the financial markets and the mortgage mess.
Retail RLX- Fell into the bottom ranks last week. Another bellwether for the economy and
the stock market going into the last quarter.
Housing HGX- Still dead last in our ranks. Frankly it looks like the decline in home prices
has just begun.
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