Aces Back to Back
The hangover continues as the Dow Jones dropped 193 points and the Nasdaq NDX 50
points with Bernanke ‘standing by’.
Sector Action for the week was plus 781 with only 10 Sectors up and 21 down. Our
Market Barometer bottomed out on Tuesday and the positive Action is indicative of
Institutional buying. We are due for a big bounce.
With Fed funds closer to 30 year rates than 3 month rates Bernanke is way behind.
Lowering rates to 3% would be the quickest, simplest and most effective way to handle
the current crises’. The US is in a recession masked by World economic growth. This
shows up in our Sector rankings with domestic sectors-- Banks, Housing and Retail
down significantly while international Sectors-- Gold, the Oil Patch and China are
posting gains over the last year.
Rydex Alerts- Bullish Russell and OTC.
Short term Trading indicator- Oversold
INTERMEDIATE TERM TRENDS- Bearish
INTERMEDIATE OSCILLATOR - Oversold Buy last week. We only get a reading like this
once or twice a year. The probability of a significant bounce is very high.
Market breadth is the most bearish indicator. With more stocks going down than up since October
cumulative breadth is testing last years lows.
Gold XAU- Tops on the Sector rank but with negative Action. We took profits on our
Kinross Gold KGC Friday up nearly 25% in a months time.
Oil Patch XOI, XNG, OSX - Still in the top ranks but with negative Action and price
action. We were correct to suggest taking profits and getting more willing to short rallies.
The Bull market in energy is very long in the tooth.
Ultra ETF’s- Took profits in bullish Utility. Bought bullish Technology ROM, bullish
Financial UYG and Russell UWM.
Financials XBD, BKX, KCE, KIX- Still improving in rank if not in price as yet. Citicorp C
earnings Tuesday which should be a watershed event. Will the FOMC act as well?
Biotech BTK and Pharmaceutical DRG - The first Sectors to come to life this year. Elan
ELN has a big announcement coming this week. Biotech and drug companies are
generally not affected by economic slowdowns and the stocks are seen as a good value
having declined last year.
Commodities DJAIG- Rose in price last week but had negative Action. Time to think
about taking profits not piling on or buying anew.
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