STOCK WINNERS AND LOSERS -- MARKET AT TOP OF TRADING RANGE?
BIG VOLUME LOSERS... The first three charts show some high-volume losers today. On the Nasdaq, QLogic broke moving average support -- on the highest volume in two months. Among retailers, Federated tumbled on very heavy volume -- after failing a retest of its 50-day average. McDonalds also met new selling at its 50-day line -- and fell heavily today on big volume. MCD was one of the Dow's biggest lowers.
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GOLD AND ENERGY GAINERS... Pockets of strength were seen in gold, energy, homebuilding, tobacco, and papers. Consumer staples also did well -- possibly reflecting a more defensive market mood. The sampling of stock charts shown below all have two things in common -- they jumped on rising volume. Newmont Mining gained over a point after bouncing off moving average support. [Gold prices jumped $7.00 today and gold stocks gained over 4%]. Freeport McMoran Copper & Gold hit a new six-month high on rising volume. Last night we showed Apache Oil breaking out to the upside reflecting strength in natural gas stocks. Energy stocks bounced sharply today -- led by natural gas stocks. [Crude oil hit a new two-year high today. Frigid weather in the northeast is also boosting natural gas prices].
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OTHER VOLUME GAINERS... United Technologies was the Dow's strongest stock. It's chart shows UTX hitting a new recovery high on much higher volume. In a strong homebuilding group, KBH hit a two month high -- also on heavy volume. In a strong paper group, MWV was up today on better volume -- and is holding over its 200-day average.
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CONSUMER STAPLE LEADERS... Consumer staples were strong today. The three charts below show some of the big-volume leaders in that defensive group. All gained on heavier volume. Kellogg and Colgate Palmolive cleared moving average resistance. Gillette hit a four-month high and is challenging its 200-day line.
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MARKET AT TOP OF TRADING RANGE?... The market appears to be turning more defensive. Rising gold and oil prices arising from war jitters are part of the problem. Relatively good earnings reports don't seem to be helping much either. [As technical analysts, we take a dim view of stocks that decline on good earnings]. We've been expecting the major averages to challenge either their 200-day averages -- or their fourth quarter high. The chart of the S&P 100 (OEX), however, has already reached its 200-day line and is starting to weaken. That may be a bad sign. We have to consider the possibility/likelihood that the market has reached the top of its trading range and will weaken from here. The lines along the bottom are also instructive. The black ADX line is supposed to reflect directional movement in the market. Right now, it not only flat; it's declining. That betrays an absence of directional movement -- which is symptomatic of a trading range environment.
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