MARKET AVERAGES CLOSE MODESTLY LOWER -- GOLD JUMPS SIX DOLLARS -- MONEY MANAGEMENT UPDATE
DOW LOSES 8.75, BUT ON LIGHT VOLUME... The subdued action in the Dow pretty much reflected Monday's quiet trading. The Dow dropped 8.75 points, but on very light volume. Breadth was modestly positive on both the big board and the Nasdaq. The fact that Europe was closed may have contributed to listless trading. The daily chart shows the Dow still resting just above its 200-day moving average. One point of modest concern is the daily stochastic lines turning negative. We'll keep an eye on that over the next few days to see if it means anything. While the major averages lost some ground, two of the strongest sectors were gold and oil. Oil climbed to $31 and caused some buying in energy shares. Gold jumped an impressive $6.30 to close near $334. That pushed gold stocks up 2.5% and made them the day's strongest groups.
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GOLD INDEXES CLIMB... We recently showed the two gold indexes bouncing off chart support along their late November lows. Today, the XAU closed over its (blue) 50-day moving average for the first time since early February. The AMEX Gold Bugs Index ($HUI) looks even stronger. The HUI has cleared its late-March high and is trading over its 200-day moving average. The HUI normally rises faster than the XAU because it only includes "unhedged" gold stocks, which benefit more from rising gold prices. Gold recently bounced off major chart support near $325.
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MONEY MANAGEMENT UDPATE... The trends of most market averages, as well as the breadth measures we use at MurphyMorris Money Management, were up last week. Our current positions also improved a bit. The market is now in the most important two weeks for earnings reporting, and that usually brings some daily volatility. Our relative strength works still shows that the NYSE market holds dominance over the Nasdaq (even though the Nasdaq was stronger last week). NYSE dominance over the Nasdaq has historically been an indication that the market is more volatile and less productive. We continue to follow our indicators which are more positive, and are staying with existing long positions, but are doing so very cautiously. We invite you to read an article on the MurphyMorris Money Management approach and the April 15 Money Management Update. You can get there from the yellow box in the upper right corner of the MurphyMorris.com home page.
