USE MARKET SUMMARY PAGE TO GET BIG PICTURE -- SMALL CAPS AND FINANCIALS LEAD MARKET HIGHER FOR A CHANGE -- ENERGY IS STRONG AS WELL -- S&P 500 TESTS RESISTANCE AT 1492
SMALL CAPS LEAD FOR A CHANGE... One of our readers asked how I go about making sense of so much market data on a given day. One of the places I start with is the Market Summary page. I'll use some of today's data to show how I use it to see what's up and what's down. Chart 1 shows the Major Indices as of noon on Thursday, December 6 (today). By glancing at the bars to the right, I can see in an instant that small caps (Russell 2000 and S&P Small Caps) are the day's strongest indices with gains of 1.4%. By clicking on one of the boxes to the far left, I can see an actual chart. Chart 2 shows the RUT moving up to test last week's high at 780. It also shows the relative strength ratio for the RUT starting to bounce for the first time in awhile. Since small caps have been a drag on the market, new buying in smaller stocks is a positive sign for the market.
Chart 1
Chart 2
FINANCIALS ARE STRONGEST SECTOR... Chart 3 shows the AMEX Select Sector SPDRs at midday today. Eight are positive and one negative. The negative sector is Utilities, which has been strong of late on defensive buying. The fact that utilities are down today suggests some profit-taking in bonds and a more positive tone in stocks. Financial stocks are the day's strongest group (+1.4%). The daily bars in Chart 4 show the Financials SPDR (XLF) moving higher today. Its relative strength line is starting to bounce as well. Earlier in the week I suggested that a yearend rally was unlikely unless financial stocks start to rally. Today's financial buying also sets a more positive tone for the overall market. Energy stocks are also strong (+1%). Chart 5 shows the XLE trading back over its 50-day moving average for the first time in a month.
Chart 3
Chart 4
Chart 5
RETAILERS ARE WEAK ... Chart 6 shows some of the US Industry Indices for today. Among the strongest industries are Commodities and Oil Services. That tells me that the Oil Service group is leading the energy complex higher (in percentage terms). Chart 7 shows the Oil Service Holders climbing over their 50-day moving average as well. Retailers are the day's weakest industry (-1.3%). Chart 8 shows the S&P Retail Index trending lower. Its relative strength line remains in a downtrend as well. Today's information on the Market Summary page tells me several things. One is the financials and small caps are leading the rally for a change. That's a positive sign. Energy stocks appear to be turning back up again. Retailers remain on the "avoid" list. I can then go to the Market Carpets to find out which energy stocks are leading that sector higher (Hess, XTO, and Transocean)and which retailers are pulling that group lower (Family Dollar, Target and JC Penny) and see which of them have the strongest or weakest charts. [I'll leave the Market Carpets for another day]. The Market Summary page will save you time in looking for the day's leaders and will give you a snapshot of the big picture.
Chart 6
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Chart 8
S&P 500 CHALLENGING RESISTANCE ... With small caps and financials in the lead, the S&P 500 is challenging its mid-November peak at 1492. A decisive close above that level would be a short-term bullish breakout and signal the start of the traditional yearend rally. We'll take another look after today's close to see if an upside breakout takes place.
Chart 9
