OIL SERVICE HOLDERS ARE WEAKEST GROUP ... The rotation out of energy stocks that started last week is continuing. Energy was the day's weakest sector. Oil service was energy's weakest group. Chart 1 shows the Oil Service Holders backing off from new resistance at its (green) 20-day... READ MORE
SOFTWARE HOLDERS SHOW TECH LEADERSHIP... I've written several times about some new signs of market leadership coming from the technology sector. I've mentioned Internet stocks as an example of a group that is trying to lead the Nasdaq market higher. Software stocks qualify as another technology... READ MORE
MMM LEADS DOW LOWER... Although all the major averages are starting the week on the downside, the Dow is the biggest percentage loser. That's mainly due to today's chart breakdown in MMM. Chart 1 shows the big Dow stock falling under its spring low this morning... READ MORE
ROTATION OUT OF ENERGY AND MATERIALS ... The biggest market feature of the week was the fact that Energy and Materials were the two weakest sectors. This is a reversal of recent trends. The loss of leadership by those two former leaders contributed to this week's market selling. At... READ MORE
CYCLICAL FALL ALONG WITH CONSUMER STOCKS ... I mentioned yesterday that part of the market's problem is loss of leadership from former market leaders -- without any significant rotation into weaker groups. The first two charts show two market groups that usually compete with each other for market leadership.... READ MORE
SOX BOUNCES A BIT... With some help from Intel, Semiconductor Holders managed a modest gain today and on rising volume. That was enough to keep it above its 50-day moving average. But it closed near the bottom of its daily range. Even so, chips were one of the few bright... READ MORE
BOTH GOOD AND BAD NEWS ... Energy and basic material stocks are the two weakest sectors of the stock market today. Chart 1 shows the Energy Select Sector SPDR heading down toward its 50-day moving average after issuing a short-term sell signal on Monday. There's good and bad news... READ MORE
OIL SERVICE INDEX GIVES SHORT-TERM SELL ... I wrote yesterday that the oil service group (and the rest of the energy sector) had issued a short-term parabolic sell signal from an overbought condition. The short-term trend of the Oil Service Index (OSX) weakened even further today. Chart 1 shows the OSX... READ MORE
ENERGY SELECT SPDR HITS PARABOLIC SELL POINT... Since I wrote about applying the parabolic stopout points to the oil sector last week, I thought it only fair to point out that each of the energy indexes I follow are hitting their parabolic sell stops today for the first time in... READ MORE
BEAR MARKET IN DOLLAR CREATED BULL MARKET IN COMMODITIES... A weak September jobs report pushed the U.S. dollar sharply lower today. The dollar drop pushed gold to a six-month high and boosted gold shares which were the day's strongest market group. The dollar bear market is nothing... READ MORE
FOREIGN CURRENCIES JUMP AGAINST DOLLAR... Today's weaker than expected September jobs report is having a negative impact on the U.S. dollar which is falling against its major foreign counterparts. Charts 1 and 2 show today's jump in the Japanese yen and the Euro. The yen... READ MORE
DRUGS PULL DOW LOWER... The Dow lost over a hundred points today. But most of the selling was concentrated in its three big drug stocks. The three top percentage losers were Pfizer (-4%), Johnson & Johnson (-3%), and Merck (-2%). Chart 2 shows Pfizer tumbling to a new 52-week low... READ MORE
USING PARABOLIC STOPS IN AN OVERBOUGHT OIL MARKET... Yesterday I talked about using the Parabolic SAR dots to keep a tight protective sell stop in a rising but overbought energy sector. This sensitive trend-following system works best when a market like oil is in a strong uptrend -- as it... READ MORE
DUPONT IS DOW LEADER... Today I'm going to focus on individual stock leaders in several major indexes. I'm looking for stocks that are showing the best percentage gains combined with good chart action. What I mean by good chart action is a stock that's... READ MORE
THE ENERGY BULLISH PERCENT INDEX... A week ago I talked about how the energy sector was very overbought on both a short and long term basis and even suggested taking some partial profits (with emphasis on the word partial). With energy prices still rising, however, energy stocks keep hitting new... READ MORE
TELECOM ETFS HITS NEW 52-WEEK HIGHS... The telecom group is breaking through some significant resistance barriers. Back in late July (July 27, 2004) I wrote about the telecom ETF shown in Chart 1 just starting to bounce off its 200-day moving average (see red circle) and starting to show upside... READ MORE
TAIWAN AND SOUTH KOREA HAVE STRONG CHIP LINKS... Last Friday I mentioned strong gains in Asia on the back of an impressive rally in the Semiconductor (SOX) Index. Two Asian countries that I mentioned were South Korea and Taiwan. It's no coincidence that in today's trading... READ MORE
NASDAQ 100 TOPS 200-DAY LINE... One theme I keep repeating is the need for Nasdaq leadership during any fourth quarter rally. I'm happy to report that on the first day of the fourth quarter the Nasdaq 100 led a very impressive market rally that could carry through the... READ MORE
NASDAQ 100 BREAKING THROUGH 200-DAY AVERAGE... One of the points I've tried to make recently is that technology leadership is a necessary ingredient in any fourth quarter rally. On the first day of that fourth quarter, technology is spearheading a very impressive market rally. The next three charts... READ MORE
BASIC MATERIALS BREAK OUT... One of the rules I try to follow is to take whatever the market is giving. What I mean by that is there's usually at least one sector in the market that is doing especially well and that offers opportunities for profits. Our job... READ MORE
OILS CORRECT AS CRUDE BACKS OFF FROM $50 ... With crude oil back under $50, traders are taking some profits out of an overbought energy sector. Earlier today I showed the AMEX Oil Index pulling back from a short-term overbought condition. While energy was the biggest sector loser today, oil service... READ MORE
OIL INDEX OVERBOUGHT ... I've mentioned several times over the past week that oil stocks are in a short-term overbought condition. With crude oil falling back from $50 today, some profit-taking is being seen in the energy patch. The 14-day RSI line carries a double message. The first is... READ MORE
MATERIALS SPDR IS STRONGEST SECTOR... Yesterday's article talked about using the Materials Select Sector SPDR as one way to participate in the industrial and precious metals rally. In today's trading, while everyone was looking at oil, metals markets turned in an even stronger performance. The XLB... READ MORE
OIL SERVICE INDEX HITS THREE-YEAR HIGH ... I recently suggested that although I thought the energy sector was over-extended on a short to intermediate term basis (and I still do), oil service stocks appear to offer the best value in the group. Chart 1 shows why. The last monthly bar in... READ MORE
JAPANESE STOCKS UNDER PRESSURE... Last Friday I showed some regions of the world that were benefitting from rising energy and commodity prices. Two of the top performers were Canada and Latin America. Both are big producers of natural resources. It works the opposite way for Japan. Japan is totally dependent... READ MORE
CRB INDEX HITS FOUR MONTH HIGH... The CRB Index (of seventeen commodities) gained 3.56 today to close over 281 for the first time in four months. Thirteen commodities rose. The fact that orange juice and cotton were among the biggest gainers may be due to hurricane activity. But that&... READ MORE
CANADA IS WINNER FOR THE WEEK ... Most global markets are doing better than the U.S. market. One way to spot the country or regional leaders is to view the weekly (or monthly) international rankings on the Fidelity Fund Carpet, which can be accessed through the Market Carpet on the... READ MORE
HISTORY OF OCTOBER TOPS... Late last week I mentioned that crude oil had a history of peaking during October or at least experiencing significant pullbacks. Chart 1 shows the track record. The monthly bars plot the history since 1990. The black arrows show those years where a sigificant pullback occurred... READ MORE
S&P BACKS OFF FROM 2004 TRENDLINE... With today's sharp pullback, it's a good idea to see where the pullback is coming from -- and why it shouldn't be too much of a surprise. I showed this chart last Friday to make the... READ MORE
FANNIE MAE FALLS THE HARDEST... It's not hard to see where most of the damage is being felt today. The biggest sector loser so far today is the financial group. The two biggest percentage losers in the S&P 500 are also financial stocks -- Fannie Mae... READ MORE
LONG-TERM RATES FALL IN FACE OF FED TIGHTENING ... The Fed raised the Fed funds rate another quarter of a point today as everyone expected. They also left their wording pretty much intact. That set in motion some intermarket relationships that may not make sense at first blush. For one thing,... READ MORE
END OF 20-YEAR BEAR MARKET... In my recent Intermarket Analysis book (and in several market messages from last year), one of the subjects I discussed was the re-emergence of commodity markets from a twenty-year bear market and their relative appeal as an asset class. That case is made pretty clear... READ MORE
BEST AND WORST OF THE DAY... Charts 1 and 2 pretty much sum up the major sector movers today. The Consumer Staples Select Sector SPDR tumbled all the way to its August low -- pulled down by the likes of Colgate Palmolive, Procter & Gamble, Alberto Culver and tobacco stocks.... READ MORE
DOW TRANSPORTS AND UTILITIES HIT 52-WEEK HIGHS... Two of the three Dow Averages reached a new 52-week high this week. Chart 1 shows the Dow Transports closing decisively over its summer high. Chart 2 shows the Dow Utilities in an even stronger climb. Interestingly, the utilities seem to have attracted... READ MORE
INDUSTRIAL ETF NEARS SUMMER HIGH ... So far this week I've written about relative strength in biotech, the Internet, and the consumer discretionary groups. In each case, I first found a sector index that was displaying rising relative strength combined with strong chart action. The chart action is usually... READ MORE
CONSUMER DISCRETIONARY ETF HITS THREE-MONTH HIGH ... On a day when the market experienced minor gains, one of the standout groups was consumer discretionary stocks. Chart 1 shows the AMEX Consumer Discretionary Select SPDR hitting a new three-month high today on big volume. Its relative strength ratio line has been rising... READ MORE
BIOTECH BREAKOUT ... Biotech stocks continue to show good chart action and good relative strength. The purpose of this market messsage is to update my August 27 piece on the biotech group, show the technical improvement since then, and also sugget a number of ways of taking advantage of this rallying... READ MORE
MARKET IS OVERBOUGHT SHORT-TERM ... Earnings warnings in Coke and Xilinx contributed to some profit-taking in the Nasdaq and the big board today. Two other reasons for today's setback is a short-term overbought condition and the closeness to some overhead resistance levels in the major stock indexes. I showed... READ MORE
INTERNET INDEX CLEARS 200-DAY LINE... Although most of the talk in the recent technology revival has been about the SOX Index, Internet stocks are doing much better. Chart 1 shows the IIX Internet Index closing over its 200-day moving average for two consecutive days. [By comparison, the SOX Index has... READ MORE
NASDAQ EXCEEDS 50-DAY AVERAGE... In a continuation of Thursday's strong action, the Nasdaq led the rest of the market into a strong Friday close. As Chart 1 shows, the Nasdaq finally broke through its (blue) 50-day average at week's end for the first time since early... READ MORE