WHAT TO DO?... With the stock market starting to look toppy, I've been surprised at the number of messages I've received asking what to do in an environment of a weak dollar, rising commodities, rising interest rates, and a peaking stock market. Surprised because that'... READ MORE
HEAVIER TRADING ON DOWN DAYS ... One of the market's problems is the fact that the volume pattern has turned negative. The previous week's upside breakout to new highs by the S&P 500 took place on light volume. Last week's downturn came on... READ MORE
WATCH OUT FOR DIVERGENCES IN WAVE FIVE ... Last Friday I expressed my belief that the cyclical bull market that began in October 2002 had probably ended. That belief was based partially on my Elliott wave view that the fifth and final upwave that started last summer had ended. I also... READ MORE
BOND YIELDS BREAKOUT ... With each passing day the headlines get worse for the dollar, bonds, and stocks while supporting rising commodities and stocks tied to those commodities. That's an intermarket recipe for building inflation pressures with higher interest rates, which may have already ended the cyclical bull market... READ MORE
TEN-YEAR T-NOTE YIELD BREAKS THROUGH DECEMBER HIGH ... With all of the leading indicators of inflation pointing upward, it was just a matter of time before long-term rates started to rise as well. They did it today in a big way. Chart 1 shows the ten-year T-note yield breaking through its... READ MORE
THEY'RE USUALLY THE FIRST TO PEAK ... From an intermarket perspective, there are three things that have historically led to market tops. The first two are a falling dollar and rising commodities. We've had those two for some time. The third thing is an upturn in long-term... READ MORE
TEN-YEAR T-NOTE YIELD HITS SEVEN-MONTH HIGH ... It may have been the recent rise in commodity prices to 24-year highs and weakness in the dollar. Or it may have been economists' raising their 2005 forecast for economic growth. It may even be the fact that the Japanese yen is rising... READ MORE
CRUDE OIL TESTING OCTOBER HIGH ... Earlier today I wrote about how another drop in the U.S. Dollar was giving a big boost to gold and most other commodities. Gold closed $5 higher along with rising gold stocks. Both have achieved short-term bullish breakouts. The CRB Index climbed over 3... READ MORE
GOLD SHARES RISE ALONG WITH THE EURO... More dollar selling is boosting gold prices more than $3 higher today (Chart 1). The Gold/Silver (XAU) Index has already broken out to a new three-month high. Since gold stocks usually rise faster than bullion, an upside breakout in the yellow metal... READ MORE
PROFIT-TAKING IN ENERGY ... Last week I wrote about the fact the Oil Service Holders (OIH) were in an overbought condition and up against chart resistance formed during 2000 at the 100 level. Prices backed off from that level last Monday. After a low-volume retest of that level again on Friday,... READ MORE
LOOKING FOR 62% RETRACEMENT AT 1250 ... With the S&P 500 having broken out of its recent trading range, and trading at the highest level in more than three years, it's time to revisit my earlier Elliott wave interpretation and came up with some possible upside price... READ MORE
BOND BUYING PULLS YIELDS LOWER... This morning's strong job report is having a positive impact on both bonds and stocks. The bullish impact on stocks isn't surprising. The impact on bonds may be. Bond traders are encouraged by the absence of upward wage pressure which helps... READ MORE
BUT CLOSES IN LOWER END OF DAY'S RANGE ... The price of crude rose all the way to $55, resulting in a test of its all-time high reached last October. After climbing more than $2.00 intra-day, however, it settled up only .52 cents and in the lower end... READ MORE
CRUDE NEARS $55 TARGET ... Yesterday's spike in crude oil pushed it to $53 for the first time since last October. That puts the price of this key commodity within a couple of dollars of the top its recent trading range. That will be an important test for a... READ MORE
OIL SERVICE STOCKS STARTING TO CORRECT... Earlier today I wrote about an overbought energy sector that was starting to experience some profit-taking. Oil service stocks were the day's weakest group. Although that group is also overbought, there's another longer-range technical reason why oil service stocks are... READ MORE
ENERGY OVERBOUGHT AND PULLING BACK ... After a spectacular run since the start of January, the energy sector is finally succumbing to some profit-taking after trading in overbought territory for nearly a month. Yesterday's high volume drop -- followed by today's selling -- suggest that the rally... READ MORE
BIOTECH INDEX LOSES 6% ... Biotech stocks were the hardest hit today in a falling market. Chart 1 shows the Biotechnology Index (BTK) falling to a four-month low today and closing well below its 200-day moving average. Its relative strength line has fallen to the lowest level in a year. That... READ MORE
JAPANESE YEN JUMPS AGAINST OTHER CURRENCIES... On Monday, February 14 I wrote an optimistic article on Japan entitled "Land of the Rising Sun, The Rising Yen, and Maybe Even a Rising Stock Market" (February 14, 2005). I'm revisiting that bullish story today because the Japanese yen... READ MORE
UTILITIES PAY DIVIDENDS ... Earlier in the week I showed utility stocks selling off in reaction to a jump in interest rates. That was due to the fact that utilities are rate-sensitive. At the same time, it's important to recognize that utilities are also considered to be a defensive... READ MORE
SEMICONDUCTOR HOLDERS BOUNCE OFF 200-DAY LINE... In a reversal of roles, the semiconductor group has moved from one of the weakest parts of technology to one of the strongest. While Internet and networking stocks have been helping to pull the Nasdaq market lower, the chips are finally lending some support... READ MORE
ENERGY PRICES AREN'T REALLY DROPPING ... The news media made a lot out of the relatively small gain of 0.1% in the January CPI number. A lot of financial headlines claimed that showed that inflation fears were overblown. I don't think so. That's because... READ MORE
FINANCIALS AND REITS DROP FURTHER... Last Friday I wrote about how the buildup of inflation pressures -- and the threat of rising long-term rates -- were combining to cause loss of market leadership in the financials and REITs. That negative trend continued today as both groups were among the day&... READ MORE
DOLLAR PLUNGES ON KOREAN SELLING ... This morning I wrote about heavy selling in the U.S. dollar on the South Korean central bank's announced intention to diversify its currency holdings out of U.S. dollars and into other foreign currencies. Virtually all foreign currencies jumped on that news... READ MORE
EURO AND YEN SURGE AGAINST THE DOLLAR ... The dollar is falling heavily today against most of the world's currency markets. Although the dollar rally had already ended a couple of weeks ago, today's heavy dollar selling came from the Bank of Korea's announcement that... READ MORE
REVIEW OF ELLIOTT WAVES... This is as good a time as any to review what I've been writing since the start of the year, and to clarify what advice I've been giving. Rather than repeat everything here, I invite you to review the headlines of my... READ MORE
NASDAQ 100 DROPS ON HIGHER VOLUME... The Nasdaq 100 had a bad chart day. It was the biggest percentage loser of the major stock indexes. And it fell on rising volume. That's bad for two reasons. It continues the pullback from its 50-day moving average -- thereby preventing... READ MORE
RELATIVE STRENGTH ALONE ISN'T ENOUGH ... I place a lot of importance on relative strength. As a rule, I generally recommend market groups -- or individual stocks -- that are showing relative strength. In other words, they're outperforming the S&P 500. But relative strength by... READ MORE
MOVING AVERAGE LINES... I received some questions on the moving average lines that I used yesterday while doing a ratio analysis of the Nasdaq 100 to the S&P 500. I've also been asked to show how to create the ratio lines. One way is shown in... READ MORE
DOW DIAMONDS NEAR OLD HIGH ... Chart 1 shows the Dow Diamonds nearing a test of their late December high. What remains suspicious is the absence of volume. If you look at the green volume bars since this rally began at the start of February, you'll see that they&... READ MORE
MATERIALS SELECT SPDR IS BREAKING OUT... With commodity prices on the rise again, the Materials Select Sector SPDR (XLB) is attempting a bullish breakout today. Chart 1 shows the XLB trading over its fourth quarter high near 30. Its relative strength line has been rising for the past three weeks.... READ MORE
YEN JUMPS ON JAPAN TRADE SURPLUS... Last week I wrote about an overbought U.S. dollar running into resistance near 85 and starting to weaken. I showed that an oversold Canadian Dollar and Euro were starting to bounce (along with gold and gold shares). Today's focus is on... READ MORE
SEMIS GAIN OVER 3%... Last Friday I wrote about new signs of strength in the semiconductor group. I also wrote that buying in that group -- if it continued -- would be supportive to the technology sector and the market in general. That's because rising chip stocks help... READ MORE
CRB INDEX CLIMBS BACK OVER 50-DAY LINE... Earlier today I wrote about new selling in the U.S. dollar which gave a boost to gold and oil. In fact, fourteen out of seventeen commodity markets rose today and pushed the CRB Index up 4.39 points. As Chart 1 shows,... READ MORE
GOLD ETF BOUNCES ON VOLUME ... The Gold Trust Shares (GLD) are bouncing impressively today off their 200-day moving average. And they're doing so on very strong volume. Chart 1 shows that today's up volume is the heaviest in more than two months. The daily oscillators are... READ MORE
TEN-YEAR T-NOTE YIELD FALLS UNDER 4% ... My article yesterday on the yield curve talked about some reasons why falling long-term rates might not be a good thing for the stock market or the economy. For one thing, falling bond yields hint at a weaker economy. For another, falling long-term rates... READ MORE
WHAT DOES IT MEAN? ... Earlier this afternoon I did an interview with Ron Insana on CNBC. Our discussion was about the recent drop in long-term bond yields -- and the implications of the flattening yield curve. I thought I'd elaborate on the subject since it's not... READ MORE
SEMICONDUCTOR HOLDERS LEAD TECH RALLY ... For the first time in awhile, technology was the market's top sector. Most of that came from a strong semiconductor group which gained well over 4% in Friday trading. The top sector ETF was the Semiconductor Holders (SMH) shown in Chart 1. It... READ MORE
SEMICONDUCTOR HOLDERS LEAD FRIDAY BOUNCE... The February market rally is drawing strength today from the semiconductor group. Chart 1 shows the Semiconductor Holders (SMH) trading at the highest level in a month and challenging its 50-day moving average. Its relative strength also carries some good news for the group and... READ MORE
DOLLAR INDEX NEARS LONG-TERM CHART SUPPORT... I've gotten a lot of requests to update my views on the dollar. Before doing that, however, I need to point out that nothing that the dollar has done since the start of the new year has been a surprise. In fact,... READ MORE
GOLD INDEX STILL TESTING TRENDLINE SUPPORT... Back on January 10, I wrote about the Gold & Silver Index (XAU) being in a support zone defined by the rising trendline shown in Chart 1. The trendline starts in April 2003 and is drawn under the April/July 2004 lows (see arrows)... READ MORE