FED HOLDS RATES STEADY... To no one's surpise, the Fed left short-term rates unchanged today. The combination of falling commodity prices, lower inflation numbers, and the threat from a weak housing sector made another rate hike highly unlikely. The market was rallying into the news and stayed firm... READ MORE
BOND ETF HITS NEW HIGH ... Chart 1 shows the 7-10 Year Treasury Bond ETF (IEF) over the last eighteen months. I showed a similar chart last Friday to demonstrate how lower inflation pressures (signalled by falling commodity prices) were giving a boost to bond prices. We're seeing more... READ MORE
FALLING COMMODITIES BOOST BOND PRICES... The biggest story in the financial markets has been the breakdown in commodity prices and energy in particular. One of the immediate beneficiaries of falling commodities is usually the bond market. That's because bond prices are very sensitive to inflation trends. Historically, bond... READ MORE
BROKERS PLAY CATCH-UP TO FINANCIALS ... The financial sector has been one of the market's strongest groups all year. That can be seen by the rising relative strength ratio of the Financials Sector SPDR (XLF) in Chart 1. Chart 1 also shows the XLF trading above its May peak... READ MORE
FALLING OIL BOOSTS RETAILERS ... Over the last year, one of the market sectors most hurt by rising energy prices has been retailers. With oil prices falling to a five-month low, however, retailers have become one of the market's strongest groups. To show how closely the two markets are... READ MORE
GOLD TUMBLES BELOW SUMMER LOW... Gold and silver have succumbed to selling pressure that has weighed on most commodity markets over the last month. With energy prices falling, and the CRB Index having broken its summer low, the entire commmodity price structure is crumbling. I thought that a weaker dollar... READ MORE
S&P GIVES SHORT-TERM SELL SIGNAL ... The market continued its early September slide today. Several of our short-term technical indicators have turned negative. One of them them is the daily MACD (which happens to be one of my favorite indicators). Chart 1 shows the S&P 500 sliding... READ MORE
GOLD ETF GAPS DOWN ... The price of gold is falling pretty hard today. By early afternoon, the Gold ETF (GLD) is down the equivalent of $16. Silver is falling as well along with most other commodities. Chart 1 puts today's gold selling into the context of its two-month... READ MORE
SMALL CAPS CONTINUE TO LAG ... Last Friday I showed the Nasdaq Composite entering a resistance zone marked by its early July peak at 2190 and its 200-day moving average. I wrote that what the Nasdaq did in that zone would tell us a lot about its real strength and that... READ MORE
GOLD INDEXES BREAK OUT... Both of the precious metal stock indexes that I follow are breaking out to the upside today. Charts 1 shows the AMEX Gold Bugs Index (HUI) breaking through its summer highs to the highest level since mid-May. Chart 2 shows the PHLX Gold & Silver Index... READ MORE
GOLD IS DOING BETTER THAN OIL ... I've recently turned more cautious on the oil sector while turning more optimistic on precious metals. That may seem like a contradiction since both are commodity markets and do have some historical correlation. Part of my reasoning is based on fundamental considerations.... READ MORE
GLAMIS JUMPS 20% ... The announcement that Goldcorp (GG) is buying Glamis Gold (GLG) is causing dramatic swings in both gold stocks. Chart 1 shows Glamis Gold surging nearly 20% (on massive volume) to a new 52-week high. At the same time, Goldcorp is falling 8.5% on heavy volume. It&... READ MORE
SHORT-TERM ENERGY TREND TURNS DOWN... With energy prices continuing to drop, selling pressure has intensified in energy stocks. On Monday, I warned that the Energy Sector SPDR (XLE) was headed for a test of its 50-day moving average. Chart 1 shows the XLE breaking that support line today. That'... READ MORE
HURRICANE MISSES GULF COAST... News that a hurricane threat to oil refineries in the Gulf of Mexico had passed caused heavy selling in the energy pits today and took most other commodity markets lower as well. Crude oil prices fell more than $2.00. Chart 1 shows the nearby futures... READ MORE
2006 LEADERS... If you glance at "John's Latest Performance Chart" you'll see the best and worst group performances for the first eight months of 2006. It shows the six top performers for the year compared to the four worst. The six winners have something... READ MORE
CRB INDEX TESTING JUNE LOW ... Last week I showed the Reuters/Jefferies CRB Index slipping beneath its 200-day moving average and warned that it was starting to look toppy. The real key to the chart, however, is the ability of CRB Index to stay above its June low at 329.... READ MORE
CRB BREAKS 200-DAY AVERAGE ... I wrote yesterday about recent selling in commmodity pits pushing the Reuters/Jefferies CRB Index into a test of its 200-day average. Today's five point drop has pushed it below that long-term support line in pretty decisive fashion (see red arrow). Chart 1 shows... READ MORE
JULY CPI HAS SLOWEST GAIN IN FIVE MONTHS ... The market got a second dose of good news on inflation in two days. On the heels of yesterday's weak PPI number, today's report showed a gain of only 0.2% in the July core CPI number which... READ MORE
WEAK PPI BOOSTS BONDS AND STOCKS... Core inflation at the producer level fell unexpectedly during July. Since inflation is the most closely watched figure these days (because of its impact on Fed decision-making), bonds and stocks rallied on the news. The dollar dropped. For the first time in awhile, today&... READ MORE
STRONG RETAIL NUMBERS AND IMPORT PRICES ... The market is having second thoughts about the Fed being done with its rate hiking. A strong retail report today and a big jump in import prices suggest that the economy and inflation may be a little stronger than expected. I agree with the... READ MORE
GOLD ETF NEARS WEEKLY BUY SIGNAL ... I suggested yesterday that gold could be one of the biggest beneficiaries of Fed inaction on rates. That was predicated on my view that the dollar would weaken. In today's trading, the dollar is indeed dropping and gold prices are rising. This... READ MORE
RETAILERS AND HOMEBUILDERS FALL... The Fed paused today as pretty much everyone expected. Unfortunately, the stock market fell on the news. Part of the reason may have had to do with the wording of the accompanying statement. The Fed acknowledged economic slowing, especially in the housing sector. Its claim (or... READ MORE
BOND YIELDS HIT FOUR-MONTH LOW... The U.S. economy added fewer jobs than expected during July and the unemployment report rose for the first time in five months to 4.8% from 4.6%. The weak job report is the latest in a string of signs that the economy is... READ MORE
US DOLLAR IS ROLLING OVER ... Recent reports of economic weakening, combined with diminished expectations for additional rate hikes by the Fed, are causing selling in the dollar. Chart 1 (plotted through Tuesday) shows the U.S. Dollar Index starting to roll over to the downside over the last week. The... READ MORE
NATURAL GAS SPIKES ON HOT WEATHER... While everyone has been looking at the rising price of crude oil and gasoline, natural gas prices have declined for most of the year -- until the last week. Unusually hot weather conditions have produced an impressive spike in natural gas prices which climbed... READ MORE
SECOND QUARTER GDP DROPS SHARPLY... Today's report that U.S. second quarter growth fell to 2.5%, which is less than half of the first quarter's +5.6%, carries both good and bad news. The bad news is that the economy is slowing. The good news... READ MORE
FEDEX LEADS TRANSPORTS LOWER ... The transportation sector continues to get battered. Yesterday we showed UPS and a couple of rail stocks falling below their 200-day lines. Today's most notable casualty is FedEx. Chart 1 shows that stock breaking both its 200-day line and its June low. Even an... READ MORE
DOW INDUSTRIALS VS. INDUSTRIALS SPDR ... I've written several times over the past few months that the Dow Industrials were holding up a little better than the rest of the market, and interpreted that to mean that investors were switching from riskier small cap stocks into more stable industrials.... READ MORE
AT&T HITS NEW FOUR-YEAR HIGH ... Although the market remains in a short-term rally mode, upside leadership keeps coming from traditionally defensive groups. Today's standout Dow performer was AT&T which surged to the highest level in four years. The daily bars in Chart 1 show... READ MORE
HEALTHCARE IS GETTING BETTER... On Friday I wrote about how the big pharmas were attracting some serious money and were starting to pull the entire healthcare sector higher. I showed the daily chart of the Health Care Sector SPDR (XLV) and suggested that it needed a close over its 200-day... READ MORE
DRUGS LEAD HEALTHCARE HIGHER... Whenever we list defensive groups that usually do better when the market gets into trouble, the usual candidates are consumer staples, utilities, and healthcare. Consumer staples and utilities have continued to be the market's top performers over the last couple of months. It looks... READ MORE
MARKET LIKES FED COMMENTS ... The bond and stock markets liked what Mr. Bernanke had to say today before Congress. He indicated that economic growth and inflation were moderating which was taken to mean that the Fed might be nearing the end of its rate hikes. Bond prices rose and yields... READ MORE
DOLLAR BUYING PUSHES GOLD LOWER ... Yesterday saw the first serious selling of gold and silver in more than a month. Part of that selling is due to technical factors. Part of it is also due to a rising dollar. While geopolitical concerns have helped boost gold and oil prices recently,... READ MORE
HOMEBUILDERS CONTINUE TO CRUMBLE... Yesterday I wrote about how relative weakness in retail stocks over the last year was an early sign that higher energy prices and rising interest rates were starting to hurt the economy and the stock market. It was reported this morning that June's retail... READ MORE
CRUDE EXCEEDS $76... Crude oil surged $1.70 today to reach a new all-time high. A lot of that had to do with mideast tensions. It also had a lot to do with the big drop in oil inventories reported on Wednesday. And the fact that oil, like most commodities,... READ MORE
S&P RETESTS 200-DAY AVERAGE ... This is as good a time as any to take another look at a variety of moving average lines and signals. I'm going to show three different ways to do that. The first is the usual 50- and 200-day moving averages. The... READ MORE
DIVIDEND ETF IS OUTPERFORMING ... Last Friday I showed a few defensive groups that were showing upside leadership including consumer staples, pharmaceuticals, and utilities. Here's another one. Chart 1 is a daily bar chart of the DJ Dividend Index iShares (DVY) through the first six months of 2006. The... READ MORE
A RECIPE FOR STAGFLATION ... The June employment report gave a double dose of bad news to the stock market today. First of all, June job growth was very weak. That hinted at economic slowing. At the same time, June wages jumped at the fastest rate in five years. That'... READ MORE
CRB INDEX CLEARS 50-DAY LINE ... Commodity markets continue the new rally that began with the recent bounce off their 200-day moving average. Today's gain has pushed the Reuters/Jefferies CRB Index back above its 50-day moving average. Fourteen of the nineteen commodities are in the black with some... READ MORE
GASOLINE LEADS COMMODITY MARKETS HIGHER ... Commodity markets rose again today. The most bullish action occurred in the gasoline pits. Chart 1 shows the continuous futures contract for unleaded gasoline breaking out to a new ten-month high. Crude oil rose another $1.35 to close at 73.50. That's... READ MORE