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October 27, 2005
Market Musings
If you don't think rates are moving higher, just look at the bond market. TLT gapped lower and the 10-year T-Note Yield is approaching its March high. The bond market is forecasting higher rates.
A slow down in defense spending hurt Boeing and this could trickle down to other defense contractors.
Adobe (ADBE) continues to rock with a forecast in the upper end of its range.
Rising input costs hurt earnings at Newmont (NEM). This theme continues to dominate the Materials sector. Mining shares have a lot more to worry about than just the price of gold.
Consumer Confidence hit two year low on Tuesday and this could trickle down into retail spending. The Retail HOLDRS (RTH) cannot hold the break above 94 and the Consumer Discretionary SPDR (XLY) formed a bearish rising flag.
David Fuller notes that Bush, like Reagan, is trying to grow our way out of the deficits and this will be inflationary. It is either inflate or die. Even though it may be difficult to accept, Bush's policy is easy to understand - especially when politicians are concerned.
Guru Investor John Reese notes that Western Digital (WDC) is storing up strength - see TheStreet.com. That may indeed be the case, but WDC at least needs to break above 12.3 to break the current fall.
James Altucher thinks that Six Flags (PKS) will benefit from a year old activist effort - see TheStreet.com
Richard Suttermier says that now is the time to rotate into techs - see TheStreet.com. You first Richard.
The Nasdaq 100 formed a harami cross on Mon-Tue and a hanging man on Wednesday.
The Dow Industrials cannot make it above 10450.
The HealthCare SPDR (XLV) broke support around 30.5 and remains one of the weakest sectors, if not THE weakest.
Buy on rumor and sell on news? Rising energy prices hit earnings in the Materials sector. However, the Materials SPDR (XLB) bounced over the last six days. This bounce follows a decline from early August to mid October.
The Information Technology SPDR (XLK) is running into resistance at broken support (20.5) with a bearish engulfing and shooting star.
The B2B Internet HOLDRS (BHH) is challenging resistance at 2.35 with good volume.
The Biotech HOLDRS (BBH) broke falling flag resistance with a gap and that gap is holding. Watch 183 for a big failure.
Posted by Arthur B. Hill at October 27, 2005 06:03 AM