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November 02, 2005
Market Musings
The Dow formed a small falling flag over the last two days. Watch 10450-10500 for a breakout.
The Nasdaq formed its second harami in as many weeks and Monday's gap better hold.
Indecision gripped the market yesterday as a number of stocks and indices formed doji.
The S&P 100 is still meeting resistance from broken support.
The Internet HOLDRS (HHH) continues to lead the Nasdaq and formed a cup-with-handle over the last three months.
The more I hear about the yearend rally, but more I wonder if it will ever come.
James Stewart of SmartMoney notes that the Materials Sector should benefit from falling oil prices. The chart confirms this as the Materials SPDR (XLB) has shot higher the last few weeks.
The Institute for Supply Management (ISM) manufacturing index came in at 59.1 in October. Anything over 50 shows economic strength and this confirms the strong GDP numbers released on Friday.
In an effort to keep pace with Google, Microsoft is moving into web-based software. Windows and Office have the lion's share of the market. Yes, it is a commanding position, but also one with the most to loose.
When was the last time you saw a utility stock loose 20% in one month and 10% in one day? Look at TXU.
The US Dollar Index remains strong. This makes imports cheaper and exports dearer. Not a good combination for US based manufacturing.
Jon Markman notes that contrarians and value investors are circling the wagons around newspaper stocks (WPO, GCI, KRI, SSP and TRB).
The Nikkei closed at a four year high and is one of the strongest markets in the world right now.
John Berry of Bloomberg notes that the Fed may be on the road to a neutral stance. This makes sense as there is usually a period of flatness before a policy change.
Qualcom reports earnings today and this will affect the networking group and the Nasdaq.
The Dow Transports is off to the races with a new high, but the Dow Industrials is lagging and this creates a Dow Theory non-confirmation.
Posted by Arthur B. Hill at November 2, 2005 06:13 AM