bullbearinvestor.com

Thursday - April 27, 2006

SMH and the McClellan Volume Oscillator

Yesterday I highlighted the Semiconductor HOLDRS (SMH) and the bullish crossover in the McClellan Oscillator. This indicator is based on the advance/decline statistics and the bullish crossover signals a move from negative territory to positive territory. I also look at the volume based McClellan Oscillator or McClellan Volume Oscillator. This is based on the percentage of volume in advancing stocks less the percentage of volume in declining stocks. Volume based breadth stats give more weight to large-cap stocks because large-caps typically have more volume. In contrast, regular advance/decline stats give more weight to small and madcap stocks. The Semiconductor HOLDRS (SMH) is heavily weighted towards the larger cap stocks as Intel, Applied Materials and Texas Instruments make up around 50% of this ETF. Just three 3 stocks (out of 20) account for the majority of the ETF’s price change.

The McClellan Volume Oscillator moved into positive territory on Wednesday (green circle) and the components of this ETF continue to show strength. SMH already broke its 50-day EMA (gray oval), but the McClellan Summation Index (volume based too) remains below its 20-day EMA (red circle). The big break for SMH will come when the McClellan Summation Index moves above its 20-day EMA. Stay tuned and checkout ETFInvestmentOutlook.com for the latest breadth charts (click here)

By Arthur B. Hill - Thu 27-Apr-06 at 12:07PM in Breadth
Email to friend | Permalink | Home | Comments (0)

Nasdaq Underperforming the NY Composite

The Nasdaq continues to underperform the NYSE Composite and this is not a pretty picture. The market overall just does better when the Nasdaq and techs lead. Right now the Nasdaq and techs are lagging the NYSE Composite. I use the NYSE Composite for a comparison because there is no overlap. Stocks are either part of the NYSE, Nasdaq or Amex. The bottom chart shows the Nasdaq/NY Comp ratio or the price relative. The Nasdaq is outperforming when the price relative rises and underperforming when it falls. Notice that the price relative broke a rising trendline in late 2003 and the Nasdaq peaked in early 2004. The Nasdaq underperformed until 2005 (gray box) and price relative broke trendline resistance in July 2004 (green line). This outperformance did not last though and the price relative broke support over the last two months (gray oval). This is not a good sign of techs or the market overall.

By Arthur B. Hill - Thu 27-Apr-06 at 12:07PM in
Email to friend | Permalink | Home | Comments (0)

Five Year Note Yield Exceeds 5%

What is holding stock bulls back? Two things mainly: rising interest rates and high oil prices. The 5-year Note Yield ($FVX) moved above 5% yesterday. The one and done crowd grabbed the spotlight last week, but this pullback proven quite minor (gray oval). The Fed follows the bond market and I would not start anticipating a change in Fed policy until the 5-year Note Yield starts to fall. Right now FVX points to further rate hikes and higher interest costs with an upside target around 5.5%.

By Arthur B. Hill - Thu 27-Apr-06 at 12:06PM in Bonds
Email to friend | Permalink | Home | Comments (0)

Wednesday - April 26, 2006

Semis Coming to Life?

Each morning I review the breadth tables at ETFInvestmentOutlook.com. These sortable tables rank around 100 ETFs and Indices by the McClellan Oscillator, McClellan Volume Oscillator and changes in these oscillators. There is also an alert column to show when the McClellan Oscillator crosses into positive territory or negative territory.

In today’s table, the McClellan Oscillator for all three Semiconductor ETFs crossed into positive territory. In fact, these were the only ETFs/Indices with bullish crossovers. There were 14 ETFs/Indices with bearish crossovers. Keep in mind that that McClellan Oscillator is fairly sensitive and can gyrate above and below zero.

This is where the McClellan Summation Index comes in handy. The McClellan Summation Index is a cumulative measure of the McClellan Oscillator and it takes more than just one positive day to turn this indicator around. For the Semiconductor HOLDRS (SMH), the McClellan Summation Index moved above the 20-day EMA last week and this coincided with a trendline break in SMH (twice in fact). The trendline break is holding and I want to see more strength from the breadth stats to push the McClellan Summation Index into positive territory. This would turn the indicator bullish and I would then expect SMH to challenge its January high.

See ETFInvestmentOutlook.com for more details and charts (click here).

By Arthur B. Hill - Wed 26-Apr-06 at 12:12PM in Breadth
Email to friend | Permalink | Home | Comments (0)

Tuesday - April 25, 2006

RKH Breadth

This chart shows the McClellan Oscillator and McClellan Summation Index based on the stocks in the Regional Bank HOLDRS (RKH). The ETF recorded a new high last week, but the McClellan Oscillator and McClellan Summation Index are lagging behind. Both formed lower highs last week and the McClellan Oscillator moved into negative territory yesterday. This is not a good sign for RKH breadth and these indicators are not confirming Tuesday’s rally (green oval). Look for RKH to break its 50-day EMA to confirm weakness in these key breadth indicators and reverse the current uptrend.

Volume based breadth charts and new high/low breadth charts are also available for RKH at ETFInvestmentOutlook.com (click here)

By Arthur B. Hill - Tue 25-Apr-06 at 03:46PM in Breadth
Email to friend | Permalink | Home | Comments (0)

Cable Companies and Earnings Season

The Wall Street Journal reports:

Cable-TV Companies Hold Great Expectations. There have been plenty of high-fives in the cable-television industry as major operators prepare to release first-quarter earnings, starting Thursday with Comcast Corp. While the first quarter is typically a good one for operators, this is expected to be one of the best in years in terms of revenue growth and other financial measures for companies such as Comcast, Time Warner Inc. and Cablevision Systems Corp. All three are expected to add more subscribers than they have for years, setting the stage for the industry to show an annual gain in customers for the first time since 2002.

Comcast has already surged and broke resistance at 28.5 on good volume. The pattern looks like a big double bottom and the breakout projects further strength towards 31. Also notice that the pattern looked like a head-and-shoulders in late March (gray box). However, this bearish pattern was never confirmed with a support break (neckline) and the stock broke the high of the right shoulder on its way up.

Relative to CMCSA, Time Warner (TWX) is underperforming and has yet to breakout. The stock managed to firm over the last few weeks and form an outside reversal on 10-Apr. There was even a high volume advance on 18-Apr, but the stock pulled back. Watch for a move above 17.2 to trigger a mini breakout.

By Arthur B. Hill - Tue 25-Apr-06 at 03:45PM in Stocks
Email to friend | Permalink | Home | Comments (0)

Monday - April 24, 2006

NDX Breadth Turns Sour

Was Tuesday’s big surge a fluke or the start of a new leg higher? The gains held Wednesday and Thursday, but the Nasdaq fell apart on Friday. AD Volume Net% moved below –50% for the fourth time this month (gray oval) and this is not a good sign at all. From a breadth standpoint, Tuesday’s surge failed big time. The McClellan Oscillator and McClellan Summation Index both moved into negative territory (red ovals). These bearish signals should not happen after such strength on Tuesday and this is bearish for breadth.

You can see breadth charts like this for 80+ ETFs at ETFInvestmentOutlook.com (click here)

By Arthur B. Hill - Mon 24-Apr-06 at 03:27PM in Breadth
Email to friend | Permalink | Home | Comments (0)

A Pair of Bearish Engulfings for the Nasdaq

Tech bulls were rattled on Friday as the Nasdaq opened strong and closed weak to form a big bearish engulfing pattern. The second attempt to break above 2350 failed, but the index remains above support at 2300 and a total breakdown can be averted as long as this level holds. A break below 2300 would negate the late March breakout and turn the daily chart/trend bearish. Techs were leading the recent rally and their leadership would be sorely missed.

By Arthur B. Hill - Mon 24-Apr-06 at 03:26PM in Indices
Email to friend | Permalink | Home | Comments (0)

DELL Cut to SELL

Barry Ritholtz of Ritholtz Research notes: Citigroup analyst Richard Gardner has heard the whining. He cuts Dell to a Sell, advises them to work on customer support. Gardner Note: "In our view, it would be preferable for Dell to reduce margins, and even near-term growth, rather than destroy 20 years of brand equity"".

Not kidding. I wonder if he peaked at the chart and why he was so late to the party. DELL formed a clear descending triangle, which is a bearish continuation pattern, and gapped below support.

By Arthur B. Hill - Mon 24-Apr-06 at 03:26PM in Stocks
Email to friend | Permalink | Home | Comments (0)

Demand for Euros

Barron’s and Gartman have an idea of what is driving demand for Euros: “In the free-floating monetary system -- or more properly, a lack of monetary system -- currencies have become international brands, like Coke. And the dollar is showing signs of losing market share. Euro notes in circulation, especially of the €500 denomination, have increased 22% in the past year. Observes Dennis Gartman, editor of the daily Gartman Letter, a suitcase of euronotes weighs the same as one filled with $100 bills but is worth 6.1 times as much, a boon to drug dealers.”

By Arthur B. Hill - Mon 24-Apr-06 at 03:25PM in US Dollar
Email to friend | Permalink | Home | Comments (0)

Tuesday - April 18, 2006

Finance SPDR (XLF) Holds Support

We have already see breakdowns in interest rate sensitive ETFs such as the Utility SPDR (XLU), Homebuilders SPDR (XHB) and REIT iShares (ICF). However, the Finance SPDR (XLF) held support from its March low and this is keeping the S&P 500 relatively firm. The stock consolidated the last three days and the next move will heavily influence the S&P 500. A break below 32.3 would be bearish and a break above 32.8 would keep the bull alive.

By Arthur B. Hill - Tue 18-Apr-06 at 10:28AM in Sectors
Email to friend | Permalink | Home | Comments (0)

Retail HOLDRS (RTH) Breaking Down

After a support break last week, the Retail HOLDRS (RTH) is leading the way lower again this week. The breakout at 99 failed miserably with a bearish engulfing on 7-Apr and a break below the April low. This group is showing relative weakness and this bodes ill for the Consumer Discretionary sector and the S&P 500. RTH would need to bounce back above 98 to undo the technical damage of the last six days.

By Arthur B. Hill - Tue 18-Apr-06 at 10:26AM in Industries
Email to friend | Permalink | Home | Comments (0)

NDX Equal Weight Holding Breakout

For a different perspective, here is the Nasdaq 100 equal weight index. NDXE broke above resistance at 1140 and broken resistance now turns into support. The index firmed on Wednesday and Thursday, but fell again Monday. A strong index should hold its resistance break and further weakness below 1140 would be quite negative. Despite the sharp pullback over the last six days, the resistance breakout has yet to fold and this chart is more bullish than bearish.

By Arthur B. Hill - Tue 18-Apr-06 at 10:26AM in Indices
Email to friend | Permalink | Home | Comments (0)

Transports Suffer Setback

Despite rising oil prices, the Dow Transports has been one of the best performers in 2006 with a 15% move from the January low to the April high. The Average was dealt a big setback over the last seven days and is challenging support from the October trendline. So far this pullback is considered a correction within a bigger uptrend. I am marking support at 4500 and a move below this level would suggest that a bigger trend change is in the works.

By Arthur B. Hill - Tue 18-Apr-06 at 10:25AM in Industries
Email to friend | Permalink | Home | Comments (0)

Dow Still Falling Within Flag

The Dow remains oversold and near support from broken resistance, but cannot manage a breakout or bounce to reverse the falling flag. This is the second flag in as many months and there is a lot of support around 11100. The prior flag reversed with a long white candlestick on 10-Mar (white oval). For this flag to reverse and the Dow to turn bullish, I would want to see a break above 11200 with a nice long white candlestick.

By Arthur B. Hill - Tue 18-Apr-06 at 10:25AM in Indices
Email to friend | Permalink | Home | Comments (0)

Saturday - April 15, 2006

New Site for ETF Breadth Charts

ETFInvestmentoutlook.com (click here)

I find breadth indicators and charts invaluable for analyzing the major indices, sectors, industry groups and ETFs. Breadth indicators provide a robust bottom-up approach to measure the inner workings of an ETF, sector or index. Equity based ETFs are made up of individual stocks. The Information Technology SPDR (XLK) features around 85 stocks from the technology sector. Breadth statistics measure the ups, downs, new highs, new lows and volume for each of these individual stocks. The results are then totaled to form aggregate breadth indicators. Think of these as the vital signs (pulse, blood pressure and breathing) that reveal underlying strength or weakness that is sure to enhance the analysis process. Check out ETFInvestmentoutlook.com (click here)

By Arthur B. Hill - Sat 15-Apr-06 at 03:34AM in Breadth
Email to friend | Permalink | Home | Comments (0)

Dow Oversold and At Support

The decline in the Dow Industrials over the last few weeks looks like a bull flag. This downward sloping flag is a potentially bullish pattern that requires confirmation with an upside breakout. Notice that the Dow formed a similar falling flag in late February and early March. The breakout at 11100 in early March confirmed this flag and led to a new reaction high. For the current flag, a break above 11250 would confirm the pattern and signal a continuation higher. The upside target would be the upper channel trendline or to the 11500-11600 area.

In addition to the flag, the Dow is trading at trendline support and the Ratio-Adjusted McClellan Oscillator is oversold. The Dow firmed over the last two days near support from the October trendline. This trendline has now been touched four times and a break would be quite negative. As long as this trendline holds, the trend since October is clearly up. The McClellan Oscillator dipped below –70 for the third time in five months (green circles). The prior oversold dips in December and January led to impressive bounces. The combination of trendline support and an oversold McClellan Oscillator increases the odds of a bounce as we head into earnings season.

By Arthur B. Hill - Sat 15-Apr-06 at 03:30AM in Breadth
Email to friend | Permalink | Home | Comments (0)

Wednesday - April 12, 2006

Internet Stocks Cannot Hold Gains

Techs are holding up better than the broader market right now, but the Internet HOLDRS (HHH) looks poised to break flag support. The stock worked its way higher the last few weeks, formed a bearish engulfing on Friday and broke minor support at 57.8 yesterday. Further weakness below 57 would break the lower flag trendline and this would weigh on the Nasdaq.

By Arthur B. Hill - Wed 12-Apr-06 at 07:14AM in Industries
Email to friend | Permalink | Home | Comments (0)

Retail Gets Slammed

Weakness in the broader market can be blamed on retail ($70 oil). The Retail HOLDRS (RTH) failed to hold last week’s gap and moved sharply lower the last three days. The falling flag breakout at 99 failed to hold and I must now consider a more bearish pattern. The blue trendlines show a rising wedge. The stock broke the lower trendline, formed a lower high on Friday and broke support Tuesday. This is bearish for retail, and the Consumer Discretionary sector.

By Arthur B. Hill - Wed 12-Apr-06 at 07:14AM in Industries
Email to friend | Permalink | Home | Comments (0)

Dow Forms Another Flag

It’s now or never for the Dow. Another flag has taken shape and the Average is trading near the early March breakout. Notice that the prior flag found support near the mid February breakout (gray oval). The Dow is showing signs of firmness and now we just need a catalyst such as that provided by the long white candlestick on 10-March. A strong close above 11000 would provide this bullish catalyst.

By Arthur B. Hill - Wed 12-Apr-06 at 07:13AM in Indices
Email to friend | Permalink | Home | Comments (0)

Tuesday - April 11, 2006

Oil Pushing 70

If this were a chart of the Nasdaq, pundits would be screaming double top. However, this is a chart of oil and stock market bears are unlikely to see a double top. I do not see a double top in oil (yet), nor do I see a downtrend in stocks (yet). Sure, rising oil prices hurt, but both stocks and oil are still trending higher. In fact, stocks have outperformed oil this year as the Nasdaq, Dow and Russell 2000 are already above their January highs.

By Arthur B. Hill - Tue 11-Apr-06 at 06:22AM in Oil
Email to friend | Permalink | Home | Comments (0)

Gold Challenging 600

Gold also continues its relentless rise and GLD appears headed towards the mid 60s (650s for Gold). This forecast is based on the falling wedge (ABC) breakout and a move to the upper channel trendline. Key support is set at 55. There is a clear relationship between rising gold, oil and interest rates (falling bonds). The message is inflationary and continued trends in all three could limit upside in stocks.

By Arthur B. Hill - Tue 11-Apr-06 at 06:21AM in Gold
Email to friend | Permalink | Home | Comments (0)

Bonds Oversold

The fall in bonds has been huge. TLT declined from 93 to 85 in less than three months and the 10-year T-Note Yield moved above 5%. The trend is clearly down for TLT, but also oversold and ripe for a consolidation or even a bounce. TLT formed an inside day yesterday and this is the spot for bottom pickers and those that like to catch falling knives. A bounce in bonds could also boost the non-tech dominated stock indices (SPX, Dow).

By Arthur B. Hill - Tue 11-Apr-06 at 06:21AM in Bonds
Email to friend | Permalink | Home | Comments (0)

Stocks and Rates Moving Higher

While bonds fell off a cliff in 2006 and interest rates moved higher, the S&P 500 Equal Weight Index (RSP) kept on rising. Stocks and interest rates are positively correlated this year. Rising interest rates, oil and gold cannot be considered good news yet stocks still move higher. The ability to advance in the face of negative news is bullish. Perhaps stocks are looking ahead to a positive second quarter earnings season?

By Arthur B. Hill - Tue 11-Apr-06 at 06:20AM in Indices
Email to friend | Permalink | Home | Comments (0)

A Homebuilder Harami

Watch the Homebuilders SPDR (XHB) for clues on when rates will hurt. The stock formed a harami with the long white candlestick and smaller white candlestick last week (Wed-Thur). The last three days have been inside days and a break from the current consolidation holds the short-term key. A move above 46.5 would signal a continuation of the 5-Apr gap and be bullish. A move below 44 would confirm the harami and trigger a bearish signal.

By Arthur B. Hill - Tue 11-Apr-06 at 06:19AM in Industries
Email to friend | Permalink | Home | Comments (0)

Friday - April 07, 2006

Gold Heading Above 600

Gold remains strong and last week’s gap is holding. The breakout from the ABC correction and falling wedge signaled a continuation of the Nov-Jan advance and the upside target is around 64 or the upper channel trendline. I find it weird that stocks, in particular the Finance sector, can rally in the face of such strength in bullion. However, until there is a bearish technical signal, the trend for both stocks and gold is up and further gains are expected.

By Arthur B. Hill - Fri 07-Apr-06 at 06:41AM in Gold
Email to friend | Permalink | Home | Comments (0)

Oil Follows Gold Lead

Gold is not the only perplexing issue. Oil also remains strong and the break above 65 is holding. The long-term trend is clearly up and oil held support around 60 in February and March. The next resistance zone is just below 70 and then it is on to 80. Ouch. One reason oil is strong is because demand is strong. Demand is strong because the economy is strong. From strength in the Dow Transports, it is clear that truckers and airlines are burning lots of oil to move lots of goods.

By Arthur B. Hill - Fri 07-Apr-06 at 06:40AM in Oil
Email to friend | Permalink | Home | Comments (0)

Retail Gap

Despite rising gold and oil, the Retail HOLDRS (RTH) managed to break falling flag resistance. I pointed out RTH on Tuesday with the long black candlestick and 62% retracement. I noted that this was a good spot for a reversal or some firmness and the stock obliged with piercing pattern, gap and break above the upper flag trendline. This is positive price action for retail and the Consumer Discretionary sector.

By Arthur B. Hill - Fri 07-Apr-06 at 06:40AM in Industries
Email to friend | Permalink | Home | Comments (0)

Biotech Breakdown

The Biotech HOLDRS (BBH) is obviously concerned about rising gold and oil (just kidding). I am not sure of the reason for weakness, but the chart shows a clear triangle break down and this signals a continuation lower. Resistance at 195 is reinforced and it would take a move above this level to turn bullish. Also of note, the Biotech iShares (BBI) and Biotech SPDR (XBI) were also weak.

By Arthur B. Hill - Fri 07-Apr-06 at 06:38AM in
Email to friend | Permalink | Home | Comments (0)

Broadband Breakout

In sharp contrast to the Biotech HOLDRS (BBH), the Broad Band HOLDRS (BDH) broke resistance at 21 and this group continues to lead the Nasdaq and broader market. This index looks a lot like the Networking Index and includes heavy weights like QCOM, MOT, GLW, BRCM and SFA, which Cisco just bought.

By Arthur B. Hill - Fri 07-Apr-06 at 06:34AM in Industries
Email to friend | Permalink | Home | Comments (0)

Thursday - April 06, 2006

Yield Curve Turns Positive Again

What makes the “one and done” crowd so excited about interest rates? Probably, the yield curve. After an inversion in February, the yield curve rebounded in March and is positive again. An inversion occurs when the shorter yield (5YR) is greater than the longer yield (10YR). We saw a similar bounce in September, but it failed and the 10YR-5YR Yield Curve is trading back at resistance. The Fed is tightening as long as it trends down. A breakout above 1 would be significant and signal less tightening.

By Arthur B. Hill - Thu 06-Apr-06 at 10:32AM in Bonds
Email to friend | Permalink | Home | Comments (0)

XLY Following XLE Up

It is also possible for the Consumer Discretionary SPDR (XLY) to advance along with the Energy SPDR (XLE). Although less likely, it is happening as XLY broke falling flag resistance with two long white candlesticks and the move reinforces trendline support. Technically, XLY has yet to make it above last week’s high and I would like to see follow through above 34.05. The breakout in this cyclical sector buoyed the S&P 500.

By Arthur B. Hill - Thu 06-Apr-06 at 10:32AM in Sectors
Email to friend | Permalink | Home | Comments (0)

XLE Holding Breakout Too

What’s bearish about this chart? Same answer: nothing. XLE formed a falling wedge and held the May trendline. The breakout at 55 is bullish and the bulls have nothing to fear as long as 54 holds. Notice that the Nasdaq is stronger than XLE and it is possible for both the Nasdaq and XLE to advance at the same time.

By Arthur B. Hill - Thu 06-Apr-06 at 10:32AM in Sectors
Email to friend | Permalink | Home | Comments (0)

Nasdaq Holding Breakout

What’s bearish about this picture? Nothing – zero, zilch, nada. After the Oct-Jan surge, the index formed a triangle consolidation to digest the gains. This is pretty normal stuff. The triangle breakout signals a continuation higher and the upside projection is to around 2450-2500. There is a resistance zone around 2300 that turns into support and the bulls have nothing to fear as long as this zone holds.

By Arthur B. Hill - Thu 06-Apr-06 at 10:31AM in Indices
Email to friend | Permalink | Home | Comments (0)

Wednesday - April 05, 2006

Dollar Gets Hammered

The US Dollar Index was not a happy camper Tuesday and the index actually weakened while rates advanced over the last 5-6 weeks. Rising interest rates are bullish for the greenback and the inability to rise in the face of good news is bearish. The index broke rising wedge support in mid March, formed a lower high and declined sharply over the last four days. This setup is bearish and points to further weakness.

By Arthur B. Hill - Wed 05-Apr-06 at 02:50PM in US Dollar
Email to friend | Permalink | Home | Comments (0)

Rates Drop a Wee Bit

A one day drop in interest rates (10-year T-Note Yield) sparked interest rate sensitive stocks. This also caused the US Dollar Index to fall and gold to stall near 585. However, Tuesday’s small decline in rates is not enough to reverse the long-term or even the short-term uptrend. TNX is holding the January trendline and remains with a series of higher highs and higher lows. Many momentum indicators are overextended, but this suggests a pullback, not a trend reversal.

By Arthur B. Hill - Wed 05-Apr-06 at 02:50PM in Bonds
Email to friend | Permalink | Home | Comments (0)

XLU Forms Bullish Engulfing

The interest rate sensitive Utility SPDR (XLU) also bounced with a bullish engulfing Tuesday. This is by far the weakest sector and the bounce comes after a support break last week. Was this support break an over reaction? The stock certainly became oversold as 10-day RSI moved below 30. A long position here would be a bottom picking exercise and it would take a move above 31.5 (follow thru) to confirm the bullish engulfing pattern.

By Arthur B. Hill - Wed 05-Apr-06 at 02:49PM in Sectors
Email to friend | Permalink | Home | Comments (0)

Finance Pops to Challenge Flag

Strength in the Finance sector powered the S&P 500 and Dow on turn around Tuesday. The Finance SPDR (XLF) formed a falling flag and then stabilized around 32.5. An inverted hammer formed on Monday and a long white candlestick on Tuesday. The move was enough to break the upper flag trendline and this is quite positive for the S&P 500 and NYSE Composite, two finance heavy indices. The move also reinforces support from the March low and this is the level to watch for a break down.

By Arthur B. Hill - Wed 05-Apr-06 at 02:49PM in Sectors
Email to friend | Permalink | Home | Comments (0)

Tuesday - April 04, 2006

A Bull Flag for the Dow Diamonds (DIA)

Here is the Dow Diamonds (DIA) with the pattern du jour for the large-cap non-tech indices. After a mid March surge to new highs, DIA met resistance around 113 and pulled back over the last two weeks. The pullback looks like a falling flag and it is quite similar to the late Feb/early March pullback. The stock is nearing trendline support and also support from broken resistance around 111. An inverted hammer formed yesterday and a break above 112.5 would be bullish for DIA and the Dow.

By Arthur B. Hill - Tue 04-Apr-06 at 10:43AM in Indices
Email to friend | Permalink | Home | Comments (0)

Cyclicals Lead the Way Lower

Weakness in the Dow and S&P 500 stems from weakness in the Consumer Discretionary SPDR (XLY), Finance SPDR (XLF) and HealthCare SPDR (XLV) over the last two weeks. XLY opened strong and closed weak yesterday to form a long black candlestick and remain within the falling flag (magenta trendlines). The stock failed to breakout last week and a move above 34.05 is needed to revive the Dow and S&P 500.

By Arthur B. Hill - Tue 04-Apr-06 at 10:42AM in Sectors
Email to friend | Permalink | Home | Comments (0)

Retail Stocks Drag Cyclicals Lower

Weakness in the Consumer Discretionary SPDR (XLY) stems from weakness in the Retail HOLDRS (RTH). Wal-mart, Target and Best Buy led this group lower yesterday. RTH broke the lower trendline of a rising wedge and fell sharply yesterday. A falling flag has taken shape and the decline below 98 retraced 62% of the mid March advance (96.5-101.5). This is a good spot for a reversal or some firmness. A move above 99 would break falling flag resistance and this would be bullish for XLY and SPX.

By Arthur B. Hill - Tue 04-Apr-06 at 10:42AM in Industries
Email to friend | Permalink | Home | Comments (0)

Higher Energy Means Less to Spend

The Retail group and Consumer Discretionary sector seem to be adversely affected by strength in the Energy and Natural Resource groups. While the Dow and S&P 500 have corrected, the Natural Resources iShares (IGE) broke above resistance at 95. However, the going has gotten tough with a doji, black candle and shooting star the last three days. Broken resistance turns into support at 95 and a break below this level would throw cold water on the bulls.

By Arthur B. Hill - Tue 04-Apr-06 at 10:41AM in Industries
Email to friend | Permalink | Home | Comments (0)

REITs Feeling Interest Rate Heat

We have already seen the Utility SPDR (XLU) break down and it looks as if the REIT iShares (ICF) will be next. The stock formed a dark cloud pattern last Thursday and declined sharply on Monday. A break below the October trendline and late March low would be bearish with a downside target around 78. Interest rate sensitive stocks are not the place to be right now.

By Arthur B. Hill - Tue 04-Apr-06 at 10:40AM in Industries
Email to friend | Permalink | Home | Comments (0)