Wiser Trader Stocks and Options Newsletter
______________________________________________________________________________
Issue No. 70 March 20, 2006
Prescott, Arizona Systems@WiserTrader.com
______________________________________________________________________________
1.0
Trading
How far can this rally go
without the NASDAQ?
1.1 NASDAQ
The DOW and the NYSE
Composite have broken upward out of their two-year rising wedge patterns.
The S&P 500 and the Russell 2000 are both at the top of their two-year
patterns as if ready to break out. However, the NASDAQ continues to move
sideways, as shown in Figure 1.
FIGURE 1
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© 2005 Desert Mountain
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licensed advisors. Trades discussed represent recommendations made by the
editor for the wisertrader.com portfolio. The newsletter and web site are
for information only and should not be considered as personal advice. While
it is believed that the posted information is factual, mistakes can be made
in transcription. Investors should trade stocks only after verifying all
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with trading system companies.
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Technology stocks
represent the main providers of innovation and increased productivity. The
NASDAQ is not usually a follower. Typically, it leads the direction of the
major indices. It remains to be seen whether it will make a dramatic move
upward in the near future or serve as a moderating factor for the market as a
whole.
2.0 Market Analysis
Overall, it was a
positive week with broad based gains. Market sentiment is upbeat in the
belief that the Fed will not raise rates too far, and endanger economic and
earnings growth.
Key industry ETF’s in
Table 2A are Biotech and Semiconductors, which confirm the NASDAQ.
Transportation confirms the Dow Jones Industrial Average according to Dow
Theory. Banking and Financials are confirming indicators for the S&P
500. Gold and Housing are respective indicators for the inverse health of
the currency (inflation) and the capacity for consumer spending.
Table 2A
Indices, Key Industry ETF’s and Sector SPDR’s
|
|
1 month
|
1 wk ago
|
2 wks ago
|
3 wks ago
|
4 wks ago
|
|
Dow Jones Industrial Index
|
1.5%
|
1.8%
|
0.5%
|
-0.4%
|
-0.5%
|
|
NASDAQ Composite Index
|
1.1%
|
2.0%
|
-1.8%
|
0.7%
|
0.2%
|
|
NYSE Composite Index
|
1.6%
|
2.0%
|
-0.5%
|
-0.2%
|
0.2%
|
|
S & P 500 Index
|
2.2%
|
2.4%
|
-0.5%
|
-0.1%
|
0.4%
|
|
Russell 2000 Index
|
2.1%
|
2.7%
|
-1.6%
|
0.2%
|
0.8%
|
|
HGX, Phil. Housing Index
|
4.1%
|
7.4%
|
-2.2%
|
-3.1%
|
2.4%
|
|
IYR, Real Estate
|
7.2%
|
4.4%
|
2.7%
|
-0.6%
|
0.6%
|
|
GLD, GOLD
|
0.3%
|
2.4%
|
-4.4%
|
1.2%
|
1.2%
|
|
RKH, Banking
|
2.3%
|
2.0%
|
0.2%
|
-1.9%
|
2.0%
|
|
IYT, Transportation
|
3.7%
|
2.4%
|
-1.1%
|
1.5%
|
0.9%
|
|
SMH, Semiconductors
|
-6.2%
|
-1.1%
|
-5.3%
|
2.7%
|
-2.5%
|
|
BBH, Biotechnology
|
1.6%
|
3.8%
|
-1.5%
|
-1.4%
|
0.9%
|
|
OIH, Oil
|
3.4%
|
5.1%
|
-6.1%
|
2.2%
|
2.5%
|
|
XLE,
Energy
|
1.2%
|
4.4%
|
-5.1%
|
0.9%
|
1.2%
|
|
XLU,
Utilities
|
-0.5%
|
1.4%
|
-1.8%
|
-0.7%
|
0.7%
|
|
XLB,
Materials
|
1.7%
|
2.8%
|
-1.4%
|
0.1%
|
0.2%
|
|
XLI,
Industrial
|
3.8%
|
2.9%
|
0.3%
|
0.2%
|
0.4%
|
|
XLK,
Technology
|
0.8%
|
1.8%
|
-1.3%
|
1.4%
|
-1.0%
|
|
XLV,
Healthcare
|
0.1%
|
0.9%
|
0.2%
|
-1.0%
|
0.0%
|
|
XLF,
Financials
|
2.1%
|
1.4%
|
0.4%
|
-1.1%
|
1.4%
|
|
XLP,
Consumer Staples
|
1.4%
|
-0.8%
|
2.5%
|
-0.5%
|
0.2%
|
|
XLY,
Consumer Discretionary
|
1.2%
|
2.0%
|
-0.4%
|
0.1%
|
-0.5%
|
Table 2B
Volatility
|
Indicator
|
Current
|
Last Week
|
2 Weeks Ago
|
Complacent
|
Cautious
|
|
VIX **
|
12.1
|
11.9
|
12.0
|
< 20
|
> 50
|
|
VXN ***
|
15.4
|
17.6
|
16.3
|
< 30
|
> 70
|
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** Above 20 day SMA = Short-term sell signal.
***
Below 20 day SMA = Short-term buy signal.
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Figure 2 compares the major averages with key
ETF’s and Sector SPDR’s.
FIGURE 2
|
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