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Wiser Trader Stocks and Options Newsletter ______________________________________________________________________________
Issue No. 80 June 12, 2006 Prescott, Arizona Systems@WiserTrader.com ______________________________________________________________________________
1.0 Trading
The market is characterized by extremely choppy trading.
1.1 Channels
The major averages lost from 2.8 to 4.9% for the week, as seen in Table 1A.
TABLE 1A
While the DOW and NYSE Composite are at their 200-day SMA, the Russell 2000, S&P 500 and NASDAQ have broken below theirs, as seen in Table 1B.
TABLE 1B
The NASDAQ in Figure 1A, after bouncing off the lower trend line of its 2-year trading channel, has broken below it. Its next major support is around 2,050.
FIGURE 1A
The S&P 500 shown in Figure 1B is approaching the lower trend line of its 2-year trading channel. We will know by July if it will bounce off the 1,240 level or continue lower.
FIGURE 1B
Figure 1C shows that the past two weeks have been unusually choppy with the average Williams %R indicator for the five indices crossing its 200-day average (-42) four times. The fact that the range of component indicator values is tight implies that the market could move sharply from here.
FIGURE 1C
This kind of uncertainty was seen back in late March to early April but with less down side, as seen in Figure 1D.
FIGURE 1D
This is not a good time to enter new major long positions. It is better to tighten sell stops now since four of the five major indices are still working their way toward the bottom trend line of their 2-year channels. It will be interesting to see how they respond to reaching their channel support lines.
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1 month |
1 wk ago |
2 wks ago |
3 wks ago |
4 wks ago |
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Dow Jones Industrial Index |
-4.3% |
-3.2% |
-0.3% |
1.2% |
-2.1% |
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NASDAQ Composite Index |
-4.8% |
-3.8% |
0.4% |
0.8% |
-2.2% |
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S & P 500 Index |
-3.0% |
-2.8% |
0.6% |
1.0% |
-1.9% |
|
NYSE Composite Index |
-5.3% |
-4.1% |
0.8% |
0.8% |
-2.8% |
|
Russell 2000 Index |
-5.5% |
-4.9% |
1.1% |
1.0% |
-2.7% |
|
HGX, Phil. Housing Index |
-12.6% |
-6.8% |
-1.9% |
0.1% |
-4.4% |
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IYR, Real Estate |
2.4% |
0.0% |
2.2% |
1.7% |
-1.5% |
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GLD, GOLD |
-15.0% |
-4.8% |
-2.5% |
-0.7% |
-7.8% |
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RKH, Banking |
-1.0% |
-1.1% |
1.4% |
0.7% |
-1.9% |
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IYT, Transportation |
-5.8% |
-4.4% |
1.8% |
1.1% |
-4.2% |
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SMH, Semiconductors |
-9.4% |
-5.9% |
1.2% |
-2.8% |
-2.1% |
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BBH, Biotechnology |
0.2% |
-3.3% |
0.9% |
2.3% |
0.4% |
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OIH, Oil Infrastructure |
-9.7% |
-8.4% |
3.5% |
2.9% |
-7.4% |
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XLE, Energy |
-6.9% |
-6.6% |
2.6% |
2.0% |
-4.8% |
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XLU, Utilities |
3.9% |
-0.2% |
2.9% |
1.7% |
-0.5% |
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XLB, Materials |
-9.5% |
-6.8% |
0.8% |
1.0% |
-4.6% |
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XLI, Industrial |
-6.0% |
-4.4% |
0.6% |
0.3% |
-2.5% |
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XLK, Technology |
-5.0% |
-3.7% |
-0.2% |
0.8% |
-1.8% |
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XLV, Healthcare |
0.1% |
-1.5% |
1.1% |
0.9% |
-0.4% |
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XLF, Financials |
-1.5% |
-1.7% |
0.9% |
1.0% |
-1.8% |
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XLP, Consumer Staples |
0.5% |
-0.8% |
-0.5% |
2.0% |
-0.2% |
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XLY, Consumer Discretionary |
-2.8% |
-2.4% |
0.9% |
0.0% |
-1.2% |
The VIX and VXN volatility indexes are listed in Table 2B.
Table 2B
Volatility
|
Indicator |
Current |
Last Week |
2 Weeks Ago |
Complacent |
Cautious |
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VIX ** |
18.1 |
14.3 |
14.3 |
< 20 |
> 50 |
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VXN *** |
23.2 |
18.4 |
18.6 |
< 30 |
> 70 |
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** Above 20 day SMA = Short-term sell signal. *** Above 20 day SMA = Short-term sell signal. |
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Figure 2A compares the major averages with key ETF’s and Sector SPDR’s.
FIGURE 2A
Table 2C Market Summary Industries are listed according to the Yahoo.com Classification System
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