Wiser Trader Stocks and Options Newsletter
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Issue No. 82 June 26, 2006
Prescott, Arizona Systems@WiserTrader.com
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1.0
Trading
There are two
housekeeping items. (1) The link that allows you to download
XLQPlus for a free 45-day evaluation is now functioning. (2) Pages were recently
added where you can order
books on stocks, options and technical analysis.
If the major averages
have bottomed, they have not bounced.
1.1 A Pause
A second test of 2-year
lower trend lines for the major averages is underway. The lack of much bounce,
seen in Figure 1A for the S&P 500, is not a welcome sight. Still it is
not a reason to worry yet. In the past, the averages have retested their
lows several times. Large investors are reluctant to get back in the water
due to the possibility that there might be more down side. A few more
push-ups off the lower rail may yet convince investors to put some of that
sidelined cash back to work. It is not likely that much will happen until
after Thursday’s FOMC statement.
FIGURE 1A
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© 2006 Desert Mountain
Systems, LLC. Members of wisertrader.com are neither licensed brokers nor
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 information and consulting with a licensed broker or
adviser. Desert Mountain Systems markets third party trading systems but
has no other affiliation with trading system companies.
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$29.96
Technical Analysis from A to Z, 2nd Edition
2.0 Market Analysis
Volatility can be
expected to continue this week. The FOMC issues its June policy statement on
Thursday. The market is essentially stalled for what may be several weeks as
several things compete for investor’s attention. Technically, the major
averages are at a point of long-term support at their lower trend lines.
Trading volume is low as the prospect of more rate hikes nears. Earnings
season is upon us once again with slightly upbeat expectations.
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
|
-2.6%
|
-0.2%
|
1.1%
|
-3.2%
|
-0.3%
|
|
NASDAQ Composite Index
|
-4.0%
|
-0.4%
|
-0.2%
|
-3.8%
|
0.4%
|
|
S & P 500 Index
|
-2.8%
|
-0.6%
|
-0.1%
|
-2.8%
|
0.6%
|
|
NYSE Composite Index
|
-3.8%
|
-0.1%
|
-0.4%
|
-4.1%
|
0.8%
|
|
Russell 2000 Index
|
-5.4%
|
-0.4%
|
-1.2%
|
-4.9%
|
1.1%
|
|
HGX, Phil. Housing Index
|
-8.8%
|
0.6%
|
-0.9%
|
-6.8%
|
-1.9%
|
|
IYR, Real Estate
|
-1.0%
|
-2.2%
|
-0.9%
|
0.0%
|
2.2%
|
|
GLD, GOLD
|
-10.9%
|
0.5%
|
-4.6%
|
-4.8%
|
-2.5%
|
|
RKH, Banking
|
-3.3%
|
-1.2%
|
-2.5%
|
-1.1%
|
1.4%
|
|
IYT, Transportation
|
2.1%
|
2.8%
|
2.1%
|
-4.4%
|
1.8%
|
|
SMH, Semiconductors
|
-5.1%
|
-1.7%
|
1.3%
|
-5.9%
|
1.2%
|
|
BBH, Biotechnology
|
-3.8%
|
-2.0%
|
0.6%
|
-3.3%
|
0.9%
|
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OIH, Oil Infrastructure
|
-6.2%
|
-0.9%
|
-0.2%
|
-8.4%
|
3.5%
|
|
XLE,
Energy
|
-3.1%
|
0.5%
|
0.6%
|
-6.6%
|
2.6%
|
|
XLU,
Utilities
|
0.1%
|
-1.4%
|
-1.1%
|
-0.2%
|
2.9%
|
|
XLB,
Materials
|
-5.0%
|
1.1%
|
0.0%
|
-6.8%
|
0.8%
|
|
XLI,
Industrial
|
-2.6%
|
-0.1%
|
1.3%
|
-4.4%
|
0.6%
|
|
XLK,
Technology
|
-3.5%
|
-0.8%
|
1.3%
|
-3.7%
|
-0.2%
|
|
XLV,
Healthcare
|
-1.9%
|
-1.1%
|
-0.4%
|
-1.5%
|
1.1%
|
|
XLF,
Financials
|
-4.0%
|
-0.6%
|
-2.7%
|
-1.7%
|
0.9%
|
|
XLP,
Consumer Staples
|
-1.2%
|
0.2%
|
-0.1%
|
-0.8%
|
-0.5%
|
|
XLY,
Consumer Discretionary
|
-2.3%
|
-0.8%
|
0.0%
|
-2.4%
|
0.9%
|
The VIX and VXN volatility indexes are listed in
Table 2B.
Table 2B
Volatility
|
Indicator
|
Current
|
Last Week
|
2 Weeks Ago
|
Complacent
|
Cautious
|
|
VIX **
|
15.9
|
17.3
|
18.1
|
< 20
|
> 50
|
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VXN ***
|
20.4
|
21.7
|
23.2
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< 30
|
> 70
|
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** Below 20 day SMA = Short-term buy signal.
***
Below 20 day SMA = Short-term buy signal.
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Figure 2A compares the major averages with key
ETF’s and Sector SPDRs.
FIGURE 2A
Table 2C
Market Summary
Industries are
listed according to the Yahoo Industry Classification
Major Indices For the Past Week: Dow Jones -0.2% NASDAQ -0.4% S&P500 Index -0.6% Russell 2000 -0.4% NYSE -0.1% 30 Year Bond 5.257% 10 Year Note 5.228% Leading Industries For the Past Week:
Lagging Industries For the Past Week:
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Leading Industries For the Past Month:
Lagging Industries For the Past Month:
Crude Oil $70.84 Gold for the past 30 days: USD -8.22% CAD -8.15% CHF -5.93% GBP -5.72% EUR -8.50% JPY -5.18% |
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