Market Soapbox Tues 04/05/05
Another day of profit taking -1.7% in crude oil futures $56.05 -$1.68. Energy -1.3% was the only economic sector closing to the downside, the XOI was off 0.94%. Strength in Airline +3.0% lifted the transports. Pharma, biotech, health care, consumer were up. Technology was mixed, small gains in Semiconductor offset losses in Networking, Hardware and Software.
Treasuries were rangebound as the benchmark 10-year note closed down 3 ticks to yield 4.46%. The dollar and gold held their ground. The RUT Small Cap and MID Mid Cap were suspiciously weak only gaining 0.10%. Advance Decline volume was Nasdaq 9 to 7, Amex 3 to 1, NYSE 10 to 7. New Highs to Lows Nasdaq 1 to 2, Amex 1 to 2, NYSE 2 to 1. Overall volume was tepid and the market lacks conviction on up swings.
For the moment, the indexes are resting just above their support levels at DJIA 10350, SP500 1163, Nasdaq 1975, NDX 1465, SOX 410, RUT 605, MID 650. If they break and stay below these levels on high volume for at least 2 days, we will see some serious downside from there.
I do not expect any meaningful or sustainable upside for the market until after reporting season is over. The market is still anemic and this is looking eerily, like the lull before a big storm. Tommorrow and Thursday should tell whether we are going to plummet down in the near term, or grind sideways and up until Wend. next week.
Some recommendations: Retain dividend paying longs that are flat or in uptrend since Jan 1st. Anything else, you already should have gotten defensive and stopped out. Place a tolerable stop on all remaining long positions. Buy some insurance - put a reasonable percentage in a 200% short fund (Rydex, Profunds) to counterbalance your potential losses on the longs. At the moment, I prefer to short the RUT.
If the market falls further, you will get forced out to cash and mitigate your loss. If we move up with conviction, a reasonably placed stop order on the "insurance" fund will take it off the table. On the way up, you can nibble on what you perceive to have "value".
Treasuries were rangebound as the benchmark 10-year note closed down 3 ticks to yield 4.46%. The dollar and gold held their ground. The RUT Small Cap and MID Mid Cap were suspiciously weak only gaining 0.10%. Advance Decline volume was Nasdaq 9 to 7, Amex 3 to 1, NYSE 10 to 7. New Highs to Lows Nasdaq 1 to 2, Amex 1 to 2, NYSE 2 to 1. Overall volume was tepid and the market lacks conviction on up swings.
For the moment, the indexes are resting just above their support levels at DJIA 10350, SP500 1163, Nasdaq 1975, NDX 1465, SOX 410, RUT 605, MID 650. If they break and stay below these levels on high volume for at least 2 days, we will see some serious downside from there.
I do not expect any meaningful or sustainable upside for the market until after reporting season is over. The market is still anemic and this is looking eerily, like the lull before a big storm. Tommorrow and Thursday should tell whether we are going to plummet down in the near term, or grind sideways and up until Wend. next week.
Some recommendations: Retain dividend paying longs that are flat or in uptrend since Jan 1st. Anything else, you already should have gotten defensive and stopped out. Place a tolerable stop on all remaining long positions. Buy some insurance - put a reasonable percentage in a 200% short fund (Rydex, Profunds) to counterbalance your potential losses on the longs. At the moment, I prefer to short the RUT.
If the market falls further, you will get forced out to cash and mitigate your loss. If we move up with conviction, a reasonably placed stop order on the "insurance" fund will take it off the table. On the way up, you can nibble on what you perceive to have "value".
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