It’s so easy to fall in love
People tell me love’s for fools
So here I go breaking all of the rules
- Where We Are
- What Was Important About Last Week
- What We Are Watching For This Week
- A Word On Discipline
Where We Are:
Taking a look at the overall markets:
The markets appeared to be on cruise-control as broad market indexes trended higher in the holiday shortened week.
Continued leadership in Biotech, Broker Dealers, and Transportation is paving the way for a technically strong market.
Technology and Banking appear to be on strong footing which is exactly what we want to see when we’re long.
When things look good there is a tendency to want to jump on the train in fear of missing out. Don’t.
Keep things simple and wait for optimum setups.
Winners will take care of themselves, it’s our job to take care of the losers.
The Dow Industrial Average ($INDU), +4.58%, closed just under the year’s high of 10,984.86.
The S&P 500 ($SPX), +3.56%, cruised to a new high for the year.
Nasdaq ($COMPQ), +1.69%, also hit a new high for the year.
Russell 2000 ($RUT), +1.65%, closed just under the year’s high of 688.51.
Volume indications for the past three weeks illustrate a bullish institutional bias.
New Highs – New Lows continue to improve over the past three weeks, though the ratio has yet to come back to the year’s highs in step with the broad market indexes.
Investors Intelligence shows the bullish money managers dominating the bearish money managers at a ratio 0f 2.31. This contrarians indicator has been bearish for the past few months.
Key chart action for the week:
Charts courtesy of Stockcharts.com
The 20+-year Note Holdr (TLT) remains under its major moving averages as it attempts to rally off recent lows.
The U.S. Dollar Index ($USD) was little changed on the week, though remains trend-up after breaking out of a two-year base.
The Gold Miners Index ($XAU) followed through on its breakout from a two-year base. The question is how long will the historical inverse relationship between miners and bonds continue its counter trend? We’re siding with Gold.
The Dow Jones AIG Commodity Index ($DJAIG) was little changed as the index remains between its major moving averages with the 50-day above the 200-day.
Technology ($DJUSTC) put in a fourth week of solid rallying.
The Semiconductor Index ($SOX) poked north of a down trend-line, and face further resistance around the 500 level.
Banks ($BKX) impressed with a new high for the year.
Broker Dealers ($XBD) cruised to another new high.
Retail ($RLX) as been trending higher for the past month, though has yet to take out the year’s high.
Internet ($IIX) hit another new high for the year.
Healthcare ($HCX) was little changed for the week, as it failed to take out last week’s high, and is short of the year’s high as well.
Biotech ($BTK) squeezed another new high for the year.
REIT’s ($DJR) moved higher as they attempt to regain the year’s high.
Homebuilders ($DJUSHB) moved further aboveits major moving averages, thugh are far from the year’s high.
Transportation ($TRAN) hit another new high for the year.
Airlines ($XAL) retreated for the week as they continuer to flirt with a major trend-line.
Defense ($DFX) continues to consolidate in a five month base.
Energy ($IXE) moved higher as it attempts to get back on track with a trend up after topping out a month ago. Oil Services ($OSX) managed to put in a new high for the year.
The top 10 industry groups from the 6 month RS screen are:
- DRUGS – GENERIC
- INVESTMNT BROKERAGE-RE
- DRUG DELIVERY
- SEMICONDUCTR-MEMORY CH
- INVESTMNT BROKERAGE-NA
- INSURANCE BROKERS
- ELECTRONICS WHOLESALE
- SEMICONDUCTOR EQUIP MA
- INDUSTRIAL ELECTRICAL
What Was Important About Last Week
- Deere (DE) said it earned $232.8 million in its fiscal fourth quarter, down 35% from a year ago, though ahead of Wall Street forecasts.
- Leading economic indicators rose in October after four straight months of declines as it beat economists expectations.
- Unemployment claims rose by 30,000 to 335,000 last week, which is higher than economists expected, and the biggest in two months.
Key earnings releases:
- MONDAY: none
- TUESDAY: Chico’s FAS, Inc. (CHS).
- WEDNESDAY: Dress Barn (DBRN), Smithfield Foods (SFD), Synopsys (SNPS), Tiffany & Co. (TIF).
- THURSDAY: none
- FRIDAY: Quanex (NX).
On the economic front we have potential market movers with:
- MONDAY: Existing Home Sales
- TUESDAY: Durable Orders, Consumer Confidence, New Home Sales
- WEDNESDAY: Chain Deflator-Prel., GDP-Prel., Chicago PMI, Crude Inventories, Fed’s Beige Book
- THURSDAY: Auto Sales, Truck Sales, Initial Claims, Personal Income, Personal Spending, Personal Spending, Construction Spending, ISM Index.
- FRIDAY: Average Workweek, Hourly Earnings, Nonfarm Payrolls, Unemployment Rate.
- The Growth Stock Landscape
- What We Like – What We Have
- This Week’s Scans: • SETUPS • BREAKOUTS • BASE BUILDING • SHORTS
This Week’s Word On Discipline:
“To think bad thoughts is really the easiest thing in the world. If you leave your mind to itself it will spiral down into ever-increasing unhappiness. To think good thoughts, however, requires effort. This is one of the things that discipline – training – is about.”– James Clavell, in his novel “Shogun”