| Stock market analysis and sector index charts |
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| Friday, February 24, 2006 |
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Weekend Update
The S&P 500 Large Cap Index (SPX)
Right now the S&P 500 is just below resistance @ 1294.20. The daily chart shows that it is well above support and the uptrend line is well intact. In addition, the ascending triangle pattern is still working, we are just waiting on a breakout. Both futures and the S&P 500 have not yet taken out January highs. Friday was an inside day. The market still looks to go higher. In addition, we crossed the 61% Fibonacci retracement level in the 1250s. That is why bulls live above 1250 and bears live below that number. That is why we have been long since November. You can only fight the trend so much and join the party.
The S&P 500 Large Cap Index/ Swiss Franc (SPX:XSF)
I have decided to show you this chart to illustrate the fact that when the SPX goes up in other currencies such as in the Swiss Franc, that means there is momentum behind the current move in the S&P500. It also means that the S&P 500 will start to look more attractive to overseas investors.
The Bank Index - Philadelphia (BKX)
The weekly chart currently shows the BKX breaking out of its 2 1/2 year consolidation channel / slim jim to hit new all time highs this week at $107.77 The BKX has been in a bullish trend reversal since the October 2005 lows. Leadership continues to be in the Banks, Brokers, Small Caps, Mid Caps, Biotech, transports, Dow industrials, overseas markets etc... When you get this type of broad strength there is only one to go but up.
NYSE Composite (NYA)
On Friday we hit new 52 week highs at 8140.50. The trend turned bullish back in November 2005 and has continued to make new all time highs for the past 4 months. The daily chart shows that it is currently breaking out of an ascending triangle. Within the triangle the is also a sub pattern. It is a diamond top continuation reversal pattern. This type of pattern is often mistaken for a head and shoulders top, shorts then have to cover thus causing a fast move upwards.
S&P Retail Index (RLX)
The daily chart shows the RLX in 4 month sideways correction. It will remain range bound until it takes out 472.70. There are no set ups in the retail sector at this time. The RLX may be a good short if is unable to break this resistance level.
ISE Oil & Gas Services Index (OOG)
The OOG on the daily is currently in a bearish trend reversal on the daily chart. There is no bullish divergence in the PPO and stochastics are weak and turning over. Short term the energy sector is a risky sector to be in. Get rid of you oil stocks and get into the bio -pharmas and high beta stocks. I am still long LSS and MPET. One more thing, oil is outperforming the stocks. Consequently, it is never a good time to be in the stocks when that is the case as it is now. (Nevertheless, keep an out because the correction may be over sooner than we think.)
The Gold and Silver Index - Philadelphia (XAU)
The daily chart of the XAU is currently bearish. The XAU is in a wave 3 to 4 correction and is bear flagging on the daily chart. Today it had an inside day and closed at 140.51. Gold is outperforming the precious metal stocks -- not a good sign. We need to wait and see how this correction unfolds and see if it holds the uptrend line around the mid 120s. There are no trades recommended at this time. Nothing to go long. Sit on hands!
SP500
SP500 IN SWISS FRANC
$BKX
$NYA
RETAIL
$OOG
$XAU
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