Afternoon Update- Stats on the Current Market

Weekly Bullish Trend Reversal From Last November

The S&P 500 Large Cap Index (SPX) - Daily chart

Today was a weak day in the broader market and the SPX had a poor close. At this point in the market it is too soon to use indicators such as a the VIX or charts that call market tops because we haven't moved enough. What do I mean by that? Let me explain. Since the SPX had the weekly bullish trend reversal as of last November, both the highs and lows for the SPX were placed this year in 2006. The SPX 52 week highs were placed last week at 1297.57 this year and the swing lows from the bullish trend reversal in November were put in at 1245.74 in February. Consequently the range for the SPX for the past five months from the highs to the lows has been 51.83 points. The SPX is currently down 25.34 points from the highs or we are 26.49 points up from the lows. We are in a trading range. Fifty plus stock set ups later and the SPX has only been in a range! Five trading days ago the SPX hit 1297.33, last Monday the SPX was at new 52 week highs. This week we have pulled back 1.95%. You can see on the SPX chart that there are a lot of patterns: ascending triangles, wedges, broadening triangles and an ascending wedge. Well, my point is that the line in the sand for playing this market long is a break below 1246. Bulls live above that number bottom line. When we trade in a range we still have to be bullish above 1246. This range forces us to go in and out of stocks in the best sectors and it is a stock pickers market. There are 237 sub-sectors so you have to be picky! Therefore, you have to keep your winners to offset you losers when we are is this range. Sometimes in a range bound market it is best to do nothing with the stocks that you own. This range also makes bear and bulls frustrated. Stop freaking out.

Portfolio update

There have been three sectors since November 2005 that I have been trading; the gold sector (XAU)NEM, the energy sector(OIH) BRY, SU, CNQ and the bio- Pharma Sector, which is a sector that I made up. I am trying to be very specific as to which stocks that I pick for the portfolio. I want to pick the front runners for each sector. For the bio- pharma sector I picked CELG, CEPH, NBIX, GPRO, PPH. My point is, that I specifically hand pick the best stocks. For the cement sector I only picked one stock, FRK, which did very well. The other stocks that I have picked for the portfolio have been a mix to add diversification. I like to pick the higher beta performance stock such as; GRMN,AAPL,SNDK,CEDC,and PZZA. Mostly, I like to play sectors.

Index Stats

What I want to point out here also is that a pull back on an index is 2 to 5%, a correction is 10-15% a bear market is 20% or more. The XAU is in a deep correction because it is down 20.57% from its highs - you could call that a bear market. We are no longer in gold stocks. The OIH is in a correction, it is down 15.32%. We are no longer in energy stocks. The COMPQ is down 3.57%, it is in a pull back off the highs. The SPX is down 1.95% and the INDU is down 1.67%, both in pull backs off the highs. The stocks that we have been rotating in and out of have put us in a good place. We rotated out of gold and oil at the top, and into the bio pharmas and high beta momentum stocks which have been holding up well.

 

Weekly Bullish Trend Reversal From Last November

Stats

2006 Lows 1245.74
2006 Highs 1297.57

-------------------------------

Range 51.83 points

Currently 1272.23 down 25.34 from the highs or -1.95%
Currently 1272.23 up 26.49 from the lows or +2.13%

This range goes all the way back to November 21st 2005

 

Index Stats

($XAU down -20.57%)
(OIH down -15.32%)
(NASDAQ down -3.57%)
(SP500 -1.95%)
(DOW down -1.67%)

$SPX--There is no sector chart for the Bio/Pharma Stocks or I would show that above also