| Weekend Update - $SPX, $CRX, $XAU, $BKX, $GASO, $WTIC |
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| Sunday, December 17, 2006 |
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The S&P 500 Large Cap Index ($SPX) - Daily chart
As you can see, the $SPX is still trading in the middle of it's up trending channel. Which is pretty much the same as recent previous updates? The $SPX continues to creep up. However, fewer and fewer stocks are now participating in this up trending move. This is somewhat suspicious. Despite this, the trend remains bullish and the $SPX has yet to break the middle of the channel to the upside or downside. Since the $SPX is trading right in the middle of the channel, it is riskier to trade now, because the overall market is frothy, and yet the uptrend remains strong. If you buy now, chances are the $SPX will trade to the bottom of the channel, if you don't buy now, chances are the SPX will likely trade to the top of the channel. The top of the channel is a good 20 to 40 points away, and if the $SPX dropped to the 13 EMA which is at 1411. The $SPX is still frothy if it hits 1411. The SPX is very stretched from it's moving averages in the short term. The RSI is showing light bearish divergence, yet the stochastics are bull flagging. The rest of the oscillators and indicators are in a 1-2-3 bullish trend reversal. However, there are other sectors that have been correcting, while the $SPX has been advancing, so I want to have a look at those. These will most likely advance while the $SPX corrects to it's moving averages or uptrend line.
Commodity Related Equity Index stocks ($CRX) - Weekly Chart
The CRX covers the following commodities: copper, silver, aluminum, oil etc...Amazingly enough, the top does not look to be in the commodity index. As you can see the on the weekly chart, the CRX has held it's uptrend line for the last three years. The $CRX is forming a possible ascending triangle pattern. The $CRX has gone up for the last 8 weeks. Last week it did pause to rest. However, this is the time that we can also get large moves in this sector. Some of our portfolio stocks, such as ADM, APA, and GG are components of the $CRX. Indicators and oscillators are in a 1-2-3 bullish trend reversal.
The Gold and Silver Index- Philadelphia ($XAU) - Daily Chart
The Daily chart of the $XAU illustrates that it has completed it's wave 3 to wave 4 ABC correction. The $XAU has broken it's intermediate term downtrend line to the upside. Recently, the $XAU is consolidating to test the downtrend line and it's 34 EMA. Nevertheless, it's recent uptrend line is intact. The $XAU is in a 1-23- bullish trend reversal. The PPO is making new highs along with price. I believe that the $XAU is close to completing it's pullback and will now begin to advance will whilst the $SPX consolidates.
The Bank Index -Philadelphia (BKX)- Daily Chart
The daily chart of the $BKX illustrates that it has broken out of an ascending triangle. On Friday it made new all time 52 week highs. However, the chart says that it is frothy. However, there is nothing bearish about it. This is not a good time to add to positions in this sector. The indicators and oscillators are in a 1-2-3 bullish trend reversal.
Unleaded Gasoline- Continuous Contract NYMEX - EOD -($GASO)Daily Chart
Unleaded gas was a big focus of ours this past summer, and we shorted many energy stocks. Now, the correction is over, and it has competed it's move to the retracement zone. The chart now looks bullish. If you look at the moving averages you can see that they are now converging and pointing upwards. You can see huge bullish divergence in the RSI and PPO. The stochastics are now forming a bullish V to the upside. Unleaded Gasoline will follow the price movements in OIL. Our portfolio stock, VLO is highly leveraged to the price of unleaded to Gasoline.
Oil -Light Crude-Continuous Contract (EOD) ($WTIC) - Daily Chart
The daily chart of WTIC shows that Oil has completed it's counter trend wave 3 to 4 pullback. Oil has broken out of it's diamond bottom pattern and is now in a move up to wave 5. Once $WTIC takes oot$64.00 it looks to make another move up to test it's previous highs around $70.00 in the medium term. Indicators and oscillators are very bullish, and stochastics are bull flagging, and t the PPO is showing bullish divergence. Note the bullish cross of the moving averages. This has bullish implications for our portfolio energy stocks. OXY is the most leveraged to the price movements in OIL. The USO ETF which is not in the portfolio, is also leveraged to the price of oil. AIl of our stocks are somewhat leveraged to the price of oil. These are only a few of the portfolio stocks have been recommended for the Oil sector: SU, UPL, OXY, VLO, BRY, and CNQ. Please look at the rest of the portfolio for other oil sector stock plays. Please note that we may have a 3-4 day pullback in the energy stocks this week because the price of oil is moving up and the stocks need to pull back to catch up with the price of oil. The stocks have been front running the move in oil so a breather is necessary.
$SPX
$CRX COMPONENTS
$CRX
$XAU
$BKX
$GASO
$WTIC
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