Skip to main content

Weekly Market Update - bears take a breather

Weekly Market Call

The week began with another selloff followed on Tuesday with a big up day. The remainder of the week the averages moved in a fairly tight range. Sentiment seems to have evened out with bulls remaining optimistic but saying that caution is in order and bears expecting a retest of the recent lows.

The only reasonably important economic news related to jobs and wages. February job growth came in just shy of expectations. Investors chose to believe this provided some assurance the economy was still in decent shape even though the number was the lowest in two years. Wages increased more than productivity did. On the one hand, higher wages support consumer spending but, coupled with a slower rate of productivity growth, it tends to compress company margins. Investors went with the bullish interpretation.

TradeRadar signals at the end of this week sit pretty much where they were at the end of last week: all indexes still flashing the SELL signal. In this first chart, you can see how SPY is displaying the classic TradeRadar reversal peak in spite of the 1% recovery in the S&P 500 this week.

Click to view larger image

In this next chart, you can see how QQQQ has had several false SELL signals but sits now in firmly bearish territory.

Click to view larger image

All in all, the economy seems to be in a slowing trend and the market is finally beginning to reflect that fact. My opinion is that we will retest the recent lows this coming week or the following week and the outcome will determine the course the market will take over the next several months.

ETF Comments

Indexes - as discussed above, all the indexes are flashing the TradeRadar SELL signal.

Commodities - XLE has been flashing a TradeRadar SELL signal since early January but it stubbornly refuses to capitulate. If you look at the price of oil as represented by a chart of USO, you will see why: oil hit an intermediate low in mid-January but has been moving up since then. Indeed, TradeRadar has been flashing a potential BUY signal on USO since mid-February.

Technology - the TradeRadar signal for XLK looks very much like that for QQQQ: a sloppy SELL

Housing - the home builders ETF (XHB) is looking very weak here and appears to be succumbing to the sub-prime mortgage mess. The REITs ETF (IYR), in spite of recovering somewhat this week, is still flashing a solid SELL signal as a result of last week's smackdown.

Biotech - XBI now appears weaker than the home builders.

Financial - XLF also recovered somewhat this week but the signal is still a SELL. The financials are still vulnerable to the mortgage situation, problems with the carry trade and the feeling that interest rates won't be coming down anytime soon.

TradeRadar Stock Picks

With the NASDAQ 100 recovering a bit this week, the ProShares Ultra Short QQQ (QID)fell back a bit. At $55.45, we are now showing a gain of 5.3% since our recommendation went out.

We continue to hold Generex (GNBT) even though it is going nowhere. It lost a penny this week to close at $1.71. We are showing a slight gain.

This week an adjustment of the TradeRadar filter settings led us to sell PacificNet (PACT) at $4.95 for a loss of 5.4%. The weak TradeRadar SELL signal first flashed on 2/12/2007 should have been heeded. With the stock at $6.42, we could have captured a 22% gain. Ah well...

Finally giving in to the negative tone in the market and the concerns over sub-prime mortgages, Tarragon (TARR) gave up its recent gains and then some. TARR finished the week at $11.17, off 14.4% from last Friday's closing price, handing us a loss of 3.9% and flashing a weak TradeRadar SELL signal.


Popular posts from this blog

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation

Trade Radar gets another update

Some of our data sources changed again and it impacted our ability to load fundamental/financial data. In response, we are rolling out a new version of the software: 7.1.24 The data sourcing issues are fixed and some dead links in the Chart menu were removed. So whether you are a registered user or someone engaged in the free trial, head over to our update page and download the latest version. The update page is here: Contact us if you have questions or identify any new issues.

Thursday Bounce: Trend Busters, Swing Signals and Trend Leaders for July 9, 2009

This is a quick post to announce that we have published Thursday's Trend Leaders, Swing Signals and Trend Busters at Alert HQ . All are based on daily data. Today we have the following: 72 Swing Signals -- A couple of days ago we had 35 signals, today we have twice as many. Happily, we now have 65 BUY signals, a mere 4 SELL Signals plus 3 Strong BUYs. Whoo-hoo! 56 Trend Leaders , all in strong up-trends according to Aroon, MACD and DMI. There are 18 new stocks that made today's list and 60 that fell off Tuesday's list. 48 Trend Busters of which 5 are BUY signals and 43 are SELL signals The view from Alert HQ -- Talk about mixed signals. If you look at our Swing Signals list you would think the market was in the middle of a big bounce. BUY signals are swamping the SELL signals and we even have a few Strong BUYs. Yes, there's a good sprinkling of tech stocks and tech ETFs but the distribution is pretty broad-based with a good number of different sectors represented, eve