Skip to main content

Weekly Market Update - bulls trying for a comeback

Weekly Market Call

There is no doubt investors were more optimistic this week. All the averages put in strong showings with all but the Russell 2000 racking up more than 2% gains.

The week was reasonably free of bad news so investors had an opportunity to focus on what good news there was: durable goods orders surged and new home sales for July surprised to the upside. Bank of America taking a stake in Countrywide Financial was looked at as a vote of confidence that the worst in the real estate sector might be over. The VIX eased and so did Treasuries.

This is not to say that there weren't some disappointments this week. There were more announcements of other lenders with liquidity problems (Thornburg Mortgage) and a number of financial firms closing their mortgage units altogether or announcing layoffs.

There was a bit of merger news to remind investors of the good old days. E*Trade and TD Ameritrade are said to be talks, Rio Tinto is still bulking up for acquisitions and the Dubai government is buying into the MGM Mirage.

It was a pretty good week but there is still considerable uncertainty and a continuing tug of war between the bulls and the bears. To help investors figure out the direction from here, we will see a big list of economic news released this week: Existing Home Sales, Consumer confidence, FOMC minutes to dissect, Initial Jobless Claims, Core PCE, Chicago PMI, Factory Orders and so on.

ETF Comments

Indexes: Using the TradeRadar software to look at the ETFs corresponding to the major averages (DIA, SPY, QQQQ and IWM), we see pretty much the same story across the board -- they all remain in the TradeRadar SELL zone. Looking to see if the recent upturn has been enough to generate a new BUY signal since the market peaks back in July, we see only very weak signals that under normal circumstances would not be actionable. It is clear that an up trend has not yet been firmly established.

Financials: XLF and KBE are deeper in the SELL zone than the major averages. KBE has bounced back sufficiently to generate a BUY signal that is weak but not as weak as those mentioned above. Is KBE getting ahead of itself or is it a leading indicator?

Real Estate: There is still no hope for the homebuilders and XHB shows little in the way of establishing a bottom. REITs have been somewhat firm, however, and we see IYR, though still in the SELL zone, sporting a weak but very sharp BUY signal when looking at the price action starting in February. According to our guidelines it is too weak to be actionable but it makes me wonder if it's time to take our profits in SRS, the inverse REIT ETF.

TradeRadar Stock Picks

Our bullish picks were mostly up and our bearish picks were down but not out. To see more detail on the portfolio of TradeRadar Stock Picks, please visit the Track Profit & Loss page at trade-radar.com
Labels:

Comments

Post a Comment

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 ...
4 comments
Read more

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:   https://tradingstockalerts.com/software/downloadpatch Contact us if you have questions or identify any new issues.
Post a Comment
Read more

Time to be conservative with your 401K

Most of the posts I and other financial bloggers write are typically focused on individual stocks or ETFs and managing active portfolios. For those folks who are more conservative investors, those whose main investment vehicle is a 401K, for example, the techniques for portfolio management might be a little different. The news of stock markets falling and pundits predicting recession is disconcerting to professional investors as well as to those of us who are watching our balances in an IRA or 401K sag. What approach should the average 401K investor take? Let's assume that the investor is contributing on a regular basis to one of these retirement accounts. There are two questions that the investor needs to ask: 1. Should I stop putting the regular contribution into stocks? My feeling is that investors making regular contributions are being handed a present by the markets. Every week the market goes down, these investors are lowering their average cost. When markets reco...
7 comments
Read more