Skip to main content

A tiresome sidewise market - can tech lead it higher?

Stocks gyrated this week in response to the release of the latest FOMC policy statement and developments in Greece including the corresponding downgrade of Greek government bonds. Economic reports were mixed. The Producer Price Index (PPI) rose more than expected in November and that was looked on as negative inflationary news. The higher prices, however, weren't reflected in the Consumer Price Index (CPI) which was in line and implies price increases were not being passed on to consumers like you and me. Industrial Production beat expectations and Initial Jobless Claims rose for a second straight week while the moving average declined.

All in all, economic fundamentals were OK this week and how important is Greece, anyway? Yet stocks didn't do much. except for tech stocks and small-caps that did actually manage to show gains this week. So how are things doing from a technical analysis point of view?

The view from Alert HQ --

Charts of some of the statistics we track at Alert HQ are presented below:



This first chart presents our moving average analysis.The number of stocks above the 50-day moving average again declined a tiny bit while the number of stocks whose 20-day MA is above the 50-day MA increased a little. This has happened two weeks in a row so far but the changes have been so small as to almost be meaningless.And, not surprisingly, the market has more or less moved sideways.

The next chart provides our trending analysis. It looks at the number of stocks in strong up-trends or down-trends based on Aroon analysis.



Here we also see the effects of a sideways market. The number of stocks in strong up-trends has barely budged and neither has the number of stocks in strong down-trends.

Conclusion --

As we said last week, what little change in markets we have seen has been slightly bearish.On the other hand, the inability of the bears to make much headway I take to be a positive. It is clear from the charts above that stocks are not over-bought so there is plenty of room for stocks to rally.

The first of two holiday shortened weeks is upon us. With many traders on vacation, volume will likely be thin and stocks volatile.

Holidays or not, there will actually be few reasonably important economic reports this week including  the final revision to Q3 GDP, existing home sales, new home sales, personal income, personal spending, University of Michigan Consumer Sentiment Index, the usual weekly initial jobless claims and the Durable Goods report.

It seems like earnings season just ended but some earnings reports started to trickle out. last week. Tech stocks were the center of attention with Research in Motion (RIMM) and Oracle (ORCL) reporting better than expected results. This week, tech will again be in the spotlight with Jabil Circuit, Progress Software, Micron Technology, Red Hat, TIBCO and 3Com reporting. So for those of you who, like me, tend to focus on the tech sector, this week will provide a small preview of what's to come as 4th quarter earnings season plays out.

This seems like a good time for sector leadership to rotate. Healthcare, consumer staples and utilities have been leaders lately. These are typically not the sectors that lead significant rallies. With imminent passage of healthcare reform, it's not unlikely that this will slow down healthcare stocks. And with tech stocks grabbing investor attention this week, we could get a positive reaction if they turn in some good results.

After all, aren't we all tired of this sidewise market?

Comments

Popular posts from this blog

Unlock Stock Market Profits - Key #1

This is the first in an ongoing series of articles where I discuss what I feel are keys to successful investing. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

There are two basic steps to investing. First, you need to find stocks that seem to have some potential. Then you have to determine whether these stocks are actually good investments. There are many stocks that at first glance look interesting, but further research reveals that there are too many negatives to warrant taking a position.

This first post in the series starts at the beginning: getting good investment ideas.

Key #1: If something special is happening to a stock, it will be reflected in some kind of unusual activity in the markets.

As individual investors, we will never be the first to know; however, unusual activity can be an early sign that allows us to follow the Wall Street professionals and …

Unlock Stock Market Profits - Key #4

This is the fourth article in a series of posts describing 10 tools to help you identify and evaluate good investing ideas. It is based on a post that provides a summary of the ten keys that individual investors should use to identify profitable stock trades. (Click here to read the original post)

With this fourth post, we will continue another step along the path of finding stocks that seem to have some potential. The first post in the series discussed how to use unusual activity to identify investing ideas. The second post described how to use stock screeners. The third post described how to use lists of new highs and new lows. This post will focus on identifying social or business trends in order to find investing ideas.

Information on new trends might turn up anywhere. In conversation with friends or business associates, in newspapers or magazines, on TV or though your work. The key is to be aware of trends and how they start, stop or change. We'll start by describing what to lo…

Interactive Ads - Google one-ups Yahoo again

Google's (GOOG) press release describing the expansion of a beta program for what are being called Gadget Ads has again shown that Google is unparalleled at melding technology and advertising to benefit its bottom line. Gadget Ads are mini-web pages or "widgets" that can be embedded within publisher pages.

I have written in the past on Yahoo's (YHOO) Smart Ads and how, by more precisely targeting site users and adjusting ad content accordingly, they provide a much desired evolution of the banner or display ad format.

Though Smart Ads and Gadget Ads are not really the same, I think it is fair to say that Google has seen the challenge of Smart Ads and has chosen to leapfrog Yahoo by rolling out its own update to the display ad format.

The evolution of the Gadget Ad --

One of the trends on the Internet over the last year or so involves software developers creating "widgets" which can be hosted within web pages and blogs. Widgets can be pretty much anything that ca…