Techs Rally, Utilities Break Out
An upbeat speech
from Federal Reserve Chairman Alan Greenspan Tuesday cheered
the tech and rate-sensitive utilities funds. The drug sector
also turned higher.
Exchange-Traded
Funds
The tech funds
took the session’s largest percentage rewards but remained
range-bound. The Merrill Lynch Semiconductor HOLDR
(
SMH |
Quote |
Chart |
News |
PowerRating)
rose 4.2%, the day’s biggest improvement in the
exchange-traded funds. The Nasdaq 100 Tracking Stock
(
QQQ |
Quote |
Chart |
News |
PowerRating)
added 4.0%, Biotech HOLDR
(
BHH |
Quote |
Chart |
News |
PowerRating) 3.8%, Internet
Infrastructure HOLDR
(
IIH |
Quote |
Chart |
News |
PowerRating) 2.8%, and Technology SPDR
(
XLK |
Quote |
Chart |
News |
PowerRating)
2.4%.
src=”https://tradingmarkets.com/media/images/fundmovers/fundmovers061300-04.gif”
width=”470″ height=”320″>
More interesting
was the action in the Merrill Lynch Pharmaceutical HOLDR
(
PPH |
Quote |
Chart |
News |
PowerRating).
The fund advanced 3.8%, breaking above resistance along its
50-day moving average.
src=”https://tradingmarkets.com/media/images/fundmovers/fundmovers061300-01.gif”
width=”470″ height=”320″>
Among the tradable
fund’s component stocks, Merck
(
MRK |
Quote |
Chart |
News |
PowerRating) rose 3 1/2 to 73
7/16, Pfizer
(
PFE |
Quote |
Chart |
News |
PowerRating) 1 15/32 to 45 27/32, Johnson &
Johnson
(
JNJ |
Quote |
Chart |
News |
PowerRating) 3 29/128 to 88, Eli Lilly
(
LLY |
Quote |
Chart |
News |
PowerRating) 2 1/2
to 80 3/4, and Warner-Lambert
(
WLA |
Quote |
Chart |
News |
PowerRating) 2 13/16 to 125 7/8.
In most of the drug gainers, volume was average to sub-par.
The Utilities SPDR
(
XLU |
Quote |
Chart |
News |
PowerRating) picked up 2.2%, clearing a six-week base.
src=”https://tradingmarkets.com/media/images/fundmovers/fundmovers061300-05.gif”
width=”470″ height=”320″>
The Mexico WEBS
fund
(
EWW |
Quote |
Chart |
News |
PowerRating) remains in a downtrend, but it appears to be
forming a complex head-and-shoulders bottom. The fund, aided
by the Mexican economy’s sensitivity to U.S. interest rates,
added 3.2%, the biggest gain among the World Equity
Benchmark Shares series of exchange-traded funds.
src=”https://tradingmarkets.com/media/images/fundmovers/fundmovers061300-02.gif”
width=”470″ height=”320″>
Barclays Global
Fund Advisors operates 17 WEBS funds. Each tracks the index
of a specific country. Each WEBS series follows the foreign
equity securities index compiled for that country by Morgan
Stanley Capital International. They are traded on the
American Stock Exchange. For more on WEBS funds, check out
my tutorial on these securities in the Knowledge
Center.
The German WEBS
fund
(
EWG |
Quote |
Chart |
News |
PowerRating) seems to be forming a handle just below its
mid-level at 25 31/32. This is a make-it-or-break-it level
for the fund as we’ll watch the fund to see if it forms a
typical 50% retracement before rolling over or punches
through the resistance level.
src=”https://tradingmarkets.com/media/images/fundmovers/fundmovers061300-03.gif”
width=”470″ height=”320″>
For long momentum
trades, I steer clear of stocks that are priced below their
mid-levels on the assumption that they are weighed down by
too much overhead supply. Overhead supply is the
amount of shares in the hands of shareholders with paper
losses. These weak holders tend to look for exits and
sell into rallies, blunting further share-price progress.
You can find a stock’s mid-level by summing the
pre-correction high and the post-correction low, then
dividing the result by 2.
On the downside,
the Basic Industries SPDR
(
XLB |
Quote |
Chart |
News |
PowerRating) forfeited 2.9%, sinking
to its lowest close since March 14. It was the largest loss
Tuesday among the exchange-traded funds.
src=”https://tradingmarkets.com/media/images/fundmovers/fundmovers061300-06.gif”
width=”470″ height=”320″>