Watch These Momentum Sectors For Leadership

  • August 13, 2002
  • Daniel Beighley

Paul Letourneau
will be writing the Stock Market Recap this week while Daniel Beighley is on
vacation.

As expected, the Federal Reserve left interest
rates unchanged today, turning down requests to jump-start the
sputtering economy while offering that it is positioned to cut rates if
conditions in the overall economy don’t improve. 

According to the Fed, the slow growth in the U.S. economy has been
caused primarily by weakness in the financial markets and increased uncertainty
related to problems in corporate reporting and governance. After that report,
the central bank shifted its policy statement to say that economic weakness is
the greater risk to the economy than inflation. That move leaves the door open
for future cuts. 

Since March, the central bank has said the risks were balanced, adding that “still-robust underlying growth in productivity,”
along with interest rates at 40-year lows, should be enough to drive the
economic recovery.

These comments initially sent the market down
slightly, then the markets regained their traction. Then within the last hour of
trading, the major indices sold off. For most of the session the major indexes
were edging higher, with the Dow
(
$INDU |
Quote |
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PowerRating) trying
to break above its resistance at 8736. By the time the dust settled and all of
the talk was done, the Dow ended down 206.50 to close at 8482.39.

The
S&P 500
(
$SPX.X |
Quote |
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News |
PowerRating) was close to breaking through a recovery high around 911.62. It looked that way for a while, but after the Fed report, the
S&P retreated to the support level of 907 to 902. From there it weakened
at the last hour and fell further to 884.21, a loss of 19.59 on the day.

The Nasdaq
(
$COMPQ |
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PowerRating) initially
started out very strong and seemed to have the potential to close positive after
trading in the positive zone and hitting the intraday high at 1325. Then, like
the other markets, the Nasdaq sold off in the last hour of trade. The Nasdaq
closed at 1269.32, down 37.52.

Some of the sectors that helped buoy the markets
for most of the day were: Semiconductors
(
$SOX.X |
Quote |
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PowerRating), Storage,
Telecom Equipment, Banks
(
$BKX.X |
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PowerRating), Brokerage
(
$XBD |
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PowerRating),
Retail
(
$RLX.X |
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PowerRating), Airline
(
$XAL.X |
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PowerRating) Oil Services
(
$OSX.X |
Quote |
Chart |
News |
PowerRating) and Beverage.

The lagging sectors were: Integrated oil,
Drugs, Rail, Biotech, Advertising, Aerospace and Utilities.

Apria Healthcare
(
AHG |
Quote |
Chart |
News |
PowerRating) is
pulling back from its recent high. AHG carries a

3-month
relative strength rank of 92 from TradingMarkets.com

UCBH Holdings
(
UCBH |
Quote |
Chart |
News |
PowerRating) is making a
60-day high with double the normal volume. UCBH has a

TradingMarkets.com RS3 rating of 89. We could see UCBH pullback to test
its support at UCBH at 40.70.

Doral
(
DORL |
Quote |
Chart |
News |
PowerRating) is breaking out above
its resistance line (40) with unusually high volume. Doral is pulling back from
the high. A possible trigger could be of Doral pulls back to the 40 support
line.

Icos Corp
(
ICOS |
Quote |
Chart |
News |
PowerRating) is breaking out of a
cup-and-handle with increasing volume. Icos has a

TradingMarkets.com RS3 rating of 98 and an up trending

ADX of 32. Icos looks to be pulling back from the high. A possible
trigger will be if ICOS tests the 24.50 support. I

Guidant
(
GDT |
Quote |
Chart |
News |
PowerRating) is forming a cup-and-handle pattern on the daily chart. GDT has a

TradingMarkets.com RS3 rating of 96 and an up trending

ADX of 32.

Best Buy [BBY|BBY] is moving in a
counter trend rally on the daily chart. BBY is holding a


3-month
relative strength rank of 14 from TradingMarkets.com.

Teva Pharmaceutical
(
TEVA |
Quote |
Chart |
News |
PowerRating) is hitting
a 60-day high with increasing volume. Teva has a

TradingMarkets.com RS3 rating of 90.

Fossil
(
FOSL |
Quote |
Chart |
News |
PowerRating) is rallying up higher
with unusually high volume. Next resistance is at 19 to 20.

NASDAQ Breadth

Adv: 1103 UpVol: 18018894

Dec: 2276 DnVol: 118999010

Net: -1173 Net: -100980116

NYSE Breadth

Adv: 1023 UpVol: 21979634

Dec: 2226 DnVol: 104156410

Net: -1203 Net: -82176776