Churning Before The Explosion
A second day of back-and-forth-action, churning, at
the recent high in the major indexes, can be constructive. This type of
action can be healthy as it allows the market to digest recent, heady gains.
Consider where we’ve come from. Since the Sept. 21 lows, the Nasdaq
Composite is up 38%, the Dow is up 22%, and the S&P 500 is up 21%.
We suggest you have a look at the Futures Indicators
Pages every night. For there you will find valuable clues about potential
action in stock index futures, contracts that parallel their underlying cash
counterparts. If you’ve been looking there, you’ll have noticed that
December Nasdaq 100 futures
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List all month. Last night (the Futures Indicators Page for the following
day goes live on TradingMarkets.com by 7 PM ET), the Nasdaq futures
registered on the 6/100 Low Volatility
List. Stocks that go into periods of below-normal volatility are likely to
make larger-than-normal moves due to the mean reverting characteristic of
volatility. While the volatility differentials provided o the lists do not
suggest direction — only a large move either way — the Momentum-5
reading of the Nasdaq, as well as
New 10-Day Highs readings in S&P
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Dow futures
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higher.
Technology is off to a lower start after Applied
Materials
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last year. AMAT is down 4% at 38.92. The semiconductor index
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is off 2.3%.
Oil service stocks
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$OSX.X |
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hammered as OPEC’s market power crumbles in the wake of its inability to get
non-members to comply with output cuts to take supply off the global market
and drive prices higher. Nearby crude oil
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Mercantile Exchange is down nearly 10%, or 1.94 at 17.80. The oil service
index is off 11.39% and Global Marine
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Weatherford
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index down at least 5.7%.
Airlines
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sector after United
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UAL |
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cabin. UAL is up 5% at 12.51.
A slight drop in initial jobless claims is a positive
for the economy. So was yesterday’s record retail sales figure, which jumped
7% as consumers took advantage of Detroit deals to purchase cars with zero
financing.
Another sign of potential economic prosperity is
higher copper prices and steady gains in Phelps Dodge
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PD |
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PowerRating), one of the
world’s five big copper mining companies. PD is up 1.02 at 33.92 and has
added 23% in six days.