Defending Their Positions
Stocks are defending six weeks of gains that have taken
the majors up between 20% and 39% since Sept. 21. When markets hold torrid
advances with just small losses or narrow gains, as they have been doing since
the middle of last week, that is constructive because it allows the market to
work off steam, catch up, and gain energy for the next leg up.Â
A series of flatline days or days of small advances have
placed indexes in Low Volatility setups, situations that anticipate a
larger-than-normal move is in store. You can check for these setups in equity
index futures every day on TradingMarkets.com’s 6/100
Low Volatility, 10/100
Volatility Explosion, and Multiple
Days Low Volatility lists.Â
The Dow is up 46 at 9913, the Nasdaq is up 12.06 at
1910.61, and the S&P 500 is up 4.56 at 1143.22.
In the only major economic report today, US housing
starts fell less than expected, and that is market positive because it suggests
the Fed’s ten interest rate cuts this year are working. Low interest rates are
positively correlated with homebuilding.Â
Alcoa
(
AA |
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PowerRating) is one of the biggest gainers on the Dow
after the aluminum giant said it would lay off about 5% of its work force. Most
of the layoffs will be in Europe, but the company is also shuttering a
Pennsylvania plant. The cost-cutting move is working to boost its share price,
up1.02 to 38.16.
TradersWire Interactive reported that “Pharmacia
(
PHA |
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PowerRating) gapped open (held) at its highs in a Slim Jim
formation, up 2.55 at 43.90″ after the drug maker got approval for an
arthritis drug and was upgraded. The stock has rallied an additional $1.10 since
the post and is currently up 3.52 at 44.87.Â
Airlines
(
$XAL.X |
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PowerRating) continue surging in a vote of
confidence for the Senate’s passage of an aviation security bill that would put
control of security in the hands of the government for the next three years.
Armed air marshalls will also be on planes. United
(
UAL |
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PowerRating) is up 71% off its
low from five days ago. US Airways [U]U] has more than doubled to 8.74.
The continued rally in speculative sectors signals that
many traders believe it’s safe to be back in the water. The Internet sector
(
$GIN.X |
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PowerRating)
is up 27% since the beginning of this month. Network Associates
(
NETA |
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PowerRating) is
trading at a 52-week high and just bolted out of a Slim Jim, now up 1.55 at
23.45.
In other sectors, networkers
(
$NWX.X |
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PowerRating), up 2.42%,
and security broker/dealers
(
$XBD.X |
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PowerRating), +1.62%, are rallying, while the
market is being restrained by semiconductors
(
$SOX.X |
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PowerRating), down 2.82%.