Focus on commodity related stocks
It took just six trading
days from the 1268.42 3/8/06 time period low to hit 1310.45 on
3/16/06 and from there the next 11 days into the end of Q1traded in a range,
closing at 1294.83, -0.4% on Friday. The high close during this period was
1307.25 back on 3/17/06 and the intraday high at 1310.88 on 3/21/06.
The Q2 week-one new money bias is up with a six
trading day key time zone from 4/5 – 4/12. Some of the markup shares will be
sold this week in addition to some changes in portfolio weightings, so trading
can be erratic. Q2 starts with new highs in interest rates, consumer spending
and saving heading south along with the housing market, not to mention crude oil
pushing the $70 high zone. The $US backed off as the euro gained and gold hit
new 25-year highs. It is not hard to figure out why the commodity-related stocks
are strong and will remain that way as corrections will continue to be bought.
The leaders last week in the primary
sectors/groups were XAU, +6.2%, OIH, +3.0% and the brokers +2.0%. The losers
were the PPH, -2.9%, TLT, -2.5% and BKX, -1.5%. The internals ended Q1 neutral
with the 4 MA of the volume ratio 49 and breadth +84. The actual market moves
are getting shorter and trading range action longer. There continue to be
knee-jerk reactions to economic numbers, many of which are dubious at best.
There is basically nothing of reality that is not rising in price and has been
for quite some time, which renders the CPI all but useless in the real world as
it is changed, revised and kept artificially low to suit the government’s debt
requirements.
Traders should continue to favor the
commodity-related stocks, especially on all corrections.
Have a good trading day,
Kevin Haggerty