I feel it’s best to maintain a long bias

  • June 26, 2006
  • Chris Curran


The major indexes ended up modestly lower last week in
what turned out to be a rather quiet week of trading.  Aside from a
sharp rally on Wednesday, the equities markets traded with a negative bias. 
There seemed to be a number of factors behind the lackluster action of stocks,
including summer vacations, caution ahead of next week’s FOMC meeting,
nervousness over earnings warnings, and another rise in long rates.  Overall
though, there wasn’t much damage done as most stocks seemed to spend the last
five days just marking time.  Energy shares were the strongest group, while
underperformance was seen in Healthcare names.

Moving
forward, the big market mover for the week ahead will be Thursday’s Fed
announcement.  At the moment, it’s unclear what the Fed will say following a
widely expected rate hike.  However, the uncertainty could be cleared up with
key Housing data due out Monday and Tuesday.  While there is a lot of talk how
the Fed fears inflation, I would guess that Mr. Bernanke’s biggest fear is
Housing.  The lending behind the current Housing market is simply too vulnerable
for the Fed to be comfortable maintaining a hawkish posture beyond Thursday’s
meeting.  With that said, I feel it’s best to maintain a long bias in my
trading.  Patience may be required, but eventually I would expect to see another
sharp “Fed is done” rally.

                           

Daily
Pivot Points for 6-26-06

Symbol Pivot       R1 R2 R3 S1 S2 S3
INDU 11012.25 11051.10 11113.11 11151.96 10950.24 10911.39 10849.38
SPX 1246.35 1251.28 1258.05 1262.98 1239.58 1234.65 1227.88
ES M6 1256.83 1262.67 1269.83 1275.67 1249.67 1243.83 1236.67
SP M6 1256.87 1262.63 1269.77 1275.53 1249.73 1243.97 1236.83
YM M6 11091.33 11135.67 11197.33 11241.67 11029.67 10985.33 10923.67
BKX 105.54 106.02 106.55 107.03 105.01 104.53 104.00
SOX 446.21 449.28 453.16 456.23 442.33 439.26 435.38

Please feel free to email me
with any questions you might have, and have a great trading week!

Chris Curran