Still Cautious…But Optimistic
Well
we ended the week on an up note, but does this mean good
times are due the markets? Not taking any particular side, but
in reviewing the FOMC minutes of the June meeting, it seemed to
indicate that Federal Reserve Board members were in agreement that the
policy enforced by the Fed was already "stimulative,"
even before the 25 basis point cut.
In addition the group
consensus was that the earlier rate cuts have not taken full effect on
the markets. That sound pretty good to me. So when will we feel the
full impact of these rate cuts? Well in the past it has taken between
6 to 18 months for the economy to reap the rewards of these moves.
Right now we know its not 6 months, so our next benchmark will be the
end of this year….in time for a Santa Claus rally.
Until then, let‘s
just trade with caution,
using tight stops and adjusting position size.
Global Imaging Systems (GISX)
after making a new high 2 weeks ago looks poised to testing that level
once again. The stock in the high range of its ascending triangle.
Syncor International (SCOR)
continues to scale up its right side of its multi–week
cup. The radiopharmaceuticals service provider is showing some
impressive earnings and sales growth on a quarterly basis.
Steris Corp (STE)
looks interesting on a technical basis. It is in a low–volatility
situation and has formed a multi week symmetrical triangle. An
explosive move in either direction is imminent.
Looking at some ETFs the
Internet Infrastructure HOLDRS (IIH)
gained 6.8%.
The Biotechnology HOLDRS (BDH)
shot up 5.5%.
And the Semiconductor HOLDRS
(SMH)
closed up 5.4%.
On the downside, the
Regional Bank HOLDRS (RKH)
lost 1.1% as the fear that the Federal Reserve Board is nearing the
end of the easing cycle.
Also losing was the iShares
DJ U.S. Real Estate Index (IYR)
which fell fractionally 0.9% as did the WEBS-Austria Benchmark (EWO)
which closed off 0.8%.
Remember that all securities
are risky. In any trade, you should always reduce your risk by
adjusting position size and placing open protective stops where
you will sell your long or cover your short in case the market turns
against you. For an introduction to combining price stops with
position sizing, see Loren’s lesson, Risky
Business.
Have a great
weekend.
Greg