Stimulative Actions Needed
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Although the
past couple of trading sessions were positive, we would ideally like
to see some other signs that will insure the markets can maintain a longer term
rally:
a number of follow–through
days, better fundamentals and increase in insider buying.
One negative note is the Conference
Board’s Leading Economic Indicator,
which had broken into positive territory broke down back into negative territory
based on the August numbers. This indicates to me that our hopes for a recovery
will be delayed until all other facets of the recovery come into play
(fundamentals, follow through days etc.). We will need some additional policy
moves to help stimulate the economy.
Looking at some stocks setting up for
momentum plays, Hollywood Entertainment (HLYW)
is forming an ascending symmetrical triangle.
On the short side, American Power
Conversion (APCC)
is pulling back off its low, but closed week. Earnings growth has been down on a
year over year basis over the last 4 quarters (-6%,
-41%,
-42% and -38%).
Looking at some ETFs, the iShares S&P
TSE 60 Index (IKC)
gained 5.5%.
The iShares Australia Index (EWA)
closed higher 5.2%.
And the WEBS-Italy (EWI)
tacked on 4.4%.
Losing ground was the Telecom
Brasileiras (TBH)
which slid 5.4%.
The WEBS-Korea Fund (EWY)
fell 4.6%.
And the Oil Service HOLDRs (OIH)
closed lower 3.4%.
The Technology Select Sector (XLK)
has pulled back off its low and closed weak today. It looks poised to resume its
trend down.
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.
Greg