These 3 sectors continue to lead the market
The major
indexes finished mixed for the holiday-shortened week. Because of a lack of
major news and catalysts, equities struggled to find direction, while rallies
were unable to hold. This simply was a market that was unable to go up or
down. Precious Metal and Energy shares were able to reassume their leadership
roles, while Chip names continued to struggle to find direction. However, it
should be noted that small cap shares continued their winning ways, with the
Russell 2000 up roughly 9% so far for 2006.
Moving
forward, the key question to ponder is if the major indexes are topping, or
simply consolidating their recent gains. Optimism over the Fed stopping its
rate hikes has without a doubt stopped many from selling stocks. Also, the fear
of the Fed making dovish comments at any given time has also likely caused a
great deal of nervousness among the short seller crowd. But, on the other side
of the fence, the uncertainty over the future of monetary policy seems to be
holding the the equities markets back from making an explosive move to the
upside.
With the
real estate market clearly in a slowing down mode, the Fed continues to walk a
tight rope with regard to its bias towards future hikes. This is because we
won’t know the effects of the recent hikes for months to come. By that time, as
we saw in late 2000, it may be too late to prevent a recession and bear market
if it turns out that monetary policy was too hawkish. With the Fed Funds
futures now indicating that odds favor at least 3 more hikes, it may be some
time before any light is shed at the end of the tunnel.
Daily Pivots for 2-27-06
| Symbol | Pivot | R1 | R2 | R3 | S1 | S2 | S3 |
| INDU | 11052.54 | 11094.85 | 11127.86 | 11170.17 | 11019.53 | 10977.22 | 10944.21 |
| SPX | 1289.05 | 1292.49 | 1295.54 | 1298.98 | 1286.00 | 1282.56 | 1279.51 |
| ES H6 | 1291.42 | 1295.83 | 1298.67 | 1303.08 | 1288.58 | 1284.17 | 1281.33 |
| SP H6 | 1291.43 | 1295.77 | 1298.53 | 1302.87 | 1288.67 | 1284.33 | 1281.57 |
| YM H6 | 11075.00 | 11128.00 | 11168.00 | 11221.00 | 11035.00 | 10982.00 | 10942.00 |
| BKX | 107.20 | 107.74 | 108.15 | 108.69 | 106.79 | 106.25 | 105.84 |
| SOX | 525.06 | 527.27 | 529.99 | 532.20 | 522.34 | 520.13 | 517.41 |
Please feel free to email me with any questions
you might have, and have a great trading week!
Chris Curran
Chris Curran
started his trading career at the age of 22 with a national brokerage firm. He
combines fundamentals and technicals to get the big picture on the market. Chris
has been trading for 15 years, starting full time in 1997, and has never had a
losing year as a full-time trader.