Value Is Still Holding
Okay, the markets are very oversold, so we could see a bounce for the short
term. Looking at the economic data which was released today, it was not very
promising. The jobless rate climbed to 4.9% as the manufacturing sector slashed
113,000 jobs in August. The market dynamics are awful to say the least and we
should continue to watch how the broader markets behave. With the S&P
closing below its April low, we must watch the Nasdaq and Dow to see if they can
find some support.
In looking for opportunities, we can
see an inversion between the S&P 500 vs. the Russell 2000 Value
Index. The Russell 2000 Value Index has held up. So
for the time being, until market dynamics start changing in favor of growth
stocks, we should continue to look for momentum plays within the small- and mid-cap value
stocks.
In the energy sector, Remington Oil and
Gas
(
ROIL |
Quote |
Chart |
News |
PowerRating) is forming the handle to a multi-week base.
Looking at ETFs, the Internet
Infrastructure HOLDRs
(
IIH |
Quote |
Chart |
News |
PowerRating) rose 5.4%.
The iShares DJ Internet Trust
(
IYV |
Quote |
Chart |
News |
PowerRating)
climbed 2.9%.
Also gaining was the Broadband HOLDRs
(
BDH |
Quote |
Chart |
News |
PowerRating), which closed up 0.8%.
Plenty of red in the fund watch,
leading the way was the iShares DJ Consumer Cyclical
(
IYC |
Quote |
Chart |
News |
PowerRating), which fell 3.9%.
The Cyclical/Transportation Select
Sector
(
XLY |
Quote |
Chart |
News |
PowerRating) slipped 3.6%.
And the Internet HOLDRs
(
HHH |
Quote |
Chart |
News |
PowerRating)
closed lower 4.9% as it descends down the right side of a multi-week inverted
cup.
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,