Very short-term overbought
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The
Generals’ markup into the six-month report card ending
6/30/06 started from a short-term oversold condition with both the SPX and $INDU
at their 377-day EMAs. Based on Monday’s SPX close of 1280.19, the index has
advanced +5% off the 6/14/06 1219.29 low. The commodity sector stocks led the
markup, in addition to transportation, brokerage and a handful of "ATL" (above
the line) stocks, where Px > 20 > 50 > 200 starting the markup. The few NDX 100
ATL stocks like Garmin
(
GRMN |
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PowerRating), Paccar
(
PCAR |
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PowerRating), Sigma-Aldrich
(
SIAL |
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PowerRating),
Expeditors International
(
EXPD |
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PowerRating), Intuit
(
INTU |
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PowerRating) and C.H. Robinson
(
CHRW |
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PowerRating) all made new rally highs, so traders should be heads-up for a quick
downside retracement in these stocks. The Generals accomplished the markup at
the same time the CRB, Gold, silver and interest rates all advanced, while the
$US declined. It’s a great game, and the casino is controlled.
Monday was an early close, with NYSE volume at
763 MM, only 45% of last week’s average volume. The index proxies hardly traded,
with both the DIA and QQQQ < 15% of the 30-day average volume, as were the OIH
and XLE. The SPY traded 25% of its volume, and the SMH 20%. The trading was thin
and the SPX was +0.8% to 1280.19 and $INDU +0.7% to 11,228. The volume ratio was
71 and breadth +1354. The SPX and $INDU have approached the initial significant
retracement level to their bull cycle highs and the market is very short-term
overbought, so I would expect some more selling into the retracement zone after
maybe some more new July money is allocated.
Have a good trading day,
Kevin Haggerty
