Watch Your Dollar
Okay,
we got through the day without another power outage,
which
is good. It gave me some time to go over some stocks and other
economic indicators which could shed some light on what might happen
to the markets. Well yesterday,
as you know,
the Semiconductor Index ($SOX.X)
broke below its 200 day moving average,
which is not to good for the markets.
Today I was looking at how
the US Dollar is performing against the Swiss Franc, Deutsche Mark and
the British Pound, however my focus is on the Dollar verses the Swiss
Franc. It looks like the Dollar could break support while the Swiss
Franc looks poised to breakout. This could be a very crucial juncture
for the US economy.
Why? Because a weak dollar
will make make global investors reevaluate the U.S. markets and its
strength. If they feel our markets are weak they could pull out their
money an reinvest in other vehicles outside the U.S. The Gold and
Silver Index ($XAU.X)
closed higher today as the U.S. dollar made a 3 month low against the
Eurodollar today.
Downey Financial (DSL)
looks like it could take out its pivot point on a second handle
formation. The Savings and Loan has a 5 year growth rate on earnings
increasing over the last 3 quarters (16%, 18% and 48%). The Savings
and Loan group has been one of the top performing groups over the past
few weeks.
Volume has been
drying up in the handle and is less than 10% away from its 52 week
high.
Resmed (RMD)
is basing. The medical products company has shown some nice earnings
growth (33%, 24%, 33% and 32%) with a 5 year growth rate of 40%. The
company closed off its highs but should continue to be monitored.
Among the ETF’s which showed
some strength in today’s session were led by the WEBS-Singapore
Benchmark (EWS)
which gained 1.3%.
Also moving higher in the
session was the WEBS-Mexico Benchmark (EWW)
which gained 0.9% and the Utilities HOLDRs
(UTH)
which moved up 0.8%.
In the red was the Morgan
Stanley Internet Streets Tracks (MII)
which fell 3.1%
The WEBS-Korea Benchmark (EWY)
slipped 3.0%.
And the Internet
Infrastructure HOLDRs
(IIH)
closed lower by 1.8%.
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.
Greg