RSSCatalyst Needed to Push Broad Markets Higher
By Jim Farrish | August 14, 2008 | 8:56 AM | 0 Comments
200 day moving average is coming into play for the leading sectors. This is the next hurdle for investors in this bounce of the July lows. We have discussed the retracement towards the May high and we are half way there with some indexes such as the S&P 600 small cap index retracing more than 90%. We need a catalyst to push the broad markets higher or we may start to test the bounce.
Oil moved higher on the supply data yesterday removing the perceived benefit to the market in trading. Oil Services (NYSE: OIH) moved up more than 4% on the day. Support at $180 is trying to hold. This sector has sold off more than 18% since the July 1st high. The general consensus is for a bounce and yesterday may have been the beginning? Energy (NYSE: IYE) made a similar move gaining more than 3% on the day, but volume was well below the average. This sector is like waiting for water to boil, you know eventually it will happen, but there are too many eyes watching it. Be patient.
Retail ran into below expected sales data. This led to some selling across the sector. However, it was less than I would have expected showing some optimism from investors towards the consumer. Despite the data this sector continues in an uptrend and is defying logic to some degree. (NYSE: RTH) managed a gain on the day while (NYSE: XRT) produces a loss. This is a result of weighting and exposure by each ETF. XRT is the SPDR for the S&P retail sector overall and more diversified giving a better overall picture of the sector. RTH on the other hand is 22% Wal-Mart and 11.2% Home Depot. Worth watching near term to see how this play out.
The bulls are picking up some steam with the number of bullish investors picking up to 34% from the low of 27.8% in July. The bears are falling as well to 43.6% from a high of 50.1% in July. We are still a ways from the bulls controlling the outlook. This is reflected in the trading data as well as the intraday swings in pricing. This is still a bear market so play with caution, cash is still king.
| 
|
