Schaeffer's Trading Floor Blog

Still Sliding

by 4/8/2005 2:24 PM
Stocks quoted in this article:

The bulls continue to struggle to hold the ground they earned this week...


Chart Courtesy of Thomson/ILX

Another bout of selling has pushed the major indices to new session lows. The SPX is now creeping in on short-term support near 1184 which as I said earlier was Wednesday's closing level and yesterday's low...

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Stocks quoted in this article:

Things are still relatively quiet. A NYSE net ticks spike hit recently but nothing really came of it as the indices appear to be basing near their session lows. Here are today's top and bottom performing Exchange Traded Funds (ETFs)...

Top Performing Sector Exchange Traded Funds:

  • iShares Lehman 20+ Year Treas Bond (TLT) = +0.32 percent
  • iShares C&S Realty Majors (ICF) = +0.30 percent
  • iShares GS Semiconductor (IGW) = +0.22 percent
  • streetTRACKS Gold Shares (GLD) = +0.19 percent
  • Wireless HOLDRS (WMH) = +0.09 percent
  • Semiconductor HOLDRS (SMH) = +0.09 percent
  • iShares GS Networking (IGN) = +0.04 percent
  • iShares DJ US Cons Goods (IYK) = +0.02 percent

Bottom Performing Sector Exchange Traded Funds:

  • iShares Russell 2000 Index (IWM) = -0.81 percent
  • Energy Select Sector SPDR (XLE) = -0.83 percent
  • iShares DJ US Basic Materials (IYM) = -0.82 percent
  • Materials Select Sector SPDR (XLB) = -0.82 percent
  • Biotech HOLDRS (BBH) = -0.83 percent
  • iShares DJ US Energy (IYE) = -0.96 percent
  • Oil Service HOLDRS (OIH) = -1.06 percent
  • iShares DJ Transportation Average (IYT) = -2.40 percent

As you can see, the top performing groups are barely above breakeven. The bottom performing list reflects the weakness we already noted on the small caps and transports while we also see some declines in oil services and energy.

Note: If you are not familiar with ETFs, make sure you read the Education and FAQ sections in our ETF center.

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Index Check

by 4/8/2005 12:39 PM
Stocks quoted in this article:

Updating my index chart....

We see an all around negative bias with only gold and gold stocks showing gains at midday...perhaps the most interesting aspect is that oil is leading the charge lower...oil stocks are relatively flat while natural gas concerns pull back...small caps (RUT) are struggling...

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Lunch Time!

by 4/8/2005 12:03 PM
Stocks quoted in this article:

We enter the noon hour with the bulls struggling to hold their ground...


Chart Courtesy of Thomson/ILX

While we aren't there yet, a level to watch is 1184 - which was Wednesday's closing level and yesterday's low...

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In response to my post below - Readers Respond - Another Perspective, Mike says - "Thanks to you and Joe for the article. Quite interesting. [text removed] The article is interesting...but begins to raise another thought: the more a piece of information is circulated, the less effective it tends to become (can you say, "VIX"?). I hope less, and not more, articles focus on the sentiment factors mentioned, or else everyone will be trading off them to no one's benefit! Thanks again and have a great weekend."

My response - . While I normally try to post emails "as is", I needed to remove a portion of the email. Let's just say that Mike was very complimentary of the author's appearance...

I did want to post his comments because he brings up a good point in that individual indicators can seem to lose their effectiveness when they become widely popular. However, one of the points that stood out to me is that this article is not typical of what you see from the Street. In other words, while this is a good concern to be aware of, I am not sure we are moving to a point where sentiment as a whole is widely accepted.

I also want to quickly touch on the VIX as that is another topic worthy of discussion. While this can certainly be debated, from my perspective I am not sure I would call the volatility indices "less effective". I don't think of them in terms of direct impact but that they are best used as one gauge of underlying complacency. And just because investors are complacent, it doesn't mean the market has to go down. It just raises the risk level and acts a warning sign to be cognizant of what else is going on.

The low volatility readings are being explained away and I have even seen some argue they are bullish. There also appears to be a contingent out there that continues to believe that selling volatility is still the way to go - even at low levels. I think this just adds to the risk as complacency has a tendency to be followed by blow-ups as investors begin to believe that nothing bad can happen. As Bernie has said before - it usually comes under the heading of - no one could have predicted that...

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