Schaeffer's Trading Floor Blog

Final Figures

by 5/23/2005 5:04 PM
Stocks quoted in this article:

And while the chart in the previous post showed momentum slowed slightly into the close...

Index Index Value Point Change Percent Change
S&P 500 (SPX) 1193.9 4.6 points 0.39 percent
Dow Jones Industrial Average (DJIA) 10523.6 52 points 0.5 percent
Nasdaq Composite (COMP) 2056.7 10.3 points 0.50 percent
Russell 2000 (RUT) 612.9 3.5 points 0.57 percent
CBOE Market Volatility Index (VXO) 11.44 -0.72 points -5.9 percent

The bulls did score yet another "win", both in terms of hitting small gains on the day and in holding onto the recent gains.

Overall we see a positive bias on the day. While the broad market indices were "quietly higher", a number of sectors tagged the one percent mark. Gold stocks took the lead as they try to rally back from their recent lows. Oil related stocks also popped along with housing and internet. A few groups were lower on the day, but none significantly so.

Earlier today I talked about the XLE chart, which tracks the energy sector. The XLE did manage a close above that congestion zone it may now be headed for that upper rail where the action should be very interesting.

I should also note that even though today's gain on the SPX wasn't extraordinarily large, it was enough to surpass the high from early April. In other words, the bulls continue to make progress. As someone who believes in following the tape, I am finding it increasingly more difficult to disparage the bulls' efforts as they are slowing overtaking resistance. Yes, the "fear gauges" show complacency, but I have learned to respect the upside potential when the bulls have momentum on their side. And that is where I will pick up in the morning...

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Into the Close

by 5/23/2005 4:18 PM
Stocks quoted in this article:

Despite an afternoon buying spree...

Chart Courtesy of Thomson/ILX

...the bulls lost some momentum into the close as some late-day selling caused the indices to give back some of their gains.

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Stocks quoted in this article:

Here are today's top and bottom performing Exchange Traded Funds (ETFs)...

Top Performing Sector Exchange Traded Funds:

  • Energy Select Sector SPDR (XLE) = +1.87 percent
  • iShares DJ US Energy (IYE) = +1.82 percent
  • iShares GS Natural Resource (IGE) = +1.59 percent
  • Oil Service HOLDRS (OIH) = +1.48 percent
  • Internet HOLDRS (HHH) = +1.44 percent
  • iShares DJ US Basic Materials (IYM) = +1.26 percent
  • Materials Select Sector SPDR (XLB) = +1.04 percent
  • iShares DJ US Industrial (IYJ) = +0.97 percent

Bottom Performing Sector Exchange Traded Funds:

  • Financial Select Sector SPDR (XLF) = +0.21 percent
  • iShares DJ US Financial Svcs (IYG) = +0.20 percent
  • iShares DJ US Telecom (IYZ) = +0.09 percent
  • Utilities HOLDRS (UTH) = -0.01 percent
  • Regional Bank HOLDRS (RKH) = -0.02 percent
  • streetTRACKS Gold Shares (GLD) = -0.10 percent
  • iShares DJ US Utilities (IDU) = -0.14 percent
  • Utilities Select Sector SPDR (XLU) = -0.30 percent

As you can see, there is an upward bias as only a few groups trade lower on the day, and those losses are muted. The top performing group are mostly energy/materials related but the HHH did manage to slip in there...

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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Stocks quoted in this article:

Dave says - "Lets be frank and admit that this is a lousy trading market. What to do? Extending your time frame is one thing, but that is risky. Who will want to buy your stock in two days, or two years. I continue to like AIG because institutional investors receive a steady source of funds to invest, and they tend to like these situations."

My response - I want to post this question for two reasons. One, because it offers a chance to share a mutual frustration and two, because it gives us a chance to explore alternative views.

Without a doubt this has been a rough few months as the SPX sits at nearly the same level it was at in early December. The risk to extending your holding period can be mitigated by decreasing your trading size or by using options, but both of those will incur a cost. In this environment, I think it is important to focus on the type of stocks such as those I showed in last week's scan or those you can find in the Special Tool Kit filters but others may find a different approach more beneficial...

And along the lines that each person will need to develop an approach that fits their personality, I would have to respectfully disagree on AIG as I think that optimism is too high given the problems lurking (more information can be found here) but I am by no means saying Dave is wrong.

Trading is about applying a consistent edge. What works for one person may not work for another. And many times, trading is not about what you do right, but what mistakes you can avoid. In other words, you want a style that helps you trade away from your weaknesses. In this case, I see AIG as overloved so I would avoid it, but someone with a different analysis style may be able to make money with it.

As the old Wall Street saying goes, it is the differences of opinion that make a market...


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by 5/23/2005 2:13 PM
Stocks quoted in this article:

It looks like the bulls are starting to come alive as my alert for NYSE net ticks hit as the major indices pop to a new high for the session...

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