Schaeffer's Trading Floor Blog

At the Open

by 5/2/2005 9:47 AM
Stocks quoted in this article:

The trading week has officially begun and here is what I see...

As indicated by the pre-open futures action, we see a positive bias at the open....housing is taking the lead but it is a very close race...semis and internet lagged Friday's action so it is worth watching to see if this morning's bounce holds...brokers are under pressure as turmoil at MWD continues and UBS downgrades a number of major players...gold stocks have yet bounce from their recent lows...

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Stocks quoted in this article:

Stuart says...in a manner of speaking... - "Take a look at the utilities group...Take a look at the utilities group...Take a look at the utilities group..."

My response - Actually, he sent me a string of emails pointing to the performance and profile of a number of utility stocks. At times, I can be "less-than-astute" so his persistence was needed. Later on today I will delve into a few stocks from the group, but I wanted to start by noting the weekly chart of the Utilities HOLDRS (UTH)...


Created with SuperCharts by Omega Research

I have added in the red channel and the 20-week moving average to help describe the recent trend. There aren't too many sectors that I can think of that show such a steady uptrend in this environment. Also note how the group has been consolidating near the upper edge of the channel.

In theory this should act as an area of resistance but the fact that the group has not been rejected may hint that buying pressure is building relative to what has been the case in this trend. In other words, the group may be poised for a breakout...

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Into the Open

by 5/2/2005 9:07 AM
Stocks quoted in this article:

Shifting from the long-term view in the post below...lets note what the pre-open action looks like...

S&P futures are still holding roughly three points above fair value so it looks like we are set for a positive open. Gold has continued to weaken as it now trades down 2.70. Oil has ticked higher but remains below 50.

A scan of the headlines shows the chatter is already turning to tomorrow's FOMC meeting while oil below 50 is being given credit for this morning's pre-open rally...

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Stocks quoted in this article:

Having read the article in the post below, I now want to turn your attention to the monthly chart of the SPX...


Created with SuperCharts by Omega Research

Here we see the support/resistant zone that we have been discussing for some time. I have also added the 20-month moving average which provides one way to gauge the long-term trend. Friday's close marked the end of April and gave us a monthly close that was mired in that long-term support/resistant zone and perched precariously above the 20-month trendline.

As Bernie noted in his post, the bulls don't see a reason to be concerned while the bears seem on the Street aren't forecasting major declines.

Why is this worth noting? Because the monthly chart above shows we are at a critical juncture. The SPX has not traded below the 20-month average since the bear slide that followed the bubble pop but few seem to be braced for a continuation of the recent downtrend, which sets the stage for negative surprises...

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Must Read

by 5/2/2005 8:38 AM
Stocks quoted in this article:

I have been trying to assimilate all of the comments that I saw and heard over the weekend...But perhaps the best summary can be found in Bernie's most recent commentary - "Déjà vu All Over Again: Happy Bulls, Complacent "Bears"".

If you have not read this piece yet, stop reading this post and click on that link now...Seriously...Go ahead, I'll wait...

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