Biotechs...

The S&P 500 Biotech industry looks like it is about to rally. Viewing the chart above, you will notice that the current price action is above the recent downward trend line from 2003 to 2005. The industry is also in a consistent upward rally since 2002. (BOTH YELLOW TREND LINES)

If corporate earnings remain solid in this group, testing the resistance levels (PURPLE LINES) will be the first test for the rally to continue. Look for the group to hit the 969.33 followed by 1012.71. Downside risk is 816.46 followed by 802.17.

As earnings season is in full swing, the market is reacting very positively on good earnings reports and fairly harshly on bad earnings reports. While this continues, expect the status quo. We still have a huge international issue going on in the Middle East. The Israel-Hezbollah War, Iran and Korean nuclear issue, and possible other fronts are all going to come back into the forefront once this earnings season is over.  ¶ 11:46:00 AM 0 comments

  Airlines....
The S&P Airline Sector has been in a major slump for the last 2-3 years. For obvious reasons (including 9/11, reduced consumer flying, as well as carrier financials) the sector has seen stagnate money flow. Recent technical indicators might suggest something is about to happen. Take a look at the weekly chart above and you will notice that the sectors Bollinger Bands have been flat over the last couple of months, both on the top and bottom bands. This suggests that there is ample pressure from both the sellers and buyers. It is a tug of war to see who will win. Further analysis points to an increasing RSI. The latest dip in May-June has led to a bullish divergence. There has been strength in the downturn in question which is a major signal for a possible rally.

Some names to watch in this group are:

MAIR - MAIR Holdings Inc.
LUV - Southwest Airlines
MESA - MESA Air Group
XJT - ExpressJet Holdings Inc.  ¶ 12:03:00 PM 0 comments

  DIA and SPY

Above are the weekly charts of the Diamonds (DIA) and Spiders (SPY). We can see right off the bat that support is being or about to be tested. With earnings season under full swing, and the international front still taking the front burner, it will be time to tell what these indices will do. While approaching support, buyers are still wary of what the short-term future holds for equities. Caution is the rule of thumb at this juncture. If prices break support levels, look for massive amounts of selling with pick up in short interest.

Also, higher temperatures across much of the US as well as heading in to Europe should push utilities higher. We are heading in to the dog days of summer and a international situation brewing. Remember, not only is the situation with Israel and Palestine happening, we also have the continued nuclear threat from Iran and North Korea. Do not expect these issues to be over anytime soon. Again, caution is the main idea here.  ¶ 8:46:00 AM 0 comments

  All is NOT well on the international front...





The Middle East about to undergo major warfare if the current situation is not resolved shortly. And by the looks of it, nothing is done to abort this escalation. The Israeli and Palestinian confrontation is being forced into a major turning point in which a war would be the outcome. Considering the news from the last 2 weeks, ALL IS NOT WELL ON THE INTERNATIONAL FRONT.

Earnings play aside for now, the major focus of the global markets is reacting to the developments in North Korea, Iran, India, Israel, Palestine, Lebanon, and Syria. Major tensions are being played out between the Israelis and Palestinians, with a possible Iran connection (click on title of this post!). Debka.com is suggesting that Iran is trying to force a Middle East war scenario before going into the G8 Summit in Russia. If this plays out to be true, it only reinforces the speculation among the Western World that Iran is buying time to build nuclear weapons and will stop at nothing to get it done.

As this all plays out, political instability in the world is causing uncertainty in the markets. As the earning season is jut underway, look for this issue to put a hold on the markets for the next month or so. Commodities are starting to rally as all sectors have been down today. Gold and Oil charts above are hinting at pending rallies as they might break resistance levels.  ¶ 3:50:00 PM 0 comments

  Updated Utilities...


Utilities are looking very good here.
As we see from the charts above, the group looks to be in a break out rally stage. Money is flowing into the group as international tensions still play a role on the global markets and the fact that the public seems to be lightening up on retail sales spending (more likely due to high gas prices). There is also the increased speculation of M&A activity within the group. As more and more cash comes into the group via PIPEs and mergers, it is bound to become evident that these investment seekers are looking for higher returns.

The IDU and XLU are showing great signs that the recent downtrends from this past spring have expired and are showing signs of bullish sentiment. Watch these groups if there is continued weakness on the international front, which is more than likely considering there have been train bombings in India (which could be from al-Qaida)

Some names that might catch your interest....

EXC - Exelon Corp.
AEP - American Electric Power Company Inc.
SJI - South Jersey Industries
EP - El Paso Corp.  ¶ 3:12:00 PM 0 comments

  Stagflation possibly contained? Take a good look at the economic numbers this morning and you'll see that one number has beat all the rest. The average earnings for workers in June rose .5%, a big jump from the expected .3% and even higher jump from the previous .1% in May. The market might be concerned with the Non-Farm payroll numbers (which is still higher than its previous reading), the earnings number is more important in that it might be a signal that stagflation is contained. While inflation issue still remains an issue, it is interesting to see that workers are being paid more to handle recent inflationary factors that are evident in the current economic situation our country faces.  ¶ 8:40:00 AM 0 comments

  Abundant news on 4th of July weekend...

International issues rule the day!!

We have our plates full with international escalation issues that are effecting not only the US, but the rest of the world. First of all, we have the North Korean missile issue. While our main concern with N. Korea was the belief that they obtain the technology to deliver a missile that could land within the United States, it was short lived. Many missiles were launched, but the real one everyone was interested in only logged a mere 40 seconds of flight time. Bottomline... N. Korea has a long way to go before they could deliver a nuclear payload to the mainland US. Negotiations will be needed though in order to quell N. Korea from harming Japan, South Korea, and other neighbors.

Also, the tensions in Israel and Palestine continue to escalate. The tone of this situation resembles a war stance by both sides. This could escalate fear among the world as this might spread across the region.

With this said, the US market is holding steady. The biggest catalyst, barring any escalation in the international realm, will be the earnings season right around the corner. Right now, the S&P 500 is looking like earnings will grow by 9.7%, up from 9.5% last week. What does this mean? People are spending money and not affected by the high price of gasoline, even during the peak summer driving period. The Fed might continue to raise rates, yet the decline in the recent PPI number (July ex-food/energy was 1.66%, down from 2.83% a year ago) may give them more incentive to stall a hike in rates and give them more room down the road to react.

What does all this mean for the markets? Hold tight for now. The chart above is the SPY (S&P 500 ETF). Recent price action has hit the 50% retracement of the recent downtrend. A good earnings season, again barring any escalation on the international front, should provide a rally for the market and enable the multi-year rally to remain intact. A bad earnings season (possibly with poor forward guidance) coupled with possible escalation on the international front will spell bad news for the markets and should push money into treasuries, energy, commodities, or other sources of investment potential such as the Consumer Staples Sector (chart above).  ¶ 8:59:00 PM 0 comments