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Strategies & Market Trends : Technical analysis for shorts & longs

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Dec 24 4:00 PM EST

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To: Johnny Canuck who wrote (36919)	5/2/2002 2:27:21 AM
From: Johnny Canuck	Read Replies (1) of 69209

Technical Basics: Sector Trends 01-May-02 09:29 ET [BRIEFING.COM - Jim Schroeder] For the majority of the last several months much of the market has been at best trending sideways. In this type of environment it can be extremely difficult to find investments exhibiting the type of characteristics (bullish) that keep the antacid on the medicine shelf. Sectors In recent briefs we have looked at market sectors from a seasonal perspective. The most recent update indicated that there were no sectors beginning a new bullish seasonal phase in May. In fact there is not much on the horizon starting such a period until biotech (BTK) in August. With little in the bullish camp seasonally, it was not surprisingly that a number of emails were received requesting the areas of the market that are performing well. In the table below are the more widely followed sectors, the near/intermediate trend (daily/weekly) and some commentary based on the charts. A relatively simple system of following trendlines, 20 and 50 period moving averages and retracements was used as this is often where trends either reverse or accelerate. A system such as this can provide the trader with an edge when looking at the individual components or the industry/index proxies. Sector Near Term Trend Intermediate Term Trend Commentary Biotech (BTK) negative negative Negative trend entrenched but bounced off Sep 01 low and above 200 wk sma. Semiconductor (SOX) negative negative Breaks down but holds at bottom of 5 mo. range. Run beyond 545/555 neutralizes Networking (NWX) negative negative Still eyeing Sep 2001 low; needs to break 225 and 240 to improve. Bank Index (BKX) neutral/negative Positive Weakened but held at retrace support; sustained break of 880 improves near term posture. Wireless Telecom (YLS) negative negative Recently set new all time low Utility (UTY) Positive Positive Slow but steady uptrend still intact. Retail (RLX) negative negative Recently pushed back below 20 day/wk ema. Oil Index (XOI) negative neutral Above Apr low but need to break 547/548 (20 ema/50 sma) to upgrade near term trend. 20 wk ema holding. Oil Service (OSX) Positive Positive Uptrend intact but has reached overbought territory. Natural Gas (XNG) negative Positive Near term trend weak but did bounce near 20 wk ema. Computer-Hardware (HWI) negative negative Recently broke down, need move above 144/146 (20 day/wk ema) to upgrade to neutral. Disk Drive (DDX) negative neutral Penetrated 20 day/wk ema but held at 2 mo range bottom and 200 day sma.. Internet (DOT) negative negative Firm multi-month downtrend still dominant. Software (GSO) negative negative Oversold after setting new 6 month low but needs to break142/148 to upgrade. Telecom (XTC) negative negative Fresh lows, now at lowest level since Nov 1997 Airline (XAL) negative neutral Just extended 2 mo decline; broke 20 wk ema. Forest & Paper Prod (FPP) neutral neutral Bounced off 100 day sma and retrace; run through 358/360 upgrades near term. Consumer Index (CMR) negative negative Attempting to bounce after this week's breakdown. Healthcare Index (HMO) Positive Positive Continues to set multi-year highs. Health Provider (RXH) Positive Positive Consolidating over last week but above 20 day ema. Broker/dealer (XBD) negative negative Broke 20 day/wk ema but has held at bottom of 2 mo range. Cyclical (CYC) negative neutral Weaker bias near term but attempting to work back into 2 mo range; held at 20 wk ema. Gold (XAU) Positive Positive Bias positive as above 20 day ema but weak over last few days. Drug (DRG) negative negative Ugly trend; is oversold but strong signs yet of turnaround S&P SmallCap 600 Positive Positive The IJR index recently pushed back above 20 day ema after minor dip; longer term trend strong. S&P MidCap 400 neutral Positive Correction in index (IJH) over last wk holds at long term trendline; retesting 20 day ema. Real Estate (Dow Jones Index) neutral Positive The index (IYR) is back testing 20 day ema after holding near 50 day sma and retrace. Conclusion Of the 27 sector/indices presented, only ten are in what could be considered intermediate term bullish trends. Other than more defensive plays such as gold and healthcare we have energy (oil service, natural gas), banking and real estate along with the proxies for the S&P SmallCap (IJR) and MidCap (IJH) markets. The latter two have easily outdistanced the rest of the major market averages as they have gained 9.76% and 5.89%, respectively, y-t-d. The use of these proxies as an investment tool eases the burden of picking stocks within a less familiar universe and immediately provides more diversification than one issue or a small basket of stocks. If you have any comments, questions or suggestions send them to Jim Schroeder

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