A few more thoughts...for the week...
Last week, the Dow Jones Industrial Average was up 33.13 points to 8602.52 (+0.39%), the Nasdaq Composite was up 18.17 points to 1771.66 (1.04%), the S&P 500 was up 12.92 at 1068.61 (+1.22%) and the Russell 2000 index of small cap stocks was up 5.05 to 468.77 (+1.09%).
..and probably of major importance this past week...the bond market rallied pushing the 30 year bond back bleow 6.00%.
Let's take a look at some of the indicators that are followed in this
newsletter...
From the March 1st newsletter:
<<ok, one more troubling indicator.
as of 2/21, the Investor's Intelligence bullish sentiment was 46.0% bulls.
This indicator got as high as 48.8% in early October of 97 but was also in the mid 40's during last July. Are we saturated with bull(s) yet? And as of Feb 24th, 65.81% of NYSE stocks were trading above their 10 week MA (down from 69.08% the week before) and still quite a bit below the 97 high of 87.46% on June 19, 1997.>>
Well, as of 3/4/98, the Investor's Intelligence bullish sentiment is 48.8% bulls. As stated above, this was the high reading reached in early October of 97....but this is only one indicator. On March 4th, 72.88% of all stocks on the NYSE were above their 10 week moving averages....which indicates a very strong market....and still quite a bit away from the reading reached last June. The new lows on the NYSE are still well under 40, although we're getting back to having some days in the 20's. The cumulative advance / decline line is hitting new highs and finally the small caps are at new highs. With all of these bullish readings, one would think that earnings are still accelerating....but are they?
I can't help but remember some of the warnings given just over a week ago from some of the tech heavyweights. If Intel is having a slower than expected revenue growth quarter, then many other tech companies are probably having the same experience. This week Solectron will report their earnings on the past quarter...it will be interesting to see how this ECM giant did over the past 3 months.
The Dow Consensus estimate for 98 did inch upwards this past week to
$461.02....so that's a small positive.
Last week, the newsletter was a bit worried about what the long bond did the prior week. Staying above 6.00% with the market going up was not a sustainable set of events. The market got a bit of some breathing room with the long bond dropping its yield back down to under 6.00%. But this in itself is not the trouble that could eventually lead to another correction.
The decelleration of earnings growth and maybe even the lowering of gains going forward could cause some grief. One of the newsletter readers asked about overall support of the major averages. The 200 day MA is usually used as an important technical level of support. So for kiscks, I'll tell you that the 200 day MA on the Dow is at 7910.49 (-8.04%), on the S&P 500 is 947.79 (-11.31%), and the Nasdaq is 1597.35 (-9.84%). These are the levels to watch for if another correction gets underway...but as I said last week, most of the indicators aren't pointing that way right now....some are, but not most (Using indicators keeps emotions out of the decisions...
Over the past few weeks, the newsletter has mentioned the oil service sector as an area to focus attention on. Obviously, focusing attention on this group was a bit early but if the bickering between the OPEC and Venuzuela gets settled, then oil may finally bottom out. The following is another bullish case for the sector....
worth.com
Paulo
www3.edgenet.net |
