Market Update

A quick blog today as I’m in the midst of doing some new research as well as meeting with my website programmer. BTW, the new site is looking absolutely fabulous and will hopefully be up and running within the month.

Follow-up from yesterday
Yesterday I noted that the excessively high positive levels in the VWAPs combined with the extremely low value in the Trin (Arms Index) pointed to a lower opening today. That did not happen as most of the major indices opened up, but my forecase wasn’t completely off-base as most of them drifted lower as the day wore. The Trin roughly mirrored the opposite movement hitting an intra-day high of over 1.60 (compare that with yesterday’s values between 0.3 and 0.5). There’s still more than a half hour to the closing bell. Barring an eleventh hour rally (which can happen), all of the indices look poised to close down on the day (around 1% for the S&P and the Dow 30).

Today’s action
The oil, gas, solar energy, coal, and metals (gold, silver, aluminum) sectors rallied nicely today with many issues gapping up strongly on the open and rallying off of multi-year lows. The drillers especially look good. Here’s some that broke out of their bases today: Berry (BRY), Dril-Quip (DRQ), Diamond Offshore (DO), Murphy Oil (MUR), and Ultra Petroleum (UPL). In the gold sector Randgold (GOLD) is nearing its all-time high set almost a year ago. The stock has already rallied 67% from its October low and its chart is showing no signs of slowing down.

The financial outlook
Bank and brokerage stocks have been rallying along with the overall market and a good question to ask is if this rally is genuine. The XLF, the financial ETF, is trading around $8.80 and the regional banking ETF, the RKH, is about $53.50. They’re both getting close to overhead resistance which they need to break through in order for this rally to have any legs.

A more visual way of evaluating the status of financials is to look at the ultrashort financial ETF, the SKF.

The chart shows strong support at $100, a level it must break before the financials have a even a hope of rallying.

That’s it for today.

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