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This weekend, in my Sector Watch, I wrote:
“I’m finding XME interesting this week. Its MACD is already touching the signal. Coals showed a lot of strength last week as BTU reported very good earnings. On Friday, even though the market faded in the last hour, coal stocks was able to hold on to some gains. I think if the overall market environment continues to improve in the new week, coal stocks could be among the leaders.”
This morning, in the Trading Room, my first comment was:
HappyTrading October 20, 2008 7:27 AM
good morning!
XME/OIH/XLE
these sectors look strong.
These sectors indeed lead the market up today! Coal stocks were particularly strong: BTU +18.11%; CNX +15.11%; MEE +12.83%; ACI +10.77%. Energy stocks continued where they left off on Friday: DVN +12.57%; HES +13.44%; APA +10.39%; CHK +13.92%. Oil Services also recorded solid gains: RIG +13.24%; SLB +11.5%; DO +10.77%; NOV +22.2%!!
The Dow closed up +413.21 points; SPX added +44.85 points; Nasdaq gained +58.74 points:
Commodity-related sectors were very strong: XME (metals and mining) +14.36%; OIH (oil services) +12.21%; XLE (energy) +11.65%; USO (oil) +4.09%; GDX (gold miners) +11.53%; MOO +9.54%. XLF (financials) added +4.95% and HGX (housing) gained +5.93%. Techs were solid too, with BTK (biotechs), INX2 (Internet), and SWH (software) advancing more than +4%. FXI (Chinese ADRs) jumped +8.4%.
SPX
SPX added +44.85 points to close at 985.40. It closed above the 10-day MA. The MACD went up.
Nasdaq
Nasdaq gained +58.74 points to close at 1770.03. It also close aboe its 10-day MA. Its MACD curved higher.
Like I was saying last night in my Market Forecast, we should start to watch for bullish crossovers on the market indices. Today, the market major indices closed above the 10-day MA. A very good sign. Nasdaq‘s MACD (red line) is touching the “signal” (green line) and should get a bullish crossover soon. VIX dropped more than 17 points to close at 52.97!! That’s very good for the market! I think the best scenario for the market tomorrow is actually to open “lower”; let off some steam. Then, resume back up in the afternoon or late morning. If the market opens up, people will probably start to lock in profits, which would invite the bears back in. We need to see the market being able to string together a few wins. After the market AXP reported earnings that beat the estimates. AXP shares were more than +6% higher in AH trading. On the other hand, TXN‘s report was not so rosy. TXN fell 5.9% after the report was released.
Good night and HappyTrading! ™
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