Stock Watch (Something For Everyone) - 7/20/2014

Here are some stocks & ETF that might be of some interest to keep an eye on for the coming week:
DIS, KO, MMM, TRV, XOM, XLB, XLP, XLY, XME, LOW PCYC, TXN, JDSU, NTAP and HOT.

Downtrend Continue

The US dollar continues to strengthen due to 'flight to safety' caused by the uncertainties from the Euro crisis and the direction of the US economy.

All the major sectors appear to have turned downward. Until the current uncertainties are removed from the market, the market will continue to be very news driven. Unless one is shorting this market, it is best to move to the sideline and wait for the dust to settle before start looking for long positions. Presently, it is best to be 'out of the market wishing you are in' than 'in the market wishing you are out'. Capital preservation is job one right now. Do not be tempted by a dead cat bounce that will likely to happen in the near term as the market is getting to the oversold condition. Wait for confirmation from the market that the end of the downtrend has occurred before moving back into the market.



Disclosure: Long SH, PSQ, and AAPL PUT

Sector ETF Review

Here is a video reviewing some of the sectors that have been pushing the market up and how they could drag the market down.



Disclosure: no position

Sectors Review

As the market is consolidating to get ready for its next move, I thought it would be a good opportunity for me to post my review on some of the market sectors. Before I proceed, I like to recommend all my readers to visit Dr. Brett's blog (it is also listed in my blogroll under TraderFeed,) he gives a good summary on the sectors performance and many valuable trading development techniques. In this post, I will cover those sectors that Dr. Brett has summarized.

The tech has been one of the leaders throughout this rally. The XLK has been trending higher and the 50 SMA has crossed over the 200 SMA. As the second quarter coming to an end, lot of those skeptical fund managers that have been underweight in tech will dress up their portfolio with tech stocks before the end of the quarter. This window dressing will boost the tech ETF, XLK higher.



The financial has been strong until its recent consolidation. Similar to the tech sector, lot of people were skeptical about the financial sector. For those skeptics that have missed this rally, they are feeling they must move in during this consolidation to make up for their miss. Also, for those fund managers that have been invested in financial, they will increase their position on financial to dress up their portfolio with recent strong performers. After the XLF consolidated near the 200 SMA, the end of the quarter window dressing will move it above the 200 SMA and continue its upward trend toward the Nov 2008 high level.



With crude oil going from the $30's to over $70 a barrel, the energy sector has benefited from the crude oil rally. Looking at the energy ETF, XLE, it appears there remains some additional upside. Although the crude oil rally might be near the end, but the momentum on the energy stocks will continue for a bit longer due to window dressing and the anticipated pick up in demands due to the summer months.



Until recent increases in the long bond yields and the mortgage rates, the consumer sectors were performing quite nicely in anticipating the recovery is just around the corner. As this bear market rally make its final move, the momentum should carry over to these consumer sectors for some additional upside. The strength of this upside will depends on the perceived action or inaction on the interest rate by the Fed to combat the rising bond yield.





Momentum for the materials ETF, XLB might be slowing a bit, but the uptrend remains intact.



The industrial sector is similar to the consumer sectors. It is consolidating above the 200 SMA for support. Until signs of technical deterioration, uptrend remains intact to break above the Jan 2009 high.



Finally, the health care sector is gaining strengths as money rotate into this sector.