Wednesday July 18, 2012
There are many letters that attempt to call 'the top' or 'the bottom' in the market. Yet there are many markets and the change is a passage over time. For an entire school of fish, in an aquarium one tap on the glass may reverse course for the whole school. Usually that is not the case for the stock market. Different sectors move at different rates of speed. We noted this weekend that the Aussie and Canadian Dollars have already begun a move up while the Euro has not.
But if we are right on our conviction that a rally lies ahead, various sectors of the stock market should be picking up. The overall market did bottom on June 1. Today an alert reader of TMP brings the Semi conductor group to our attention.
Just for fun I did something different than our usual chart of say the SOX index, here is a screen shot of
the semiconductor group as I track it on stockcharts. Shazam Captain Marvel! A 3% move in one morning, and more, is significant. So another group joins the stampede. The longer the Dollar and Bonds refuse to drop, ie holders are not selling, the more dramatic the shift will be as Meathead and Archie Bunker try to get through the same door at the same time.
The Performance Chart ranks stocks by their relative performance one to another. This chart shows that some sectors are leading while others still lag. XES the Energy Service ETF we recommended is the leader. Next EWZ the Brazilian ETF is moving up, Brazil is a big commodity producer so this makes sense.
The Green line is COPX Global Copper Miners. It looks to be registering its third higher low, but lagging XES and EWZ. Finally I listed the SOX index of semi conductors. Its move up today does not show on the chart but the point is that it lags the other three.
FCG natural gas producers is another big winner today. So the markets continue to come our way, patience....
By the way, did anyone notice that article on page one today about the Germans using the mark again, and it is being accepted? That very act is a nostalgic social mood shift away from the Euro and all its problems, like the Greek bailout, back to a simpler time, every man or country for him or her self. This may well be the start of a trend in Europe, let's watch.