Chart Newspaper cutting of the Month
Market sentiment can be measured in a number of ways and our weekly
Advisors Sentiment Survey is the most main stream and reliable example. However, sentiment can also be gauged on a daily basis through standard media and with that in mind we are this month highlighting a newspaper cutting instead of a chart.
Material in the press generally reflects and is agreeable with the views and opinions and of the public (they don't like to read, let alone pay for, something they disagree with). The headline from the New York Times on March 29
th “
Stocks Soar, But Many Ask Why” was a classic example of this and we highlighted it in the
Coe Report.
Wall Street is often said to climb a wall of worry. Headlines contribute to the thought process of the market analyst and in this case it reinforced the belief that the crowd remains bearish on equities. Totally the opposite of the public's sentiment at market tops, such as was apparent at the turn of the millennium.
In the
Coe Report, the last 34 closed portfolio trades have all been winners. If you have never subscribed to the service then email our subscriptions manager, Sarah, to organize a free trial. We will not ask for any payment information. Sarah can be reached at
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Indexes - Technology
The NASDAQ 100 (NDX) continues to break to new highs against the S&P 500. This tech index is now at its best relative level since the tech bubble was deflating in 2001.
Leadership by tech provides strong supporting evidence towards the bullish case. Investors should only consider turning defensive if this relative P&F chart were to reverse, as was the case at the end of last year. This chart forewarned of the January downturn by the general market when it reversed in late December.
Point and Figure charts have been central to analysis at Investors Intelligence since the 1950's. Veterans Mike Burke and John Gray have amassed 77 years experience between them of P&F chart reading and they analyze developments daily in the P&F based
US Hotlines.
Commodities – Crude Oil
The final days of March saw the Crude Oil (CL1) chart make its move with a break out to new recovery highs, something we called for in last month's report.
As stated then, we anticipate a visit to $90. That level is a cluster target formed between the 50% retracement level at $89.83 and a region of resistance from a late 2007 consolidation. Given the brute force of the breakout, we expect that target zone to be tested in the first half of the month. Momentum conditions are on the side of the bulls with 21-day RSI only just pushing through 60; overbought conditions of last October are a long way off.
Commodity ETFs are covered each week in the
ETF Review by Tarquin Coe. In the portfolio for that service we are long oil through the Powershares DB Oil Fund (DBO) and also the energy sector through the iShares S&P Global Energy Index (IXC) and the Dynamic Energy Exploration (PXE) fund. Both these sector funds are now showing renewed outperformance. The energy dog is Natural Gas and we have been short the Natural Gas Fund (UNG) since December-18
th (a +30% gain).
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