Still looking for catalyst to continue higher

Welcome back to “As the Market Turns”. The lead story remains the issues in Iraq and the future disruption to oil production. Crude ended the day flat and energy stocks were higher, but all eyes are fixed on what is next for this situation. High oil prices will translate into higher gasoline (UGA) prices and that in turn will impact the consumer as the price will push well above $4 per gallon. More worries to add to those we are already tracking.

Tomorrow the FOMC meeting begins and many are watching to see what if anything new the Fed will bring to the party. Not much in terms of change are expected, but you always have to be aware of the what the Fed wants and what direction they are stirring the ship. Wednesday afternoon should be business as usual, but we will see how it all unfolds.

Practice patience.

Notes to Note:

  • The Volatility or VIX index back to 12.7, but still flirting with breaking higher.¬†No momentum in the fear side and that is keep the VIX in check despite some modest selling.
  • Oil remains near¬†$107 with the issues in Iraq still in question and we still holding our trades in the commodities for now with tighter stops.¬†Energy stocks remained on the upside¬†and holding the trend.
  • Interest rates on the thirty-year bond fell to¬†3.39% and the ten-year is at 2.59%. The move keeps the downtrend in yields in play. Still watching for that rise in yield so many have predicted this year.
  • Small caps (IWM)¬†tested the break higher again, but is holding above the $115 level. Third test on Monday bounced again back near $116.¬†Move above $117 would be a continuation of the upside and follow through to the breakout from consolidation above $113.
  • BBN jumped 2.5% on comments from Bill Gross. The break from the consolidation spiked on four times average volume.
  • TAN breaks through resistance as well getting as the alternative energy space benefits from the rise in crude prices. SPWR led the sector with a 7.8% rise on Monday. PBW broke from a bottom reversal test and worth tracking as well.
  • XBI resumes the move higher as ACHN was up 21% and OREX was up 7%.
  • MLPs have been pushing to new highs as well. They are benefiting from the move in the energy sector and oil prices. NGL and ACMP are hitting new highs.
  • DBB bounced for the second day off the test of the trendline. Steel¬†(AKS)¬†andCopper (JJC) both added to the move.

Chart Notes:

The chart below is a comparison chart of the 10 largest holding in AMLP ETF. The master limited partnerships are focused in the energy sector. As you can see clearly the leadership from MMP and EPD have helped the uptrend remain in play for the sector. With the push higher the last week it is sector worth watching the parts as well as the whole. The ETF also pays a 5.9% dividend.

AMLP

The biotech sector is pushing healthcare higher and benefiting from the return to growth stocks by investors. Monday pushed above the consolidation of the last week on the chart, and the uptrend remains in play off the May low. IBB looks similar in trend, but is a way to capture he small cap stock in the sector.

XBI

Semiconductors continued to the upside after one day of selling and continues to lead both technology and the markets higher.  Positive guidance from Intel on Friday and SUNE led the sector today with a 10.9% gain.

SOXX

Choppy is the current movement from the broad indexes. It may take two day or two weeks, but we will watch to see how it unfolds and what rotation takes place as a result. Remember the long term trends are still in the upward direction and their is plenty of room between the current close and those trend lines on the downside. Manage your risk relative to your time frame and remain patient.