Sunday, July 15, 2007

Stock Market Views for the Weekend

* Continuing to Look Good - Toshiba was the feature of an earlier post. It continues to benefit from its positioning in nuclear energy, particularly in light of India's recent push toward nuclear development and its stated intentions to spend considerable resources on this development.

* Volume Concentrated in the Advancing Stocks - I notice that the 3-day Arms Index (AKA TRIN) for the NYSE ended the week at .57. That's the third lowest level since the start of 2004 (N = 878 trading days), suggesting volume chasing the strong stocks. When the 3-day TRIN has been below .70 (N = 20), next day results in the S&P 500 Index (SPY) have been weak, averaging a loss of -.22% (6 up, 14 down). That weakness has carried over to subnormal (and negative) returns over the next three trading sessions.

* Hot Tech Stocks - The tech sector has been showing excellent money flows, and the large cap tech stocks have been leading the way higher during this recent rally. The StockPickr site tracks the five top growth stocks in the tech universe, according to Goldman Sachs. Also check out StockPickr's tracking of the portfolio of Prince Al-Waleed.

* Putting Trading Principles to Work - I recently outlined 10 principles of short-term trading. Trade Ideas has taken the post to the next level by outlining specific trading strategies for many of the principles. Great post with creative applications.

* U.S. and U.K. Hedge Fund Perspectives - Interesting finance shorts from the Moneyscience site, including a link to a contest to spend time with a London hedge fund manager and an interesting view of hedge fund shorting in the S&P 500 futures.

* Top 100 Finance Blogs - Thanks to InstantBull for its blogroll of the most popular trading and investing blogs according to Alexa and Technorati stats. I'll be using this list to check out blogs that I'm not familiar with in hopes of providing some additional visibility for the best ones in future posts.

* Worthwhile Reading - Several valuable posts from the Short-Term Trading blog, including a view on how dollar depreciation may not help the trade deficit, the risks of collateralized debt obligations, and a very interesting view on the Fed model as a market predictor.

* VIX and Options Trading - BZB Trader sees a head-and-shoulders top in the VIX, implying further market strength to come. The VIX and More site also has some thought-provoking posts on the VIX as a timing tool, including a look at the Trading Markets rule. Adam Warner has some valuable thoughts about trend following with a deep options strategy.

* Concentration of Income - This morning's New York Times reports an interesting fact: Until now, there have been only two other periods in American history when the top 1/100th of 1% of the population owned 5% of the country's wealth: 1915/1916 and in the late 1920's. Both were periods of wealth that preceded major stock market crashes.