Monday, October 08, 2007

Check on the Markets to Start the Week

* Mixed Strength - While the Dow and S&P 500 Index have moved to new highs, my Cumulative Adjusted TICK measure continues to lag. The Advance-Decline lines for NYSE Common stocks, S&P 600 small caps, S&P 400 mid caps, and NASDAQ Composite all are falling short of their July peaks. The Advance-Decline lines specific to the S&P 500, Dow, and NASDAQ 100, however, are making new highs. Clearly the large caps are showing relative strength here. Friday's rally showed some broadening of the market strength; I'll be looking to see if that continues this week.

* Technical Strength - My basket of 40 stocks, evenly divided among S&P 500 sectors, shows 29 stocks in a position of technical strength, 7 neutral, and 4 weak. The Technical Strength Index, at +2100, remains strong. A major change is that the financial stocks I track are all displaying technical strength as of Friday. They were the weakest sector during the August decline. Conversely, the technology stocks are showing weakening technical strength here. Check out BZB Trader's observations re: how the NASDAQ is showing greater strength than at any time since 1999.

* Weak Dollar - In his link updates, Trader Mike notes an article detailing the impact of the weak dollar. It's an excellent article, noting both the hazards of the weak dollar, but also the beneficiaries. The impact of the sovereign funds, who will continue to be attracted to sale prices on U.S. assets, is important.

* Where the Growth Is - Among his links, Charles Kirk includes an article on the fastest growing companies; see also the interesting quote from Hulbert on timing the market right here.

* Those Financial Stocks - Adam Warner finds a decline in volatility in the options of financial shares and no excess negativity among traders--quite a shift from August. VIX and More charts the market's recent decline in volatility.

* Gender and Returns - Abnormal Returns offers a fresh round of worthwhile links, including a research study of how gender diversity affects returns at mutual funds.

* Mainstream Media Goes After Blog Traffic - Illuminating post from Barry Ritholtz; see also his week in preview, including why one economist has turned less bullish in his outlook.

* Is a Crisis Averted? - Mish offers his take on the recent jobs report and what it might mean for Fed policy.