Sorry for the absence here. Took advantage of the long weekend to go on a short trip. Hope you all had a good rest and good trading week.
In my earlier post, I talked about Solar & Airline Sector Vs Crude Oil. With oil and gas being in the focus everyday and its negative impact on the equities market, those who are day-trading will find it useful to follow movement of crude oil. While I understand thinkorswim is planning to have the crude oil futures data soon, they gave no time frame as to when it is expected to be release. Not wanting to sit around to wait especially with oil moving inversely to the market, I went around looking for FREE live oil data charting. I found one at livecharts.co.uk and it has served its purpose pretty well. Do take note that the timing of their charts are based on UK time. If you know of another source to get free live oil charting, please leave a comment here and I will compile a list for readers. Thanks! Economic calendar for next week: Mon: Construction Spending, ISM Index
Tue: Factory Orders Notable earnings: GES, TOL Wed: ADP Employment, Productivity, ISM Service Notable earnings: HOV, VIP, PSS
Here's a technical analysis of Amazon.com, Inc. (NASDAQ:AMZN) chart. It is gaining momentum and looks like it is going to break out soon. It gapped up strongly today and closed above 200 days simple moving average with nice volume. Prior to this, in the last two months or so, it has also printed higher lows. A close above $82.5 with good volume would be a good breakout. But you'll need to measure your risk/reward to see if you prefer to trade the breakout or wait for the pullback.
At the moment, other stocks that I'm watching closely are: BEN, UTHR, SNDK, WYNN and ACI Earnings reporting is coming to an end soon with the retailers rounding up the loose ends this week.
Crude oil price has been setting record highs almost every day. Other than energy stocks, there are also 2 other sectors that are correlated to crude oil prices.
1) Solar sector This sector is red hot! It is a beneficiary of high oil prices as everyone looks to alternative energy. Here's a 6 month chart of Oil Service HOLDRs (AMEX:OIH) vs First Solar, Inc. (NASDAQ:FSLR). Left scale for FSLR, right scale for OIH. Blue line represent FSLR, black line is OIH. See how they move in tandem. Positive correlation. Other stocks in this sector includes CSIQ, SOL, JASO, LDK, STP, SPWR etc. TAN is recent ETF for this sector. But note that within this solar group, there are some stocks that exhibit relative strength than others. Example of stronger solar stocks include FSLR, CSIQ, SOL.
Today, Goldman Sachs raised their crude forecast for the second half of the year to $141 from $107 based on supply constraints, If this is materialize, solar stocks could be in for another ride up. But on a personal note, I do hope this will not come true. Here in the U.S gas stations, I've already started to see it cross the $4/gallon mark!
2) Airline sector Oil is a big part of this business and their margins are getting squeezed by the surging oil price. Needless to say, it has a negative correlation to oil prices. See Oil Service HOLDRs (AMEX:OIH) vs Continental Airlines, Inc. (NYSE: CAL) chart below.
Left scale for CAL, right scale for OIH. Blue line represent CAL, black line is OIH. Observe how these two usually moves in opposite direction. From what I know, CAL, SKYW and UAUA are the only 3 optionable airline stocks still trading above $10. But if oil prices continues to rise at such rate, its a matter of time these 3 stocks sink below $10 as well.
Very interesting sector moves I observed recently. The last two weeks see money flowing heavily into previously weak sectors like Financials, Consumer Discretionary and Technology (see above). On the other hand, previously strong sectors like Energy, Materials and Consumer Staples see outflows.
Now the tide seems to have turned again based on last two days (see above). Energy and Materials regained their momentum while Consumer Discretionary and Technology lost steam. The question is can Energy and Materials continue to hang on to their lead? Or will Technology, Financials and Consumer Discretionary finally take over? Watch these sectors closely and let your trades follow the money flows Earnings reporting is winding down and there are not many key economic data this week
Mon: ISM Service ARG, ANR, APC, CECO, CLF, HLF, TDW, VMC, WTW, WLL