Weekly Sector Report | 10/29/10 (by Leisa)

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We closed October without any of the oft-anticipated fireworks that define this transition month into 4th quarter. The total stock market index was up .13%–we can call that flat.  Below are the 24 major Sectors and their relative performance.



As is usual, I have prepared a chart book in PDF form for your use with the weekly, daily, and monthly (since it is month end charts) for each of the sectors listed above.  You can downoad it here. It's a large file, so be patient.

Below is a weekly chart of the total stock market index.  I like to view this chart because it eliminates the bias of small, large, mid-cap, tech, industrials weighting that is evident in the other indices. I also like to look at the weekly to eliminate some of the daily noise. 



We've a string of positive bars–9 weeks now.  With elections this week, perhaps the market will give us its own version of the move  9 1/2 Weeks?  As we've repeatedly seen, when the market gets to critical junctures, the news flow is the major impetus for the direction up or down–and last week was an example of much activity but very little direction although the sectors had quite a bit of push and pull (which is why I look at them).

A Sloper asked a very good question about "What is Intermarket Analysis".  John Murphy, at Stockcharts.com, has an intermarket chart that you can access (free to all)  to see the interplay between the USD, 30 Year bond price (price is inverse to rates), CRB index, and the S&P index:


To quote John Murphy:

Intermarket Technical Analysis is the study of the relationships between the four major financial markets: Stocks, Bonds, Commodities and Currencies. There are three key relationships that bind these four markets together. These relationships are:

  • The INVERSE relationship between commodities and bonds
  • The POSITIVE relationship between bonds and stocks
  • The INVERSE relationship between the US Dollar and commodities

POSITIVE: When one goes up, the other goes up also.
INVERSE: When one goes up, the other goes down.

When these relationships occur, the markets are said to be acting "normally" and there is a good probability the current trends will continue. When one or more of these relationships break down, the markets should be watched carefully for signs of general trend reversals


I believe it is worth cutlivating a general understanding of these relationships–they truly are market drivers.  Trading/investing is often like juggling:  there are several balls that one has to keep in the air.  As with most endeavors, with practice and discipline, it becomes easier.

Courtesy of Wiki

(courtesy of Wikipedia)



Here's a clip from the Rocky Horror Picture Show…seems appropriate for this market to date and for the 'anticipation' for the coming week.  I wish you good trading this week.