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I was asked today to write and read a script that will be used as our "Hold Message" next week when you call the 800 number. This is what has kept me from my posting today. If you would prefer not to listen to the message, I copied the text of what I wrote. It is a snapshot of this weeks market activity, followed by a generic forecast. It goes a little something like this...
"Hello...this is Jeff Kohler. Some of you may recognize my voice from the INVESTools Trading Rooms sessions. I teach courses on Price Patterns, Credit Spreads, and a new session on Options Pricing & Volatility. You may also recognize me from Master Talk on Wednesday nights where we discuss market conditions, potential trades, and various strategies that are cohesive with the current market environment.
I have been given the opportunity to present to you, a market overview if you will. Let's start by recapping what we saw out of the market last week.
Traders remained somewhat quiet throughout the last few days. This is typical to see low volume in the summer months, especially August. However, the lack of convincing inflation data has caused the market to stall. The biggest news from last week was the continued disappointment out of the Homebuilders group. New home sales dropped 4.3%, which is the biggest drop seen since February, while inventory of unsold homes hit a record high. Take that news combined with rising energy costs, and this really puts pressure on the average consumerÂs wallet... Which happens to be the main driver of our economy.
The major averages finished the week on a down note. The Dow Jones Industrial Average was down .86% for last week, the S&P 500 down .55%, and the Nasdaq finishing with the biggest loss of a 1.09% drop in last weeks activity.
The price of oil has been busy as of recently. There has been a steady rise in the price of light sweet crude as we approached week end. With uncertainty in the Middle East concerning a possible blocking of oil exports, combined with early concerns of what could be "Tropical Storm Ernesto," light sweet crude for October delivery closed at $72.51 a barrel. While the storm is still in its developmental stages, forecasters claim it is still too early to tell its significance or the potential impact it could have if it reaches the Gulf of Mexico. As you know, most offshore oil and natural gas facilities are located in the gulf. No matter the severity of the threat, energy companies are preparing for hurricane season regardless, and taking the all the necessary precautions due to the disasters last years storms left behind.
Now that we have recapped last week's activity, let's discuss what to expect in this upcoming week. Major earnings announcements have started to trail off now that we are nearing the end of the third quarter. The big economic announcements taking place next week will be the release of the FOMC minutes on Tuesday, and unemployment data on Friday. While most of the reaction has come and gone from the results of the FOMC meeting, the minutes will give traders a more in depth look at what was actually discussed. Most traders are hoping to gather any kind of insight on the possibility of future rate hikes.
As you maneuver through the market next week, here are a few interesting points to consider.
As you conduct a technical analysis of the major market averages, keep a close eye on old resistance levels. The prior high points from June and July may act as a level of support for this recent retracement. If the market turns higher here and continues its uptrend, this should install more bullish conviction and offer good upside opportunity in the short term.
I also recommend taking a quick look at the volatility index. To do this, go to the corporate snapshot and type in the symbol VIX.X. The VIX is now trading in its lower range. As of Fridays close it was trading at 12.31. This is significant for option traders since it means the market has reached a level of complacency. As a contrarian indicator, if the VIX starts to rise into next week, this will confirm a bearish stance on the market and you are likely to see prices continue to drop.
If you are in the market for strong stocks that are heating up in strong industry groups, I have compiled a list to share. First I recommend taking a look at the Transportation/Water Transportation group. You can access this group be entering the symbol .TWT into the corporate snapshot. I mentioned this group in a MasterTalk session last month, and they are still continuing to trend strong. Within this group you will want to add these following stocks to your watchlist for further investigation.
General Maritime Corporation- symbol GMR. This is a great fundamental company, and a leader in their group. The look as if they might be finding support and ready to make their next advance in their current uptrend.
OMI Corporation- symbol OMM. They are another great leader in this strong industry group displaying the same technical strength as GMR.
One last company in that list, which happens to be a lower priced growth opportunity, would be Diana shipping. The symbol is DSX. They are a young but strong company in this group that has a legitimate shot at competing with its peers.
Finally, I want you to keep an eye on the Natural Gas/Utilities group, which is symbol .UNG. If interest rates remain steady, these stocks have a good shot at appreciating in value. Many of the issues in this group are in existing uptrends and look as if they may have found support. Within this group, keep an eye on NATIONAL FUEL & GAS COMPANY, which is symbol NFG. It has been a steady mover and great performer over the majority of the year. A competitor to also be mindful of is symbol OKE. Having the same trend and technical strength as NFG, OKE brings slightly better fundamentals to the table yet similar technical strengths.
We have discussed a list of things to keep in mind as the week progresses. Continue to stay positive and focused on task at hand. Be diligent and thorough in your analysis, and most importantly, stay disciplined to your rules! I wish you the best of luck this week. Happy Trading."
I am going to go record it right now. I will work in another post this evening to feast on before the weekend. Thanks for your continued comments that are appearing in the blog. I love to hear what's on your mind.
PS- If you happen to see unanswered questions in the blog that you have an answer to...feel free to help others by leaving a post sharing information you may know. As you are well aware, I maintain this blog not for personal gain. I do it to help all of you. So turn around and help each other when the opportunity presents itself. It is a great feeling to be in the position to help others.
Be back soon!
"Hello...this is Jeff Kohler. Some of you may recognize my voice from the INVESTools Trading Rooms sessions. I teach courses on Price Patterns, Credit Spreads, and a new session on Options Pricing & Volatility. You may also recognize me from Master Talk on Wednesday nights where we discuss market conditions, potential trades, and various strategies that are cohesive with the current market environment.
I have been given the opportunity to present to you, a market overview if you will. Let's start by recapping what we saw out of the market last week.
Traders remained somewhat quiet throughout the last few days. This is typical to see low volume in the summer months, especially August. However, the lack of convincing inflation data has caused the market to stall. The biggest news from last week was the continued disappointment out of the Homebuilders group. New home sales dropped 4.3%, which is the biggest drop seen since February, while inventory of unsold homes hit a record high. Take that news combined with rising energy costs, and this really puts pressure on the average consumerÂs wallet... Which happens to be the main driver of our economy.
The major averages finished the week on a down note. The Dow Jones Industrial Average was down .86% for last week, the S&P 500 down .55%, and the Nasdaq finishing with the biggest loss of a 1.09% drop in last weeks activity.
The price of oil has been busy as of recently. There has been a steady rise in the price of light sweet crude as we approached week end. With uncertainty in the Middle East concerning a possible blocking of oil exports, combined with early concerns of what could be "Tropical Storm Ernesto," light sweet crude for October delivery closed at $72.51 a barrel. While the storm is still in its developmental stages, forecasters claim it is still too early to tell its significance or the potential impact it could have if it reaches the Gulf of Mexico. As you know, most offshore oil and natural gas facilities are located in the gulf. No matter the severity of the threat, energy companies are preparing for hurricane season regardless, and taking the all the necessary precautions due to the disasters last years storms left behind.
Now that we have recapped last week's activity, let's discuss what to expect in this upcoming week. Major earnings announcements have started to trail off now that we are nearing the end of the third quarter. The big economic announcements taking place next week will be the release of the FOMC minutes on Tuesday, and unemployment data on Friday. While most of the reaction has come and gone from the results of the FOMC meeting, the minutes will give traders a more in depth look at what was actually discussed. Most traders are hoping to gather any kind of insight on the possibility of future rate hikes.
As you maneuver through the market next week, here are a few interesting points to consider.
As you conduct a technical analysis of the major market averages, keep a close eye on old resistance levels. The prior high points from June and July may act as a level of support for this recent retracement. If the market turns higher here and continues its uptrend, this should install more bullish conviction and offer good upside opportunity in the short term.
I also recommend taking a quick look at the volatility index. To do this, go to the corporate snapshot and type in the symbol VIX.X. The VIX is now trading in its lower range. As of Fridays close it was trading at 12.31. This is significant for option traders since it means the market has reached a level of complacency. As a contrarian indicator, if the VIX starts to rise into next week, this will confirm a bearish stance on the market and you are likely to see prices continue to drop.
If you are in the market for strong stocks that are heating up in strong industry groups, I have compiled a list to share. First I recommend taking a look at the Transportation/Water Transportation group. You can access this group be entering the symbol .TWT into the corporate snapshot. I mentioned this group in a MasterTalk session last month, and they are still continuing to trend strong. Within this group you will want to add these following stocks to your watchlist for further investigation.
General Maritime Corporation- symbol GMR. This is a great fundamental company, and a leader in their group. The look as if they might be finding support and ready to make their next advance in their current uptrend.
OMI Corporation- symbol OMM. They are another great leader in this strong industry group displaying the same technical strength as GMR.
One last company in that list, which happens to be a lower priced growth opportunity, would be Diana shipping. The symbol is DSX. They are a young but strong company in this group that has a legitimate shot at competing with its peers.
Finally, I want you to keep an eye on the Natural Gas/Utilities group, which is symbol .UNG. If interest rates remain steady, these stocks have a good shot at appreciating in value. Many of the issues in this group are in existing uptrends and look as if they may have found support. Within this group, keep an eye on NATIONAL FUEL & GAS COMPANY, which is symbol NFG. It has been a steady mover and great performer over the majority of the year. A competitor to also be mindful of is symbol OKE. Having the same trend and technical strength as NFG, OKE brings slightly better fundamentals to the table yet similar technical strengths.
We have discussed a list of things to keep in mind as the week progresses. Continue to stay positive and focused on task at hand. Be diligent and thorough in your analysis, and most importantly, stay disciplined to your rules! I wish you the best of luck this week. Happy Trading."
I am going to go record it right now. I will work in another post this evening to feast on before the weekend. Thanks for your continued comments that are appearing in the blog. I love to hear what's on your mind.
PS- If you happen to see unanswered questions in the blog that you have an answer to...feel free to help others by leaving a post sharing information you may know. As you are well aware, I maintain this blog not for personal gain. I do it to help all of you. So turn around and help each other when the opportunity presents itself. It is a great feeling to be in the position to help others.
Be back soon!
