Tuesday, April 10, 2007

Federal Reserve Minutes and Oil

Today at 2pm the Federal Reserve will release the minutes from its March meeting. This has been an anticipated release, and it should give some needed information to what other thoughts the Fed had at the last meeting. This information should move the market one way or the other, because lately interest rates and their direction, seem to be the topic of interest. The chart above of the S&P500 shows that the rally of late has been on decreasing volume. This is also confirmed by the moving average of the advance/decline line. The market has had a good move off the lows of a few weeks back, and with earnings ahead, there could be some profit taking.

The chart of the Nasdaq Composite is very similar to the S&P500 except that the volume as of late has been increasing. This doesn't mean that there could not be profit taking, but it could be a sign of rotation into technology. Time will tell, and with a heavy dose of earnings over the next few weeks, volatility is a given.

Juniper Networks has made a decent move out of its previous channel. The volume yesterday was pretty strong. Can this move continue into its earnings release,April 23?

Goldman Sachs is an interesting chart. Is it a cup with handle formation or is it just retracing some of its down move? This stock never sits still for long and its hard to bet against Goldman Sachs. It will not take too much volume to make any shorts cover positions if it starts moving again. Hopefully it can come down to a nice level, and a lot of money can be made on the next run up.


Today oil stopped going down after the news last week that the tensions with Iran were lessening with the release of the British soldiers. As oil came down, the oil stocks held pretty strong. This is because only the current month futures contract of oil came down, the forward contracts were bought. These deals with more futures trading, but the bets that oil is going higher are still there, global demand and hurricane season are on the horizon.

Global Santafe, Dril-Quip, and Ensco International are a few charts that are similar to the OIH index. The do look they are going to go higher.

Monday Baker Hughes(BHI) announced that March rig counts worldwide had gone up 2% compared to March a year ago. This might not seem like much, but the international rig count was up over 10% and the US rig count was 2.2%. Canada's rig count dropped. It is worth digging into the global growth of rigs and that will be a topic for the post tomorrow. It will include some sites for research and how to locate all of this information.

Below are a couple charts that have lagged the sector, but had some nice volume


A couple things to watch on the macro picture. The dollar index is getting to a point where it could make a move to test a previous low. This could lead to an increased focus on the exchange rates versus various parts of the world and who it is good for and who it isn't. The direction of interest rates is key to this. If the dollar breaks to a new low with any momentum, it might be hard for the market to shrug off the news.

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