Bank Index Showing Signs of Consolidation

Many cross-currents remain in this market. One can argue there are no "new" reports of good or bad news, only new "perceptions" of mostly bad news. The economy continues to strengthen but today's housing starts number disappointed many. The Fed's decision to hold rates where they are rattled some investors. The fear is that this recovery is not proceeding as expected. When does the economic cycle ever proceed totally as planned? Never. Although the cycle remains, there continues to be an element of uncertainty, either to the upside or downside. This is how the cycle operates.

The above chart illustrates the Bank Stock Index (BKX.X) shows signs of consolidation. The banking industry has been pummeled during this last recession. It continues to encounter tremendous resistance due to the fiscal problems in Europe. For the most part the U.S. bank exposure to these problems is minimal. More importantly, for this market to put together any kind of meaningful rally the bank stocks must participate. Although the doomsayers continue to their negative predictions, the Bank Index continues to show signs of life. This is exactly where a bullish perspective would place it. Now is the time to pick up those bank stocks which you did not want to chase during the last rally. Keep an eye on the present support line. If it is violated things could get quite a bit more interesting.

Of course, Washington could announce some boneheaded-type legislation aimed at "protecting us from the banks." This would send the market spiraling downward. For now, they are preoccupied with their own public relations problem handling the Gulf Shore oil leak and internal personnel changes.

Note: The above is for information purposes only. Any decision to buy, sell, or hold a specif investment should be reviewed by your own investment advisor.

Descending Wedge Breakout for Dow Industrials

The above chart shows the weekly Dow Jones Industrial Average has successfully broken out of its descending wedge pattern. For weeks the Marketdoc Report has been pointing to the numerous buying opportunities which exist in the market. The market appears ready to challenge its 200-day moving average of 10,477. The strength at which it moves above the 200-day average will determine the strength of the next leg upwards.

The past few weeks have shown another stream of negative news for the market. Most of the news was "old news" such as the situation in Europe, but the perception was extremely negative. Hence, the market sold off. It is highly suspected that investors were short of cash and needed to sell some of their holdings, others were just skittish, and some wanted to take profits. Regardless of the reason, we have seen another classic descending wedge pattern with its subsequent breakout. Selling volume seems to be getting exhausted.

The fundamental news about our domestic economy continues to be relatively good. We are in an early recovery phase. Don't listen to the self-proclaimed experts who keep pointing to unemployment numbers. Unemployment is a LAGGING economic indicator. When a string of unemployment numbers are decreasing is when most investors should be SELLING into rallies. For now, the market appears headed higher. Can something unexpected happen? Of course, including a possible cluster-flop legislation which can come out of Washington at anytime. Washington is our "Sword of Damocles" for this market. For now it seems good that Washington cannot seem to agree on anything for very long.

Note: The above is for information purposes only. Any decision to buy, sell, or hold a specific investment should be reviewed by your own personal investment advisor.

Chicago Welcomes Lord Stanley

Captain Jonathan Toews accepts the Stanley Cup on behalf of his team


Last night, to a full house in Philadelphia, the Chicago Blackhawks beat the Philadelphia Flyers 4-3 in overtime, to clinch the prized Cup in one of the most exciting Stanley Cup Final playoff games in the history of professional hockey. Both teams played their hearts out but Chicago gained the victory when Patrick Kane scored "the goal that almost nobody saw" at 4 minutes 6 seconds in overtime. Kane's quick wrist shot went between the legs of Philadelpia goalie Michael Leighton. The puck became lodged in the netting and only a few players and onlookers were aware the goal was scored. The play was reviewed to be sure the puck actually went in. Both goal tenders played superbly. Chicago's Antti Niemi stopped a third period onslaught by Philadelphia as they attempted to gain victory and send the playoff series back to Chicago for a seventh, all-deciding game. The game was the most widely watched Stanley Cup Final game since 1974.

The Stanley Cup was donated as a trophy in 1892 by then Governor of Canada, Lord Stanley of Preston. It has a long tradition of passing on to those hockey teams who find themselves worthy of this cherished prize by winning a series of playoff elimination rounds. It was originally awarded to the Montreal Hockey Club in 1893 "after defeating all comers of the late season including the Ontario Hockey Club." It is said that Lord Stanley purchased a punch bowl made of pure Silver in Sheffield, England, for about 10 guineas (about $1,175 in today's US dollars.) The Cup has since been passed on year-after-year to the new champions. The names of each player of every winning team are inscribed on the Cup. Several additions have been made over the years to accommodate all of the names. There are actually three "official" Stanley Cups- The original purchased by Lord Stanley, the Presentation Cup which is the one actually presented to teams each year, and a Replica Trophy to be used as a stand-in at the Hockey Hall of Fame.

There is much significance to the Chicago Blackhawks winning the Cup this year. It is Chicago's first Cup since 1961, for a total three times winning the Cup. Its first Stanley Cup championship was in 1938. The team has recently come under control of William Rockwell "Rocky" Wirtz, grandson to the late owner Arthur M. Wirtz. Rocky breathed life into this dying franchise. Himself, an avid hockey fan, Rocky welcomed all of the former players back to the ice arena where they had been previously told they were not welcome. He held a series of promotions for the hockey franchise. He made the fans and the team feel good about itself once again. This most recent Stanley Cup championship team is one of the youngest teams in the hockey league this year. The team was cheered all season by the Blackhawk's oldest living player, Al Suomi, 96, who played for the team in the 1936-37 season. It is believed Mr. Suomi is the oldest surviving NHL player.

Chicagoans have much to celebrate in their team's victory this year. To the city, the fans, the organization, Mr. Wirtz, and the players-- Congratulations!

Uncertainty Continues... Market at Crossroads

Once again we saw the Dow Jones Industrial Average test its lows for the year at the all important 10,000 level. Why is it so important? This level is a key psychological level in the market. It is also an intermediate support level.

We have been covering this uncertainty for several weeks now. Uncertainty-breeds- volatility-which-breeds-opportunity. Could the market go lower? Of course, but when everyone expects a crash is when one WILL NOT HAPPEN. If this were September/October things would be less sure. However, it is rare for the market to collapse during this time of year. Some of our indicators show the market can go lower. Others are showing an oversold bias. What we are seeing is a crisis of confidence in the markets, mostly over the European situation. I suspect many investors may be cash-strapped right now and this may have been causing some of the selling lately. All they need is an excuse for more selling. Our domestic economic fundamentals remain sound and show continued economic recovery.

There are several buying opportunities which remain. Now is the time to pick up some of those companies which you didn't want to chase last year.

Note: The above is for information purposes only. Any decision to buy, sell, or hold a specific investment for a portfoloio should be reviewed by your personal investment advisor.