Market Insights

Stock Market Tips from Marc Chaikin June 28, 2014

Rally Stalls as Sector Rotation Continues

The S&P 500 Index closed at 1,960.96, down 0.1% on the week. The stock market
reversed from a new all-time high on Tuesday at 1,968 on the S&P 500 Index and
finished down 0.6%, breaking a short-term support pivot at 1,952. While this
bearish price action usually results in 2-3% follow through selling, this is a
resilient market indeed, and stocks regrouped to finish the week on relatively solid
footing.
As shown by the Power Bars below, large cap and blue chip stocks continue to lead
the way as investors look for stability and yield, while the spread between bullish
and bearish power gauge ratings in the Nasdaq 100 remains slightly negative.
(Power Bars from )

While there has been a decent rally in The Nasdaq 100 and something less but still
positive in the Russell 2000, there is nothing likely to change in the upcoming
holiday shortened week. With traders and investors taking a long weekend, we
should expect more of the same, with the markets unlikely to make upside
progress.

With earnings season due to begin on July 8th when Alcoa (AA) reports, the stock
market will take its cue from company guidance regarding the 2nd half of 2014.
A 6% rally in the 1st half of 2014, after a 5 year bull market, is decent enough and
there is nothing that I see which would derail the stock market short of some very
disappointing 2nd quarter earnings reports and negative company guidance.
Stay tuned.
6/29/14 2014 Chaikin Analytics, LLC. All rights
reserved.
1
Nike (NKE) - Another High Flier to Sell on Strength
Nike reported earnings after the close on Thursday which exceeded Wall Street
estimates and the stock gapped up over 2 points on Friday. A funny thing
happened to NKE as it closed at its low for the day in a generally neutral market.
This strikes me as bearish behavior for this perennial favorite and gives investors
and traders a chance to sell this bearish Power Gauge rated stock as it makes a
triple top.
While we respect positive earnings surprises, the markets response was
underwhelming and with Nike now overbought selling on strength makes sense.
(NKE Chart from showing Overbought Sell signal)

ETF Sector Update
The strongest sectors in terms of Power Gauge ratings are Utilities (XLU),
Financial (XLF), Health Care (XLV), Energy (XLE) and Technology (XLK). There
have, however, been lots of cross-currents as investors fled from high yield utilities
and oil refiners effected by the limited lifting of a longstanding ban on U.S. exports
of crude oil.
6/29/14 2014 Chaikin Analytics, LLC. All rights
reserved.
2
(SPDR Sector Chaikin Power Bars from )

The Retail stocks continue to drag down the Consumer Discretionary Sector
(XLY).

Update on the Oil Refining Stocks
Oil Refiners which have been stellar performers with bullish Chaikin Power Gauge
ratings were blindsided last week by a Wall Street Journal story about a Commerce
Department decision to allow 2 Texas oil companies, Pioneer Natural Resources
(PXD) and Enterprise Products Partners (EPD) to export extra-light crude oil
condensate overseas.
There has been a ban on U.S. exports of unrefined crude oil since 1975. In the past 3
years as the price of Brent (overseas) Crude Oil has spiked higher vs. domestic
crude oil (WTI) companies like Valero (VLO), Tesoro (TSO) and Holly Frontier
have benefited. These stocks dropped 8-10% on Wednesday and have struggled to
regain their footing.
6/29/14 2014 Chaikin Analytics, LLC. All rights
reserved.
3
(VLO chart from )

Both VLO and TSO still have bullish Chaikin Power Gauge ratings but it will take
some time for the market to decide if this exception to the export ban will result in
a trickle or a flood of crude oil exports. Politics will play a part in this discussion as
U.S. energy independence is a major plus for the U.S. economy, and the Obama
administration may not want to appear to be jeopardizing that very positive state of
affairs.

Professionals: for more on Chaikin Analytics Individuals: for more on Chaikin
Power Tools

Disclaimer: Chaikin Analytics LLC is not registered as a securities broker-dealer or
advisor either with the U.S. Securities and Exchange Commission or with any state
securities regulatory authority. Chaikin Analytics does not recommend the purchase
of any stock or advise on the suitability of any trade. The information presented is
generic in nature and is not to be construed as an endorsement, recommendation,
advice or any offer or solicitation to buy or sell securities of any kind, but solely as
information requiring further research as to suitability, accuracy and
appropriateness. Users bear sole responsibility for their own stock research and
ecisions.
6/29/14 2014 Chaikin Analytics, LLC. All rights
reserved.
4