Sector Investing

[ReturntoSender]

CLOSING WRAP-UP, June 8
By Jody Osborne, Optionetics.com
6/8/2004 6:45:00 PM

http://www.optionetics.com/articles/article_full.asp?idNo=10527

Major market indices gain ground after a tough start Tuesday morning. The Dow ($INDU) was able to add 41.44 points on the session, closing at 10,432.52. The S&P 500 ($SPX) rallied from a loss to finish with a gain of 1.76 points to 1,142.18. The Nasdaq ($COMPQ), which added more than 40 points on Monday, closed the session with a gain of 2.91 points to 2,023.53. Volume remained light with the NYSE trading 1.19 billion shares and the Naz turning over 1.46 billion. Market breadth wasn’t able to turn the corner on the session, with losers outpacing winners by a 17-to-15 and 17-to-13 margin on the Big Board and Naz respectively.

A nice drop in oil prices led stocks higher today, with the Energy Department predicting that oil prices will drop to around $36.20 by the third quarter. This is, of course, if OPEC keeps to its plan to raise production by 2 million barrels in July and another 500,000 barrels in August. On the session, oil fell below $38 a barrel to their lowest level in five weeks. We now need to see if these lower prices trickle down to gasoline costs, which have been at record highs this past month.

Fed Chairman Greenspan had a negative impact on trading this morning following tough comments on inflation. Mr. Greenspan stated that the Fed is ready to do whatver it takes to keep price stability. However, the Chairman did say that the current forecast is for a measured pace of rate hikes. Even so, if prices start to raise more than currently expected, traders need to be prepared for rate hikes of more than 25-basis points at a time. Fed fund futures are now pricing in a 12 percent chance of a 50-basis point hike at the June 29/30 meeting.

The Philly Semiconductor Index ($SOX) rallied to finish in the black Tuesday. The sector was hurt by lackluster news from Texas Instruments (TXN) at its mid-quarter update last night. TXN fell 0.72 percent on the session to $26.04, with the SOX adding 0.24 percent.

Overall, the bulls continue to show strength, but volume is still anemic at best. Nonetheless, the major market indices continue to trade above prior resistance and the Naz has held onto its break of the 2K level.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site