The major indexes have danced around their 20 day MA on the whole month of August. The good news is that the indexes gravitate more towards above the MA than below lately. With Friday’s drop, the major indexes are back to their 20 day MA once again, so, they could get a bounce. Also, VIX is right at its resistance, VIX could fail and market could rise.
Another good news is the continued fail of oil price. Gustav proves to be a total flub, another embarrassment for the administration (state, local), and more burden for the tax payers. So, the premium build on the crude should be taken out and more excuses for shorts to sell the crude.
There are obstacles of course; among them are the economic data of ISAM index on Tuesday and non-farm job on Friday. The bad news from economic front could derail the good feeling of the traders just come back from vacation.
So, if our assumption is right, where should we put our money?
Transportation seems fit the bill, they normally move in-tune with the market and opposite with the price of the oil.
IYT, UPS, FDX and JBHT are the ones could rise.
Technology becomes laggard lately thanks to dell. We just need to pay closer attention to see whether the investors give up on tech or it was just a temporary set back.
