After a lower open, the major indexes have recovered to now show fractional losses, but there's a bright light among the indexes this morning that has the smaller cap Russell-2000 Index (RUT.X) 369.96 +0.12% showing fractional gain while the Dow Industrials (INDU) 8,186 -0.18% slips lower by 14 points, the broader S&P 500 Index (SPX.X) 868 -0.05% trades decimally lower, and larger cap technology as depicted by the NASDAQ-100 Index (NDX.X) 1,060 -0.18% shows a 1.5 point loss.
While stocks darted to a low after three men were seen climbing cables of a bridge that leads into Manhattan, and later walked into Manhattan, reports that the three men were detained and that "alcohol was involved" and New York officials saying that several bridge closures were initiated as a precautionary tactic, found the major indexes recovering from their lows.
I hope these three gentleman look good in orange, and enjoy three squares of bread and water for a couple of weeks.
Sector action this morning has been mixed to modestly higher, with healthcare sectors such as the Morgan Stanley Health Providers Index (RXH.X) 274.74 +1.68% and HMO Index (HMO.X) 534 +1.85%, along with Gold/Silver Index (XAU.X) 63.98 +2.86% leading this morning's gains. Yesterday we noted that Wednesday's trade saw Dorsey/Wright and Associates "healthcare" sector bullish % (BPHEAL) reverse back up into "bull confirmed" status, and that internal strengthening looks to be playing out in the outward appearance of some of the healthcare stocks.
Yesterday, I was looking for an "exit" point in a previously profiled bearish trade in McKesson (NYSE:MCK) $25.36 +1.35%, which was profiled as bearish at/near current levels and in this morning's market monitor, have advised bears to lower their exposure to a bearish trade in this stock. While still one of the weaker and more bearish looking stocks that has ties to both the drug and healthcare sectors, it's my belief, based on past observation, that a rising tide in a sector and MARKET tends to lift all boats, and while this stock was profiled as bearish prior to internal sector and market strength, I think it best to move to the sidelines with MARKET and SECTOR internals improving in both the drug and healthcare sector bullish %. On March 21, Dorsey/Wright and Associates "drug" sector bullish % reversed up into "bull alert" status.
In last night's market monitor, I made note that yesterday's trade also saw a reversal up in the "restaurant" sector bullish % (BPREST) and now has achieved "bull confirmed" status at 34.27%. I'm not currently aware of an index that tracks the trading of restaurant stocks, but made note of a couple of stocks that sector bulls might want to set some upside alerts on.
YUM Brands (NYSE:YUM) $24.77 +0.85% is a stock I'd view as bullish on a move above $26.00. This would be a break above bearish resistance trend on the point and figure chart, and also trigger a triple-top buy signal. I also made note that a trade at $26.00 would be above the downward-trending 200-day SMA, which currently resides at $25.88.
Another stock in the group that looks compelling is CBRL Group (NASDAQ:CBRL) $27.92 +1.19%. This stock's relative strength chart just reversed back higher, and I like partial positions here at the market, and would add to positions on a break higher at $30.00, which would trigger a "bullish triangle" pattern.
Both patterns mentioned above if triggered are deemed "bullish" patterns with high probability success from Professor Davis' study. I will post Professor Davis study in today's 01:00 Update, so that our friends at premierinvestor.net can view them. I've published this probabilities table in past intra-day updates and it can also be found in the August 30, 2002 09:00 AM Update at this link. http://members.OptionInvestor.com/archive/intraday/2002/083002_1.asp