Financials Continue the Pain, NASDAQ Rolling Over

June 24, 2008

Stocks failed to rebound from Friday’s action as selling pressure was just too great. The NASDAQ lead the major indexes to the downside as big cap technology stocks continue to fall out of favor. There is no question that Small Cap and Mid Cap stocks are the place to be in this market, but more specifically Oil and Gas small cap stocks. With the FOMC meeting looming most traders will be hesitant to put on large trades prior to Wednesday’s rate decision. In addition to Wednesday’s rate decision we have oil inventories, an important reading because refiners should be gearing up for the July 4th holiday. Overall, this market is unhealthy and the area of real strength is small cap Oil and Gas stocks everything else should be left alone.

The NASDAQ took out its most recent attempted rally’s low reseting our attempted rally day count. It comes to no surprise as the Dow and S&P 500 look real weak. Not too mention over 200 stocks on the NASDAQ hit new lows yesterday. An overall weak market and one that should not be overplayed but played with extreme caution. Basically, I believe Cash is King and is the best landing spot for me.

Crude oil once again is setting up for more upside. The oil summit in London will do nothing for the price of oil. There are three things that can help ease pricing, but only two long term solutions. One is to decrease demand via alternative fuels, but this is still a few years out. The second is to increase the supply of oil by drilling here in the United States. Another solution which is only a temporary fix would be to increase margin limits on those who trade in crude oil futures. Crude oil is ready to run again regardless of the fixes that may be in place, chart: