Saturday, February 26, 2005

Market Week in Review

S&P 500 1,211.37 +.88%

Click here for the Weekly Wrap by

Bottom Line: Overall, last week's market performance was positive. The advance/decline line was stronger, most sectors rose and volume was decent. The CRB Index rose to an all-time high, resulting in substantial outperformance by most commodity-related stocks. Moreover, better-than-expected economic reports spurred cyclical shares to gains for the week. However, consumer stocks underperformed as energy prices approached highs set in October of last year. Technology was mixed on the week. The semiconductor index rose 3.24% and closed above its 200-day moving-average, while the internet sector underperformed substantially, falling 2.25%. Measures of investor anxiety were mostly lower on the week, but the AAII % Bulls fell to 31.82%, a relatively low level. Worries over South Korea's one sentence statement about their diversifying out of US assets are overdone, in my opinion. It is highly unlikely that South Korea would risk damaging their relationship with the US given current circumstances. Just 10 days ago a report showed the strongest 2 month accumulation of US assets by international investors in 2 years. Finally, it was a big psychological positive for the Bulls that the significant rise in crude oil, heating oil and natural gas didn't result in any follow-through declines from Tuesday's sharp sell-off. As well, the fact that strong economic reports and worries over the US dollar didn't result in higher long-term interest rates is also a boost to psychology.

No comments: