Tuesday, July 18, 2006

Utilities, the defensive play

Today the S&P 500's 50-day moving average crossed below the 200-day, albeit 2 months since the index began falling.

Some signs point to a short-term bottom, as the markets bounce after some hard-hitting days. Across the board, everything has been down: Oil, Gold, Stocks, Bonds, and other commodities. Everything, that is, except the Utilities, who's technicals look inverted to everything else (it's moving opposite, like a defensive sector).

I finally found it after looking overseas to figure out where the money's going. If everything in the U.S. is going down, is it all just going to cash (which MANY people say they are doing)? Despite the Israeli tensions, the Middle Eastern markets were way up today, and India had a good day despite yesterday's train bombing in the financial zone. My guess is people are buying into the panic of these countries, expecting things to get better eventually.

However, fighting and bombing are still going on, and I fear there is more blood to be shed "in the streets." I'd say these investors/traders are jumping the gun (no pun intended), or catching a falling knife. Those markets may likely see more losses in the near future.

Back to the U.S., I expect we'll see a short-term bounce (or "rally" as the media likes to say). But I'm still Bearish overall until I see better signs.

And where's the talk on today's Homebuilder Index release???

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