By: John Kosar of Street Authority
All major U.S. stock indices finished in positive territory for the fourth consecutive week, led by the tech-heavy Nasdaq 100, which gained 1.6% and is now up 17.6% for the year. This index has been a major focus of mine since the Aug. 25 Market Outlook. Its move above major overhead resistance at 4,147 this month was an important catalyst for the recent strength in the broader market.
On a sector basis, technology, consumer discretionary and materials led. Utilities, energy and financials trailed the pack and finished the week in negative territory.
Cisco Systems Resuming 2011 Uptrend?
The recent strength and leadership shown by the technology sector resulted in a potential buying opportunity in Cisco Systems (NASDAQ: CSCO). I discussed the topic Wednesday on CNBC, just before the tech bellwether announced its fiscal first-quarter earnings.
CSCO, which is the 10th largest constituent stock comprising 3.3% of the technology sector index, broke out to the upside on Friday from 15 months of sideways action that indicated investor indecision.
This breakout indicates that CSCO's larger August 2011 advance has resumed and targets a move to $32, 22% above Friday's close. This will remain valid as long as the upper boundary of the indecision area at $25.90 loosely contains prices on the downside as underlying support. Continue reading "In The Week Ahead: This Stock's Breakout Signals More Gains Ahead in 2014"
The Gold Report: In a 4th of July investor letter, you wrote that the precious metals complex, both mining shares and bullion, appear to be in the process of completing a major bottom, and you're more comfortable with the proposition that the downside potential has been fully exhausted. What are the signs that it's really turning this time?
John Hathaway: The gold futures chart is showing that we are in the process of a reverse head-and-shoulders pattern, which is a sign that a bottom has been completed. It means that downward momentum has been exhausted. This bottom will be confirmed when gold trades above $1,400/ounce ($1,400/oz), which is a stretch from where we are. At least we can say fairly credibly that it's shaping up to be a bottom, but we may test it over the summer.
Source: International Strategy Investment Group LLC
TGR: Are statistics on money flows telling you that investors are starting to get interested again? Continue reading "John Hathaway and Doug Groh: Buy Gold Like It's 1999"
By: John Kosar of Street Authority
Major U.S. indices closed mixed last week, with the broad-market SP 500 and tech-heavy Nasdaq 100 closing higher and the blue-chip Dow industrials and small-cap Russell 2000 closing lower. The bigger takeaway to last week's lack of direction is that the bellwether SP 500 has been moving sideways for the past month and is essentially unchanged since July 1.
This recent loss of upward momentum suggests some distribution/profit-taking has been occurring and defines a near-term decision point in the index, bordered by 1,986 on the upside and 1,953 on the downside, from which its 2014 advance must resume if still healthy and intact.
Small Caps, Volatility Will Be Key Again This Week
In the July 14 and July 21 Market Outlooks, I pointed out that the Russell 2000 and the Vanguard Small Cap Growth ETF (NYSE: VBK) were situated right on top of major support levels and amid favorable conditions to resume their 2014 advances -- if they were still valid. Following initial rebounds, Friday's sharp decline positioned both back on top of these levels -- 1,143 on the Russell 2000 and $121.53 on VBK. Continue reading "Next Gold Buying Opportunity May Be Just Around the Corner"