Stock market related articles only please.

Non-stock market related articles are allowed to be posted here. The more the merrier.

YATES CONVICTION OVERTURNED

http://www.cnn.com/2006/LAW/07/26/yates.trial.ap/index.html

All I can say is, UNFRIGGINBELIEVABLE.

This insanity plea is a copout. Everyone that kills 5 children that is theirs' is insane!

I agree with you Minstrel.

To Succeed, Get Mentally Tough
07/26/2006 8:54 AM

Mental attitude always plays a big part in investing success but it is more important than usual in a difficult environment like we have now. It is particularly important that we not let the challenges we face weigh us down, and that we stay flexible and adaptable. Stubborness and an unwillingness to adapt carry a high price if we aren't careful.

The most important mental adjustment we can make now is to simply embrace the fact that we are faced with a downtrending market that is struggling to find support. We shouldn't be overly optimistic about the short term because the difficulties are still quite evident, nor should we be so pessimistic that we refuse to even consider the idea that things may improve.

As we have seen, even a nasty downtrend offers up surprisingly strong rallies. If you are fleet of foot and finger, you can profit from them, but we can't forget that we are still stuck in a downtrend and that the market is not healthy.

Although we need to respect the fact of a downtrend, we also must constantly keep our eyes open for signs of a change in market character. When we start seeing evidence that things might be changing, we prepare ourselves mentally so that we can act quickly and decisively when the time is right.

In the last couple of days, we have had a few positives. Technology stocks showed some relative strength in our big rally on Monday, and we have made some higher highs and higher lows. Yesterday we even managed a little follow through and saw the second day in a row with a strong finish. That certainly isn't enough to turn the market tide but they are things to tuck away in the back of your mind and consider as you contemplate the action the rest of the week.

Success in this market depends on your mental attitude. Make sure you appreciate the challenges and don't let the difficulties get you down. I assure you that if you persevere and keep an open mind, you will enjoy success.

Market Msg from John Murphy -- 7/26/06


RAILS AND OTHER TRANSPORTATION LOSERS WEIGH ON INDUSTRIAL SPDR -- ENERGY SPDR FAR OUTPACES OIL SERVICE HOLDERS
     
       

DOW INDUSTRIALS VS. INDUSTRIALS SPDR ... I've written several times over the past few months that the Dow Industrials were holding up a little better than the rest of the market, and interpreted that to mean that investors were switching from riskier small cap stocks into more stable industrials. That's been especially true for some of the recent Dow defensive leaders like Altria, AT&T, Pfizer, Merck, and oil giant Exxon Mobil. The Dow Industrials shouldn't be confused with the Industrials Sector SPDR (XLI). Chart 1 shows the Dow Industrials bouncing off their June low and trading back above their moving average lines. Its relative strength ratio has held up pretty well against the rest of the market. That's not true of the Industrials ETF shown in Chart 2. The XLI has undercut both its June low and its 200-day moving average. Its falling relative strength line peaked in May and has fallen especially hard over the last month. Although some industrial stocks accounted for the heavy selling, most of it came from transportation stocks. Yes, the XLI includes both industrial and transportation stocks. UPS has been one of the biggest losers this week and over the last month. It saw the biggest drop in its history yesterday and is down again today. Most of the other selling has come from the rails. Two of today's biggest losers are Norfolk Southern and Burlington Northern. Over the last month, the two rails have lost 20% and 12% respectively. That's hurt both the Dow Transports and the Industrials SPDR.

TRANSPORTS GET DE-RAILED... The next two charts show the serious chart damage done to both of the big rail stocks. Both have tumbled well below their 200-day lines and are trading at the lowest levels of the year. Their falling relative strength lines show how badly they've done versus the S&P 500. The RS line for NSC in Chart 3 has broken a yearlong up trendline. BNI hasn't done much better. And both have fallen on monster volume. It seems only fair to suspect that plunges in these economically-sensitive stocks are warning about waning strength in the economy and the stock market. It isn't good news for Dow Transports either which are threatening their 200-day line for the first time in nine months.

DISPARITY IN ENERGY ETFS ... Chart 5 shows crude oil futures gaining another dollar today and trading well above its 50-average and its June peak at $74. Gasoline prices have a similar chart pattern. Natural gas, which has been weak, is starting to bounce. That's giving a big boost to energy stocks which are the day's strongest sector. When looking at energy stocks, however, it's important to note the significant difference between the two main energy ETFs. Chart 6 shows the Energy Sector SPDR (XLE) which bounced off its 50-day moving average on Monday and is hitting a new three-month high today. Its relative strength line has risen steadily since mid-June. Most of the big buying in the XLE has come from oil giants like Chevron Texaco and Exxon Mobil which are trading at record highs. A number of other energy stocks are approaching that milestone (see below). That hasn't been true of the oil service group which has lagged way behind the XLE. Chart 7 shows the Oil Service Holders (OIH) climbing back over its 200-day line today, but still well below its July peak. Of the two energy ETFs, the XLE is the stronger by far. That's where most of the energy money is being made right now. Continuing strength in the oil patch may also have something to do with the recent selling in transportation stocks.

ENERGY STOCKS ON THE MOVE ... Three recent leaders in the Energy Sector SPDR are shown below. ConocoPhillips is trading at three-month high and nearing a challenge of its all-time high at 72 (Chart . Devon Energy has just broken a six-month down trendline (Chart 9). XTO Energy is nearing its all-time high at 48 (Chart 10). Renewed confidence in energy may boost the stock market over the short-run, but could pose a problem if it means even higher oil prices. Rising energy stocks and falling transports are a bad combination for the market.

Time Is on the Rally's Side

By Helene Meisler
RealMoney.com Contributor
7/26/2006 9:01 AM EDT
Click here for more stories by Helene Meisler             
Technical Analysis

    * The market can make rally attempts right into month-end mark-ups.
    * The Bank Index ratio to the S&P isn't good enough yet to justify a bet on banks.
    * The ratio of the SOX to the Nasdaq has shown a negative cross.


Isn't it exciting? We've now had two up days in a row!

Funny, I recall saying the same thing last Wednesday morning as well. Maybe I jinxed it by taking notice; we got one more up day and that was that.

On the oscillator chart, you can hardly see these last two days. That's because the oscillator still has time on its side.

There is still time left for the market to make rally attempts for the remainder of this week.

Coincidentally, that leads us right into the end of the month, where we have the potential for mark-ups.



But more than the rally, I've got two ratio charts on my mind. I want to follow up on the ratio of the Bank Index compared with the S&P 500. When I last discussed this chart, I said I expected it to back off from that downtrend line, and it has. It continues to do so this week, despite a 28-point rally in the S&P.

I expect that sometime in the next week, we'll begin to see this ratio hold and turn upward. If and when that time comes, I will be sure to let you know. For now, the banks continue to be underperformers.

I also want to discuss another ratio I keep but have shown on an infrequent basis. It's the ratio of the Semiconductor Index to the Nasdaq. As you can imagine, it has been declining in recent months, and is now at 19%. There is nothing special about 19%, except that in January 2005 we got that low and bounced, and did the same in April 2005. The first trip down there post-2000 came in October 2002.

For that reason, I submit that a break of 19 would be considered quite bearish for the semiconductors.

Of course, when we look at the chart of the SOX, we see that this 480-ish level corresponds with the ratio chart's 19% level. In fact, there is plenty of support all of the way down to around 375 on the SOX chart. And if it gets down there, it probably will be oversold enough to rally. My concern is not so much for the support breaking on the SOX chart; I'm more concerned about what we see when we look more closely at that ratio chart.

Note on the ratio chart that the surge up through 20% that came in February 2000 (point A) was a breakout of sorts and we haven't really broken back down below this level since then. Yes, even in the depths of the bear market in 2002 the ratio remained above this level. Therefore I would consider a break of this level serious.

The SOX really ought to try and hold this 375 support the first time down, but if this ratio breaks, I believe it means the next time down the SOX will break 375 rather easily.

And because everyone seems so concerned about crosses as bad omens, I can tell you that the SOX actually got one around mid-June. The 200-day moving average on the SOX has rolled over, so the two moving averages are both heading in the same direction.

Party crashers
By Dan Wetzel, Yahoo! Sports
July 27, 2006

Dan Wetzel
Yahoo! Sports
Less than seven weeks since they were lifeless, the Minnesota Twins left Ozzie Guillen speechless and now everyone in the American League is sleepless at the thought of October in Minneapolis.

Or do you think dealing with Johan Santana and Francisco Liriano in a five-game divisional playoff series sounds like a good time?

That is, if the Twins don't ruin your postseason dreams before they start.

Minnesota finished up a three-game sweep of the Chicago White Sox with Wednesday's 7-4 win, moving their torrid record to 34-8 since June 8, which includes victories in 12 of their last 13 games. With that, the Twins moved even with Chicago (and a half-game back of the New York Yankees) in the AL wild-card race.

And maybe most impressively, the Twins even shut up Guillen. Sort of.

ADVERTISEMENT
click here
"For the first time in my life, I'm speechless," the White Sox manager told reporters after the game.

You can't blame Ozzie. Who saw this coming? In early June, the Twins were 25-33 and destined, it seemed, to watch the White Sox and Detroit Tigers spend the summer battling for the Central Division title and/or a possible wild-card bid.

They were the Roger Clemens of major league teams – they took the first two months off.

Now Minnesota hosts Detroit – which still holds an 8½-game lead – this weekend in Minneapolis in what is shaping up as a most unlikely monster series.

The Twins will trot out both of their young, seemingly unstoppable aces – Liriano (12-2, 1.93 ERA) goes Friday, Santana (12-5, 3.04) pitches Sunday – to try to tame the Tigers, who are winners of 12 of their last 13 series. As an added bonus for Minnesota, it gets to avoid the Tigers' lights-out rookie Justin Verlander.

Anyone else circle this series with major playoff implications back in April?

"Even when we were playing as bad as we were the first month-and-a-half of the season, we still didn't give up on ourselves," outfielder Michael Cuddyer told reporters after the game Wednesday. "We still played with enthusiasm. And we still knew that if we played the type of baseball we're capable of, we could get back into things."

No one else believed, but they do now. If nothing else the Twins have thrown a wrench in what was shaping up as an orderly, if intense, playoff chase in the AL. Essentially Detroit, Chicago, New York and the Boston Red Sox were competing for three playoff spots – the AL West wouldn't factor in the wild-card chase and the Toronto Blue Jays were a possible X-factor but probably couldn't hold up.

Now Chicago is reeling, Detroit is wondering and fans in Boston or New York – at least the few who are aware of teams west of the Hudson – should be worried. Minnesota got its act going soon enough to avoid being last year's Cleveland Indians – the best team down the stretch who couldn't overcome a pathetically slow start and wound up out of the action.

One hundred games into the season, the Twins (59-41) have as good of a shot as anyone.

This may not be the most loaded roster in baseball, but with Santana and Liriano, you can practically bank on two victories every rotation. Get one more win somewhere else and you are playing .600 baseball.

That, of course, would be a decided cool down for the Twins, who are playing .810 baseball of late.

Minnesota is a home-grown club – almost everyone came out of the farm system – and it will be interesting to see if the Twins gamble and grab another bat (Alfonso Soriano is on the block, in case you hadn't heard) before Monday's non-waiver trade deadline.

Obviously, the Twins aren't going to stay this hot the rest of the way – at least we think – but Santana and Liriano (a combined 15-2 since the turnaround) have the look of Curt Schilling and Randy Johnson as Arizona Diamondbacks circa 2001.

That is why everyone is leery of Minnesota, even Detroit. The Tigers still have a big cushion in the AL Central (although we'll see by Monday), but everyone else is in immediate sight for the Twins, who aren't looking to let up on the accelerator.

With Chicago stumbling, Ozzie silent and the White Sox's once 11-game advantage over the Twins gone, Minnesota just kept looking forward on Wednesday.

"We knew, eventually, if we were to keep winning," Cuddyer said, "we'd catch whoever was in front of us."

Dan Wetzel is Yahoo! Sports' national columnist.

DOW CHEMICAL HURTS CHEMICALS AND MATERIALS SPDR -- FEDEX AND DOW TRANPORTS FALL BELOW 200-DAY LINE -- DOW COMPOSITE INDEX MAY OFFER CLUES TO MARKET DIRECTION
     
       

FEDEX LEADS TRANSPORTS LOWER ... The transportation sector continues to get battered. Yesterday we showed UPS and a couple of rail stocks falling below their 200-day lines. Today's most notable casualty is FedEx. Chart 1 shows that stock breaking both its 200-day line and its June low. Even an amateur chart watcher knows that's bad chart action. A couple of other big transportation losers today were Ryder and JetBlue. That was enough to push the Dow Transports below their 200-day moving average (Chart 2). That economically-sensitive index has also broken its June low. Rising energy costs have been one of the reasons cited for this week's poor performance numbers and weak forecasts. The same is true for chemical companies which fell hard today.


Chart 1


Chart 2

DOW CHEMICAL LEADS GROUP LOWER... Chemical stocks were one of the day's weakest performers. That's not really new. The DJ US Chemical Index in Chart 3 peaked at the start of 2005 -- both on an absolute and a relative basis. After forming a double peak in May of this year, it's started falling again. Today's plunge keeps it well below its 200-day average and close to a new low for the year. [The 50-day line has dropped below the 200-day which is another negative sign]. The biggest culprit today was Dow Chemical which plunged 10% to a new three-year low. Chart 4 shows that the biggest chemical stock has been falling since the start of 2005. It turned in a disappointing second quarter report and gave a weak forecast for the rest of the year. The main reason given was rising energy and material costs. It seems like we've been hearing that a lot lately. Dupont also succumbed to selling. Chart 5 shows that it has been a big underachiever as well. Chemical selling explains why the Materials SPDR (XLB) was today's biggest percentage loser (-2.1%). It just so happens that Dow Chemical and Dupont are the two most heavily weighted stocks in the XLB. Today's selling by those two chemical giants pushed the XLB back below its 200-day average


Chart 3


Chart 4


Chart 5

WATCHING THE DOW COMPOSITE INDEX ... The Dow Utilities have been rising while the Dow Transports have been falling. While the transports have broken their 200-day average, the Dow Industrials remain above their moving average lines and sit right between the other two Dow Indexes -- neither hot nor cold. One way to decipher the overall trend in the Dow family is to study the chart of the Dow Jones Composite Index (DJA). That index is comprised of 65 stocks and includes the 30 industrials, 20 transports, and 15 utilities in the three Dow indexes. Chart 6 shows the DJA forming two declining tops in May and early July which gives it a negative slant. It's trading below a "falling" 50-day moving average (which is more serious than trading below a "rising" moving average). Most of the recent losses have come from the transports. I suggested last week that it's not a good sign for the market when the defensive utilities are rising while the cyclical transports are falling. The Dow Industrials meanwhile are being kept aloft by defensive and energy stocks. I don't take those as positive signs for the market. That's why the Dow Composite Average may offer a realistic view of things. It's worth watching very closely for any more serious signs of weakness.

Bulk of the Advance May Be Behind Us

By private Arms
RealMoney.com Contributor
7/28/2006 9:13 AM EDT
Click here for more stories by private Arms             
Technical Analysis


The rally I had been anticipating that was signaled by the very oversold condition of the shorter-term Arms Index numbers has developed nicely. The Dow has rallied to very close to the highs made on the prior rally earlier in the month. Because of this, some resistance was to be anticipated, and that seems to be what started to show up in Thursday's trading. The early rally hit that level, and then the indices all backed off for the rest of the day.

The Arms Index moving averages are no longer oversold, as you can see in the chart below. The five-day had already moved to neutral territory, but now the 10-day is back to that area also.

We aren't yet overbought, so I'm willing to watch and wait a bit longer. I would be inclined to hold most long positions here, but the bulk of the advance we had been anticipating may already be behind us.

Market Masks Its Pain

By Jeff Cooper
Street Insight Contributor
7/28/2006 6:54 AM EDT
Click here for more stories by Jeff Cooper             
Technical Analysis

I showed a chart Wednesday in the Pivot Points section of the Trading Reports that indicated the S&P 500 was poised to pull back and test initial support at 1264.

The early opening strength on Thursday was a bluff. Nevertheless, most stocks found a first-hour high, if not a first-half-hour high, before rolling over. In the process, the S&P pulled back between my initial 1264 S&P support and secondary support at 1260. The index made a low of 1261.90 before a feeble bounce at the bell to close at 1263.20.

Last-ditch support as shown in Wednesday's 10-minute chart is 1255. Nevertheless, despite my belief that the indices can and would hold up into the end of the first week of August and the Aug. 8 Fed meeting, many stocks are in a crash-and-burn pattern. Support on many names is being broken, with large-range gaps to the downside in just too many names for me not to believe that an accident is waiting to happen for the indices as a whole.

On Monday, I said I did not want to be short over the next couple of days. The market has really held our feet to the fire and taken us to task on that notion. We got a rally, but individual stocks gave up a lot of gusto on Thursday. The important thing to remember is that we are trading individual names and must honor stops and pivot points on what we are trading regardless of what the overall market is doing. Many times, the market can mask deterioration under the surface for a while.

Conclusion: Thursday scored an outside day down on the S&P -- meaning Thursday's high was above Wednesday's high. In addition, the index snuck back below its 200-day moving average once again. This large-range reversal is not a good omen coming after the three-day swing chart turned up Wednesday, but not totally unexpected.

Nevertheless, as I mentioned earlier in the week, the turn up with the three-day swing chart often defines a high when the big picture trend is down, and such was the case July 3. Moreover, Thursday's reversal also puts in the prospect of a third lower high, which as you know often indicates a Power Surge to the downside.

If 1255 S&P does not hold, the market itself may not hold up into the Fed meeting. Be that as it may, the market is certainly in defense mode and I would not get aggressive on the long side unless it is on an intraday basis.