Monday February 9, 2015 – Weekly Market Update

 

Are you getting the impression that this market
is schizophrenic?

Two weeks ago, the S & P 500 was down 56.83 points.
Then last week, it reversed and was up 60.48!

And it seems like this has happened all year.

As of today, the S & P 500 has an average range of
26.44 points per day. On a weekly basis, it is almost
51 points.

When you consider that back in December, the
S & P 500 had an average daily range of $14,
today’s movements are massive compared to that.

Last September, the range was only about $12.

If you compare those two figures, you realize that
we are double the daily range from six months
ago.

So, what does this volatility tell us?

Well for one, it tells you that you need to be careful.
Better to err on the side of caution.

Don’t fall victim to the talking heads on TV who
constantly scream buy, buy, buy.

Pick your spots to buy.

Last week I was mentioning to take a look at out
of favor sectors.

Steel was one of the sectors to take a look at.

The other one is oil. The spot price for oil lost
over 50% of it’s value since last summer.

Along with that drop, the stocks of oil companies
dropped like a rocket.

I was looking at a few Candian oil sand stocks.

One of them was Penn West Energy Ltd., symbol PWE.
PWE was trading for over $9 per share last summer.

It recently dropped to a low of $1.37. Essentially, it
lost almost 85% of it’s value.

There was an entry on January 30th when it closed at
$1.49 per share.

Today it is trading for $2.64. So, in just over one week,
it is up almost 80%.

This is why it pays to keep an eye on oversold sectors.

Will it head higher? I don’t know, but at this point you
can trail a stop under the daily low and keep moving it
up if it does head higher.

This is why it pays to look at beaten down sectors.

I hope this has been helpful.

This entry was posted in Weekly Market Updates. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *