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The S&P Sector Carpet is full of green on Friday with the darkest green showing up in the technology and industrials sectors. The average gain in the tech sector is 3.4%, while the average gain in the industrial sector is 3%. There are isolate spots of red and the utilities sector is the weakest.


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The Egypt Index ETF (EGPT) surged in the lead up to Hosni Mubarak’s resignation and then declined as democratic elections were called. The decline ended when uncertainty became certainty and Mohammed Morsi was declared president on 24-June. With the correction holding above the December low, it looks like a channel breakout would signal a continuation of the prior advance.


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American Eagle Outfitters (AEO) has been stuck in a consolidation since early May. Moreover, notice that this consolidation is narrowing as the Bollinger Bands contract. In the indicator window, Bollinger BandWidth is currently at its lowest level since February, which was scene of the last big contraction and breakout. Watch the current boundaries for the next directional clue.



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Stocks were down sharply on Monday, but there were a two pockets of strength. The image below was taken from the ETF market summary. Notice that the Commodity Index Fund (DBC) and the Gold Miners ETF (GDX) are positive for the day. Also of note, gold, silver and corn were advancing on Monday.


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Alcoa (AA) is part of the Basic Materials SPDR (XLB) and in a clear downtrend. On the P&F chart (3 x .25), the stock broke to new lows in 2011 and then formed a descending triangle the last nine months. The red A marks October 2011 and the red 6 marks June 2012. Even though the stock recovered from a support break this month, the trend remains down and further weakness is expected.


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The image below comes from the Sector Carpet. First, notice that all sectors are lower. Second, notice that the Basic Materials SPDR (XLB), Energy SPDR (XLE) and Technology SPDR (XLK) have the most red. The Consumer Discretionary SPDR (XLY) is not far behind. Third, notice that the defensive sectors (XLU, XLP, XLV) are holding up the best because they have the smallest losses.


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Cheesecake Factory (CAKE) moved sharply lower at the beginning of June and then rebounded with the market the last few weeks. This rebound, however, is running into resistance from the gap and prior high. Also notice that MACD turned down and is on the verge of breaking below its signal line.


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The PerfChart below shows the three month performance for five commodity indices and the CRB Index ($CRB). All five are down and $CRB is down around 14%. Blame it on energy, which is down over 21%. Precious metals have held up relatively well with a decline less than 4%.


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The image below, which stems from the sector summary at StockCharts.com, shows the key industry groups within technology sector. On Monday, computer hardware, internet and semiconductors were leading the way higher. Users can click on these names to see the individual stocks, which is a great way to identify leaders and laggards within the group.


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The Dow surged over 150 points on Thursday and broke above its May high. With only 30 stocks, chartists can use the CandleGlance feature at StockCharts.com to find which stocks led the move. The Dow is a price weighed average and the stocks with the highest price have the most influence. This means stocks with big gains (<1.5%) and prices prices (> $60) carried the day (CVX, MCD, JNJ, TRV, XOM)


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