6/29/14 2014 Chaikin Analytics, LLC. All rights reserved.

1
Market Insights
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Stock Market Tips from Marc Chaikin June 28, 2014

Rally Stalls as Sector Rotation Continues

The S&P 500 Index closed at 1,960.96, down 0.1% on the week. The stock market
reversed from a new all-time high on Tuesday at 1,968 on the S&P 500 Index and
finished down 0.6%, breaking a short-term support pivot at 1,952. While this
bearish price action usually results in 2-3% follow through selling, this is a resilient
market indeed, and stocks regrouped to finish the week on relatively solid footing.
As shown by the Power Bars below, large cap and blue chip stocks continue to lead
the way as investors look for stability and yield, while the spread between bullish
and bearish power gauge ratings in the Nasdaq 100 remains slightly negative.


(Power Bars from Chaikin Analytics)

While there has been a decent rally in The Nasdaq 100 and something less but still
positive in the Russell 2000, there is nothing likely to change in the upcoming
holiday shortened week. With traders and investors taking a long weekend, we
should expect more of the same, with the markets unlikely to make upside progress.

With earnings season due to begin on July 8
th
when Alcoa (AA) reports, the stock
market will take its cue from company guidance regarding the 2
nd
half of 2014.
A 6% rally in the 1
st
half of 2014, after a 5 year bull market, is decent enough and
there is nothing that I see which would derail the stock market short of some very
disappointing 2
nd
quarter earnings reports and negative company guidance.
Stay tuned.


6/29/14 2014 Chaikin Analytics, LLC. All rights reserved. 2


Nike (NKE) - Another High Flier to Sell on Strength
Nike reported earnings after the close on Thursday which exceeded Wall Street
estimates and the stock gapped up over 2 points on Friday. A funny thing happened
to NKE as it closed at its low for the day in a generally neutral market. This strikes
me as bearish behavior for this perennial favorite and gives investors and traders a
chance to sell this bearish Power Gauge rated stock as it makes a triple top.
While we respect positive earnings surprises, the markets response was
underwhelming and with Nike now overbought selling on strength makes sense.

(NKE Chart from Chaikin Analytics, showing Overbought Sell signal)

ETF Sector Update
The strongest sectors in terms of Power Gauge ratings are Utilities (XLU),
Financial (XLF), Health Care (XLV), Energy (XLE) and Technology (XLK). There
have, however, been lots of cross-currents as investors fled from high yield utilities
and oil refiners effected by the limited lifting of a longstanding ban on U.S. exports of
crude oil.
6/29/14 2014 Chaikin Analytics, LLC. All rights reserved. 3

(SPDR Sector Chaikin Power Bars from Chaikin Analytics)

The Retail stocks continue to drag down the Consumer Discretionary Sector
(XLY).

Update on the Oil Refining Stocks
Oil Refiners which have been stellar performers with bullish Chaikin Power Gauge
ratings were blindsided last week by a Wall Street Journal story about a Commerce
Department decision to allow 2 Texas oil companies, Pioneer Natural Resources
(PXD) and Enterprise Products Partners (EPD) to export extra-light crude oil
condensate overseas.
There has been a ban on U.S. exports of unrefined crude oil since 1975. In the past 3
years as the price of Brent (overseas) Crude Oil has spiked higher vs. domestic crude
oil (WTI) companies like Valero (VLO), Tesoro (TSO) and Holly Frontier have
benefited. These stocks dropped 8-10% on Wednesday and have struggled to regain
their footing.
6/29/14 2014 Chaikin Analytics, LLC. All rights reserved. 4

(VLO chart from Chaikin Analytics)

Both VLO and TSO still have bullish Chaikin Power Gauge ratings but it will take
some time for the market to decide if this exception to the export ban will result in a
trickle or a flood of crude oil exports. Politics will play a part in this discussion as
U.S. energy independence is a major plus for the U.S. economy, and the Obama
administration may not want to appear to be jeopardizing that very positive state of
affairs.

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