Major Market Indexes
Tuesday, August 24, 2010
The major market indexes remain about 1% lower across the board, as we head into the latter half of the trading day. At last check, the Dow Jones Industrial Average (DJIA) was down about 86 points at 10,088.4, with resistance in the 10,100 region gaining strength. In sector activity, the Morgan Stanley Cyclical Index (CYC) has plunged nearly 2%, as investors jump ship on companies sensitive to economic turmoil, such as United States Steel Corp. (X), Dow Chemical Co. (DOW), and Johnson Controls Inc. (JCI).
Freeport McMoRan Copper & Gold Inc. (FCX) is leading the CYC lower, with the stock plunging more than 4% to test support at its 50-day moving average in the $67.50 region. Adding to the stock's decline, HSBC downgraded its rating on FCX to "neutral" from "overweight" ahead of the open this morning. FCX is in danger of receiving additional downgrades, as Zacks reports that the stock has acquired 13 "buys," four "holds," and no "sells."
On the upside, oil-service sector stocks are in rally mode, despite a 1.75% drop in the front month crude contract.
Specifically, the Oil Service HOLDRS Trust (OIH) has rallied roughly 1%, and is pushing to reclaim the psychologically significant 100 mark. Leading the group higher has been Transocean Ltd. (RIG), even as company executives testify in the ongoing federal investigation into the Deepwater Horizon Incident, or Gulf oil spill. RIG is rebounding off support in the round-number 50 region, which is also home to its rising 50-day moving average. Sentiment is bullish, however, with the stock's SOIR of 0.58 arriving in the 20th percentile of it annual range. There is room for potential upgrades, though, as 13 of the 30 analysts following the shares rate them a "hold" or worse.
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