Markets Resiience in Spite of Bad News AND Some Oil Cleanup Ideas (with more to come)

Well, it was an up down up down up down up day, what can I say. The markets opened positive then shortly sold off after the rose and some economic news was also negative. Initial Jobless Claims rose by 12,000 when analyst expected them to fall by 6,000. In addition, The Philly Fed's June index of Business Activity for factories fell by over 13 points to 8 from 21.4. Analyst expected a reading of 21, so this was way off. It also demonstrates how regional the recovery is. Lastly, the Conference Board's Index of Leading Indicators was slightly off with a .4% increase rather than expectations of a .6% increase. At least that was still positive.

In any event, this set the tone for this morning's markets. During the afternoon, the markets oscillated below breakeven, then at 1:00 CST, it got to even, then immediately sold off. Finally, the last 1/2 hour of the day, it rallied.

All 3 major indices ended positive. This is resilience in the face of bad economic news. During the day, the indices tested those resistance levels, now hopefully support levels, and bounced off of the repeatedly. From a technical standpoint, this is all good news. Once again, the main thing we need now is volume to increase. Volume on the NYSE was 5.2 Billion shares, still below its current 6.4 billion 30 day moving average.

Some decent even marginally positive economic news and the markets could go higher. However, with the bad economic fundamentals, this should be only considered a short to midterm rally. The problem, growth is slowing and our US budgets are based upon growth. That means the deficits will mushroom unless we get growth.

Over the next few days, I will give you some stocks to study that might take advantage of the Oil Spill Disaster in the Gulf. These are all clean up companies that specialize in oil & environmental cleanup. The one for today is Nalco Holdings NLC, which specialize in oil dispersants to "treat" the oil. I believe their demand will continue to go up and they have recently come off a trend line. Therefore, this is one of the timelier stocks out of the bunch in my opinion. I have attached both a long term chart, and a short term chart for you to get a clearer picture of what is recent and relevant.

Well, I don't have any more time today, but we will be discussing all of these on the show today at 4-6 p.m. CST on 1190 AM in DFW, or you can listen streaming via our website.

Thanks, and keep studying,
Dan Stewart CFA®