Most of the major sectors are still clumped together, unable to push any single one to the forefront with the exception of the basic materials stocks - they're up about 9% over the last month. However, as overbought as they look, we're not even necessarily interested in looking at them right now. However, there are a couple of industries that look like they're shrugging off most of that sluggish behavior -- one in a bullish way, and one in a bearish way. Toys is the former, and coal is the latter.

Coal - Bearish

Don't be fooled by a little upside volatility in the Dow Jones Coal Index (DJUSCL) - those swings can't undo the fact that these stocks have been in a downtrend since early 2006. Since then, the free-falls have been strong and easy to make, while the rallies have been short-lived. On the daily chart, the bearish clue is the resistance at the 50-day moving average line. It's not the first time we've seen it there, but it's the first time we've seen it there since July of last year.

Dow Jones Coal Index (DJUSCL) - Daily


On the weekly chart of the Dow Jones Coal Index, we can see how the index is making lower highs -- a testament to the weak and short-lived rallied we mentioned above. True, when we hit 221.19 in early 2007, it didn't make that important lower low; we saw 205 in September of 2006. However, between the direction the 200-day and 50-day lines are pointed - downward - and the troubles these stocks are having, we see more downside in store.

Let's set a target of 185 for the Dow Jones Coal Index. The suggested stop on the bias is at 265, right between the 50- and 200-day moving averages.

The bigger coal stocks are Arch Coal (ACI), Peabody (BTU), and Massey (MEE).

Dow Jones Coal Index (DJUSCL) - Weekly


Toys - Bullish, Probably

We've looked at this one a few times in the last few months, but it keeps coming back as it provides a pretty good trading opportunity. The Dow Jones Toy Index (DJUSTY) had a great run in late 2006, then tapered off the last couple of months. That slow period, though, may have just been a consolidation phase -- one that's close to an end. The index is up 4.2% over the last two weeks (not even a full two weeks), and is up 7.6% over the last four weeks. That move pulled the index back above the 50 day average, and is threatening multi-year highs. While we don't yet have all the signals we'd really like to see (like a MACD cross, or a new high), we don't mind being a little pre-emptive here - it's worth the risk.

Let's establish an upside target of 430, and set a stop on this bullish bias at 347 -- just slightly under the 50-day average line, which should leave plenty of room for volatility.

The major names in this industry are Hasbro (HAS), Mattel (MAT), and JAKKS Pacific (JAKK).

Dow Jones Toy Index (DJUSTY)


Price Headley is the founder and chief analyst of BigTrends.com.