Short -Term Future of NYX

NYSE Euronext, Inc. (NYX) is a low-debt growth company that has benefited from the recent increased market volatility and reported impressive numbers in the recent quarters. However, being in the NYX camp has been simply painful. NYX had dropped approximately 30% from its all-time high highlighting the fact that investing against the market is risky and can be painful. In the last 2 days NYX shares rose by 10% alleviating some of the pain and prompting THE question – is it time to sell and book these gains?

To look for the significance of the present trend, money flow index (MFI), a measure of the strength of money going in and out of a security, was used. MFI over 80 signals a top and under 20 indicates a bottom. Currently, MFI for NYX is approximately equal to 50 implying that there is more room for gains. This observation was confirmed by relative strength index (RSI) analysis. RSI enables assessment of risk for correction on overbought/oversold conditions of the security. Current 14-day RSI for NYX is slightly less than 50 (RSI = 70 is considered overbought and RSI = 30 is considered oversold) indicating that the top is yet to come.

Another indicator, stochastic oscillator comparing closing stock price to the range of price over a time period, was employed to shed some light on the future of NYX. Stochastic oscillator for NYX rises after falling below the level of 20 indicating a BUY sign. Also, recently %K-line crossed the %D-line rising above it and stressing the BUY sign.

Bottom line, competition, regulatory environment and ability to integrate acquisitions will define 2008 for NYX. However, in the short-term NYX should be able to extend its 2-day rally.

AUY in 2008

Current times have once again brought into focus the importance of gold stocks in any well-diversified portfolio. In the first two week of 2008 GOLD has delivered, and it is poised to have a strong run as the fiscal year continues.

Yamana Gold (AUY) is my absolute favorite gold stock primarily because the company’s focus on growing its operations and producing gold at cheap levels is well poised to benefit from the rising gold prices. AUY has gained more than 20% since the start of the year and the current volatility in the market demands a look into the future.

Financial analysis employing Moving Average Convergence/Divergence (MACD - a trend following indicator) and Money Flow Index (MFI - a momentum indicator) reinforces the positive outlook for AUY. The recent rise of MACD above the reference MACD-signal and the zero level signals a BUY sign. Moreover, the fact that there is no divergence between the AUY prices and the aforementioned indicators (MACD and MFI) indicates that the reversal in current upward trend is not expected.

Bottom line, AUY is well poised to shine.