We will have a regular weekly market report, a report taking issue with the many articles on the Fed and the impending raising of rates, Mark Cuban’s thoughts on a bubble and probably throw in one of our “just wondering” reports on the weekend. You can tell football season is over.
Have you seen the Dax? Have you seen the CAC? Have you seen the FTSE? Have you seen the Euro. The Euro crashes and those markets skyrocket. All of this because of the decision by the ECB to print a trillion or two. It remains amazing that the decision of one man can manipulate their stock markets up and their currencies down. We would have thought that there would be a point where markets ignore moves by people who caused the problems in the first place…but as of now…nothing doing. So the equity bubble continues.
To be brief…mostly a sitting week with a pullback off of Monday’s highs. With the sitting, there was fireworks in the land of biotech as PCYC gets bought and in sympathy, others get juiced. Besides that, a lot of sitting.
Keep in mind, nothing has changed with what is not working. We have successfully alerted you to stay away from a myriad of areas that remain bearish including energy,oil &gas, gaming and others. If anything changes, we will let you know.
The market continues to pull in…but as of this second…no biggie.
We have simple tactics right now as the market works off the recent up move. We keep a list of the strongest names that are pulling into support/moving averages for primary or secondary buy points. When we see a slew of them start to move off these levels, we look to attack. Of course, there are some names that refuse to pull back and just sit tight. These will tend to be the strongest of the strong.
If the pullback turns into something worse, initial support levels for the strongest names will just be taken out. We then look for the next level…usually around the 10 week/50 day moving average. Keep in mind, it takes more than 2 days for this to play out.
Strength remains in many biotechs, semiconductors, medical and other tech-type names. Lastly, pay attention to names that recently gapped up on volume because of earnings. Some of the symbols to pay attention to are ROST,MNST,VRX and HAR. None are buyable here but the strength of the gaps put them into play if they set up again. Strength begets strength most often in the markets.
In order for markets to continue higher, pullbacks are preferable. They work off overbought conditions. They wipe the smiles off bulls faces. They build better bases. Looks like we may be getting one here. Anything is possible but we expect any pullback to be controlled and rotational at this juncture. The one area that pulled in most was the SEMIS as the group was juiced on a big buyout. The groups still looks fine.
For a change, really didn’t see any changes that stuck out today so nothing to report. With the fake employment number coming up Friday, we do expect some jello moving on the plate.
After a darn good move, this 60-40 market is now feeling a little tired. A 60-40 market simply means about 6 out of 10 stocks remain in shape while 4 out of 10 just ain’t happening. Looking farther out, these numbers do not thrill but as long as the major indices stay above their respective 50 day average and as long as the 60% keeps working, no sweat.
So to be repetitive, we remain bearish on a long list of areas…some we have been bearish for quite a long time:
ENERGY/OIL & GAS…except for REFINERS.
STEEL, COPPER, ALUMINUM, COAL and all that stuff.
UTILITIES, REITS as BONDS have topped. Near term , bonds may have put in a low.
We are also starting to see tops in AIRLINES which with the RAILS have held back the TRANSPORTS recently.
Remains a long list of MEDICAL,MEDICAL PRODUCTS, BIOTECH, MANAGED CARE and GENERICS.
RETAIL-(DISCOUNT,HOME IMPROVEMENT, DEPARTMENT STORES, DRUG STORES, SUPERMARKETS , APPAREL)
A few other notes:
FINANCIALS are mostly mixed. Not much there.
GOLD had been emerging but is now still in pullback mode.
HOUSING is the latest group that has emerged on the upside. This group had been dormant for a while.
As usual, we will have a comprehensive market report over the weekend…but…with the market hanging tight, lots of stuff working underneath but the areas we have pointed out to you to avoid have not really changed. Here are a few.
We would continue to avoid anything energy (except for refiners). We believe the recent rally/bounce is just that. The same goes for natural gas which seems to be breaking down here.
On top of that, most all commodity areas seem to have also hit the wall after bouncing in their downtrend. Again, no leadership here.
Recently, we told you on Feb 6 that we thought the bond market and many interest rate sensitive areas had topped for now. That stance has not changed as reits and utilities coninue to act poorly here.
We would not continue to avoid most gaming…especially the ones with exposure to Macau.
We will have a few other areas over the weekend as it is easier to isolate weakness when the market is strong.