WEEKEND NOTES

To be repetitive on the sentiment front:

Sentiment remains off the charts bullish. Markets remain verrry overbought as price is stretched and extended. BUT…as we have always told you, sentiment is not a pinpoint indicator. Very often, too bullish sentiment can stay on the high side for a while. So, watch price…and to this minute, price remains strong.

ALL major indices remain above support and moving averages. WORLD markets are also in tune. The best bullish markets are the ones where world markets are working. ALMOST 7 out of 10 stocks are now working. MORE and more sectors are showing up on our screens. Not sure we need to say more. but REACTIONS to earnings have been good. Bad earnings like IBM gap up. Really bad earnings like GE reverse the gaps to the downside. Good earnings are rewarded.

Also:

TRANSPORTS remain strong as the pullback has been minor.

SMALL CAPS, while resting have hardly budged.

FINANCIALS are working. Poor reaction s like GS get bought up. Smaller financials are also setting up into earnings.

SEMICONDUCTORS remain beasts.  The worst we can say is the group is the most stretched and the most overbought on our screens.

There are still a bunch of areas to avoid like:

A slew of OIL/ENERGY names though the REFINERS are strong.

CONSUMER STAPLE areas like FOOD,TOBACCO.

MEDIA, a ton of RETAIL, RESTAURANTS,CABLE/SATELLITE,.

We remain in the midst of earning’s season. So far, so good. A few big blow-ups are occurring but this is normal. Just realize at any time, the “overboughtness” can take over but so far, nothing doing.