WEDNESDAY:
Factory orders are out at 10:00ET, and they are not expected to be barn
burners. Nothing in the economy right now is going to set things on fire
to the upside. The key for the economy and the market is the war. Good
war news will drive a further rally as the war is the current seminal
event. Tuesday night the report was that US troops were in a major battle
that was the start of the ground war for Baghdad. If that battle is
relatively fast and decisive that is a positive step for the market. It
will then have the actual Baghdad siege to deal with. Everything these
days moves one step at a time.
After the Tuesday action the indexes are still in shape to continue the
rally, but there is the rather uncomfortable proposition of the SP500
starting with the lead. With NYSE breadth better than 2:1, however, that
shows there is some additional buying other than in the large caps. We
will be watching for tech stocks to start higher on volume. While the
techs were lounging Tuesday, education, drugs, consumers, scientific &
technical had good sessions. Those are the leaders that continue to lead
and provide the support for the market.
Wednesday we will be looking for those stocks to continue breaking higher
ahead of the market. As we have discussed before, the leaders start to
move out and lead ahead of the rest of the market. Monday was a setback,
but Tuesday helped regain some ground with SP500 rallying on stronger
volume and wider breadth than the Monday selling. Nasdaq did not cave in,
holding the 200 day MVA; if it joins the action the upside will be much
more powerful. We exited some of those positions Tuesday simply because
we did not want to risk bigger downside; we can always get back in if we
want, but there are several good patterns that did not dip down that look
ready for our money if they make their moves. |
