Hi Duke,
A bit before noon, after seeing the tone improve with the broad market, I started removing my short hedges and left a net-long position for the near term.
Despite the impressiveness of today's rally, the S&P 500 still remains below the 200 dma. That is offset by a greater extent in the short term by the lower channel boundary support of this downtrend. Take a look also at the long term uptrend by connecting the lows from 10/9/98 with the low from 10/18/99 for the S&P 500. You'll see that we're right at the support line, fueling the argument for the near term that a bounce is due.
Near term, I'm more bullish. Sector-breadth remains weak, however, which continues to concern me. With the simultaneous strength of technology and weakness in all the other sectors, the tech weighting of the S&P 500 just recently exceeded 34%, up about 10% from around this period last year.
Given the significance of this tech weight, it's a reasonable assumption in my opinion to track the Nasdaq 100 for internal market stamina. When this starts lagging, that is the time to become more concerned. Right now, it's still in steamroller mode. Like a running back in football, I'll let the linemen plow me a path to run through, and that means playing the tech side long for greatest ease of upside movement.
Rainier |
