INDEX UPDATE
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There are no CLASS 1 or CLASS 2 BUYs on any of the INDEXES, and for the overall market, the bias is strong to the downside. It does appear that we are heading for a triple bottom, as long as we do not go lower than the previous lows.
As for me I am watching the interest rates and if it pierces the support range of 6.68-7.1, I will start shorting the market.
On a technical basis, although still somewhat subjective, the overall market is still healthy and wants to move up. Except for only a few indexes (DOW,XMI), most of the indexes I watch have either set new highs or have at least exceeded the previous peak during this last run-up. Remember the old rule - HIGHER HIGHS & HIGHER LOWS for upward momentum, and LOWER HIGHS & LOWER LOWS for downward.
INDEXES setting new highs - XAL(AIRLINES), XII(INTERNET), XOI(OILS), NASDAQ COMPOSITE, RUT(RUSSEL 2000)
INDEXES surpassing earlier peaks - DRG(DRUGS), BKX(BANKING)
The DOW was the worse performing index of them all. I was also watching the volume which was decreasing for the DOW but increasing for the NASDAQ, so I do not feel that I can consider the last runup as a low volume rally. I believe that the money in the market was not decreasing but rotating. I would appreciate if anyone could confirm such.
There are others which would fit in one of the above categories, but I did not have enough time.
At this time, I have no convincing signals that the overall market will correct further.
Unfortunately, much hype is now focused on the economic numbers coming out on Friday. If such numbers are view by the market as being bad, the probability that this correction will go down further will increase. Since I am not a fundamentalist, I will leave it to others to predict the economic numbers.
As for individual stocks:
CLASS 1 BUYS: AMD, CYMI
CLASS 2 BUYS: IBM AMAT LSI
The SOX is borderline CLASS 2 BUY
Remember, CLASS 1 BUYS are only good for an initial pop of 1-3 points. Frankly, I will NOT initiate any new long positions, until I can confirm that the previous support lines will hold.
DISCLAIMER - my analysis is based on technicals, and minimizes as much as possible fundamental considerations. It is for others to tie in the fundamentals.
Good night all |
