Electric,
My charts are not yet updated but the bottom for the DOw on 12/19 was 7576 and we are already over 300 points higher. That is not a bad rally or a weak rally, which surprises me - did not think it would be this strong. We should be approaching the overbought region now, but I need to check once the charts are updated.
The 3 major indexes have already exceeeded their previous peaks (resistance- DOW@ 7819, SPX @ 954, naz @ 1553). I will not yet be adjusting my trading range of 7550-8100.
Another sign of strength of this rally was that the DOW and NAZ were basicly moving up together and at times the NAZ was leading the DOW slightly - that's good, but we are now near overbought.
I would not be surprised to see some profit taking tomorrow or Friday, even though the Jan effect is an image in the investment community.
Would also like to comment that as this rally ends, we may start to see rotation of money into areas which are still beaten down like the smaller NAZ/RUT stocks.
Of course if the market really tanks again we can forget about money rotation. I guess my question then would be is that as this rally tops out how strong would the subsequent pullback be. I guess one would have to consider the forthcoming earnings, the Asian flu and the Jan effect (if any).
Subjectively, I do feel that once a big DOW stock reports bad earnings and blames some of it on the Asian flu, such would have a strong negative effect on the Non-HiTech sector. Also feel that the HiTech sectors has felt the negative pressures much more than the Non-Hitechs so far, so could this be the Non-HiTech sector's turn.
Well, as I said earlier we are now still range trading and there are no signals yet that we will break the trading range of 7550-8100 to the upside or downside. Would like to hear comments concerning this range trading
Seeya |
