I do not like what I am seeing with INTC and DELL. There was profit taking when both of these stocks moved up. Meanwhile, stocks like YHOO and AMZN went straight up in comparison. I think this is an indication of where the money is going: back into the stocks that lead the previous rally. Many saw how these stocks appreciated quickly and do not want to be left out this time around. At the "last minute" both DELL and INTC improved, but not an impressive showing IMO particularly considering the breakout that INTC pulled back on. If this was a normal pullback following a breakout, this stock would of been reaching for the sky today. I will check my charts today, but I am beginning to think that DELL and INTC is not the place to be for this rally, that is if we are going to have another one.
So I agree that along with my thoughts above, your view of the increased volatility in the big cap bellweathers indicating the degree of instability and lack of breadth in the market is correct, and furthermore is an indication of the lack of breadth that will be experienced on the the next rally.
If this turns into a rally, I think money will be moving into a handful of speculative stocks. The stocks of particular interest are the ones that lead the rally and sold off. So the early ones there will make money. The money that later moves into these stocks will be the losers that may also experience an abrupt finish. Just going by the performance witnessed today and considering my thesis, this group of stocks include: AOL, YHOO, AMZN, LU, CSCO, and IBM. I will look at the charts on these stocks tonight. If the rally continues, other stocks may see speculative money which I think will be the stocks with a good story. Earnings growth history is irrelevant to speculative money. But it helps if the stock has reported spurious but out of the ordinary high earnings compared to nearby quarters of small or negative earnings. Speculators love that roll of the dice that can come up "their number".
The NASDAQ moved up at the last minute with some strength. The DJIA does not look as strong and has tentatively just made it over the hurdle of its intraday resistance where it stumbled today.
Any thoughts?
Bob Graham |
