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Strategies & Market Trends : IPO and Other Stock Plays -- Ignore unavailable to you. Want to Upgrade?

To: david777 who wrote (12452)	5/12/2005 9:34:26 PM
From: david777	Read Replies (1) \| Respond to of 13331

FRIDAY: The first go round of the Michigan sentiment report is out Friday along with business inventories. The former will get the most attention as sentiment is always sexier than inventories, though the latter are more germane to determining what the economy is going to do next. DELL also reported decent earnings and was up $1 after hours. Maybe there will be some synergistic impact, but as noted, Dell makes its gains by taking market share; that is how it has done things the past four or five years and it has been quite successful at it. That is not a growth sector story, however. Thursday leaves the small but promising bounce off the April lows in some deep trouble. There is no breakdown yet, but the leader of the move is teetering on one. NASDAQ is being thrust into the reluctant leader role; it has done anything but lead this year and it would have to change its stripes to do so. Maybe DELL can do the job but we are not counting on it. Many factors appear to be in the market's favor, but it is thus far unable to respond to them since the solid bounce off the April lows. Wednesday we stated that the market starts its moves in times of turmoil and uncertainty. That is still the case now, but the market is making it harder for itself with the distribution on the NYSE indices. Distribution is the arrow in the knee of any rally attempt; a few such sessions and it is an arrow in its heart. SP500 has two and this is the point where it has to show it can still rally from here. If you wanted a time of doubt, this is it. The distribution says play defensive and watch stops. We are in leaders, and leaders hold up better than the average stock. They cannot withstand out and out selling, however. Given the strength of the move off the lows we figured this rally had more strength to take it to the next notch, i.e. the early April highs before the next test of the April lows. Thus far it has provide a four week jaunt. Not bad, but 6 to 8 weeks would have been better. Certainly that would have built a better base. Right now it has to prove it can continue the rally. It has some good data on its side, but it is fighting the Fed's strong record of ruining solid economies. How NASDAQ performs on the Dell news and whether SP500 can hold the 200 day SMA will buy it some time into next week.