The Ice is Getting Thinner
Let me get this straight…spend $1.6 trillion of money you do not have on health care…to cut costs? Let me get this straight…currently, according to statistics, the average premium/person/year is about $4,700 right now…but the future spending comes to over $6,000/person. I feel better!
I really have not had to write a report in the past couple of weeks as the market traded in a tight trading range with the markets teasing both the upside breakout and the downside. To be honest, this past Thursday had me thinking the market would extend into new high ground for another leg up but another downside reversal killed that chance…at least for the short term. Major indices are now teasing a break to the downside of the past two weeks. I do not dare even think of the intermediate term just yet.
Things to ponder:
A few sectors that have been working are now starting to roll over… I am not talking major tops. I am talking about minor tops that could repair themselves. But right now, the evidence at hand says the market is losing some strength as a few areas run into trouble. These areas include AIR FREIGHT, CRUISE LINES, AUTO PARTS RETAIL, LIFE INSURANCE, GAMING, REGIONAL BANKS, DRUGS.
COMMODITY stocks are now under distribution…and they were distributed yesterday even with the dollar being weak.
Recent growth leaders are finally feeling some pressure. Watch the leaders. If they break badly, markets could get into trouble quickly. So far, nothing more than an overdue pullback for most of them…but a few are breaking.
Short term support areas are being breached. The S&P at the 920-923 area has been breached…with more important support at 878. The DOW at 8598 has been breached with more important support at 8221. The NASDAQ remains the strongest major index with support at the recent breakout of 1773.
Secondaries…secondaries and more secondaries. I do not think there is a day where I wake up where there wasn’t announced at least a couple of secondary offerings. And it is not just from financial companies. Dilution is not a good word on wall street…and we are seeing lots of dilution.
The ice may be getting thinner. I do recognize we are headed into the end of quarter mark-up but while we wait for that, more and more stocks are breaking near term support, more and more stocks are topping, and more and more sectors are finding trouble. This must be watched. We have not seen a correction of consequence since the lows…and with the move up, is overdue. The world is not ending…just a warning shot.
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