Some very important changes in the market
Seeing some very important changes in this market…and glad
we have been out in front of it for you. First off, and most importantly, OIL
PRICES and OIL STOCKS are confirming the “big top” we have outlined for you. The
OIH broke first support at $134…and is just a stone’s throw away from breaking
longer-term support at $130. We believe this is inevitable. But don’t get caught
up in the OIH. Most stocks in the OIL complex are much much worse than this
proxy. As we have stated, we would stay away from OILS as they are over owned
and over loved. Dovetailing with that, we believe many other COMMODITY areas are
following suit. While GOLD has held $600, the underlying stocks are breaking
down badly. We also believe it is inevitable that GOLD is going to have another
leg down and head into support around next $550. And yes, you may add all the
other COMMODITY areas to the topping list. Some say this is a good thing for the
market. If OIL PRICES go down…if COMMODITIES drop…the overall market should
do better because inflation talk can come off the table. We are not so sure. We
believe there is a good chance that all this is occurring because the economy is
in major slowdown mode…and not sure that is a good thing right now.
The market had two distribution days on Wednesday and Thursday. Friday’s rally
was on lighter volume. We certainly do not want to see more of that. High volume
down days and lower volume up days will only lead to overall lower prices. The
short-term support we are watching closely is 1289 on the S&P…11,260 on the
DOW…428 on the SOX and 2122 on the NASDAQ. We have no overall worries until
these levels are taken out. These thoughts do not take away the fact we are now
starting to see better action in some RETAIL…some RESTAURANTS…and the
HOTELS…we are just not so sure there is enough leadership to carry this market
much higher. If those support levels are taken out, you will hear from us.
