Why Magazine Covers Are Important Indicators
Here are my thoughts.
Before I even start, please recognize that after every holiday in
the past 11 months, the market has ramped up…big time!
When the Dow and S&P went to NEW HIGHS this week,
there were 200 fewer NEW HIGHS on the NYSE than a few weeks back…a negative
divergence. Another LOUD negative divergence is the
major recent underperformance of the TRANSPORTS
(which failed right at the 50-day average) and more importantly, the Nasdaq and
the SOX. I told you TECH was lagging and now the
lag is becoming more pronounced. Before I show you some charts, here is an
important note:
Forbes magazine’s cover was recently entitled “TECH IS BACK: THE 25
HOTTEST TECH STOCKS.” If that’s not bad enough, I just received Fortune…the
front cover…you guessed it…”10 TECH TRENDS TO BET ON.” These covers should
worry TECH investors as the mainstream magazines report the news AFTER it has
already happened. You did not see any of these covers back in March 2003, did
you?
Intel
(
INTC |
Quote |
Chart |
News |
PowerRating)
is tracing out a reverse cup and handle. A break below $29.66 completes the
pattern. In case you did not know, INTC remains a big influence.
Microsoft
(
MSFT |
Quote |
Chart |
News |
PowerRating)
has now broke below the longer-term 200-day average. Keep in mind, MSFT, in no
way, is a leader. But with it being 12% of the Nasdaq 100, I thought it was
worth mentioning.
The Semiconductor
index
(
$SOX.X |
Quote |
Chart |
News |
PowerRating) just broke below its 50-day average
again. A break below 493 would be short-term negative.
Watch 2013 and then more importantly, 2000 on the
Nasdaq (its previous breakout).
The negatives are mostly
TECHNOLOGY stocks. Don’t take your eye off the ball if the NYSE-types
continue to do well. TECHNOLOGY is not the end-all-be-all. There still remain
plenty of good charts and setups to play off of…just a little tougher at this
point in time.
Gary Kaltbaum