Barely Hanging On
Yesterday I
wrote about the recent up-tick
in relative strength in the Nasdaq 100 vs.
the S&P 500. This strength was evident
again yesterday, as all the other broad indexes made new lows, while the
Nasdaq did not. The divergence between the Nasdaq and the rest of the market
(S&P 500, Dow, Russell) is due mostly to blips in the Semiconductor and
Biotech areas. If the market manages to surprise us by going up for more than
a day and a half, these will be the areas to concentrate on.
Meanwhile, despite being
very oversold, as of 11:30 am this morning the broad market still refuses to
respond in any meaningful way to the upside.Â
As my readers know, I have taken a couple of defined-risk trades from the long
side over the past two weeks, only to see most of them get stopped
out. Obviously this has been a frustrating period, with abnormally strong
downside momentum swamping any signs of a bottom. As of this morning I am
still long the Biotech HOLDRs
(
BBH |
Quote |
Chart |
News |
PowerRating)
from lower levels.
Microsoft’s
(
MSFT |
Quote |
Chart |
News |
PowerRating) and Sun’s
(
SUNW |
Quote |
Chart |
News |
PowerRating) disappointing news from
yesterday have not caused the Nasdaq to implode like one might have imagined
it would. I suppose that’s a good sign, but we’ll have to wait and see.Â
Actually, the best trading markets lately — by far — have been the futures
markets. Volatility in coffee, soybeans, gold and the euro currency has been
fantastic. I am long-term bullish on commodities as some of you know from my
previous columns, especially grains and Gold. Massive amounts of money being
pumped into the systems will ultimately cause inflation, the question is:
where? I believe it will be in hard assets such as commodities.
Have a great weekend.
Â
