A Key Juncture

Cyclicals,
value, low beta…
whichever way you want to call it, these areas
continue to act well. Because of this, the Dow is now rising to the upper end of
its definable trading range between 10,300 and 11,000. I have absolutely no clue
which way it goes. I will say one thing: It is the same caveat I have been
giving for the past five years every time cyclicals start to outperform. They
look good, trade well and are now leading … but don’t expect it
to
last very long
.
So, enjoy the aluminums, chemicals, oils, believe it or not, gold and other boooring areas right now. Just be ready for a quick end to the move. The best place to find these names is the New High List. More and
more are showing up each day.

On the other end of the spectrum, I simply do not know how to describe what
continues to happen with the Nasdaq, specifically technology. As you know, I
have been skeptical of every bounce since I started writing this column. I have
actually been holding myself back from really telling you what I think happens.
Let’s just say, it’s nothing you want to hear. With Intel
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‘s warning
tonight, I am not feeling much better. I would continue to give little or no
weight to technology at this time.

Last but not least, I would also be avoiding Biotech. Several reports ago, I
mentioned that the group had topped out. It is now at a key juncture. A chart of
the Biotech Trust
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speaks for itself. 

There is nothing but a black hole if
it breaks these levels. Many individual names have already broken support. Keep
in mind, a lot of names in the space are very speculative with little or no
revenues. I know there is a lot of promise but I am thinking of another area
with lots of promise but no revenues or earnings that has had a rough trip
lately. Hmm!

Have a great weekend.