A near-term low may be in for this sector




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Wow! Vicious sector
rotation occurring
…and it’s important that you stay in front of it.

COMMODITIES followed our script to a tee as OIL, GOLD, SILVER, COPPER,
ALUMINUM… have now broke down and badly. The break of $130 we told you about
for the OIH was much more important than even we thought…and as we told you,
OIL PRICES were heading lower. This has been setting up for weeks and is now
coming to fruition in a big way. Already, these areas are oversold and due to
bounce. Do not dare the bounce as we believe any bounce will be short-lived.
GOLD also broke the important $600 level.

In my trading diary, I wrote several weeks ago that the next time COMMODITIES
cracked, the market would crack. Nope. All that money flowing from COMMODITIES
found its way into everything CONSUMER. We saw the bid in RETAIL in our last
report but in no way, shape or form did we think it would get this kind of a
pop. The set-up was there.

Other thoughts:

TRANSPORTS have put in a near-term low. This is helping. We are especially
liking the action in the AIRLINES. OIL down…AIRLINES up.

HOUSING looks like a near-term low is in. We want you to recognize that over a
year ago, all the news was good in the HOUSING business. HOUSING stocks topped
out on the good news. Now…all the news is bad…and guess what? HOUSING stocks
are no longer going down…and in fact, after teasing a breakdown in the past
week, HOUSING stocks have held and some are moving above their first resistance.
Sell the good news…buy the bad news.

TECH…TECH…TECH…TECH is still in gear as the NASDAQ/NDX and SOX moved above
another area of resistance. As we have said for years, follow the SOX.

We cannot find anything bad about the action the past two days. The more areas
that bottom, the better. There is still a clear lack of growth leadership
breaking out but if this positive action continues, we gather we will get some.

On top of all the COMMODITY areas, we are seeing one other area possibly
topping…UTILITIES as the market comes off the DEFENSIVE plays.