Here’s the strongest sectors
Barry Bonds is now
saying his life is in shambles. Hey big boy, maybe you should go take
a little trip down to New Orleans to see what it means for someone’s life to be
in shambles! First let’s talk about what happened yesterday, and then later in
this article, we’ll look at some sector action.
All this talk about the Fed being tight…ladies and gentleman, the Fed is in no
way, shape or form…tight. Maybe it has increased the cost of money but in no
way have they decreased the availability of money. In our humble opinion, this
Fed remains loose. Keep in mind, Big Ben worked for this administration and keep
in mind this is an important election year. It’s not too hard to put that puzzle
together.
We would like to tell you the market had another distribution day on
Tuesday…that would be 4 for the NASDAQ and 3 for the S&P in the past month.
We would like to tell you the NASDAQ once again was turned back at around the
2330 area.. This was the third time it occurred on a negative reversal day.
We would like to tell you that the NASDAQ 100 continues to labor and
underperform other major indices.
We would like to tell you that the SOX continues to act like the Knicks on a
good day. The SOX has not been able to budge from recent lows and already seems
to be rolling over at these lower levels.
We would like to tell you that the BOND MARKET is now breaking important
support…which means rates are headed higher.
We would like to tell you that UTILITIES continue to act poorly which fits right
in with the bond market action. UTILITIES have had a decent track record of
topping out about 6 months before Mr. Market tops out.
We would like to tell you that a bunch of FINANCIALS are back to rolling over
again. Take a look at the chart of BEN and TROW:
We started off with the negatives to get them out of the way. The good news is
there remains many positives.
For starters, for the most part, WORLD MARKETS are not budging. Yes, the MIDDLE
EAST markets are being slammed. Yes, BRAZIL seems to be rolling over…but ASIA
is strong and EUROPE doesn’t know what a 2% correction looks like. In fact, this
morning, EUROPE is up and JAPAN is up over 250 points.
Major indices are still above moving averages and support levels. Until they are
breached…the "market" continues to get the benefit of the doubt. If they are
breached, then we can talk.
There is strength in plenty of sectors:
The OIL sector are now turning the corner. We have mentioned the strongest
relative strength to you in this group and they continue to lead. Now…notice
how the OIH has moved above near-term resistance. Nothing bad happens if it
stays above it.
The STEEL sector has gone parabolic. If you own…bless you. If you don’t,
please wait for pullbacks.
REITS remain very strong but extended. Once again, pullbacks are needed.
The SILVER sector has been strong…GOLD has lagged SILVER. We would like to see
better bases form before touching.
The INTERNET sector may be turning the corner. We are not entirely sure just yet
but noticing better volume patterns in some of the popular names. GOOGLE gapped
but that was on its addition to the S&P…not so sure that is meaningful yet.
We are now heading into the end of quarter in the next 3 days. Normally, you
will get a bullish bias…but yesterday’s action has us scratching our forehead
a wee bit. We are quite cognizant that this market has not had a good correction
in a long while and that it may be overdue. At the very least, continue to keep
in mind that this is not a "throw a dart" market right now. Strict discipline is
warranted.
Gary Kaltbaum