Let’s Talk About Bases
Since the reversal on 7/25,
the
(
SOX |
Quote |
Chart |
News |
PowerRating) is now up six days in a row. The low on that day was 530, closing
at 553. Currently, the SOX sits at 632. In other words,
OVERBOUGHT. The most important thing about the SOX is that it has the
best technicals of the TECHNOLOGY group. Big,
loooong bases pervade the group.
Please keep in mind that many rallies have
failed over the past few months.
Maybe this time it is different…but only
time will tell.
I like the fact that names like
(
CY |
Quote |
Chart |
News |
PowerRating) and
(
NSM |
Quote |
Chart |
News |
PowerRating) have broken above mid-level bases. If more and more names follow suit,
I become more emboldened. I urge you to pay attention to this group as it COULD
give important clues for TECHNOLOGY going forward.
The rest of the market continues to follow the path of
viscous sector rotations. It is very tough to stay with one area of the market
for very long because of how swift the moves are. Nothing wrong with continued
vigilance with every play. It just doesn’t feel like the markets are ready to
bust out in any meaningful way.
With the better tone, I like to fish out stocks that are
not going along for the ride.
(
AOL |
Quote |
Chart |
News |
PowerRating) is being pulled up on lighter volume. This
appears to be a broken stock at this point in time. The 200-day average is at
$47 and (I believe) a wall of resistance lies at $48.
(
THQI |
Quote |
Chart |
News |
PowerRating) has broken below its 50-day average on heavier
volume. This stock had been a
leader for quite awhile. Any rally towards the low 50s could possibly provide a
signal to consider choosing an entry point.
A couple of last points. I keep hearing about how positive
it is that the NEW HIGH LIST is expanding. I would normally agree. But between
the non-operating companies, the stocks trading under $15 and the stocks that
trade less than 100,000 shares…there is not much left. I want to see better
quality.
Lastly, my sentiment indicators remain quite suspect for
the market. The percentage of bearish newsletter writers has hit a four-year low
and bulls are moving higher. To me, these numbers do not indicate a big bull run
from here. In fact, almost the opposite.