Looking For Chinks In The Armor

The split market I have told you about remains. While the “speculative”
TECH, TELCO,
INTERNET, BIOTECHS
and SEMIS continue to do well, a long list
of sectors continue to act poorly. Even with the split tape, I just don’t see
any technical reason to believe this rally is about  to end any time soon. The
real question is about how much farther this rally has to go. Every pullback is
met with a bout of buying. This is in stark contrast to the action leading up to
October’s low. Just last week, the market was blasted on Tuesday…only to
recover on Wednesday.

From a near-term point of view, go slow. As I pen this report, futures are
smoking this morning on an Intel upgrade and strong retail numbers from Friday.
I just feel that the TECH market is extended
here on a technical basis…and now…strategists are jumping on the
bandwagon…evidenced by an upgrade of WIRELESS
stocks this morning. The NASDAQ and
NASDAQ 100 are also nearing their respective
200-day averages which could lead to some stalling action. A break to the upside
on these averages would be a positive.

It is also remains important to note that the sentiment front remains unexciting
as bearish advisors are at a very low reading of 25%, the VIX and VXN are
stretched to the downside, and put/calls continue to have complacent readings.