My Best Guess
O.K. O.K. It’s Tuesday
night. The kiddies are asleep and the Mom is in bed. Whenever
the market has a follow-through day, I go through
5,000 stock charts and try to
figure things out. I then ask myself, “What
happened today?”
I take all
emotion out and talk facts. Here are my thoughts.
On Tuesday, April
10, the
Dow, S&P 500 and
Nasdaq confirmed their latest rally
by following through off of last Thursday’s strong move.
Volume expanded from the
prior day,
especially on the
Nasdaq. Keep in
mind, every bull market has started
with a follow -through day but not every follow-through day turned into a new
bull market. Just remember how many of these days failed over the last
year. I
believe there were two
or three
failures just this year.
I repeat what I have said on
many occasions over the past few months: If this is for
real, leadership will
reassert itself and stocks will start coming out of sound bases. So
far, this move
is stocks rallying after dropping, in some cases
70%-80%. A couple of the biggest
dollar gainers on Tuesday were Juniper
(
JNPR |
Quote |
Chart |
News |
PowerRating) and
Ciena
(
CIEN |
Quote |
Chart |
News |
PowerRating). Keeping it in
perspective, Juniper closed at
$40. It was $145 in January and $244 in
October. Ciena closed at $45. It was $108 in January and $151 in
October. Rallies
had to happen at a given point in time. Lots of repairing to do.
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Please pay no attention to fundamental opinion at this juncture, and frankly that
goes for any opinion. Let the market action be your
guide. As
usual, the market
will do whatever it wants to do,
regardless. Many bears will start giving reasons
why the markets shouldn’t rally. Just
remember, the market doesn’t care about
yesterday’s bad news, only what is going to happen in the future. This rally has
started with all kinds of negative talk. I would continue to watch how the market
reacts in the face of any more bad news.
One hint: Did you notice two companies that missed estimates
yesterday? One was
Cypress Semiconductor
(
CY |
Quote |
Chart |
News |
PowerRating), the other was
Aetna
(
AET |
Quote |
Chart |
News |
PowerRating). Cypress finished
up, Aetna was way
down. Technology most definitely is acting oversold.
This latest move was also helped by all the negative sentiment that has built up
in the market over the last month. I have mentioned this in previous
reports. The
wrong-way crowd may have called a near-term low
again. Put/call ratios have
spiked above 1.0 a couple of times in the past couple of weeks.
My best guess? I do not have a best
guess. Probably a rally of
intermediate-term led
by Technology. Time will tell. I would not go buying
indiscriminately at this point
in time. This has happened
before. My strict discipline has kept me out of the
carnage over the past few months. If no leadership shows
up, I would continue to
play it close to the vest.
*As I press the button to send this in, Semiconductors
are up, big
time. An analyst
from a major firm upgraded them after lowering estimates just two days ago. Seems
like some of these fundamentalists are becoming technicians. Should have another
big Technology move today.