My Views On This Week

I received a ton of emails about my last report. All it takes is to zing a few
smelly fish analysts and boom. Oh yeah, 99% of you agreed with my thoughts.

Be careful about listening too much to the people who keep saying the market is
about to be trashed. I am not saying they are not going to be eventually right.
I just don’t see it right now. There are just too many stocks in good shape. 
When a market ultimately tops, it just does not turn around on a dime. Tops take
time and give many clues. So far, the market looks fine. Pullbacks have been
controlled, rotational and on light volume. I also continue to find set-ups on a
daily basis…and that is all I need to know. Also, there remains a lack of
short set-ups. This is in stark contrast of the past three years.

Leading stocks continue to act well. Most are not buyable here, but will be if
they set up in secondary bases.

The only sectors in what I would consider in negative shape are
INSURANCE, UTILITIES, OILS, NEWSPAPERS, CHEMICALS and TRUCKERS. HOMEBUILDERS are
still toppy…BIOTECH should not be bought here…too extended. It is also worth
noting that  the DOW  and larger-cap indices have been underperforming
everything else. While the NASDAQ and small to mid-cap areas broke out recently,
the DOW and S&P 500 have so far been held into a range. In order to lengthen
this rally, the DOW and S&P will need to move above 9352 and 1015 respectively.

I am finding more under-$10 names than anything else…and by a wide margin…in
TECH,WIRELESS, FIBEROPTICS. I wish I had a dime for every person that has told
me these stocks are ridiculously overvalued and that we are in another bubble.
They may be right but that type of talk is why I tell you to never listen to the
NOISE. One day, there may be heck to pay with these stocks…it just isn’t right
now.

There are tons of insiders selling tons of stock…and insiders doing very
little buying…something we will keep our eye on.

Sentiment still stinks as speculation and froth are rampant. Most of my
sentiment indicators continue to flash bright red…BUT…price and volume
first…everything else second.

EARNINGS start coming out this week. Let’s not worry how people’s opinions on
the numbers. We will watch how the market and the stocks react to the earnings.
So far, bad news is OK…and supposed good news gaps the stocks up. Notice YHOO
gapped down but is not heading lower. If I see a lot of gaps to the downside
during earnings, we will adjust.

Support on the major indices that should not be breached if this rally is going
to continue are:

DOW…8970 near-term…more importantly at 8870

S&P 500…973 and then 962