Play It As It Comes
Reversal days like last Wednesday almost always
lead to short-term
corrections. This case is no different, as the markets continue to pull back.
As stated before, this is not the end of the world, but it does put my
antennae up. It also doesn’t excite me that most of my sentiment indicators
continue to flash red. I would not ignore these indicators, as they work
almost perfectly when they hit extremes. As I stated in my last
report, they are now getting close.
With the near-term weakness, it is now time to look at
support:
Support on the S&P 500
(
$SPX.X |
Quote |
Chart |
News |
PowerRating)
is near-term 1136 and more importantly, 1114, which
was the Dec. 14 low; 9900 and, more importantly, 9700 on the
Dow
(
$INDU.X |
Quote |
Chart |
News |
PowerRating);
and 1987 and, more importantly, 1917 on the Nasdaq
(
$COMPQ.X |
Quote |
Chart |
News |
PowerRating).
Another point I need to make is that I would not treat the market as the
be-all, end-all. I would play it sector by sector, and stock by stock. For
instance, Homebuilders, which have had a great run,
appear to have topped,
while I am starting to find several Medicals starting to pop. This may be
forecasting a more defensive tone for the market, near term.
Tenet
Healthcare
(
THC |
Quote |
Chart |
News |
PowerRating) — great chart. Just needs a high-volume move.
Forest Labs
(
FRX |
Quote |
Chart |
News |
PowerRating) — a move above $83 would be bullish.
Abbott
Laboratories
(
ABT |
Quote |
Chart |
News |
PowerRating) — slow but steady base-building.
Unitedhealth
Group
(
UNH |
Quote |
Chart |
News |
PowerRating) — trying for a base-on-base breakout.
Â
Lastly, there is still a bunch of speculative
below-$10 Internet and Technology
stocks doing well. While this is a positive for them, I am not so
sure froth is a good thing, after what has occurred in the last couple of years. I am just going to continue to play it as it comes.