Running Out Of Gas?
The probabilities are high that last Wednesday the market put in a
near-term top. As quick as the ink was drying on last
Thursday’s report, the market ran out of gas. My main points in believing
risk had picked up remain the same. Sentiment became too bullish too quickly,
breakouts continued to fail, FINANCIALSÂ breaking
down all over the place and speculation becoming rampant again. None of those
factors have changed.
As I went through my usual exercise of going through 3000 charts, I was taken
aback by several things. Yes, the broad market, so far, has pulled back on
lighter volume the past two days but…
FINANCIALS are acting uglier by the day.
Very simply, it is not very often that the market does well when FINANCIALS
don’t. I urge you to take a look at the charts of the many
BANKS and S&L’s that are acting
as well as my fantasy football team, which is now a wonderful 2-8.
I found a ton of sectors in poor technical shape while the list of sectors in
good shape is quite short and suspicious. The sectors in poor technical shape
are AIRLINES, AUTOS,
BANKS, BEVERAGES,
CHEMICALS, CONSUMER
FINANCE, HOME BUILDING,
HOUSEHOLD PRODUCTS,
OIL & GAS, PAPER,
REITs, RESTAURANTS,
RETAIL (almost across the board),
S&L’s, UTILITIES.
Sectors in decent technical shape are BIOTECHS,
COMPUTERS-MANUFACTURING,
INTERNET SOFTWARE,
SEMIS, TELECOM and
WIRELESS. All are extended off their lows and
in need of a pullback…which is now happening. Only one problem with these
sectors. These were the worst of the past 30 months. I am not one to project
into the future, but how long do you think the rallies in these groups last
before they hit a wall? I am also already hearing a few too many pundits talking
about the rebirth of TECH. The only problem
is those same people said those words at 4500 NASDAQ,
4000, 3500, 3000, 2500, 2000, 1500…they would keep saying it if the
NASDAQ went to 100.
The DOLLAR has been sinking against all
major currencies…and no one is talking about it. Nothing good happens if the
dollar continues to get bludgeoned.
Markets around the world continue to follow our lead and remain in long-term
downtrends…and JAPAN is sinking into the abyss.
Leading stocks continue to have a tough time of it.
Go slower here. While the markets absorbed some supposed bad news and rallied,
recently, it absorbed some supposed good news (fed rate cut, Republicans winning
senate) and dropped. It is also very negative that bullishness and speculation
picked up after only a couple of weeks off of six-year lows. The good news is
that you already know to go slow as breakouts are almost non-existent.
I would now be watching the 870 to 877 area on the S&P
500 as support. I don’t believe the market gets in trouble unless
this area breaks…and just below that is the ever-important 50-day
average…which better hold.
I will be appearing at
the MONEYWATCH MONEY SHOW in Orlando, Fla.,
on Nov. 22-23. I will be doing a one- to two-hour mini-workshop on the 23rd at
9:00 a.m. Ralph Bloch will also be appearing as well as many other names. Go to
Welcome to MoneyWatch Expo for more
information and to sign up. My workshop will be free of charge.
The archives for my
radio show are now working only sporadically. Yahoo is getting out of the
business. You can still access the show LIVE. I am currently working on a new
provider to archive the show.