SOX, Paper, Scissors
What way are we headed tomorrow? Take your pick. During the prolonged bull markets of the 1990s, news of rate
cuts traditionally were greeted by stocks with joyous rallies on massive volume.
My how times have changed. Here we are with the third rate cut of the year on
the way, and all you hear are bearish-sounding moans that 50 basis points won’t
be enough or 75 basis points is too late and that perhaps nothing can ever bring
stocks back.
Looking past the dejected chorus is what you need to do as a
trader, because not every sector is plunging day after day after day. In fact,
as I have mentioned before, some areas like the semis stopped going down last
December. Sure they have recently retested those lows this month, but the fact
they continue to hold up well is a good sign that they could become the next
market leaders if and when the market finally turns. The SOX even managed to
book a 6.7% gain in Monday’s action.
Looking within the SOX, there are some candidates that not only
bottomed last December, but as in the case of Novellus
(
NVLS |
Quote |
Chart |
News |
PowerRating), have
remained in an uptrend ever since (except for a few brief dips below its 50-day
moving average). Novellus climbed back above its 50-day on Monday, gaining 3 1/4
or 8% to 44 1/8 on 130% of average volume and looks like it could challenge its
200-day very soon. Keep an eye on the volume, and buckle your seatbelts;
tomorrow should be an interesting day.
Have a great evening.