The Tone Has Changed–Here’s How
Not much has changed.
Yes, I said not much has
changed. STEEL, COAL, OILSÂ continue to lead. ENERGY, HOUSING and other
COMMODITIES continue to lead. SEMICONDUCTORS continue to shape up. On the
other end, much of the rest of the market is sitting there. Simply put, the
tape remains as split as can be.Â
What has changed is the tone of the major indices.
Last Tuesday, the market plunked below the all-important 50-day average…only
to reverse the next day…led by those sectors mentioned previously.
I probed a short in the SPY with a stop at new highs. I am almost out as the
move in the leading groups was strong.
I believe this year is shaping up as a sector by
sector game…not a market game…so let’s play the sectors.
INTERNETS are being left in the dust. YHOO now
trades below its 200-day average…for the first time since the lows in 2002.
EBAY and AMZN remain horrid. GOOG is also being distributed…though it is
still holding in its base.
Big-cap TECH is going no-place fast. CSCO is at
new yearly lows. I believe this continues as big-cap TECH is still over-owned.
OILS – a big WOW! Charts of XOM and CVX–supposedly
boring OILS–have gone parabolic. Let me be clear. WAIT FOR PULLBACKS! These
stocks are way above moving averages and will eventually revert back to the
mean. Of course, they can just go higher, but one has to measure risk. Risk
picks up after a move. The same goes for many COMMODITIES-based areas.
HOUSING stocks continue moving on…just keep in
mind, these stocks started their move in 2000.
BIOTECHS are mixed…but as I write this BIOGEN is
down $27 on suspension of a drug. Should be fun.
Lastly, a lot of what I am hearing from very smart
people is that late-cycle stocks are now leading. This needs to be watched
closely as cycles do repeat themselves. As always, we will let the market do
the talking.
Gary
Kaltbaum
Â