There are 2 things you want to watch

The S&P is now coming along. It had been lagging but with the FINANCIALS
starting up, we doubt it will continue to lag. In our last report, we told you
we were seeing a loss of selling momentum. That turned into strong buying on
Wednesday. First off, the
(
XLF |
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Volume was heavy. The
(
RKH |
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bad happens marketwise when these areas are in shape. It was not just the banks.
Take a look at the breakouts in names like
(
COF |
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(
BEN |
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FINANCIAL-related names.

The NASDAQ and NDX did catch a little bit of life on the back of the DOW and
S&P. The SOX held the 50-day average to the penny before reversing…and we mean
by the penny. This occurred in spite of the big puke…
(
INTC |
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another new low. We are still not thrilled with quite a few SEMI-names but love
the action in names like
(
AMD |
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(
LSI |
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TRID |
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do want to tell you that if ever the market does get in trouble, we expect the
NDX to break down first…but right now, we are not so worried.

OILS are doing exactly what we thought. They bounced and are already gagging. We
suspect this group, for the most part, is going into an extended correction and
should be played lightly. Too many names have broke support and moving averages.

HOUSING was due for a bounce but Wednesday’s action felt like more than a
bounce. We are actually thinking that for the first time in a while, pullbacks
are buyable. This is occurring while all the housing stats are going south and
all the news has been negative.

The TRANSPORTS are going to 10,000. They are never going down again. Ok…just
kidding! Just letting you know there continues to be no distribution in the
TRANSPORTS…and we continue to love most of the AIRLINES here. Would just wait
for pullbacks at this juncture. The strongest names easily are AMR and CAL.

There are two areas that we want you to keep your eye on…that being Europe and
the BROKERAGE stocks. We believe until these areas gag, there will not be much
of a chance of a huge correction. We are amazed at the tenacity of these areas.