These Sectors Look Vulnerable

February 11, 2003
Dave Landry

On Tuesday, the Nasdaq opened firmer and after an early
pullback, continued higher. However, it found its high late in the morning and
generally worked its way lower throughout most of the rest of the day. It did
bounce going into the close, but this wasn’t enough to keep it out of the minus
column.Â

The S&P put in a similar performance but gave up more
ground. This action keeps it below its recent trading range and has it closing
at multi-month lows.

Looking to the sectors, as mentioned recently, the selling
remains broad based.

Here is telecom

Insurance

Broker/Dealer

Banks

Even previously strong sectors such as the generic drugs
now appear to be in the early phases of forming a top/rolling over.

Other sectors in downtrends include, but not limited to,
the transports, utilities and the semis. Even bear market safe havens such as
the drugs and consumer non-durables remain in downtrends.Â

So what do we do? Well, nothing much has changed. In case
you haven’t noticed, my commentaries have been very similar as of late. We
remain in a, albeit choppy, downtrend. And, as further evidenced today (Tuesday)
by the
tapes broadcast on Al Jazeera, we also remain in an event driven environment. Therefore, continue to focus on the short
side but keep it light. At the risk of boring you, remain patient, there could be an opportunity to get more aggressive on a continued
breakdown followed by a pullback (and ideally timing signals).

Looking to potential setups,Â Fifth Third Bancorp
(
FITB |
Quote |
Chart |
News |
PowerRating),
mentioned Friday and in the weak banks,
still looks
like it has the potential to resume its downtrend out of a pullback.