Tremendous Resistance
There is not
much that has changed since my last
report. The main focus you should have right now is the “just in
case” scenario. Just in case the markets decide to take a bath again, it is
vital that you are looking over your shoulder. I say this because I still
believe the market is acting just like it did back in January and March/April of
2001. I don’t have to go over again what happened in the following months.
Shorter term remains tough. The major indices are right in the midst ofÂ
tremendous resistance right at the March/April lows. I pointed this out in
my
last column. At best, I believe the majors could get some more upside
testing, especially in Technology…which has
seemed to grasp some nice relative strength. It just feels like things can drop
on a dime. Just look at last Wednesday’s action.
One of the traits of continuing
bullish action will be leadership. It is the most over-asked question: What is
going to lead the market? I choose not to answer this question because you just
don’t know yet. The good news is that leadership can’t be hidden. It shows up on
the New High List. It shows up in the volume
tables. It shows up on every one of my positive screens. Right now, leadership
is still a void. Certainly, there is a smattering of Defense-related
stocks for obvious reasons and a few good charts, but that’s about it. In fact,
as I perused Dailygraphs over the weekend, I found maybe 100 or so out of the
2855 names that looked to be in better-than-decent shape. Therefore, I feel like
there’s a lot more work to be done.Â
Support on the Nasdaq is around 1626…secondary support is around 1504. I bring
up the Nasdaq first because of the fact it did not go down to the lows of 10/3
like the S&P and Dow almost did. Support on the S&P is now at around
1055 and the Dow at 9080. These numbers must be watched. If they are broken,
look out again. How many times have I said
that in the past?
The only sectors in strong technical shape are Electronics-Defense
and Security. Sectors that should be watched
for better action are Biotechs and miscellaneous Technology.
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Sectors in poor technical shape are — most everything else as they rally up
into resistance.
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