Ugly Playing Field
It’s very tough to come up with
something new to talk about with a market such as this. The action is
one of stumbling, bumbling and fumbling on a daily basis. But…most
importantly, the big trend that I have been harping on
refuses to change. Nothing I have seen in the action so far leads me to
believe the market can turn up in earnest at
this juncture.
There are a few things that do need to be watched closely
here.
Keep a close watch on the support levels that I outlined
in my last
report. In fact, all three major indices approached that support last week.
The S&P 500 actually missed
my 875 target by 2 points, hitting a low of 877. If the major
indices break those levels on a closing basis, what has become a very
tough market becomes much tougher…at least
for the long side. The Dow’s
minor support is at approximately 8290, and more important support at
8220. The Nasdaq near-term support is at 1270
and more important support at 1250.
We may bounce a little here, but I must say that based on
the horrid technical condition, odds favor a break of these levels. But as
usual, I will not anticipate but
react if it happens.
I say this for several reasons.
As I went through 3000 charts over the weekend, I found
maybe 100 stocks that are in
decent to good technical shape.
Out of 197 sector charts, I found a whopping 5 that are
technically sound. They are ALCOHOLIC BEVERAGES…namely
BEER, GAMING, GOLD,
and you can add HMOs
and HOSPITALS that look like they may get some
upside here. It is also very important
to note that many FINANCIAL stocks have recently
broke down.
Sentiment remains too bullish as bullish market advisors
remain ahead of the bears. This
amazes me in light of the worst bear markets in 70 years. Put/call numbers are
now in the complacent category, and lastly, just about every
strategist on the Street remains bullish…though their ridiculous
targets have come down markedly in the past
three months.
You can then add in all the other fun stuff that I have
been telling you about.
- Every major index is still trading below its respective
200-day average. - World markets going along for the ride.
- Breakouts either failing or going no place fast.
- Too many distribution days.
All in all, defense remains your best offense. The only
thing that can change this ugly
playing field is time.