Value Looks Good
Before I even start, if you have not
yet read Goran Yordanoff’s report from Friday,
you are simply missing out. Looks like the contrarian indicator I talked about in my last
report hit the nail on the head as the market topped the day the percentage
of bullish advisors hit a five-year high.
Coincidence? Maybe. But it continues
to amaze me how well it works when the numbers hit extremes. The jury is still
out on this one, but I would still keep a watchful eye on it.
You are most likely wondering whether this is just a pullback or something more serious.I have been thinking it would only be mild. Friday’s action now gives me some pause. A slew of past growth leaders continue to break down
and important names are not holding up any more on poor outlooks.Â
Volume was
light but you need to know that they are not double-counting the Nasdaq any more. I am not sure how much an effect this will have but volume will definitely be
lighter.
The best places to hang your hat continue to be in the more boring areas of the
market. The sectors with the best setups are: Aluminum, Aerospace/ Defense,
Banks–Regional, Railroads, REITS, Retail, S&Ls, Tools, Tobacco and
Truckers. I mention this list not to bore you but to let you know that the
technical condition continues to favor a “value” type market.
I did want to mention something I have been following quite closely over the
past couple of weeks. Has anybody noticed that every pundit you are hearing from
is saying that a new bull market started again because of the Fed? Fed this! Fed
that! Analysts are furiously pushing out statistics about how this year has to
be a great one because of Big Al or because last year was so bad.Â
I am pretty
sure I mentioned this a few reports ago but here it goes again. Do you really
believe the market is going to accommodate everyone? In no way am I saying that
it won’t. It is just my contention that the markets are out to fool everyone
right now and when the boat is tipped one way, I want to be on the other side.