We’re In Rally Mode, But I’m A Little Concerned. Here’s Why…

  • December 10, 2002
  • Tim Truebenbach

The market still appears to be

in rally mode as we saw the major averages push higher than

yesterday. NYSE volume was

lighter than Monday, but the leading Nasdaq volume came in slightly higher.

The real problem with the current rally remains on the

side of leadership. So far, we

have only seen money rotate from sector to sector. After one group moves higher or bounces from its lows, the money leaves

and does the same thing in another group.

There have been very few sustained moves.

Forest Labs (FRX) comes from

the Medical-Ethical drugs groups and was one of the first stocks to push

through resistance. Last Friday, it

faced bad news and took a heavy hit and is now trading below its 50-day moving

average.

Eon Labs (ELAB))

came under heavy distribution today as the stock closed well below its 50-day

moving average for the first time since breaking out in September.

San Disk (SNDK)

hails from the group of stocks to set recent, 52-week highs and found support

today at its 50-day moving average. It

was also able to close above its breakout point of 21.90.

This stock is what we want to see more of, but the fact that it is

still well off its all-time high leaves it with a lot of work to do before

being in the clear.

Now is the time to let patience and discipline prevail. Trying to force profits out of a market that isn’t ready to give them

can be futile and very costly. Stay

on the look out for strong companies that are ready to emerge from solid

consolidation patterns and always keep losses in check.

Until Thursday,

Tim