What I Expect Now
Nice finish
to a nice week, but I have a message: While many of my technical
indicators are now flashing green, mainly the follow-throughs on all major
indices, the markets are not going to go straight up. I expect some backing and
filling…I expect pullbacks…I expect rotation. For instance, the Semiconductor
Sector
(
$SOX.X |
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PowerRating) rallied from 510 to 641 in six days. This
would be my first candidate for a give back. But as of this second, pullbacks
are now buyable because many names broke above resistance. The best example I
could give you is the name I gave you out as my favorite…KLA-Tencor
(
KLAC |
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PowerRating). A $57 to $71 move has to pull back. It would be quite
normal to come back towards $64 and still look fine.
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Other thoughts: Cyclicals
are also extended. If I could guarantee one thing in this business, it
would be that Cyclicals will hit a wall and come
back to their moving averages. Oil
Services still look fine but are also due for a pullback towards support.
So…for this second, go slow. It has
not been a good thing the past two years to buy after a big move up. Only best
to buy on the way back down.
The Dow
(
$INDU.X |
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PowerRating)
is the only one of the big three to move above January’s highs. The S&P
500
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$SPX.X |
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PowerRating) would follow suit above 1177. It tried on Friday
but it is now pulling back.
This is fine.
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The Nasdaq
(
$COMP.X |
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PowerRating) is last in line. It would have to move above 2100 to clear. I
am not as constructive on the technical condition of the NASDAQ and the many Techs
that make it up. It has had a follow-through on volume so it gets the benefit of
the doubt…but watching for cracks closely.
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