What I Like And What You Should Stay Away From

One of my worries has been the bond market. Just recently, I told you it was
very oversold and due for a bounce. In the past 2 days, BONDS have put in a
near-term low. Let me be clear. A break below $91.29 on the
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will be talking serious problems for the BOND MARKET as the drop will turn into
something of intermediate consequence…but this second, nothing to think about.

If BONDS keep rallying, I think there is a chance HOUSING, REITS and the areas
that have been hit could recover some. They have been hit hard with most now
trading below short-term moving averages. At the very least, I would let new
bases develop.

DELL
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mega-cap TECHS that have topped and until their next earnings report,
probabilities are they will not exceed recent highs. Microsoft
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also acted poorly on their numbers but immediately recovered on a positive
BARRONS article and lots of touting. These mega caps may have influence over
TECHS going forward.

Watch the SOX. 459 is Friday’s support…and very simply, if the 450 breakout is
breached, I suspect an intermediate-term correction will ensue. Don’t
underestimate the SOX. 450 was the recent important breakout.

Watch the FINANCIALS. It could be a negative that long term rates are coming
down because short term rates are going up. The spread for the lenders is
becoming non-existent.

OILS are still powerful…but look at the
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start correcting back into moving averages…and while I have seen no sign of a
correction, I think there is a chance one will be around the corner.

ASIAN and EUROPEAN markets are acting wonderfully. Our market is lagging the
rest of the world for a change. I do not see any reason that is going to change
any time soon. This is a distinct positive as our markets rarely gag when WORLD
MARKETS are in gear.

I continue to believe the shorter-term action is shaky. I am seeing a few
negative divergences here…but would not get worried until the following areas
give way…S&P 1220…which was its recent breakout…DOW 10524…the DOW still
cant get out of its own way…the NASDAQ has no worries all the way down to
2122…which is the 50 day average…and more importantly 2100…which was its
big breakout.