Rally Time
We've been harping on the sentiment for a while now and we've warned that there was a "rip-roarin' rally" coming soon. We also advised that any bad news from the Fed was fully discounted and that once the news was out the market could probably rally. The market didn't even wait for the news to get out before it broke up. That was our clue that the decline was done.
DOW: The Dow not only rallied well, but bit broke above the TOP of the rising channel. That's bullish.
S&P500: The S&P Futures gapped above the down trend and the wedge on a day when it "should" have been down. That was a big clue that we were off to the races.
NDX: The Nasdaq put in a good stick. It's still not out of th woods, but the summation is now positive and confirmed. The Semi's need to turn up and support, but if they do, it's going to be a nice run.
RUT: The Russell was stronger than I expected and this could be good news if it can extend. If it lags in the weeks ahead, it will be an early warning of trouble this fall.
HUI: The Miners were inordinately strong and now they are back in the large channel.
SOX: The Semi's did well, but they need to break up with some conviction. There may still be some backing and filling they'll need to do even if they are bottomed.
PPH: The Pharms are looking better, but they too have work to do.
DJT: The Transports were very strong (again) and are now back in the old, tight rising channel.
RTH: The Retailers were quite strong and appear to be in an up trend.
BKX: The Banks were poised for disaster but when it didn't happen, POP! up we went. That's good news for the market. The decline looks like it was a correction, not a new Bear.
TYC: Tyco had a good day. It needed to.
SBUX: Starbucks roared higher and this was the type of stock I want to be focusing on in here. Bigger names, good liquidity, lots of sponsorship.
HRB: H&R Block did diddly on that rally. Poor relative strength makes me think that this one may be done. Let's dump and look for better places for our money.
GLW: Corning Glassworks had a great day. This one is another favorite of the big funds. We hold this in family and managed accounts from much lower.
CMS: That darned CMS has something going on. Let's look at the long side, especially (though both sides work).
TSY: Trustreet Properties is in the "wrong" sector. EVERYONE knows that realestate is going to crash. It's a bubble that is bursting, right? Well, if everyone knows it, then who is left to sell? This little guy could really run. Note that if you buy it today, you get the July dividend (of $0.11/share).
BPO: Brookfield Properties is another realestate play. I'll betcha there are a ton of gun slingers short here because of the well advertised "real estate crash". If it breaks up further, those guys are going to cover and there must be lots of them. The chart looks good already. Do I like the sector? Heck no, but I can't think of anyone who does. That HAS to present an opportunity.
CSCO: Cisco is a big name and frankly, IF the techs come on, this one should play too.
Summary:
So, where do we go from here? The Bearishness that was built up has not been depleted all that much. There's cash around and this would be a good place for a summer rally. It probably won't last too long, but a couple weeks is not unreasonable. I'm actually thinking into August, but we have to see what the sentiment looks like. For now, we have breadth and price pointing higher, and lots of fuel. Monday is a half day and Tuesday is Independence day. Our next issue will be for Wednesday. We're going to take the long weekend off. We don't expect much in the way of fireworks until then.
Be Well, and Trade Smarter Than the Average Bear!
-The ChartSmarts Team
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