After Market Close on Wednesday, August 3rd, 2005.
At the Cusp
The trend is still up, but the market's behavior suggests that it may be on the cusp of a corrective decline. Of course, sentiment has been hinting at this for some time now, and as such we've been positioning for it. Thus far, this has been the correct approach.
DOW: The Dow is hinting at trouble, but no signs of it yet.
S&P500: The S&P can't even break the 50 hour moving average. Watch out, however, if it does.
NDX: I'm not sure how I'd feel if the Naz closes much below today's lows.
QQQQ: The Semi's may hold this up, but the break out there fails...
RUT: Poor relative strength in the Russell could bode ill near term for the rest of the market.
HUI: The miners were about as perverse as I thought that they'd be and took off without completing that nice, neat correction. Typical.
DJT: The Trannies tend to lead. If we are going to top in the weeks ahead, the transports will show serious signs of weakness first, in all likelihood.
SMH: Semi's need to hold the break out. If they do, the Nasdaq should do OK. If not...
TTH: The Telecoms ran right down to our support line (drawn some days ago) and bounced. You'd think that there was something to this technical analysis stuff...
CLX: Clorox may benefit from "Flight 101" to Quality International. Folks may want to buy a consumer non-durable that's beaten down if the rest of the market looks weak.
ANF: Abercrombie and Fitch is looking like it wants to break down. it's not there yet, but if the market will give us a little help...
SSRI: Silver Standard was very strong today and we are in.
AEM: Agnico Eagle looked good to me last night, but I figured we'd have some more time. If this one tests the break out, or even comes close, it's probably a buy.
ANTP: Phazar was weaker than expected and that builds disappointment which brings selling. If it doesn't bounce here, it could get really ugly, and we ought to profit from that.
Summary:
The broader market may be having some problems, and that's an early warning sign. On the other hand, certain sectors are doing very well and look pretty Bullish. It's important to not get too Bearish even though it's pretty reasonable to expect a couple days of pullback. We could even see a few weeks of pullback. Longer-term, however, we have to be thinking that there's more upside to come.
Be Well, and Trade Smarter Than the Average Bear!
-The ChartSmarts Team
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