Reversing the reversal

Just another amazing week! 

We had a strong rally on Wednesday which lasted into midday Thursday...then the market reversed down and had a nasty selloff into the close...which continued into Friday. In fact, that was one ugly early Friday...and then, had a rally into the close. A REVERSAL OF THE REVERSAL. Unless you are a daytrader, there is no way to play this. One just cant rely on whether this latest ramp will last into late Monday. Only Paris Hilton's relationships last longer than the market's moves right now.

The DOW is setting up to break out again. I am not sure that it is a good thing when the DOW leads...but loving the charts in a few DOW names. (BA | Quote | Chart | News | PowerRating) just broke out...(HON | Quote | Chart | News | PowerRating) and (PG | Quote | Chart | News | PowerRating) are about ready to break out...(UTX | Quote | Chart | News | PowerRating) held the 50 day perfectly...amazingly, (T | Quote | Chart | News | PowerRating) is at new highs...(VZ | Quote | Chart | News | PowerRating) looks like it has turned the corner...(AXP | Quote | Chart | News | PowerRating) looks ready to break out. The question is whether the rest of the market will follow suit. Keep in mind, the DOW is only 30 stocks and does not represent what is underneath the hoood. As far as other major indices go, they all reversed nicely on Friday...but volume was suspect. We are not thrilled with recent NEW HIGH figures nor are we thrilled with the ADVANCE/DECLINE figures but until support is broken, the market will get the benefit. The NASDAQ  undercut its short-term support at 2241 but finished above it. A break below will be negative with 2189 intermediate-term support. The NDX, which has been much weaker than the NASDAQ, held right near intermedaite-term support of 1633. It actually hit 1637. The S&P held very minor support. The real test will be 1245. If ever the S&P breaks 1245, they we will talk potential trouble as that was the S&P's breakout.

Barrons now has a negative front cover article calling  GOOGLE to be cut in half from here. This reminds us of the opposite of the ANALYST who came out with the $2,000 target for GOOGLE AFTER the big move up already occurred. Maybe Barrons will be the catalyst for GOOGLE to turn back up. 

OILS/ENERGY, for the most part, have put in decent tops. Some have had mini-crashes. Just look at (PXD | Quote | Chart | News | PowerRating),(MUR | Quote | Chart | News | PowerRating),(NFX | Quote | Chart | News | PowerRating) for starters. OILS/ENERGY are already near-term oversold. I suspect we can get some bounces in here...but...we are now way past the point where you can buy everything in the groups. For every (SLB | Quote | Chart | News | PowerRating) or (HAL | Quote | Chart | News | PowerRating), you have a ton of names that have broken way below the 50 day average. In fact, I believe there are better shorts on the bounces right now than any longs. We had been telling you that these groups had become too extended, too overowned and too overloved and due for a sharp pullback.

The same goes for many COMMODITY-based stocks. We had told you, like ENERGY/OILS, that they were due for a sharp pullback. Not only have they pulled back, but many names are breaking down. Just take a look at (FCX | Quote | Chart | News | PowerRating) and (ACI | Quote | Chart | News | PowerRating).

Gary Kaltbaum