Monday, December 7, 2009

Will A Theme Emerge?

The good news is that volume was light and breadth positive. The bad news is that the action was so slow, it was hard to stay awake. The dollar held steady, and that helped pressure gold, oil and commodities. We also had some notable weakness in big-cap technology names, like AAPL and AMZN, and weakness in financials. Small-cap stocks exhibited a little relative strength, which was a positive sign, but the trading was so slow and random, it's tough to give it that much weight.

The big technical picture still looks OK. The major indices are all in trading ranges, and there hasn't been much, if any, technical damage done. The QQQ is probably the most worrisome right now, due to the big-cap technology weakness, but it is still holding recent support levels. The IWM is going to look very bad if it breaks back down under its 50-day simple moving average, but so far it is holding near the November highs.

The market is at a juncture where we have to be on the lookout for new themes and trends, especially if the dollar stays strong. The action today reflected the uncertainty that usually emerges when sector rotations are about to start. It is muddled and directionless trading with little edge. We should have some better clues in the next few days of what may emerge from this lifeless action, but in the meanwhile we have to be patient......

long AAPL - and buying more tomorrow

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