Marketview: Further Rotation Required

• Posted by DynamicHedge
• on September 23rd, 2012

Slow week for the markets as traders and investors finally swallowed the QE3 pill.  Option expiration was a non-event even though the lions share of the volatility was processed on Thursday and Friday.  Not all weeks are created equal and there is really not a lot of new information out there to share.  $BAC resistance highlighted last week and and weak earnings out of $FDX kept a lid on the upside and it appears that further rotation is required before the market advances.  The trend higher is still firmly intact.

Bull markets always make it difficult to stay the course.  Back and fill markets shake lots of people out of good positions on the way up.  If you are still bearish, every new piece of information can seem like “the reason” for the market to change course and sell off.  If you’re bullish, it’s easy to erroneously disregard important information and resist change.  Expect the market to test both entrenched beliefs.

Keep a level head and stick with what has been working.  Breadth, financials, and tech are the bellwethers until they’re replaced by something else.  They are still pointed higher.  The only economic data point that matters isn’t until next week (Nonfarm Payrolls).  See comments about $BAC from last week as nothing has changed there.

Winners: $KFT, $GOOG, $CMCSA, $UNH, $MRK, $GILD, $MO, $GE

Losers: $NSC, $UNP, $FDX, $UPS, $APC, $OXY, $HAL, $SLB

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