Marketview: Round Trip Ticket

Wild week with markets racing higher early in the week, only to give back all the gains on Thursday and Friday.  This week continued the trend of selling in the face of good economic reports.  Almost every release on the economic calendar was positive this week including, Retail Sales, Housing Starts, Existing Home Sales, and Philly Fed.  By far the biggest surprise was the resilience of Asian and European markets as they continue to climb off of oversold levels.  Both the Spanish IBEX ($IBEX) and the Shanghai Composite ($SSEC) displayed good relative strength.

Technology stocks continue to bear the brunt of the selling pressure, followed by healthcare and consumer discretionary.  The tech sector is quickly approaching an area which represents an excellent relative value to the broad market.  We saw decent strength in energy, basic materials and utilities, both of which still have lots of room to run, and I anticipate will be the engine of the next leg of the rally, along with financials.

There’s a big difference between being bearish on the market and anticipating a normal correction within an overall bull run.  The overall trend is still up.  This week the market rallied and then sold hard, trapping lots of traders and investors along the way.  Closing on the lows of the week and the selling right to the bell is not constructive for the near term.  The market is signalling that it wants to auction lower, find some sell stops and ultimately, support before continuing the rally.

Winners: $BK, $COF, $MET, $USB, $JNJ, $HAL, $SLB, $OXY

Losers: $GOOG, $AAPL, $IBM, $INTC, $ABT, $MDT, $WMT, $KRFT

 


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