Quick Market And Sector Thoughts

by Olivier on January 24, 2013

A few quick thoughts on the market and some select sectors.
Here we go:

  • Overall market as in S&P 500: This is one of the most hated rallies I have witnessed in quite some time. A lot of ‘rational’ arguments you can come up with in order to justify not participating. One would be that it’s late in the bull market cycle. Looking at price alone though the conclusion to come up with is very simple: The market wants to go up. In my main watch list that contains roughly 400 charts almost every one looks constructive and wants to go up. I also see healthy rotation going on. That being said there is always the risk of a correction and a swing top. As of yet I would rule out a long-term market top for the following two reasons: 1. Topping processes need time to play out. 2. Sector rotation is healthy.
  • Gold: Gold needs more time. I simply cannot see any kind of immediate buying pressure.
  • Gold and silver mining stocks: Abysmal performance and technical behaviour. One indicator I am watching is how strong leaders like FNV – Franco Nevada are acting. FNV has started to break down from the bullish wedge / flag pattern. Lots of miners going down hard today. The way I see it lots of miners have been holding up or have been moving down in a controlled fashion for quite some time based on hope, perceived low valuation, catch up potential etc. If the miners go down more from these levels I think a flush out is likely. This could get very ugly as a lot of weak hands might be forced to finally throw in the towel. I am still avoiding this sector for now.
  • Biotech: True bull market. The majority of the biotech stocks I am watching simply wants to go up. That’s especially the case with small to mid-cap biotech stocks. My public list contains 5 Biotech sector overview charts. More than enough to find interesting trading ideas.
  • Agriculture: An investment theme I am still very bullish on going forward. MON – Monsanto would be one example of a stock I have been monitoring for quite some time on my public list. The trend is up and accelerating.
  • Commodities: Paper and pulp related stocks are looking good. CUS.TO – Canexus is acting well and would be one way to play that trend using a picks and shovels approach. Coal stocks are trying to put in a bottom. It is still very early days to call for a turnaround. Small-cap oil and natural gas related stocks are doing well. Lots of trading ideas you can find on my public list charts.

It’s much easier to learn what you should do in trading than to do it. – William Eckhardt

Charts: http://stockcharts.com/public/1109839/tenpp

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