Once again, minor buying hesitation at the open attracts aggressive dip buyers. Early breadth is good with chips, oils and biotechnology leading, and banks, Internets and drugs on the downside.
The S&P 100 (OEX), which is the 100 largest stocks out of the S&P 500, clearly shows how the big-caps are dominating right now. Under the surface, it is not nearly as upbeat. I am starting to sound like a broken record on this point, but I continue to find few charts I want to buy and it sure is frustrating as we watch the indices dance higher. Keep in mind they are cap-weighted and not really reflective of the 'average' stock. The best advice I can give right now is focus on the charts and don't force your buys. If you are holding too much cash because you don't see charts you like, that is good solid discipline.
Speaking of broken records, the financial media is getting downright ridiculous with their hype over the DJIA getting close to hitting a new high. It really is a good example of how out of touch most financial journalism is with the reality of the stock market. The DJIA is irrelevant for the average individual investor looking to make a buck. However, it is easy and convenient for financial reports and therefore they beat it to death while ignoring what is really going on out there.
The real story isn't the DJIA at its highs but the bifurcated action of the market and the rotation out of oil and commodities and into technology and retail. Too bad they don't talk about something like that, which would help us make money, rather than sensationalize an out-of-touch index like the DJIA.
P.S. Will you be there when Cramer makes his next move?
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Rev Shark Blog Keep Your Composure 9/26/2006 2:18 PM EDT Don't be too optimistic about the uptrend -- or pesssimistic if you're sitting it out.
Rev Shark Blog Weirdness Under the Uptrend 9/26/2006 1:26 PM EDT There's been some painful rotation, and many stocks hitting new lows.
James "Rev Shark" De Porre is a self-taught trader who primarily trades for his own account from his home on Anna Maria Island, Fla. He is a member of the Michigan Bar Association and a former tax attorney and CPA. De Porre holds business and law degrees from the University of Michigan. He was formerly the host of America Online's The Shark Attack and presently operates SuperTraders.com. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here to send him an email.
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