The main point about the stock market

OIL prices have topped out near-term. Hey...maybe we will get some relief at the pump. We suspect OIL STOCKS will follow suit. They are extended and overowned...and due for pullbacks. This does not change the longer-term bullish stance.  

Sector time:  

Let's start with what is not working.  

HOUSING remains in a deep bear market. All bounces are sellable. It is only now, after a huge drop, are we getting poor numbers out of HOUSING companies.  

The SOX has been acting better and is coming up the right side. But with charts like ADI, LLTC, QLGC, SLAB, CREE, NVLS and the puke INTC, it is a split game in this group. The best looking names are easily LRCX, CYMI, OVTI, NSM, TXN, ZRAN, MU and TSM. We feel these names can be exploited on any pullback.    

BROKERS bounced sharply on Friday with the rest of the stock market...but continue to show overall distribution. At the very least, we believe this group has lost the momentum it has had for a very long time. We do believe there are still some names that are not under distribution like UBS...which is very strong, GS and JEF. Names like MER, LM and LEH have been lagging. The same goes for a few of the INVESTMENT MANAGERS but love the action in names like SEIC, MEL and STT.  

We continue to dislike most areas in the MEDICAL group. HMOs, BIOTECHS, PHARMA have been under distribution. We suspect some bouncing is in order off of a deep oversold condition but until we see volume patterns change, we are wary. There are a few names that we do like. GSK and BMY in PHARMA...and CELG in BIOTECH for instance.  

We have been negative on UTILITIES for months but things may be changing for the better. First off, TXU is a monster and should be looked at on pullbacks. We are also liking the action in names like PCG which is breaking out as we write this.  

MICROSOFT- We are in the camp that MSFT may be headed into DELL and INTC territory...which means some sort of a give-up phase. DELL and INTC have been slowly leaking to the downside as the massive overowned position is worked off. Look at the action of these names...in a good stock market.   

On the good side:  

We gave you the BIG BANKS on the set up, the day before they broke out. They are now rolling. BAC, WFC, WB and even C have moved to new highs. At this juncture, we would wait for pullbacks before buying. This is a good sign for the stock market as we have never seen a stock market get in trouble when this group was moving out. (As of this writing, WB is down on buyout of GDW.)  

GOLD remains in full bull mode. Just keep in mind that the metal is very extended while the leading stocks need pullbacks at this juncture. GOLD is probably the most extended investment out there. Nothing has changed longer-term though.  

Other COMMODITIES remain in great shape. They are also in bull mode but in dire need of pullbacks. In bull markets, corrections can be as large as 20-25% and be very violent. Nothing has changed longer-term either here as we would buy all pullbacks into moving averages and support.  

The TRANSPORTS remain in full bull mode. We continue to be amazed by the leadership in this index. EXPD was the latest to go bonkers to the upside. AIRLINES continue to be in great shape as AMR and CAL came out their right sides. Add GOL, LCC and ALK to the strong list.  

For a change, we are now liking the MEDIA group. We love the recent action in CMCSA and CVC in CABLE and liking names like NWS, UVN, TV and V.  

Sell in May and go away!" As of this second...NOT! If the stock market decides to top, we will get a few clues before the party is over. Major averages are singing a different song so far.    

Lastly, there has been a definitive not so subtle change as mega-cap companies are now getting money flows. We gather this has something to do with the falling dollar as earnings go up in that environment. Time will tell whether these companies like KO (which is starting to move out) have legs to the upside.