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Since the market's follow through day, the market continues to act constructively off its recent lows as up days have been on heavier volume while down days have been on light volume. One also has to like that leadership is indeed starting to show up. In past reports, I have mentioned the better action in areas like HOUSING, RAILS, TRUCKERS and COMMODITIES. This includes my now favorite group... STEEL. Also turning up nicely are OILS, FERTILIZER and AGRICULTURE. I must also add that SOLARS are now coming on strong. On top of that, the down and out SEMICONDUCTORS have finally turned up after an excruciating drop punctuated by no rallies whatsoever.
This action finally got me investing on the long side in the past 2 weeks... and with last Tuesday's follow-through of the NASDAQ and S&P, the market is now coming after a few high octane names. All this action is occurring while the news media reports we are already in a depression. Funny, some of these media outlets were negative when we had a 5% GDP quarter. Agendas anyone? Take your time and don't try to be a hero. If this is for real, plenty more leadership will show up. If it is not, we will know it as distribution will show up. I make no prediction of which way things play out but will react to how things start to play out. Remember, bear markets have certain characteristics... just like bull markets.
I am incessantly asked how the market can rally in the face of more bad news like the job's reports. Simple... and I will say it loud and clear for the umpteenth time. Markets lead the economy. The economy does not lead the market. FINANCIALS and REAL ESTATE topped out way in advance of any bad news.
The same occurred for RETAIL, SEMIS and the rest of the nausea we have seen over the past months. Does the recent action mean things will be better in a few months? Maybe- just remember in bear markets, intermediate-term rallies do occur. I remember several during the 2000-2003 carnage. But the bottom line is that I do not look past my headlights... and that is the evidence that is NOW at hand... not the evidence that may show up later.
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