Weekend Watchlist

Market Posture:

I'm going to keep this pretty simple, the market is still intermediate term neutral and short term bullish despite the 400 point turnaround on the Dow in the last 25 minutes on Friday. Now, that doesn't mean that the Dow can't roll down and test 8,200 - 8250 again. In fact, a drop below 8,450 would probably lead to a test of 8,250 or so. Very short term resistance on the Dow is in the 8,900 area, with intermediate term resistance in the 9,400 - 9,600 area.

Remember that traders are still skittish despite the fact that Big Money keeps buying the market whenever the Dow gets into the 8,000 area. There is still too much uncertainty (lack of visibility, lower probability, whatever you want to call it) for traders to push the market into a longer term uptrend. I speculate that the probability is pretty low that we see any bullish moves sustain longer than 4-6 weeks, we just have too many issues to work through in the coming months. So we will probably see continued support by Big Money in the "cheap valuations" zone but also intermittent selling (capital gains selling, earnings season selling, political changeover uncertainty selling, financial/real estate issues selling, and so on). That means the majority of the time for the next 3-4 months that I am likely to stick with the risk management rule of not holding a full position overnight. That doesn't mean that there won't be some excellent trading opportunities, it just means that I want to reduce my risk by reducing time and size.

Here is a list of interesting Bullish Movers recently:

Energy: SUN, MUR, RRC, OXY, EOG, APA

Financials (especially Insurance): AOC, ACE, TRV

Biotechs/Healthcare/Drug Stores: CEPH, GILD, TEVA, AMGN, GENZ, CELG, MHS, MYGN

Cyclicals/Economically Sensitive: MMM, UPS, FDX

Note: RTN, PCP

There is still quite a bit of sector uncertainty out there with the three R's and the two C's, that is Retail, Railroads, and REIT's along with Coals and Chemicals. All five of those sectors are still too squishy for me to consider anything bullish in those areas.

Remember, Monday and Tuesday we get more Retail earnings, so don't expect any "positive" news. Rather, watch to see how the market handles the news. If we start moving up then look for another test of 8,900 on the Dow. If we clear that then we will probably have a nice upswing for another few days.

As always, we shall see.....