ES -- DX/CL -- isee -- cboe put/call -- specialist/public short ratio -- trinq -- trin -- aaii bull ratio -- abx -- cmbx -- cdx -- vxo p&f -- SPX volatility curve -- VIX:VXO skew -- commodity screen -- cot -- conference board

Tuesday, September 11, 2007

 

long the financials? long real estate?




as abysmal as the picture seems from an economic standpoint, i wonder if there isn't a case to be made here to go long the financials -- just the opposite of my current position.

as seen above, the sector has experienced a brilliant washout -- on a par technically with the deepest bear market lows of the 2001-2003 run. 65% of the component stocks in the iyf got within 5% of their 52-week lows. about 40% actually made new 52-week lows. at bottom, just 6% were above their 150-day moving average. that is destruction!

but now...



some bullish non-confirmations are mixing in.



but i'd really rather to see some positive leading divergence in new highs to give a greater sense of refuge here. and maybe that will appear before the financials right the ship.

an even better case can be made for real estate.







i still think that a retest of the august 16 low in the indexes is likely -- perhaps not for leading groups like tech, but for the broader market. many of these etfs (including real estate and tech) reached oversold readings on september 4 that could well have marked the end of a bounce and the start of a test lower.

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