The market acted today as if it was in a wait and see mode ahead of big earnings announcements this week from companies such as Intel (INTC) and Motorola (MOT). Volume was late and breadth was negative most of the day before some buying into close turned it positive. The sectors we would like to see leading a market higher, technology, retailers and biotech, were running behind oil and gold.  The best thing about the action today was the strong close but we did not have any real vigor.

A look at the recent action in the Nasdaq shows a classic dead cat bounce formation which simply can not be embraced at this time. We were indeed oversold, and a bounce was inevitable; however, we are in a very precarious place technically. We now must await the results from earnings season to see which way the market mood turns. 

We have been playing the recent bird flu pandemic and these trades, while lucrative, need to be watched carefully although we suspect these stocks will continue to receive attention for some time. We also added to some of our earnings winners for client accounts, such as Btu International (BTUI) and Gfi Group (GFIG) which seem to have found footing and should begin to move forward once the focus shifts to fundamentals and away from macro market concerns. Individuals with smaller accounts probably will want to be more patient with their buys as they have the advantage of being able to be more precise with their timing.

This week should prove very interesting and could foreshadow our year end action. It will be very important to allow the market to tell you where it is going and not be overly anticipatory. Expectations for reports seem to be fairly low and that is a positive.  

Have a good evening.

RevShark