TradeWinds for June 3rd

Oh Miss Market is back to her fickle, unpredictable ways. Which just may mean the market is ready to change its stripes.

I bet a lot of you were spending your morning much like mine. Doing your job and keeping one eye on the market, or maybe watching the market full time. You felt a little uneasy about yesterday but you knew the market had three good days last week, so you watched the morning action feeling pretty good that the market was doing some consolidating maybe even adding to your gains on some long positions. Then, boom, the bottom fell out for no real good reason that I can think of - come on, it can't be the GM sales figures. And then just when you had that feeling for the millionth time that you would never trade the market again, it catches it self and makes a decent rally off the lows - particularly for the techs and small/midcaps. At the end of the day you are puzzled and confused; go home and drink a lot.

Let's try and put some rational perspective on the day if we can. Our momentum numbers are in bad shape for the longs, no doubt about it. There is still some good news below the surface, but everything is weakening right now. We still have 21 of 40 sector/indexes in positive TradeWinds territory, but that number is shrinking. The big caps are sailing into stormy seas (DIA went negative today), while the small caps and midcaps are holding out pretty good (MDY actually posted a gain today). Techs are holding tough with buyers moving into the QQQQ for second day in a row at its support level. The background macro noise is not all that bad - some good news in home building, oil is in the throes of at least a short term correction, and while some post market headlines blamed the down day on worry over financials, they were only down a fractions for the day.

Its a mixed bag for sure, which says to me its time to sit on the sidelines until Miss Market gets out of this funk and decides what to do. I think the odds are just as good that we will see a +200 day tomorrow as we might see a -200 day. If you are a gambler, then place your bet on red or black. I will be watching. Basically what I am saying is that we may be at a pivot point as early as tomorrow that either re-ignites our long move or shifts the market into a summer bear move.

Sectorwise, the only thing that was real interesting was the continued rebound of the Ag stocks. You will see a bunch of them in our Top 25 Buy Momentum List, along with our number one stock which has appeared on the list for 12 consecutive days, APH.