Miss Market is working the room, looking for someone to take to the dance. Right now she has a fancy for the small caps, mid caps and those dynamic techs. She is shunning the big boys and those financial guys.
I am still befuddled by this bifurcated market, and true to our name I will not ask why. When the trend is not clear, we step aside and just wait to see how things will shake out. Like I said yesterday, this market feels like any day could explode upwards or implode to the bear side. Its a little harder to make the case for bear side when the small and mid caps, along with the techs are hanging tough. You can also throw the transports, biotechs and Japan into that camp. But those big caps are just stinking up the place - the Dow and OEX are in negative TradeWinds waters and the SPY is acting like it wants to join them.
If you add it all up it suggest that we are heading into a range bound period of trading. The problem with that theory is that you usually don't see the volatility that we have had this week in a range bound market. We have been jumping around like popcorn lately.
Maybe we are validating the theory that come may we should just go away from the market. I don't buy that either because this is an election year and I think there will be a lot of maneuvering of money as we go through the year to try and be on the right side of what a new administration will bring in 2009.
So maybe there is a shift of money out of the stodgy big boys and the energy stocks and into the growth world of tech and small and mid caps. That has some sense to it, if you believe we have seen the worst of high energy prices for now. Whatever the reason is, Miss Market is not showing her hand right now, so I still say stick to the sidelines. If you must trade, I think its clear from this post what sectors you should look at.
For some additional trading ideas take a look at our latest Top 25 lists and TradeWinds Black Box.
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