Tradewinds for February 5th

Yesterday saw a not surprising down day in the markets. Our mini-rally was getting overheated, so there was some therputic release of the the overbought pressure. You can see that our fast momentum graph has taken a down turn, but that our moderate and slow momentum indicators were unfazed by yesterday's action. This is healthy. The momentum indicators can go in different directions for a few days as the excess is worked off, when they all get back in unison (either up or down), then we have another good entry point.

Not surprisingly, a lot of the ETFs and stocks that I track also posted a down turn in the fast momentum and fell into the neutral category. Not a big deal, just means we sit on the sidelines for a day or too and see if the this downturn is just the "pause that refreshes" or is a reversal to a downward trend.

Overall the negative momemtum continues to burn off, but we still have strong long term winds in our face, so if you are long be cautious.

We saw a lot of the agriculture stocks move into our top 25 yesterday - POT, MOS, MON, TRA, MOO. I am also detecting a revival of the solar industry in the rise of CCC, WFR and FSLR. Biotech, BBH has made a nice move. And transports remain strong - IYT, CSX and GT.

Tradewinds for Tuesday January 29th

Monday's market gave us the nice follow through to the upside days of last week to begin to solidify a new short term uptrend. Now before we too excited about that, lets remember that we still have hurricane force winds blowing in our face, but they are diminishing and more areas around the edges of the storm are starting to see some sunshine. To be real, of the 80 stocks and ETFs that I follow, 63 are in mild to severe long term downtrends. So caution is still the keyword. The short term bias is up, but don't get greedy out there.

Here are the ETFs and stocks that are sailing in calmer waters, and would be nice place to do some fishing: XHB, IYR, GLD, SLV, GDX, FXE, CSX, HERO, MOS, SLW, TRA, POT, CF.

Here are the ETFs and stocks that still have a ways to go, but can see some calm weather on the horizon: IYT, XLF, XLY, IJR, IWM, XLI, DIA, SMH, MDY, AKS, PCLN, GT, ACAS, BOOM, APH, C, DRYS, INTC, GLW.

I have down trend indicators for only three securities - Bonds, IEF where I have taken a short position, retail, RTH, which triggered a short term downtrend, but is still sailing out of the storm nicely, and CCC, a small cap stock.

Happy Sailing, and remember, Don't Ask Why.