I am moving in slow motion because I may have overdone the beers during last nights New Orleans Saints second half explosion and win over the Detroit Lions.
Running a Little Hot
I have been pretty suspect of the rally last week. Besides low volume, figured that was going to happen, the names running the hardest were some of the more beat down names with heavy short interest. Overall, short interest is at multi month lows, and the air pocket from the Tuesday gap up is a real weakness for the market should any drop happen. There's not much underneath holding things up. Add to all that the level of bullishness is very high.
I wrote a post last Sunday where I discussed keeping an eye on "safe" companies and sectors should money start coming out of them. I wrote:
It's natural and expected that in a move to a more aggressive stance on the market, money will be pulled from defensives and put to chase after other assets.....
If prices are dropping for BOTH the defensives and the general markets then you have to respect that as a strong signal. In no way has that slight blip been confirmed, but you need to be aware of it.
Up to date comparison charts are in order.
RAI vs S&P 500:
Utility Index XLU vs S&P 500:
Another item to watch is when Biotech as an industry gets hot, it can mean it's late in a uptrend cycle. Now there has been a ton of news that has been supportive of the sector so one has to keep that in mind. Here is the Nasdaq Biotech index (^NBI) against the Nasdaq for the last 6 months:
It's my belief that some kind of correction is very close. I could be wrong, and if I am these charts above will change to show that a longer rally is at hand supported by money movement.
Have a good night.