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DJIA: 49,597
So, who are you going to believe… your thinking or your eyes? Oil is up some 50%, Fed cuts unlikely, and inflation looming. Yet the market remains on its AI high. Amidst all this blessed are the technical analysts, pity the poor funnymental guys. It’s not easy to explain. This does remind us all the more of the Vietnam period, when every other week peace was at hand. Then disappointment was met with lower prices. Now good news seems rewarded and bad news is punished less and less. You might even say the market seems to be making the news. Then, too, that’s what markets do. The AI high may not last, but there’s more to the rally than AI and that’s what makes it healthy. In good markets there will always be the better than good, they’re called leaders. Important, however, is adequate participation – the A/Ds have to keep pace. The 2-to-1 up numbers Wednesday were evidence of just that.
One thing that makes this threat of peace a bit more credible is Oil’s reaction. Previously it had ignored such news, but this time has been different. Oil and the stocks are not those of old. Like Gold, which rallied sharply on the news, Oil seems something to be positioned rather than traded. Meanwhile, unless Newton got that gravity thing all wrong, it could be time to sell some Semis and hope you’re wrong, as we like to say. It doesn’t have the momentum of the Semis, but the MAG7 ETF (MAGS – 69) has shaped up rather well. Meanwhile, Software (IGV – 91) is the big laggard, but even there a move above 90 would leave it much improved. What we call the power builders, Quanta Services (PWR – 751), GE Vernova (GEV – 1046) and the like, are good charts to the point of being almost as stretched a the Semis. Communications stocks from NOK (12) to VOD (16) act well, as does the more controversial Blackberry (BB – 6). Nuclear and even the Quantum stocks also seem revived. Leaves you with the feeling there’s more to the market than just Lawrence Welk and the other semi-conductors.
Frank Gretz
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