We were hoping yesterday might resolve some issues of opaqueness surrounding the near term outlook for market sectors. Unfortunately participants failed to place their bets as the majority stayed sidelined like us. This makes sense since there are many unresolved issues and mixed signals in the current environment. Distribution has been taking place in the energy sector but as yet money has not found a new home in stocks or bonds, both of which have been losers since the beginning of the year. Now we are faced with end of the month window dressing time and oversold sectors but so far we have not seen an inflow of money anywhere. What has been occurring is scalpers have been quickly chopping off the tops of any rally attempts. At the same time, sellers have not followed through. It’s a very indecisive market environment in which we find ourselves. Sellers are afraid to get aggressive in front of potential painting of the tape by the funds and yet buyers are frightened off by the scalpers and very poor technical conditions. A few more days of this type of trading and shorts are going to find a lot of motivation to make their move
Scans of the tech sector indices show oversold conditions in the financials, consumer durables, autos, and energy, but all are in poor shape technically and it will be very difficult to find a safe long among the bunch
