Sector Overview

Last Wednesday I remarked that a strong rally to end the week was unlikely. The next day we promptly had a strong rally, which kept index charts in a bullish orientation. At this point, I do not see a great edge in either direction. In my mind, the end-of-quarter window dressing will be a non-issue after tomorrow, and then we'll get a better idea of market direction. We really have some mixed signals here.

- SPY got a boost on Thursday, pushing it above the 50 and 200 day moving averages, and maintaining a higher low. One could make exactly the same comment about IWM and QQQQ.



Looking at individual sector ETF's, things are not quite as rosy, with several trading below important moving averages, and new lower lows in place:

- XLI



- XLB



-XLF is not in the lower low camp yet, but neither would I call this a bullish chart. This is the one I am watching most closely.



- IYT: The transports are providing a mixed picture, trading below a double top, and just below the 200 day moving average, but as of yet not setting a lower low. Thursday's jump in volume could signal a move higher, but price needs to get above that double top.



So to me the index ETF's appear more bullish than the ETF's for key sectors. And what's leading here? Rental cars:





Sometimes a huge volume increase at such extended levels can signal a top, but we'll see with the rental car companies. To me this mainly looks like end-of-quarter, squeeze the shorts trading games.

Anyway, as I've mentioned many times, I'm bearish on the longer term prospects, but in the short term anything can happen here, especially given market manipulation and the possibility that the government is propping up the market.

Today I'll be watching the energy sector, following passage of the cap-and-trade bill in the House. EXC would benefit from increased focus on nuclear energy, which seems very likely.



Millions of people over the weekend were watching prisoners in the Philippines doing an impressive version of Michael Jackson's Thriller. I really enjoyed it, so here it is:



And here is The Hustle: