Howdy all, good to be back and attempting to get my arms around the market.  After spending a week in Sayulita Mexico (wow, what a place) it’s been more difficult than imagined to get back into a market mindset and try and get my arms around whats going on.  I’m getting there slowly but surely :).  While I was away, the markets continued to push higher, albeit on meager volume.  With each uninspired up day came the greater likelihood of a significant fall to retest key support levels.  It’s where we stand currently.  The Nasdaq has been hit the hardest, but the good news is that strong support is on the horizon.  Look for some sort of capitulation around this area for a signal that a bottom has been put in place.  Before that happens, I imagine we’ll get some sort of weak oversold bounce.  This may provide an opportunity to exit weak long positions and/or initiate a short trade or two.

Below is a longer term, weekly chart of the Nasdaq.  You see the long term uptrend remains intact with key support in the 2200 range.  I’ll be looking for some kind of high volume reversal in this area as a signal that a bottom may be in place.  Until then, I remain largely in cash with the possibility of a short position or two.

Rotation in Medical/Health?

With sizable corrections often come rotations from sector to sector.  With money flowing out of commodities, it’s important to get a feel for where that money is being put to work.  It may be a bit premature to say that health and medical related issues will lead in a new market upturn, but over the past several days, these industries have been leading the way and moving up despite heavy losses in just about every other nook and cranny of the market.

For example, here are the top 15 performing industries over the past 5 trading days.  9 of the 15 are medical/health related.  Look for the trend to continue.

1. Long Distance Carriers
2. Long Term Care Facilities (SUNH,  GHCI)
3. Drug Delivery
4. Health Care Plans
5. Medical Laboratories and Research
6. Music & Video Stores
7. Entertainment Diversified
8. Catv Systems
9. Drugs Wholesale
10. Drug Manufacturers
11. Medical Equipment Wholesale
12. Specialized Health Services
13. Hospitals
14. Personal Products
15. Beverages – Soft Drinks
24. Biotechnology