Don’t Be Greedy

I’m gonna keep this short and sweet.  Don’t be greedy, it’s just that easy.  The market sustained significant technical damage during the latter half of October and the first few weeks of November.  Consider the 7% retracement of that sell off over just the past 2 weeks a gift, offering a 2nd chance to lighten the load on the long side.  Bull markets die hard and offer multiple chances to get out with big profits in the bag.  I’m not saying this is a bear market just yet, but the roles have been reversed and the onus is now on the bulls to prove themselves.  Until then, I’m treating this is as a bear market in the making and the action over the past couple weeks as just a tradeable rally, nothing more.  Buy volume is waning, key resistance levels loom and the bulls are pinning their hopes on another Fed rate cut to save the day.  Perhaps the Fed cuts by 50 basis points, Jim Cramer emphatically declares  Dow 14,500 by the end of the year and we rally several hundred points.  I would have no problem missing that move knowing that I’ve already recovered all losses from the Oct/Nov sell off and if I don’t make another cent in December, had a  great year in a difficult market.  At this point, my portfolio is neutral with a sizable cash position but am watching closely to move more cash to the short side.

The Dow has cleared some very important resistance of the short downward trend and the 50 day moving average but faces another significant obstacle at resistance around 13700.  Notice the declining buy volume as traders await the Fed decision Tuesday.  If the Dow can clear 137000 with big volume I might be willing to get in the bullish camp a bit, but until then there is reason for skepticism.

The S&P has just edged up above that 50 day moving average but is right at resistance of the downward trend and has little momentum at its back.  This time around, it may take a heck of a lot more than a Fed rate cut to get above resistance with any oomph.

Like the Dow, the Nasdaq has cleared a downward trend but still faces stiff resistance around 2725.  Holding above this downward trend, then surging above 2725 with volume would be big for the bulls and could signal another lengthy rally.

 ::: Model Portfolio :::

** This section will now appear as a separate report to be published on Wednesdays.

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::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Residential Construction: 14.40%
2. Auto Parts Stores: 10.70
3. Trucking: 8.50%
4. Heavy Construction: 8.00%
5. Copper: 7.60%
6. Electronic Stores: 7.50%
7. Trucks & Other Vehicles:  7.35%
8. Technical Services: 7.10%
9. Agricultural Chemicals: 6.90%
10. Recreational Vehicles: 6.70%

– Top 10 Worst Performing Industries For the Week –

1. Business Equipment: -8.90%
2. Publishing – Books: -2.80%
3. Credit Services: -2.30%
4. CATV Systems: -2.20%
5. Textile Manufacturing: -1.90%
6. Biotechnology: -1.80%
7. Textile – Apparel Clothing: -1.40%
8. Specialty Eateries: -1.15%
9. Rental & Leasing Services: -1.05%
10. Marketing Services: -1.00%

– Top 5 Best Performing ETFs For the Week –
1. Ishares Home Construction (ITB) 10.80%
2. iPath India (INP)
3. Turkish Invest Fund (TKF) 9.25%
Morgan Stanley India (IIF) 9.15%
5. Greater China Fund (GCH) 9.15%

– Worst 5 Performing ETF’s –

1. HLDRS Biotech (BBH) -4.50%
2. Ishares Lehman 20+ Treasury (TLT) -2.80%
3. US Natural Gas (UNG)  -2.60%
4. ING Global Equity Dividend (IGD) -2.10%

5. Ishares Lehman 7-10 Yr Treasury (IEF)  -1.40%

:::  IPO’s Worth Watching for This Week :::

This section will now appear as a separate report on Mondays.

::: Upcoming Economic Reports (12/3/07 – 12/7/07) :::

Monday:         Pending Home Sales
Tuesday:       Fed Rate Decision, Wholesale Inventories
Wednesday: Export/Import Prices, Trade Balance, Treasury Budget, Crude Inventories
Thursday:      Retail Sales, PPI, Initial Claims, Business Inventories
Friday:            CPI, Industrial Production, Capacity Utilization

::: Upcoming Notable Earnings Reports :::

None this week.

::: In Case You Missed It – SelfInvestors Blog Entries of the Past Week :::

1. Sucker Rally or Climbing to the Peak of the Wall of Worry; Hot IPO – WSP Holdings (WH)

2. Indices Approach Key Resistance As Buy Volume Wanes

3. Home Builders Close to Bottom; Top Plays NVR and Toll Bros (TOL)

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