It’s no secret that the character of this market has been shifting over the past several weeks as the market adjusts to lowered expectations across the board.  However, when GE reported awful results last Friday it was a bit too much for the bull to swallow, leaving the indices in a bit of a precarious position.  .. BUT ah what a difference a week makes.  This time around Google proved all the doubters, doom and gloomers wrong.. very wrong and it provided just the spark this market needed to break out in a big way. 

Buyers remain in control with shorts running scared but how long can it last?  We’re already up 10% off the bottom and major resistance points stand in the way of another 10% mover up.  What happens when the Ag and Oil stocks begin to slip?  Can new leadership emerge?  Perhaps tech can find a grip once again following Google’s results.  I believe it’s a bit late too be getting aggressive on the long side unless you are trading in the short term.  I’ve been mentioning over the past several weeks that I’ve been adding some new long positions on the pull backs as the market appeared to be coiling for a big rally.  However, I’m not willing to get aggressive at these levels and may even look to lock in profits soon or hedge with a few short positions.

Let’s take a look at the technicals of the major indices.

The Nasdaq on Friday gapped up big and was able to clear some resistance of the April highs but still faces stiff resistance at the Jan highs.  The buy vs. sell volume indicates that buyers remain firmly in control for now.  I like the odds of breaking those Jan highs but I don’t like the odds of breaking through the major downward trend.  It’s at that point I’d be significantly paring back on long positions and getting short.

We see the same thing in the S&P.  A big move up on Friday but still faces some important resistance at the January highs and even bigger resistance at the major downtrend line which isn’t all that far away.  Certainly some more room to run, but if we get up into the 1425 level I’d be taking some chips off the table.  Note the relatively weak buy volume on these big moves.  Looks to be a considerable amount of short covering rather than big conviction on the part of institutions.

The Dow did manage to bust through those January highs, but look how close that downward trend line is.  Just 150 points away!  It’s possible that this rally ends as quick as it began.  Such is a bear market rally.

 ::: Model Portfolio :::

** This section will now appear as a separate report about every other Wednesday. 

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::: Best/Worst Performers :::

– Top 10 Performing Industries For the Week –

1. Publishing – Periodicals: 29.35%
2. Dairy Products: 12.35%
3. Oil & Gas Equipment & Services: 10.95%
4. Internet Info Providers: 10.80%
5. Nonmetallic Mineral & Mining: 10.55%
6. Shipping: 9.85%
7. Investment Brokerage:  9.80%
8. Farm Products: 9.75%
9. Technical & System Software: 9.30%
10. Farm & Construction Machinery: 8.90%

– Top 10 Worst Performing Industries For the Week –

1. Major Airlines: -6.50%
2. Resorts & Casinos: -5.05%
3. Diagnostic Substances: -3.45%
4. Research Services: -2.70%
5. Long Distance Carriers: -2.40%
6. Personal Products: -2.25%
7. Banks – NE: -2.25%
8. Medical Appliances & Equipment: -1.85%
9. Medical Equipment Wholesale: -1.80%
10. Regional Airlines: -1.35%

– Top 5 Best Performing ETFs For the Week –

1. HLDRS Oil Services (OIH)  12.55%
2. India Fund (IFN) 10.90%
3. iShares US Oil Equipment & Services (IEZ) 10.25%
4. Morgan Stanley India Invest Fund (IIF) 10.00%
5. Powershares Dynamic Oil & Gas Equipment & Services (PXJ) 9.95%

– Worst 5 Performing ETF’s –

1. HLDRS Biotech (BBH) -1.50%
2. SPDR Gold (GLD)) -.75%
3. iShares Gold Trust (IAU) -.70%
4. HLDRS Pharma (PPH)  -.50%
5. Central Fund of Canada (CEF) -.40%

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

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

While 2008 should be a much slower year for IPO’s considering the deterioration of the market, there will continue to be some good companies coming to market here and there.  I’ll be highlighting the best IPO’s every Monday.

::: Upcoming Economic Reports (4/21/2008- 4/25/2008) :::

Monday:        None
Tuesday:       Existing Home Sales
Wednesday:  Crude Inventories
Thursday:      New Home Sales, Initial Claims, Durable Orders
Friday:           Mich Sentiment (prelim)

::: Earnings I’m Watching This Week :::

Monday:
Ametek (AME), Arch Coal (ACI), Bank of America (BAC), Canadian National Railway (CNI), Fording Canadian Coal Trust (FDG), Halliburton (HAL), Netflix (NFLX), Steel Dynamics (STLD)

Tuesday:
AK Steel Holding (AKS), AmSurg (AMSG), Anixter Intl (AXE), AU Optronics (AUO), Baker Hughes (BHI), CH Robinson (CHRW), Chicago Mercantile (CME), Coach (COH), Encana (ECA), Hudson City Bancorp (HCBK), Jacobs Engineering (JEC), McDonald’s (MCD), Norfolk Southern (NSC), Options Express (OXPS), Peabody Energy (BTU), Smith Intl (SII), VMware (VMW), Yahoo (YHOO)

Wednesday:
Air Products & Chemicals (APD), Alcon (ACL), Allegheny Technologies (ATI), Aluminum Corp of China (ACH), Amazon (AMZN), Apple (AAPL), CDC Corp (CHINA), Chipotle (CMG),  EMC Corp (EMC), Range Resources (RRC), Ryland Group (RYL), Stericycle (SRCL), XTO Energy (XTO)

Thursday:
3M (MMM), Altria (MO), Baidu (BIDU), Bucyrus (BUCY), Bunge (BG), Century Aluminum (CENX), CNH Global (CNH), Deckers Outdoor (DECK), Diamond Offshore (DO), HDFC Bank (HDB), Interactive Brokers (IBKR), Life Time Fitness (LTM), MDC Holdings (MDC), MEMC Electronics (WFR), Microsoft (MSFT), Potash (POT), Rubicon (RBCN), Southwestern Energy (SWN), T Rowe Price (TROW), Terra Industries (TRA), Trade Station (TRAD), Union Pacific (UNP), VisionChina Media (VISN),

Friday:
Companhia Vale do Rio Doce (RIO)

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

1. Gold Heading Lower, Natural Gas & Uranium Headed Higher? Transports Showing Leadership

2. Coiling For Big Rally? Leaders With Momentum – ATW, MTL, SD, ECOL

3. Top Breakout Stocks With Greatest Demand: Watch Digital Ally (DGLY)

4. Indices Reclaim 50 Day Moving Average Keeping Breakout Potential Intact

5. Breakouts! Gushan Environmental Energy (GU) & Digital Ally (DGLY)