Sector Investing

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There are some interesting things going on in the market that argue against anything other than a bit of a pullback right now.

First at major tops you generally see extremely high volume as institutional investors sell their shares to small investors who generally join the party right at the wrong time.

The last couple of major tops also came with RSI(14) over 70 even on monthly charts:



I'm not saying the market is making a major top now. All I am saying is that despite QE Whatever the market is closer to a top than a bottom. Stock picking now is more important than ever.

The Dow Transports have not confirmed the recent highs in the DJIA.

Even though the FED's recent announcement fueled a broad based rally the SOX is far from showing any kind of leadership. Small cap technology stocks would need to show some leadership before I would get too excited about trading any of the stocks I usually trade long.

Again, I am not saying don't buy an oversold stock or sector spider if that's what you want to do. But what is really oversold?

Finally, I don't really trade the same way you do so my advice may be completely useless to you.

RtS