First a brief explanation of my bullish thesis: Despite all the negative news flow we have had over the last few weeks the market has proved resilient at its prior support levels, and then gave back a little under half of its rally from those levels which is entirely bullish. Furthermore, with every media outlet preaching doomsday approaching I feel that there is a lot of cash on the sidelines waiting for resolution, meaning a positive resolution would rocket us to the upside as everyone who is cash dives in scared to miss the next leg higher. Add to that the increasingly dovish comments by Ben “Helicopter” Bernanke and I maintain the bull is alive and well. It is also important to note that the “establishment” (aka the rich) own most equity with approximately 80% of all equity owned by the top 10% of the population. I say top 10% meaning by wealth because these people obviously do not have very many other noble characteristics, generally speaking of course, shown by their desire to constantly tell the little man he should be grateful for being thrown under such a nice bus. In any case I digress. Where was I? Ah the bull market. It is important to remember that the bull market is about all America has left, because lets face it almost everything else from jobs, to your so called “financial innovation”, to your leaders, to your foreign wars is bad and quite frankly getting worse.
With every stock on my uranium watch list (DNN, QMM, UEC, URG, UUU.TO, CCJ) breaking out and looking to continue strong into next week and chessNwine posting a variety of amazing looking natural gas plays I will continue to look for strength in shorted commodity related names. First though it is time to take a look at XME (Metals and Miners ETF), XLE (Energy ETF), XLB (Materials ETF) on a weekly time frame. Examining them we can see that they have bottoming or continuation patterns which would fit with a thesis of a continuation in the bull with commodities re-emerging as leadership after having been sold so savagely (i.e. get your inflation trade on) along with semi-conductors and financials which seem to have bottomed last week.
I will run some screens and post my “A” watch list for next week – although already being about 80% long in LVS, V, FAS, and SMH I will likely not deploy any more cash unless I can take some profits.
This is the link to the watch list – http://finviz.com/screener.ashx?v=210&t=CHRS,GMXR,HAIN,DMND,ZRAN,PAL,WLK,WIRE,EXXI
I ended up with a bigger list than I would like, a result of looking through all the charts generated by my favorite ppt screens, I threw in the best looking components of the three above mentioned ETF’s. My general feeling is that, all news flow aside, there are quite a few extended names. However there are also very many names with nice bases / consolidations that could easily break out.