Home Builders and home improvement retailers lead the bounce

Market Monitor: Bearish

A low volume bounce after Friday negativity saved the day.
Retail and banks are the major beneficiary of the bounce so far. Residential construction is the number two performing industry on monthly basis followed by home improvement stores at number 3. Such laggard sectors are not going to lead the market higher for long.
All these rallies in interest sensitive sectors are likely to fail in few days or week as the actual news of Fed rate cuts arrive.
This is what IBD has to say about the market

The market has scored gains in three of the past four sessions, snapping a long losing streak that whacked stocks for much of January. A few medical and energy stocks have rebounded, moving back above key support lines such as the 50-day moving average.

With that said, it's too early to get excited about such a short, modest run. The broad market indexes are still on pace for one of their worst months ever. Leading stocks have been battered. Few institutional-quality stocks have formed anything resembling a proper base.

Above all, the market remains in a clear correction. In that climate, it's best to stay on the sidelines and conserve your cash. Monitor the market from a distance, without fretting over potential trades.

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1 comment:

FAS Capital said...: Hey Pradeep,

You are right on the money. I am waiting for the right time to buy some SKF. Financials have taken such a beating I don't know how much more downside is left in them. I am waiting for a good entry point if it ever shows up.; Jan 29, 2008, 10:56:00 PM

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