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Monday, January 14, 2008

All That Glitters

We got another bounce today, nominally because of IBM's good earnings, but the volume just wasn't there. Technically we are in day 4 of the rally attempt (i should wait for tomorrow's IBD to confirm that, they hve been a little cobfusing of late). We are looking for an up day on higher volume than the previous day, and today's volume should be easy to beat. 1406 fell pretty handily, but we really need to break through 1435 before I am convinced.

The NDX really doesn't look any better. The best positive I can see is we closed on the high of the day. Getting back above the 200dma will make me feel more bullish.

The Dow transports are also trying to rally. Oil has backed off a bit, but I don't expect it to drop much further, if at all.

E-trade has a free service called Clearstation. IIf you are not familiar with it, it is a free service which does not require an E-trade account. It has been a little spotty lately (I imagine E-trade's recent difficulties might have something to do wit it), but it is really good for managing a watchlist. It is also good for finding the strongest sectors and industries. One of the strongest sectors of late is Basic Materials, and the strongest industries in that sector are specialty chemicals *primarily agricultural) and gold. GDX is an index of gold mining stocks which does well when the price of gold rises and is a good way to play the gold market. GDX broke out to a new high today, but may be due for a pullback here.

GLD is another way to play gold. It is an ETF which tracks the price of gold. This looks like it is poised for a pullback, too, giving a lower risk entry.

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