Second Wave is coming

I have been waiting for some sort of correction or pull-back in over-all market for the past 3 weeks or so, meanwhile tier 1 leaders rallied and now rest of the market will follow. S&P500 shows strong and clear sign of the longer term rally on its way and as a sign of a typical strong and sustainable rally, the leaders lead and the rest will follow. As an example look at technology stocks, APPL, GOOG, RIMM, AMZN and GRMN are way up .. and now AKAM and BRCM (2nd tier techie's) are following. My take is that, those how loaded up tier 1 are now looking for opportunities in lagger stocks and look for any positive sign (and at least in the absence of the negative outlook) to buy stocks in leading sectors. Even in sectors which were hurt by housing market crises and finance, and retailers are coming back. One stock I would like to single out here , thats CAT, with good exposure to foreign market (and week dollar) their earning should be good and their AG. business side should do very well too, but they were pulled down by th erest of the housing and construction stocks. On tier one technology stocks or those in the top 5 percentile of the market the pull-backs are terribly short and hard to catch up. 3 weeks ago I wrote about DRYS looking good at $80 and should be bought on a pull-back. Well pull-back never happened, it gained 10 weeks every week and even this morning went up close to 6 points (its about 106 now), I personally did not have the courage to buy DRYS now .. But certainly looking in stocks which went up and now are moving side ways or slightly down. Remember my argument is the market trend is positive and the lagers or those stock which are catching their breath, will go up soon. I will through some charts but you can look up the details in many financial sites like Yahoo finance yourself.
In Oil sector: XTO, APA and VLO, On the comparison chart you can see VLO is trying to catch up while XTO and APA are leaders which are moving sideways and are well positioned to resume their rally.
Technology: AKAM and BRCM are showing eagerness to move higher, I like to mention 4% jump in the stock of Sun micro (JAVA) its about $6.05, a friend of mine mentioned that to me about a 5 weeks ago (when it was below 5) and I told him I hardly trade stocks under $20, since I am looking at option-able stocks which are 20 or higher. The rally in tech stocks is certainly not over, leaders still lead, and many stocks like the ones I mentioned that are breaking away from their trading range.
Retailers: Sears Holding SHLD and Best Buy BBY.
On the short side I should be able to find more candidates (I wish I had a position in NTRI , I did not catch any of its $16 drop, its too late to short now, this stock should be doing well in the Q1 of 2008 (after holiday season) anyway, back to the current short candidates, I am looking into buying puts (side note for those who thought buying puts on NTRI mean, buy the stock: buying puts is the equivalent of selling short and capping the risk) in NIHD ( Nii Holdings Inc) its $69.59 (down 4%0 today, it went down significantly in the past 4 trading days (from 83 to 69 with heavy volume). 1.55 Million share sold by insiders in the past 6months, while the stock was moving up and hit the 52 weeks high at $90. The sector (Communication equipment) is not in a bad shape at all, usually I want the sector show signs of money moving out, but its not. --Happy Trading

ps: Read a nice posting on http://tomorrowsnewspaper.blogspot.com/2007/10/can-synaptics-hold-ground-here_06.html
on SYNA, stock went up more than $2 today and I have a small position (Call-side) , I think this stock is also fit the definition and should be bough (gradually, hoping a small pull-back)

LONG Candidates:



SHORT Candidates: