Well, the election is finally over. Now its wait and see what next. The market was 'boring' on election eve, then it rallied on election day. The market has been slowly building a bullish bias toward the October 14, 2008 intraday high. If the market break through this resistance level, I will be watching to see if it will move toward the 10200-11000 level. Seasonally, November is typically a good month for the market and is not a month in which the market selloff to make market bottom or a new market low. I believe with the removal of the election uncertainties, the market will move higher in the short term. When December comes, and the market start to refocus on the recession and the Christmas retail sales, it will set itself up for the pull back and resume to the primary downtrend. If the market still exhibiting bearish bias when entering the month of January, the likelihood for the market to make a bottom or a new low will be great.
Some of the sectors that are looking bullish for the short term are the biotech pharma and airlines. In a recessionary period, people will still need to buy the drugs they need to treat their illness. Therefore, those biotech pharma companies with specialized drug will be less affected by the recession. In addition, with the price of oil coming down, the airlines are getting a windfall profit from all those fuel surcharges they imposed on travelers when oil were $147 per barrel, and all those baggage charges. As the airlines' fuel cost comes down due to the falling oil prices, those surcharges are becoming a new profit generators for the airliners.
Those are two primary sectors that are seem to be showing strengh in this rally. Other sectors that are also interesting for the short term are the home builders and regional banks.
Again, I emphasize 'short term' because I believe this rally will be short lived. So I would be very selective and scale into a position. I will provide an update on GLD on my next post. Today I went long on DHI with a small position and waiting for entry around 62 on CELG. Will update on the trade in the comment section.
