Wednesday, June 6, 2007

Financial Leadership... or lack thereof

You can slice and dice a market any number or ways. You rationalize away concerns to fit your belief. We have all done this rightly or wrongly. My friend Dennis Gartman always says its not to be on the bull or bear side but on the right side !! Very wise advice from a wisened cat. For me I always go back to the financials. They should be leading the market and when a traditional general is not out in front leading the troops as opposed from a bunker 200 miles from the front I pay attention. The financials are lagging this market and unless they start to behave properly there could be some major problems. The financial select spidre (XLF) may have stalled here. It has broken the uptrend line from the Mar 14 lows today. The Dow Jones Financials $DJUSFN daily chart tells a similar story, it has failed to make a better high and is turning down. The weekly version of this chart shows negatively diverging momentum along with a possible bearish engulfing candle if we finish the week here. I like the Ultrashort Financial SKF as a play on this.

I came across something I thought I would share with you. I was reading some comments from Marc Faber, which by the way if you can he is worth the read. Along with managing money he publishes the Boom , Doom and Gloom report. He recently opined that wall street pundits often implore the public that crashes and panics offer excellent buying opportunitie ergo bubbles or buying panics should offer excellent selling opportunities. Something to ponder. Good luck and good trading to you.

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