Markets Race Higher led by Financials and Airlines

July 16, 2008

Wells Fargo gave a boost to the stock market with positive news stemming from its earnings release. Stocks continued to build upon gains throughout the day. Crude Oil prices sank for the second day in a row, capping a 10% decline in two days to help stocks push higher. Although price action was very positive volume was not. Volume tracked lower all day long and finally closed lower on the day. Day 2 of the most recent rally attempt was lead by financials and airlines. The two most beaten up sectors were today’s leaders, not exactly the leaders you want. We’ll have to wait and see how this rally attempt progresses, but at this point we need confirmation.Over the past few weeks you have read Joshua explain the need to get into cash and exhibit patience with this market. Many will try and bottom feed this market and lose their shirt. New Bull Market do not begin with the old leaders rallying and leading a rebound. Real fresh Bull Market depend on NEW leaders not old beaten up prior leaders. Financials and airlines have been beaten down to the point of bankruptcy. What we need are fresh new companies with new products and services that will spark the large amounts of cash on the sidelines to flood the market. At this point, we have beaten up, old leaders trying to make a comeback.