Week In Review 2/19/2007 to 2/23/2007

The market remains in an uptrend. One thing to watch out for in the coming week is the continued ascent of the oil above $61 per barrel and rise in gold prices. These two groups can kill this rally if not mitigated. The action comes at the heels of some troubling news coming out of Iran who continues to remain defiant in their quest for "peaceful" nuclear power acquisition. Iran's continued involvement in support of the insurgents in Iraq is also troubling. In addition, CPI numbers came in refuting some of the dovish comments by Ben Bernake and company last week. But that number should be taken with a grain of salt. While we are overdue for a correction in the market, we cannot force the issue at this point and go with what the market gives you. As long as the technicals remain solid in the markets, and they are, we should continue to play "offense". I would recommend that we keep the long trades short term and scalping plays might be the best way to mitigate the possible reversal in the market. The bearish sentiment is higher than ever, and the bearish noise is audible. The put to call ratio still remains relatively high.

Nasdaq is hitting highs and is showing strength finally. The real question now is, can the techs, financials, retailers, and transportations lead this market again? One thing that I am noticing is that the current market leaders have been rolling over a bit, and even great earnings report is met with selling. In a strong market, we shouldn't see those kind of action. Some laggards have been showing strength lately, just watch what Service Corp is doing (SCI).

I am still bullish on Google. It has successfully tested the $455 bottom and is trying to make one more go at the highs at $513. I believe that the uptrend remains intact, especially because a lot of investors are not sold on Google's possiblity to run again. That is good news to me. I am looking to establish long sided trades in Tower Group (TWGP), LHC Group (LHCG), and Mindray (MR).

Next week will be a tell in the market. So far I have not seen any distribution days and there is no evidence of institutional selling. So, lets keep our fingers crossed and exercise some common sense and as always, be careful out there!