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Well, the Santa Claus rally had to wait for all the presents to be opened, waiting instead for the big one that arrived on January 3rd. This gift-wrapped package came in the form of words from the Fed’s December minutes which suggested that a pause or an end to the Fed’s tightening cycle might be coming. Whether you agree with the policy or not, to the stock market this is the best of all worlds: a strong economy matched with healthy corporate balance sheets and the possibility that few Fed Funds rate hikes remain— it’s really no surprise that January has started out with a bang. Looking at the charts, the break above 11,000 for the Dow is indeed significant, suggesting a potential target in the 12,400 range by my count:
In addition, the NASDAQ confirmed its October breakout with a 2280 print last week, making 2720 my price objective:
As I suggested in July, the semiconductors are a key leading indicator; recently, they actually improved further to become one of my favored groups as more individual names have been breaking out of their previously bearish trends. Further, the relative strength for many of these names is increasing and the Point and Figure chart of the sector, as represented by the SOX index, remains in a healthy up-trend:
In addition to semiconductors, a number of other individual sectors look attractive, including gold and base metals, which I just wrote about in a separate commentary (by the way, visit our website to learn more about the exclusive discount we offer on Bullion Vault*, the best way to buy gold online). For more information about why I consider Point and Figure charts to be most useful or to learn about other favored sectors and how I manage client portfolios here at Delta, call or email me directly anytime. Happy trading in ’06! *Bullion Vault is not a broker/dealer and thus SIPC insurance does not apply and is not available. The Bullion Vault product discount mentioned above is made available merely as a courtesy by Delta Global Advisors, Inc. Over his 20-year investment career, Mr. Zaro has become a highly-regarded technical analyst who runs private client portfolios at Delta Global. He recently served as the Managing Director of Granite Wealth Management outside of Boston and spent nearly 15 years prior as a Vice President at Gage Wiley & Co. His current firm is full-service, but specializes in providing international market access as well as alternative investment strategies. In addition to U.S. market coverage, Mr. Zaro applies his expertise in technical analysis to stocks and stock markets around the globe. CONTACT
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