Rotation Taking Place

We were pleasantly surprised by the results of today’s scans. Yesterday we mentioned that results provided a pattern of neutrality rather than a pattern of strong set ups. Today we did find a pattern of strong set ups starting to emerge. This comes on the heels of market indices, which are extended and ready to pull back. What does this mean? We think that we are seeing profits taken out of recent gainers being repositioned into lagging stocks. In other words, while round one stocks rest and consolidate gains, round two stocks are gearing up. If this pans out the way it looks like should then we are seeing behavior very similar to that experienced during the uptrend in 2003 and that which was sorely absent over 2004 when stocks were grinding sideways. We will continue to update on this development as it progresses.