Market Overbought; Pullback Watch

The market was surprisingly strong on Monday but indices are over bought and prices are due to retrace some of the recent profits. QQQQ traders are overly bearish so this sector could maintain some support today. Nevertheless, prices at least need to trade in place for a few days to work off some of the recent overbought condition. We are looking for gold stocks to retrace most of their recent gains. A pullback in this sector should be considered a buying opportunity. Likewise, oil looks to be headed for $85 so while a pullback in sympathy with the broader market is probable, the pullback should come on lighter volume and produce a buying opportunity among the drillers as well. Today we are watching a list of oil stocks to get a better entry measurement. We would like to add oil to the portfolio, but want to see how some of the stocks perform as the traders come back from their long weekends. Keep an eye on ENG today as this will be one of our top choices.