Securities Research Services

Friday, January 05, 2007

Rotation Into Tech Gives Bulls the Edge

This week has been all about rotation. We had to take a conservative approach and stay sidelined most of this week as energy stocks, which were highly profitable for us over the past two months, went into a melt down. Staying mostly sidelined over the past two days has paid off though. While the trading picture was still murky yesterday, it is now clear that money from energy stocks is now being rotated into tech. Bull markets don't generally go very far without tech leading the way. The QQQQ (Nasdaq 100) has been lagging this bull market since spring. But now something interesting is taking place. The QQQQ bounced off its 50-day average this week and yesterday blasted higher on heavy volume. This is a very healthy bull market development.

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