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Sunday, January 14, 2007

Weekly Market Update: NASDAQ back in the saddle?

Weekly Market Call

It's been a pretty good week. Oil prices fell and retail sales were up. Earnings season kicked off and results thus far have been reasonably encouraging. Against this backdrop, the markets are back on track. The Dow and the S&P 500 continue in their respective uptrends with the Dow hitting a new high.

With the strong showing in retail sales this week, preceded by a strong jobs report last week, the market is now assuming that the Fed will not lower interest rates any time during the first half of the year. The market has managed to shrug off this concern and look to fundamentals. With commodity prices falling, margins should be increasing. Lower gas prices will put more spending money in consumers pockets. The housing downturn doesn't seem to be spilling over into the general economy. There are good reasons to bullish!

Now, on to the NASDAQ. After having TradeRadar flash the SELL signal for the last few weeks, the NASDAQ has started a turnaround and it actually managed to hit a new high, closing the week with a gain of 3.6% YTD, far outdistancing the Dow and the S&P which are sporting less than 1% gains apiece.

Is this enough to make the TradeRadar signal reverse from the SELL signal that was first flashed three weeks ago? (To see the TradeRadar SELL signal from 12/30/2006, click here) The TradeRadar system likes to see more than a few weeks of data between a buy signal and a sell signal but reducing the filtering does generate a new buy signal based on this week's activity.

On the other hand, though the chart tells me BUY, I can't help wondering if all this upside activity in tech and the NASDAQ is just a byproduct of the hysteria over Apple's new iPhone, introduced at this week's MacWorld. Is an expensive music-playing cellphone the most solid base to build a rally on?

TradeRadar Stock Picks

Taragon (TARR) can't seem to make up its mind as to which way to go. It continues to meander a few percent below the price where the TradeRadar BUY signal kicked in.

PacificNet (PACT) delivered some more upbeat news this week. They will be designing, building and supporting Sony's new e-commerce site. The stock spiked up and then immediately ran into profit taking. The trend remains up, however, and we continue to be holders at this point.

Generex (GNBT) had been a disappointment but the stock perked up this week and we are back in positive territory, with a 6.5% gain.

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