Market Comment: In my opinion, the character of the stock market since our last update has been synonymous with classic bull market type action. All of the major indexes have made significant progress on the upside led by the strength in the NASDAQ Composite which is up 9.68% for the quarter and 45.28% YTD. Even more encouraging is that most major indexes have recently broken out of a six week trading range which had formed just underneath the highs established in November. The only ingredient missing to really feel confident about the recent breakout is higher volume which has been absent the last week and a half due to the traditionally slow holiday trading season. I anticipate that a volume confirmation will come in early 2010. Individual stock patters remain very constructive due to the constant stream of stocks breaking out of lengthy base patterns to replace those that had made major moves on the upside and that are now consolidating. In addition, the number of sectors in strong up-trends or that have recently broken out, dwarf those that are looking tired or in downtrends. Recently, sentiment indicators that have been bullish for the balance of the year have deteriorated somewhat but nowhere near levels that would suggest an intermediate or long-term top. As has been the case all year, we expect abrupt, short, nasty bouts of selling. If the market remains true to form these corrections should be used as buying opportunities.

Sector Comment: The sectors that feature the largest number of stocks in sound up-trends can be found in the information hardware/technology group led by the strength of the semiconductor companies. The data storage sector of the market has also been very strong as it relates to both hardware and software. The healthcare industry remains mixed with the most recent strength coming from the healthcare services sector. The resource related sectors remain in favor and will more than likely consolidate recent gains. The exception here is the precious metals sector which appears to be topping out. Lastly, the financials appear to be losing momentum and are also in the process of building a top. Click here to read more.