Markets behaved bullishly Tuesday with the Nasdaq advancing .5% and the S&P 500 .4%. The Russell 2000 added .7% and they could continue to act well if the greenback gains strength going forward. Small caps are insulated from a rising dollar as the vast majority of their sales are domestic. The two strongest sectors Tuesday, were the energy group as it benefitted from a nice crude move, which as we spoke about last week now sits just beneath the round 50 figure. The XLE rose 1.5% as does not seem to be shying away from the 70 number as it did recently that last 2 times it traded above it. The other group that rose handsomely were the financials with the XLF approaching the round 20 number which has been influential dating back to September and last November-December. The XLF is now quickly approaching the round 20 number which was resistance this September and last November and December. Once again the only groups to lag Tuesday were the interest rate sensitive sectors. The staples, REITS and utilities all gave up ground today with the newly formed XLRE taking the biggest hit declining 1.9%. Below we look at a chart of GE which everyone seemed to applaud them getting out of the financial business last summer. Perhaps that does not look like such a bright move at the moment. The stock is down 7 of the last 11 weeks and during that time frame it recorded a 6 week tight pattern with the weeks ending 7/29-9/2 all CLOSING within just 15 cents of each other resulting in a big 3.8% haircut the week ending 9/9. GE now sports a bear flag and we are not inclined to play it, but it is just an illustration of a stock that at now best looks like dead money.

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