ManyPeaks.com

After Hurricane Rita showed us some mercy, we have a classic “Relief rally” on our hands. A 70 point DJIA move is nothing to scoff at.. But technically, this is just a little bounce that has done little to heal the damage done early last week.. at 10,495, we’re still 150 points below last Monday’s high.

The action in hurricane-related stocks is the exact opposite .
Those stocks are now selling off as the “hurricane holders” sell their stock in a perverse breed of disappointment. Being away from the market last Thursday & Friday, I unfortunately did not have a chance to flip out portions of my holdings into the buying panic that I now see on the charts. So, I did the next best thing..

I lessened my exposure to the theme on the mid-morning bounce that followed sharp 1st hour selloffs. There likely need to be a few more shakeouts in these stocks before the next big upleg. That would certainly make for better risk/reward entries. Plus, moves that occur on big volume without obvious news catalysts are the most lasting ones. I’m mostly waiting on the refinery & rebuilding stocks for now.