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Here we go again....

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The major market averages are struggling to hold their gains once again today as stock pull back from their best levels of the session. The HMO Index (HMO.X) broke to a new 52-week high today, but that doesn't seem to be enough to bring bulls to the table in other areas of the market.

If the market were a casino, filled with bulls and bears, then it would appear there's only one black jack table right now that bulls are gathering around and it continues to be the healthcare sector, specifically the Health Maintenance Organization (HMO) stocks.

The "gold table" had seen some crowds in recent week, and today's action in the Gold/Silver Index (XAU.X) 75.52 +0.46% hints that this sector may once again be finding a gathering of bulls after the recent decline in the group.

The Dow Jones Transportation Average (TRAN) is just off its session high after once again rallying to test its still rounding lower 50-day moving average. In the "here we go again" theme, this is a sector that broader market equity bulls would look for some leadership as this economically sensitive group continues to "hold tough," but just hasn't been able to garnish enough bullish optimism to drive the index above the 2,810 level, let alone the 50-day. Bears are also keeping an eye on this group as I would think a bear doesn't want an economically sensitive group like the Transports to catch a tailwind that could spark a rally in other parts of the market.

Dow Transportation Average Chart - Daily Interval

The Dow Transports (TRAN) are about the only group of stocks I see today that are anywhere close to any type of technical action point that could dictate a market response. However, as we've seen in recent weeks, the inability of this group to move above the 50-day MA has left other areas of the market drifting lower. While the Transports are bullish "relative" to the broader MARKET, the lack of buying in the group that would drive price higher hints that bulls have packed their bags and taking a summer vacation. It may well take a move above the 2,810 level to signal the end of this "summer break" for any type of renewed bullishness to be found in the broader market averages.

In recent weeks, I outlined an "exit strategy" for a subscriber that had held some Bema Gold (NYSE:BGO) $1.21 +13% for several years and had reduced his cost basis to under $0.67 a share. I suggested he place a stop on part of the position just under the 50% retracement level that would have him selling enough stock to take all of his initial principle off the table. We then thought we could use the stock to help take the "pulse" of the MARKET as it relates to how aggressive it is, or isn't, toward gold stocks. The thinking is that these smaller gold stocks are not the key targets of institutions, but they can be very good for getting a reading on how aggressive the MARKET is toward a sector.

Bema Gold (AMEX:BGO) Chart - Daily Interval

While I'm not trading BGO, I'm using it to alert me to bullishness coming back to the Gold/Silver stocks near-term by today's break back above the $1.16 level. In today's market monitor, I profiled shares of Newmont Mining (NYSE:NEM) $28.39 +0.96% as bullish at $28.19, stop $27.50 and targeting $30 near- term based off of observations made from Bema Gold (BGO).

Jeff Bailey
Senior Market Technician
Option Investor

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