Ken Tower Energy Quotations

Only 10 New York Stock Exchange stocks made new lows yesterday, so it's clear that there is a great deal of underlying market strength. Industrials remain the clear winner, as they reached another new high yesterday. Financials had a huge rally and also closed at a new high. Leadership will eventually shift back to tech, energy and basic materials, but we're not there yet.

This rally is very fragile, as it is being led once again by energy stocks and not technology or finance. This is no time for the bulls to relax.

We are at the top of a trading range. Everyone's willing to be bullish, but is the cash there to provide the energy the bulls need? Or is the December high the high-water mark? Dow 11,000 is one of the hooks the bulls will use to try and attract more money into the market.

You're seeing the fast money shift around a bit, and short term, that's good for stocks. Longer term, you have to consider that at some point, energy prices are going to catch up to the economy and the market.

Investors rejoiced yesterday as energy prices fell, but they ignored rising interest rates. I don't think it will be too long before the focus shifts back to rising rates and an inverted yield curve.

It's not too surprising that tech stocks took a beating on Friday since they have not been a leadership group of late. While tech has been languishing, basic materials, energy and industrial stocks have been reaching new highs. These may be tiring, but it seems too early to abandon them yet.