Another Leg Higher?
On Friday, the Nasdaq gapped lower on the open but quickly
reversed and rallied in early trading. Then, after drifting sideways, it resumed
its rally early in the afternoon. It did sell off going into the close but this
wasn’t enough to keep it from closing well.Â
The S&P put in a similar performance.
As promised, for perspective, here are the weekly charts.
The S&P:
And, the Nasdaq:
So what do we do? Obviously, judging from the above,
the longer-term trend still remains down. However, shorter-term, I still think
the market has the potential to make another leg higher. The indices are
oversold and set up as pullbacks from highs (this is especially true in the
Nasdaq). The VIX is reversing from a stretched condition (from above its 10-day
moving average). Further, the market somehow managed to climb the wall of worry
on Friday. Looking to the sectors, many tech sectors (e.g., software,
Internet, the semis, telecom etc…), like the Nasdaq itself, are set up
as pullbacks from highs. Therefore, I still think technology is the place to be.
Looking to potential setups, Dst Systems
(
DST |
Quote |
Chart |
News |
PowerRating),
in the strong software–information & delivery service sub-sector (a),Â
looks like it has the potential to resume its uptrend out of a
pullback.
Best of luck with
your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…I have read your book over a dozen times and I am still learning new things. Thanks for making me realize that I am a “method” man and I have since changed my ways increasing my success greatly….Thank you again for writing a terrific
book…”
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