Although Conditions Are Improving, Wait For These Two Things Before Buying
Hey Dave, When Are You Going To Eat Your Hat (re: Google)?
Wednesday at 12:00 PM EST. Click
here for a link to view it (I’ll also discuss current market conditions and
learning examples–provided I don’t hurl after eating my hat). Note: the
software only allows for a maximum of 100 viewers, therefore, you might want to
sign up a few minutes early.
On Tuesday, the Nasdaq bounced in early trading but quickly
reversed to sell off hard. Then, after trading sideways throughout mid-day, it
rallied (late in the day) to recoup most of its losses.
This action has it closing well.
Ditto for the Ps.
This action puts them back above their 50-day moving
average.
In the sectors, the action remains constructive. Financials
across the board have been doing well as of late. Retail still appears to be trying to make a transition higher. Major drugs and biotech
also appear to be trying to make a transition higher. Even selected areas of
weaker technology such as Internet, telecom, software, and believe it or not,
the semis are showing some improvement.
So what do we do? There was some talk that the
late-day rally was nothing more than “window dressing” (running prices
up to make a fund’s performance look better). I guess we’ll know for sure
tomorrow. In the meantime, I have to believe in what I see. And, so far, things
continue to improve. However, there’s no need to bet the farm just yet.
Keep positions light until we see more conviction in both price and
volume—which might not happen until the RNC/Labor Day is behind us.
As far as setups, keeping the above warning in mind, the
Biotech HOLDRs
(
BBH |
Quote |
Chart |
News |
PowerRating) look like they have the potential to continue higher
out of a Bow Tie formation (email me if you need rules).
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. Learn my newest and most advanced version of my Bow
Ties Strategy. Click
here for details.