An Important Indicator To Watch
On Tuesday, the Nasdaq opened weaker and initially sold off.
However, it quickly found its low and began to work its way higher. It then found its
high by mid-day and sold off again. Finally, it strengthened going into the
close.
It remains in a trading range.
The S&P put in a similar performance.
This action keeps it above its 200-day moving average.
It too remains in a trading range. The top of this range,
circa 900, could provide resistance to
the upside.
The VIX hit it lowest level since last June. Further,
it remains stretched away from its 10-day moving average (a). It remains a CVR-III
Sell.
Looking to the sectors, on the upside, retail, banks,
broker/dealer, generic drugs, health care plans, insurance, and homebuilders all
remain constructive. In the sideways category, semis and software both
remain in wide-and-loose trading ranges. It will be interesting to see if the
latest news from Intel and Microsoft will be the catalyst to end this. On
the downside, other than a few notable exceptions such as hospitals, most
sectors have been holding up fairly well. There are a few though, such as
biotech, and to a lesser extent Internet, that could be forming tops.
So what do we do? Overall, the sector action is generally
positive. However, the indices remain in a trading range. And, the VIX
remains at relative (not absolute!)* levels. Therefore, I’d continue to
keep it light no matter what you do. For the aggressive, you might look to play
an opening gap reversal in the index shares, should they gap higher on the open
and then show early sides of reversing.
No setups tonight.
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
*Email me if you need more information on how to
interpret the VIX.
“….. your book is very clear and easy to follow. I think it is
helping me to improve….”
Judy C.
