Believe In What You See, And Not In What You Believe
Smoke ‘Em If You Got ‘Em
Noble Energy
(
NBL |
Quote |
Chart |
News |
PowerRating), mentioned recently (see archives
for 12/10,12/11, & 12/12), has risen substantially since then. When
presented with such a nice, quick profit, make sure you take profits and trail a
stop higher. This way, you take some money off the table and (barring overnight
gaps) you have a shot at a homerun on the remaining shares.

Looking to the indices, on Thursday, the Nasdaq rallied,
consolidated during mid-day, and then resumed its rally (generally) for the rest
of the day. This action has it closing well and puts it back above its 50-day moving
average. So far though, it remains in a trading range.

The S&P put in a similar performance. This action
breaks it out to new highs for the year.

So what do we do? Well, I certainly didn’t
expect to see a trend day on decent volume this close to a holiday shortened
week.
As you likely know though, the market can do whatever it wants and doesn’t care
what I (or you) think. Therefore, I believe in what I see and not in what I
believe. With that said, I’m very impressed with the breakout in the S&P.
I’m also impressed that tech decided to join for the ride. However, a lot of
tech still remains questionable. Further, areas such as retail still look
vulnerable. Also, the strongest of the strongest areas still remain cyclical and
commodity related stocks such as chemicals, energy, and metals & mining
(less gold & silver). And, as implied recently, I’m not convinced that these are
the areas that can lead a bull market. But hey, the market can do whatever it
wants!
On the long side, you might want to stick with areas such
as the chemicals. If you took recent energy trades, as implied in tonight’s
example, you might want to lock in some profits since they are quickly becoming
overbought.
On the short side, retail still looks like it could provide
some opportunities. However, as long as the tape remains strong, you might want
to keep positions light and wait for entries.
Looking to potential setups, the Retail HOLDRS
(
RTH |
Quote |
Chart |
News |
PowerRating)
are setting up as in inverted cup and handle. Look for opportunities here or in stocks
forming similar patterns.

Best of luck with your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
P.P.S. Learn my 10 best swing trading patterns and strategies in my new book.
Click
Here.