Caveats And Dead Horses
On Monday, the Nasdaq opened firmer and rallied in early
trading. Then, after making new multi-month highs, it began to sell off.
However, it found its low early in the afternoon and rallied for the rest of the
day. This action has it closing well and closing in on its 200-day moving
average. Obviously, once again, this
action keeps the index above its breakout levels.
The S&P put in a similar performance but continues to
under-perform the Nasdaq.
The sector action remains mostly positive. Those sectors
that were nearing resistance levels a week ago (see archives) are now holding up
nicely above it.
Here is Internet:
Telecom: (note, also pull up the North American Telecom
Index
(
$XTC.X |
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PowerRating) if you get a chance)
Software:
And the semis:
Other areas of technology such as computer hardware and
selected drugs are also performing well. Further, outside of technology, there
are a few sectors such as broker/dealer that are making new highs.
On the short side, there aren’t very many sectors left in
strong downtrends. Hospitals and HMOs are about the only two standouts
here.
The VIX remains stretched away from its 10-day moving average
and is near multi-month lows (a).
So what do we do? As you can see above, the picture is mostly
positive. The only two caveats are 1) we are due for a correction and 2)
trading will likely be thin and choppy for the rest of this holiday week.
Therefore, continue to keep it light. If the market corrects in an orderly
fashion, we should be able to get aggressive on the long side.
No setups tonight.
Smoke ’em If You Got ’em (or The Dead Horse Finally
Dies)
Community Heath Systems
(
CYH |
Quote |
Chart |
News |
PowerRating), mentioned forever,
finally began to move to the downside over the last few days. When blessed with
such a nice, fairly quick profit, make sure you lock in a piece and move your
stop on the remainder to breakeven. That way, you have a shot at a home
run on the remaining shares. And, barring overnight gaps, the worst you could do
is breakeven.
Best of luck with
your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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