Da Boyz Are Back In Town?
On Monday, the Nasdaq opened weaker but found its low
fairly quickly. It then rallied for a solid trend day higher. This action puts
it well above its 50-day moving average. Also of interest is that the “Bow
Tie” moving averages (email if you need more information here) are
beginning to turn up.
The S&P also put in a solid day. Notice that the moving
averages are turning up here too.
So what do we do? Monday’s rally suggests that the momentum
from lows remains intact. It also suggests that the “big boyz” may not
want to be left behind. However, it obviously keeps the indices very overbought.
Therefore, don’t fight it but keep it light because it could correct at a moment’s
notice.
Looking to potential setups, the drugs ended lower
but well off their worst levels. This action is setting up a cup formation in
the sector. With that said, Eli Lilly
(
LLY |
Quote |
Chart |
News |
PowerRating), mentioned Friday night, still looks like it has the potential to resume its uptrend out of a
pullback/Bow Tie. However, once again, don’t overstay your welcome since it has some
longer-term overhead resistance to clear (not shown).
Best of luck with
your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…Your book is like an investing bible to
me…..thank you very much for writing in a simple straight forward style that even a novice like me can use…..
“
Cliff A.
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