Do This When You Are Trying To Determine The Market’s Direction
On Monday, the Nasdaq opened firmer
and after a brief dip,
resumed its rally. However, it found its high in early afternoon trading and
then worked its way lower for the remainder of the day. It still managed to hold
on to some nice gains, though.
This action puts its further above its
50-day moving average.
The S&P put in a somewhat similar performance but
wasn’t able to hold onto the lion’s share of its gains.
This action has it attempting to break above short-term
resistance.
So what do we do? As you know, I rarely take
the indices at “face value.” I tend to dig deeper, spending a lot of
time studying the sector action. And guess what? There appears to be a stealth
rally in place. On Monday, Internet continued its recent breakout, Biotech broke
out to multi-month highs (tool through the bios when you get a chance and notice
breakout action in stocks such as PDLI) as did other tech areas such as Telecom
and Software. The semis extended their recent rally, tacking on another 2 1/2%.
This action has them up nearly 12% in the last three trading days (geez, were
the analysts a little late here?). Considering the above, as I said on
Friday, I think the path
of least resistance remains to the upside. Therefore, continue putting together your shopping
list.
Not setups tonight. Since the market remains constructive,
I would imagine that we will see many setups in those aforementioned areas that
are breaking out on the first pullback.
Best of luck with your trading on Tuesday!
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.