Four Key Points About This Market
Many
equities are approaching key technical levels like: major Fibonacci
price retracements, 50 and 200 day simple moving averages, and bottoms of
uptrending channels (specifically regression channels that I use). So, we all
wanted a correction, we all thought one was coming, we all knew one had to
develop, and now that we got it, investors are all a bunch of “scaredy catsâ€
. Let me summarize:
1)
For the most part equities are in
strong uptrends
2)
A nice, healthy corrective move has
developed (similar to previous declines early in this bull cycle)
3)
Technical support is at hand
4)
Negative news is starting to swarm
With that kind of combination
of information, I’m very interested in looking for long trades in this area. Two
stocks that are at the top of my screen are (RYL) and (UTX). What you will see
about both of these charts below are that they both are at the bottom of my 2
std deviation regression channels. Those channels are uptrending channels. That
simply means that it is time to start looking for long opportunities. So, I
overlay my pattern recognition of Fibonacci analysis and start looking for entry
opportunities. In the case of (RYL) I’m buying this one above Tuesday’s high. My
stop will be below the support zone around 83. 57.
As you look at (UTX) below, it
has just completed a 14 point and 14% decline from the February highs. The
previous major decline since this rally began in October 2002 was a 13 point 20%
decline that ended March 12, 2003. That’s what I call symmetry of corrections in
an uptrend. Also note that we are now sitting on the 200 day simple moving
average along with a plethora of Fibonacci price support levels from 80-85.
Folks, this IS the zone where I look for an opportunity to go long. If this
support zone, moving average, and regression channel are broken and price falls
below 80…then I have to shift gears and start looking for rally pullbacks to
consider short trades. For now though…the focus is on the long side.
Have a great trading day!
Derrik