Here’s Why You Should Pay Attention To More Than Just The Indices
Looking to the indices, on Tuesday, the Nasdaq generally
worked its way lower throughout the morning. It found its low by mid-day and
rallied for the reminder of the day. This action puts it right at its 50-day moving
average.
The S&P outperformed the Nasdaq on both a relative and
actual basis. This action puts it at a new closing high for the
year.
So what do we do? Looking below the surface,
the strongest stocks are chemicals, energy, and metals & mining (less gold
and silver). On the downside, most of tech, even though it recovered somewhat
intra-day on Tuesday, looks questionable at best. Outside of tech, areas such as
retail (especially selected areas such as department stores) are in bona fide
downtrends. Although I can’t ignore the fact the S&P is at new closing highs
for the year, I have a hard time believing that we can began a new leg up with
only a few sectors in strong up trends. This is especially true when I consider
the fact that most of these areas are commodity related. With that said, other
than those strong areas mentioned above, you might want to wait to see if other
sectors can catch up before looking to buy. On the short side, continue to look for opportunities
in those stocks that could be attempting to make a transition lower from high
levels. This includes (but not limited to), computer hardware (most), the semis,
selected retail, and the homebuilders.
No setups tonight.
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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