If The Market Can Do This, Then Look To Get Long
I’m Dave Landry and I approved this column.Â
On Monday, the Nasdaq lapped higher on the open and
initially rallied but then began to chop sideways. In gained its footing late in
the morning and generally worked its way higher for the rest of the day–accelerating
as the day wore on. This action breaks it out to multi-week highs and puts it
above its downtrend line from the January highs. It also has the “Bow
Tie” moving averages (10-day simple, 20-day exponential, and 30-day
exponential) turning up and in proper uptrend order (the 10 > 20 >
30).Â
The S&P generally worked its way higher for a solid
trend day. The Bow Tie moving averages have also turned up and are also in
uptrend proper order here too.Â
So what do we do? Monday’s action is
encouraging. In addition to the positive index action mentioned above, it also
has most sectors improving. In fact, it breaks many out to multi-month highs and
puts some, such as retail, at new 52-weeks highs. It also has those sectors that
were questionable back into potential transitional mode (i.e. bottoming). If
these levels can hold, then begin looking to play the long side. Retail,
Internet, consumer non-durables, and banks could be a good place to look. If the
market can continue to rally, improving tech areas like the semis, software, and
even telecom could be worth a look.Â
As far as setups, since my methodology requires a pullback
(vs. playing breakouts), there aren’t many meaningful setups tonight. Remain
patient. Unless the market turns right back down, we should see plenty of stocks
setting up soon.Â
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. My new 20-hour course is now shipping.
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