Improving But Overbought
On Monday, the Nasdaq opened flat but began to rally. And,
after some mid-day drifting, it resumed its rally. Then, late in the afternoon
it began to chop around but still managed to close well. This action puts it
above its 50-day moving average for the first time in a long while.
The S&P put in a similar performance. It too is now
trading above its 50-day moving average.
So what do we do? The action in the indices remains
positive. All three are now trading above their 50-day moving average and so
far, seem unphased by overhead resistance. However, the VIX remains stretched
away from its 10-day moving average (i.e., a CVR III sell signal) and the market
remains overbought based on price and average advanced/decline readings.
Therefore, I would continued to keep it light based on the above mixed
signals and the fact that many individual issues remain choppy.
Looking to potential setups, biotech ended lower but still remains constructive.
With that said, Enzon
(
ENZN |
Quote |
Chart |
News |
PowerRating),
mentioned recently, still looks like it has the potential to rally out of a
low-level cup and handle.
Smoke ’em If You Got ’em
Medicis Pharmaceutica
(
MRX |
Quote |
Chart |
News |
PowerRating) has moved up nicely since
first mentioned (a) (yeah, I know, I’m “mostly wrong”). When blessed
with such a nice quick profit, make sure you lock in a piece.
Best of luck with
your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!