On The Sidelines
On Friday, the Nasdaq opened lower but reversed to rally
for most of the morning. It then chopped around throughout the afternoon.
This puts the Nasdaq slightly above its recent sideways
trading range/50-day moving average (a) and closing in on overhead resistance
(b).
The S&P also rallied early but then settled into a
choppy pattern. However, unlike the Nasdaq, it was unable to hold onto its
gains. It remains just above its recent highs and just below its 50-day moving average.
So what do we do? It’s encouraging that the indices are
closing in on their 50-day moving averages. There’s nothing magic about this
(moving average crossings do not test out), just a sign of strength. On the other
hand, the VIX is stretched away from its 10-day moving average (i.e., CVR 3
sell). Further, the market, sectors and most individual issues are just plain
choppy. These mixed signals are keeping me on the sidelines. And this probably
isn’t too bad of place to be in late-summer trading, especially when you
consider how great the summer (i.e., persistent) has been up until recently.
Looking to potential setups, biotech ended mixed on Friday
but remains constructive. Therefore, if you must trade, 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.
Best of luck with
your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!