Perspectives
On Friday, the Nasdaq lapped lower but quickly reversed.
However, this reversal was short lived as it soon turned around to make new
intraday lows. Then, after bouncing sideways throughout the morning, it rallied
for most of the afternoon. This action has it closing well but just shy of the
plus column.
It remains below its multi-month highs.
Since it seems that its uptrend from lows still remains
intact, I thought now would be a good time to turn the chart over for perspective.
And, as you can see below, it does look like a “top” could be in place
and a breakdown below the “support” level (a) would confirm that
top.
While in the “perspective mode,” I figured it
would also be important to look at the weekly chart. Based on this, It still
looks like a longer-term trend is in place. However, as you can see, a breakout
above the aforementioned resistance level, circa 1425, would be a good start.
The S&P continued its rally and outperformed the Nasdaq.
This action puts it just above its recent trading range.
Here is the weekly chart for perspective.
So what do we do? I’m encouraged by the fact that the
S&P is now above its trading range. Further, those tech sectors mentioned on
Thursday night (see archive), generally continued higher on Friday. I would like
to see the Nasdaq break above its highs before getting too excited. Of course, I
suppose everybody and his brother is watching that level too. The other concern
is that the VIX is beginning to stretch away (to the downside) from its 10-day
moving average. This usually suggests that a correction could come soon. So,
based on the above, I think both sides could be played. However, I see no reason
to bet the farm. When will I ever bet the farm? Probably never but if the Nasdaq
(and S&P) breaks out and then has an orderly correction, I may bet a
few acres.
Looking to potential setups, hospitals still
look poised to resume their meltdown. With that said, Community Health Systems
(
CYH |
Quote |
Chart |
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PowerRating),
mentioned recently, still looks like it has the potential to resume its
downtrend out of a pullback/Explosion Gap Pivot. When will it break down?
Probably the day after I stop mentioning it!
Enjoy your weekend!
GO SAINTS!
Best of luck with
your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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