Sectors That Could Provide Opportunities Soon
Looking to the indices, on Monday, the Nasdaq opened strong
and rallied sharply in early trading. Then, after some mid-day consolidating, it
generally worked its way higher for the rest of the day (with the exception of a
late-day pullback). This action has it closing well and breaks it decisively out
of its recent trading range/multiple tops (a).
Although somewhat less impressive, the S&P put in a
solid day too. This action pushes it to near the top of its 1-month trading
range.
Looking to the sectors, technology was the obvious big
winner but nearly all other sectors also benefited. The semis, which up
until Monday remained questionable, were incredibly strong. This action has them
closing at new 52-week highs. Sectors forming high level basis such
as Internet and retail broke out nicely to new highs. Monday’s action also
helped to complete high level “cups” in areas such as the HMOs. Regional Air
appears to be resuming its uptrend out of a Trend Knockout (TKO). As usual, email me if you need the rules.Â
So what do we do? I’m encouraged by the fact that
traders returned en masse after a holiday and this late into summer. The fact
that the Nasdaq blasted to new highs out of a trading range suggests that the
bull move (a.k.a. the big blue arrow) remains intact. Ideally, I’d like to see
the S&P follow suite, but so far, it appears to be on its way. The
sector action is overwhelming positive with many groups either breaking out to
new 52-week highs or hovering right below them. Therefore, as long as this
breakout holds, I see no reason to fight the trend.
As you know, my methodology essentially looks for pullbacks
in strong trends. Therefore, as one would expect with a market that is breaking
out, there were very few meaningful setups. Remain patient, if the breakout
holds, we should see a plethora of setups soon in the aforementioned strong
sectors.
Best of luck with your trading on Tuesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….. I still feel that your book is the best book on the subject and
offers me the best methodology for swing trading. In short, your method is outstanding….”
Michael M.
