So Far, So Good
On Tuesday, the Nasdaq lapped lower but quickly found its
low and began to rally. However, it found its high by late morning and began to
chop its way lower. This action has it closing lower but above its open.
Once again, it remains above its 50-day moving average and the “Bow
Tie” moving averages (10 simple, 20 exponential and 30 exponential)
continue to turn up.
The S&P also finished lower. It remains above its 50-day
moving average and the “Bow Tie” moving averages continue to turn up
here too.
So what do we do? So far, so good. Like the market itself,
the moving averages are beginning to point higher in many sectors (or at the
least, in stocks within those sectors) as they appear to be attempting to make
the transition from downtrend to uptrend. Further, Tuesday’s corrective action
helps to walk off some of the overbought condition. And finally, as I scan though
the database (see comments below) I’m beginning to see more and more bullish-looking charts than bearish. I am not declaring a bear market bottom. I’ll let
the talking heads do that. What I am suggesting is that if we take it day by
day, this could be a rally worth trading.
Looking to potential setups, the drugs remain constructive.
With that said, Eli Lilly
(
LLY |
Quote |
Chart |
News |
PowerRating), mentioned recently, still looks like it has the potential to resume its uptrend out of a
pullback/Bow Tie. However, once again, don’t overstay your welcome since it has some
longer-term overhead resistance to clear (not shown).
Under The Hood
As many of you know, I like to “look under the hood†to
get a feel for what’s going on in the markets. With that said, this morning I
spent a few hours tooling through all stocks that had the potential (or could
soon have the potential) for swing trades. The list of stocks was developed by
running a simple scan which showed me all stocks greater than $10 per share and
volume greater than 100k. This produced a list of around 1500 stocks. I then
flipped through each and every one of these stocks. To my amazement, there were
a lot of stocks in uptrends that were either set up or could set up soon. Most
were in transition patterns (e.g., First Thrusts) but a few were in bona fide
uptrends.
Insurance, banks, brokers, biotech, drugs, internet, telecom and even selected
semis looked pretty good. Health service, especially HMOs were also in the list.
On the downside, there were very few stocks: Restaurants and defense were about
the ones that stood out.
Best of luck with
your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…Your book is like an investing bible to
me…..thank you very much for writing in a simple straight forward style that even a novice like me can use…..
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Cliff A.
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