The Real Deal?
On Thursday, the Nasdaq gapped higher and continued nicely
higher throughout the morning. Then, after some mid-day consolidating,
stair-stepped its way higher for the remainder of the day. This action has it
closing well and slices through the 1425 resistance level.
The S&P wasn’t nearly as impressive as the Nasdaq but
did put in a solid day nonetheless. This action has it clearing its recent
highs.
The VIX stretched further away from its 10-day moving average
(a). This action has it at its lowest level since last June.
So what do we do? The fact that the Nasdaq cleared its
resistance is a major positive. Further, technology such as Internet, Telecom,
Software and the Semis also broke to multi-month highs. However, I don’t see any
reason to chase the market. Don’t get me wrong, I’m encouraged by above, it’s
just that we are very overbought and the VIX action suggests that we are due for
a correction. As I’ve said before, if this is the
“real deal” (quite impressive so far!), there will be plenty of opportunities
to buy along the way. On
the short side, continue to look for opportunities in the weaker sectors such as
the hospitals.
Looking to potential setups, in the “beat a dead horse”
department, hospitals finally appear to be resuming their meltdown. With that said Community Health Systems
(
CYH |
Quote |
Chart |
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PowerRating),
mentioned forever, also appears to be resuming its sharp downtrend out of
a pullback (a).
I received two emails on this one 1) “No horse is too
dead to beat” and 2) “Find another horse.”
Best of luck with
your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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