Wait For Follow Through Before Getting Too Excited

January 2, 2003
Dave Landry

On Thursday, the Nasdaq opened higher but immediately
reversed. However, it quickly turned back up and rallied sharply on a bullish
ISM report. It then worked its way higher throughout the rest of the day. This
action brings it all the way back up to its 50-day moving
average.

The S&P also put in the mother-of-all rallies. This
action puts it back above its 50-day moving average.

So what do we do?Â There sure was a lot of post New
Year’s celebrating on Thursday.Â Everyone seemed eager to predict how great
the rest of the year would be on today’s performance alone. Me? I dunno. Yes, it
is impressive, VERY impressive. And, the bond market surely seems to believe it
(so far). However, follow through will be key.Â This
will be especially true next week when everyone gets back from their extended
vacations. For now, I think sticking with issues that can trade contra to the
indices may be the safest bet.Â

Looking to potential setups, ASA Ltd.
(
ASA |
Quote |
Chart |
News |
PowerRating), mentioned
Tuesday night and in the
strong gold sector, still looks like it has the potential to resume its uptrend out of
a pullback/Trend Knockout (TKO).Â