Watch For Opportunities In These Interest-Sensitive Areas

On Monday, the Nasdaq dipped in early trading but quickly
found its low and began to rally. Then, after some late day consolidating, it
resumed its rally going into the close. This action puts it back above its 50-day moving
average and has it closing well. 

The S&P traded back and forth but managed to close on a
high note. This action keeps it right at its 50-day moving average. It remains
below overhead resistance which also corresponds with its recent highs/the .786
retracement of its recent leg down. 

^next^

So what do we do?  As implied recently, the
market has been mostly directionless as of late. Therefore, considering that the
methodology is momentum based, you might want to continue to keep it light. This
is further confirmed by the fact that the indices remain below shorter-term and
longer-term resistance. Considering this, on the long side, there’s not a whole
lot that I’m excited about at this juncture. Many of the “high flyers”
mentioned recently such as security companies and Internet were up substantially
on Monday (i.e. rallied out of pullbacks). About the only area that looks
interesting are the educational stocks–but that in and of itself isn’t 
“anything to write home about.” On the short side, I’m still bearish
on the interest-rate-sensitive areas. Continue to watch for opportunities here
in stocks such as REITs, electric utilities, banks, and the homebuilders.  

As far as setups, Standard Pacific Corp.
(
SPF |
Quote |
Chart |
News |
PowerRating)
, in the
weak homebuilders (and let’s face it, would want to live in a weak home–time
for a new joke, huh?), looks poised to resume its recent slide out of a First
Thrust.

Best of luck with your trading on Tuesday!

Dave Landry

dave@davelandry.com

P.S. Reminder: Protective stops on every trade!

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