What Does Friday’s Action Give Us?
On Friday, the Nasdaq opened flat but soon began to
rally. Then after trading mostly sideways, it resumed its rally late in the day.
This action has it closing well. Â
The S&P also put in a solid rally. This action puts it well above
its 50-day moving average and it puts it within 1% of its old highs. Â
So what do we do? As you know, my biggest concern lately has been
the poor performance
in technology. Well, today (Friday), tech was exceptionally strong. The semis
were the ring leader here–tacking on over 4% (thanks in part to a
downgrade–isn’t it funny how that works?). So is
this the all clear? I dunno. I do like what see so far. As usual though, follow
through will be key. I’m am a little worried that the VIX (a measure of complacency)
is stretched to the downside and hitting nearly 10-year lows. Considering the
above, I don’t think I’d be the farm on the long side just yet. Maybe look to
begin watching and nibbling on transitional patterns in areas that could be
bottoming such as the semis and possibly other tech (e.g. software). A safer bet
until the market proves itself further might be to play commodity related areas (namely
energies) that can trade contra to the indices. On the short side, honor your
stops on existing positions vs. attempting to initiate new ones.Â
As far as setups, Quicksilver Resources
(
KWK |
Quote |
Chart |
News |
PowerRating), in the
aforementioned strong energies, looks poised resume its sharp/accelerating uptrend out of a
Trend Knockout (TKO). As usual, email me if you need the rules
for the pattern.
Best of luck with your trading on Monday!Â
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. Learn my newest and most advanced version of my Bow
Ties Strategy. Click
here for details.
Â