What I Like About This Market
Looking to the indices, on Thursday, the Nasdaq opened
firmer but quickly began to sell off. However, it found its low in early trading
and begin to rally. Then, after some sideways drifting, it resumed its rally
going into the close. This action has it closing well and at another new closing high for the
year.
The S&P also rallied after dipping in early
trading.Â
Although it still remains stuck in a trading range, this
action pushes it closer to the top of that range.
Looking to the sectors, the action was overwhelmingly
positive. Many areas made, approached, or remain at new highs. These
include (but not limited to)Â consumer durables, computer hardware,
software, defense, gold, and metals & mining. Areas mentioned recently as
being set up such
as retail, semis and cyclicals continued to rally out of pullbacks/TKOs.
On the downside, major drugs (which many need after years
of trading) remain one of the few sectors in a solid downtrend.Â
So what do we do? I like the fact that the
market has been starting weak and finishing strong lately. This action draws
in shorts (and subsequently shakes them out), takes out nervous longs, and is
generally healthy behavior. It’s also what tends to happen in bull markets.
Oops, did I just say bull market? Well, I’m not going to stick my neck out that
far. However, I can’t argue with the positive sector action. As long as this
continues, I think the focus should remain on the long side. Don’t get too
aggressive just yet though. At the risk of preaching, the S&P still remains
stuck in a range and the day before a long holiday weekend is notorious for
being thin and choppy.
Looking to potential setups, Deere & Co.
(
DE |
Quote |
Chart |
News |
PowerRating)
mentioned recently and in the
strong cyclicals, still looks like it has the potential to resume its accelerating
uptrend out of a pullback.
Best of luck with your trading on Friday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“…..The best thing about Dave Landry on Swing Trading is that it is so easy to read and understand. Examples are numerous and the theme of money management – with concrete examples – is repeated throughout the entire book….”
Active Trader Magazine
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