Where I’m Beginning To See Setups
Looking to the indices, on Friday, the Nasdaq opened
slightly firmer but quickly began to sell off. It found its low in early
afternoon trading and then rallied to recover most of its losses. However, it
drifted lower going into the close to end in the minus column. This action has
it tailing below its 50-day moving average and approaching its February lows. So
far, this area could be support. On the upside, 2100 remains a potential
resistance level.
The S&P also recovered after tailing lower but also
waned going into the close. The old highs, circa 1160, remains resistance
here.
So what do we do? I’m encouraged by the fact
that the market was able to recover after what seemed to be a potential serious
slide developing. I would have much more preferred if we could have closed on a
high note, especially in front of a weekend. So far, so good I suppose. The
longer-term uptrend remains intact. Also, of minor encouragement, is the fact
that for the first time in quite a while, I’m beginning to see a few setups in
selected areas of health services, leisure, financial, telecom, and
insurance. Its certainly nothing to write home about but again, more than I’ve
seen in a while. Ideally though, I’d really like to see the indices plow through
the aforementioned resistance before getting too excited. Therefore,
considering the above, you might nibble at the market but continue to keep some
powder dry for better times (e.g., for when we break out–or break down).
Looking to potential setups, American International Group
(
AIG |
Quote |
Chart |
News |
PowerRating),
in the strong property & casualty insurance sub-sector (a), looks like it
has the potential to resume its longer-term uptrend out of a pullback.
Best of luck with your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S.
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