Why I’m Encouraged By The Action In The Market, The Sectors, And Individual Stocks
On Monday, the Nasdaq opened firmer but quickly began to
chop its way lower. However, it found its low by mid-morning and worked its way generally
higher. Then, late in the day, it rallied sharply. This action has it closing
well.
The S&P put in a similar performance.Â
So what do we do? I’m encouraged by the fact that
the indices are rallying after Monday’s Trend Knockout. Although, I would have
preferred it if the market had started weaker, undercut Monday’s lows to shake out
the last of the nervous longs and then recovered. I guess, as Mick says, “you
can’t always get whacha-wanna”. Looking to the sectors, the action is very
encouraging. Most sectors, like the market itself, looked poised to rally out of
a pullback (or TKO). These include (but not limited to) banks, biotech, energy,
homebuilders, financial, telecom, software, semis, selected drugs (delivery,
generics and others), broker/dealer, and retail. Drilling down to individual
stocks (I actually do my research in a bottoms up fashion), I seeing a plethora of
setups tonight (Tuesday)–too many to choose from. Therefore, considering the above, focus on the long side but wait for entries and honor you
stops just in case.
Looking to potential setups, Devon Energy
(
DVN |
Quote |
Chart |
News |
PowerRating), mentioned
recently and in
the strong independent oil & gas sector, still looks like it has the potential to
resume its uptrend out of a pullback.Â
Tol Brothers
(
TOL |
Quote |
Chart |
News |
PowerRating), mentioned Monday (originally mentioned in early May) and in the strong homebuilders,
still looks like it has the potential to resume its strong uptrend
out of a Trend Knockout.
Novellus Systems
(
NVLS |
Quote |
Chart |
News |
PowerRating), in the strong semis-equipment
& materials sub-sector, is in its first pullback since its melt-up out of a
base.Â
Other:
FYI, due to a scheduling conflict, I will not be writing a
column on Wednesday night.
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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