Why The Indices Are At An Inflection Point
Looking to the indices, on Friday, the Nasdaq opened firmer
but soon began to work its way lower. If found its low in early trading and
generally chopped its way higher. This action keeps it near (but below) its 50-day moving average (the red line below).
The S&P chopped back and forth. It remains right at its
50-day moving average.
Looking to the sectors, many still remain questionable at
best. Once again, a lot of tech remains below potential tops. This includes
(but not limited to) software (most), Internet, and computer hardware.
Financials bounced on Friday but most still look vulnerable. Areas such as
broker/dealer look posed to resume their recent meltdown. Retail finished higher
but some areas are beginning to look vulnerable.
So what do we do? Nothing much has changed. I
still don’t like the action in most sectors. However, so far, the indices are
holding their recent lows/finding support around their 50-day moving averages.
This action keeps them at an inflection point. Therefore, since they haven’t
done anything “wrong” (yet), I’m willing to give the recent buy
signals another day or two to work. On the short side, you might want to
continue to put together a watch list in those sectors that are
vulnerable.
Looking to potential setups, Sina
(
SINA |
Quote |
Chart |
News |
PowerRating), in the weak
Internet-software & services sub-sector (a), looks poised to continue its
downtrend out of a pullback/inverted cup and handle-like pattern.
Best of luck with your trading on Monday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
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