See The Forest For The Trees

Random Thoughts

Okay, they don’t always come right back after a 1-bar bearish pattern but as you can see, sometimes (and often) they do. This is why I don’t get too caught up in a 1-bar pattern. More often than not, tops and bottoms are a process more than an event. See the forest for the trees.

Let’s look at the scoreboard.

The Ps (S&P 500) gained nearly ½%. This is almost a “do over” from Tuesday’s slide. This action puts them back to spitting distance of all-time highs.

The Quack (Nasdaq) was a do over, and then some. It gained .68% for the day. This is enough to put it back to 14-year plus highs. Ideally, I’d like to see the index blast past the March peak. As usual, take things one day at a time.

The Rusty (IWM) gapped lower but it immediately found its low and began to rally. It wasn’t quite a “do over” here but it did manage to tack on .85%. It is less than 2% away from all-time highs.

The Energies turned back up from Tuesday’s TKO. They look poised to resume their persistent uptrend.

The strong Semis have formed a similar pattern.

Internet had a solid rally and it has been coming back nicely as of late.

Gold and Silver stocks stabilized. Both look poised to resume their recent legs higher out of a Bowtie (watch this Youtube video for more on Bowties). Write that down. It might not turn into the mother of all bottoms but it sure looks like a tradable rally.

Although, most areas remain in uptrends, All isn’t great in the world though-both figuratively and literally.

The E-fah (EFA) shares got whacked on Wednesday. As long as our market hangs in there, I wouldn’t get too excited. However, as we play this game of clues, it certainly is worth taking notice.

Aerospace/Defense continues to look questionable. It is on the cusp of forming a Bowtie down from high levels.

Retail overall still looks dubious.

For the most part though, again, most areas remain in uptrends.

So what do we do? Don’t fight the longer-term tape. Look for opportunities in the aforementioned areas that appear to have bottomed such as Gold & Silver and look to get onboard solid trends in the Energies and Semis. As usual (warning, preaching ahead), wait for entries on new positions and honor your stops on existing ones just in case.

Best of luck with your trading today!

Dave