Speculation Is Alive And Well

Random Thoughts

The Ps (S&P) lost around 1/3%. Shorter-term, they have become range bound. Ideally, I’d like to see them break out of this range and go back to the business of making new highs.

The Quack (Nasdaq) ended nearly ¼% higher. This action keeps it just shy of 14-year highs—better than a poke in the eye I suppose.

Even though the Ps were down, as evidenced by the Rusty (IWM), stocks in general had an okay day. It closed slightly higher. In general, it has worked its way higher a 2-step forward, 1-step back manner. Ideally, I’d like to see some acceleration, and of course, new highs here.

With the Ps losing a bit, it is no big surprise that some so called “brick & mortal” areas got hit.

Retail sold off hard but so far, it only appears to be correcting its recent sharp move higher.

Banks were hit fairly hard. This action has them pulling back below their prior breakout levels. So far, they only appear to be pulling back. However, additional weakness would be concerning.

Metals & Mining, led mostly by Gold & Silver, continued to implode. Aluminum and Steel & Iron which have been strong, also sold off.

The Energies got hit especially hard, losing nearly 1 ¾% for the day. This action has them reversing after just recently hitting new highs and it has them looking “toppy.” Any additional weakness could set up shorting opportunities.

With the Quack slightly higher, as you would expect, much of tech ended slightly higher. This was enough to keep areas like Telecom and the Semis at or near new highs and it has areas like Drugs & Biotech rallying out of pullbacks.

True, some areas did get hit but in general, speculation is alive and well. Again, most tech was able to hang in there. IPOs had a great day. Even “camera on a stick*” (GPRO) rallied, gaining over 8% to close at all-time highs.

So what do we do? Nothing has changed. Now that we are seeing new setups we are looking to add on the long side. Again though, since we’re not in a rip roaring new bull leg just yet, continue to pick your spots carefully. Make sure you really like setup—the trend should be clean and strong. By “clean” I mean obvious. If the chart looks like an electrocardiogram then it is not in a trend. And, as usual, wait for an entry and then use a stop once triggered just in case.

Best of luck with your trading today!

Dave

*Phrase stolen from Doug Newberry at https://www.markettoolbox.tv/