The Wedge, Mr. Jimmy, & Burl Ives

Random Thoughts

The Ps remain in drift mode. On Tuesday, they ended slightly lower. This action keeps them “wedging” at high levels. The overbought condition combined with drift suggests that the market is due to correct. This isn’t a tradable pattern though. As recently mentioned, it’s a caution flag. Futures are up nicely so hopefully, all this talk is academic.

Ideally, I’d like to see the Ps ignore the wedge, blast higher, and then have an orderly correction. You can’t always get what you want (but if you try sometimes, you just might find, you get what you need). You take what you get and you don’t throw a fit (otherwise, you’ll end up looking like Mr. Jimmy-pretty ill..maybe a Mountain Dew or some other soda, possibly cherry red would help..but I digress).

The Quack was disappointing on Tuesday. It gapped higher but immediately reversed and sold off fairly hard, losing over ½% of its value. This isn’t the end of the world but it certainly has lost some momentum as of late. On a net net basis, it hasn’t made any progress in nearly 2 weeks.

Although the overall market looks a little questionable (for now), I am seeing some bright spots in some individual areas. Metals & Mining, especially the Rare Earths, continue to wake up. See yesterday’s newsletter. I’m pretty sure you’re going to thank me on that. If things don’t pan out (punny?), I’ll refund the cost of this newsletter.

I’m also seeing a bit of a “rolling correction” throughout the rest of the market. Certain individual stocks are pulling back and so far, looking like they have the potential to continue higher.

I hate to be cliché but given the overall conditions vs. internal conditions, I think we are in a stock picker’s market. Look to trade the best and forget about the rest. Also, if the aforementioned metals begin to set up, that would be awesome since they can often trade contra to the overall market.

So what do we do? Remain very selective on new setups and above all, make sure you wait for entries. This is especially true given the nature of the overall market. And, if triggered, you know the routine: honor your stops just in case.

Best of luck with your trading today!

Dave