Without This There Is No Case

Random Thoughts

The Ps had a decent day on Friday, tacking on over 1/2%. This was a good thing since they showed follow through from Thursday’s big rally. Often, a market will have a “one and done” type of move.

Unfortunately, the futures are weak pre-market so it doesn’t look like we’ll get any follow through—at least in early trading. As I preach, follow through is key.

Thursday’s low remains an important inflection point. If that gets taken out, it could get ugly fast.

Take things one day at a time.

Back the chart out and you’ll see that the Ps haven’t made any forward progress in over 4 months.

The Quack also had a decent day. It tacked on over ¾%. This action puts it less than ¾% from multi-year highs.

Speaking of new highs, the Ps, based on Friday’s close, are just a little over 1 ¼% from all-time highs.

As a trend follower, I’m not going to argue with new highs. Follow through is key though—stop me if you’ve heard that before. So, without new highs, I don’t have a case.

So what do we do? I think the song remains the same. Keep an eye on Thursday’s low. If it gets taken out, then avoid the long side and seriously consider some shorts. On existing positions, you know the routine, honor your stops. Let the market prove you right or wrong (write that down). No matter what you do, I’d continue to be very selective while the market finds its way. Again, ideally, the issues should have recently demonstrated that they can defy gravity. Right now, I’m still seeing a few setups in selected foreign issues. On the short side, I think we could end up with a case of the bigger they are, the harder they fall. Therefore, keep an eye out for previous high fliers as they begin to fall from grace. No matter what you do, as usual, make sure you wait for entries.

Best of luck with your trading today!

Dave