Listen To This While Waiting On Follow Through

Random Thoughts

The Ps (S&P 500) bounced back nicely on Friday, gaining just over 1%. This action puts them within spitting distance of all-time highs. Although they have been sideways as of late, I’m certainly not going to argue with all-time highs.

The Quack (Nasdaq) bounced back nicely too. It gained just over 1 ½%. This action puts it back above its March peak and less than 1 ¼% away from decade plus highs.

Although the Rusty (IWM) also had a decent day, gaining over 1 ½% too, it still looks questionable. So far, a bigger picture double top remains in place here. Also, a Bowtie down could form soon. And, so far, it appears that its sell off out of a First Thrust remains intact (see recent columns). Ideally, I’d like to see it go shooting right back up. Until/unless that happens, I’d remain cautious here.

As you would expect with the indices doing so well, most sectors had a decent day. In many cases though, it was a little too little and a little too late.

Biotech came back strongly, gaining over 3%. Unfortunately, it still looks questionable after recently stalling short of its prior major high.

Drugs overall gained nearly 2%. So far, a double top remains in place here. However, a few more days like Friday would cure this problem.

The Semis bounced back nicely, gaining nearly 1 ¼%. They have been mostly sideways as of late but aren’t too far away from new highs.

Speaking of new highs, the Trannys mounted a decent comeback and managed to close at all-time highs.

The REITS banged out new highs with a vengeance. I’m having a hard time getting excited about Real Estate as a momentum play but as a trend guy, I might get forced in.

Gold and Silver ended down a smidge but well off their worst levels. I still think a bottom remains in place here. Unfortunately, it is not going to be a rout higher.

The rest of the Metals & Mining ended higher with Aluminum leading the way. It closed at multi-year highs and remains in a solid uptrend.

Energies bounced. Longer-term they remain in an uptrend but shorter-term they haven’t made any forward progress over the last 3-4 weeks.

So what do we do? It was good to see the market bounce. The question now becomes now what? As usual, follow through will be key. This isn’t that big of a feat for the Quack and Ps since they aren’t too far away from new all-time/multi-year highs respectively. It’s the Rusty and much of the rest of the market that has its work cut out for them. These areas will have to mount serious rallies in order to make new highs. One good day is a good thing, but so far, it’s just one good day. I’m still not seeing a tremendous amount of new setups. As I preach, listening to the database is key. And right now, it is saying not to do too much. I still like Gold & Silver. Just remember that commodity related stocks can make for a bumpy ride. As usual, continue to let the portfolio ebb and flow make adjustments automatically for you. Let stops take you out of positions that no longer have potential and entries trigger you in the ones that might. Also, as usual and especially in questionable conditions, make sure you really really like a setup. Sometimes the best new action is no new action. Let everyone else fight it out.

Best of luck with your trading today!

Dave