New Highs On The Horizon

Random Thoughts

You have to be careful not to chase your own tail when a market is hovering around new highs.

Thursday was ugly but Friday was a do over for the Ps and Rusty.

The Quack snapped back nicely too but didn’t quite erase all of Thursday’s losses. Still, over a 1 ½% gain is nothing to sneeze at.

As I said on Friday morning: “…if, and that’s a big if, the market rallies an takes out Thursday’s high, I think it would be off to the races. It would suggest that Thursday’s action was just a shakeout/fakeout. In fact, I’m seeing buy setups in the Q shares. They have a Double Top Knockout look to them (email me if you need the pattern).”

Errata-On Friday I wrote “inverse Q shares.” I meant to write “leveraged.” I know, big difference.

Considering the above, now that the shakeout/fakeout is behind us, I think this we could be seeing new highs on the horizon. You know the routine though, take things one-day-at-a-time.

Internally, the market looked pretty good. I suppose this is no big shocker with the Rusty up over 1 ¾%. Most all areas bounced back nicely. Insurance and Regional Banks banged out new highs. Stronger areas that have slid recently such as Transports, Retail, and Leisure bounced back strongly and now appear to have only pulled back.

Bonds did implode though. Over the intermediate-term, they remain in a sideways range. Let’s hope they stay there for a while—i.e. rates stay stable.

So what do we do? Surprisingly, I’m still not seeing a whole lot of new meaningful setups. As I have been saying, this is probably a good thing. This could be the database telling us to continue to let things shake out a bit. On existing positions, as usual, honor your stops. As I’ve been discussing, stops can help to adjust your portfolio. If we continue higher, the shorts will stop out and all your are left with is longs. And, unfortunately, vice versa.

Futures are flat to firm pre-market.

Best of luck with your trading today!

Dave