Where Else Are You Going To Go?

Random Thoughts

When it’s the only game in town, you can’t keep a good market down. I really hate that “where else are you going to go?” argument but it looks like that’s the type of market that we are in. I suppose as a trend follower, I shouldn’t get too caught up in trying to justify the “why.” Either it is going up, down, or sideways. And, lately, the arrow has been pointing higher. I’m certainly not going to fight it.

The Ps (S&P 500) did a “do over” from Monday’s sell off. This action puts the index back to within spitting distance of all-time highs.

The Quack (Nasdaq) snapped back but didn’t completely erase all of Monday’s losses. Nevertheless, it still managed to tack on over ½%.

The Rusty (IWM) bounced back nearly 1 ¼%. This is good because it had dropped over 3% from Friday to Monday.

In the sectors, the Energies bounced a bit but so far, it only appears to be a dead cat bounce. Now, before you PETA types email me, just know that this is a 100-year old Wall Street phrase used to describe a market condition. Besides, no cats were harmed since he was dead to begin with and he was accidently dropped anyway. He had a long fulfilling life. He enjoyed his house much more than his owners. He would like to take long naps on the kitchen table after visiting the litter box. And, why is it okay to beat a dead horse but you can’t drop a dead cat? Did I digress? Oh, sorry, let’s look at some more areas.

Metals and Mining turned back down. This action puts them back to 5-year lows and is yet another testament as to why we do not bottom fish.

Most everything else is looking pretty good.

Defense, Computer Hardware, Computer Software, Durables, Non-Durables, Drugs, Semis, Foods, Health Services, Insurance, Leisure, Real Estate, Retail, and quite a few others remain in uptrends and at or near new highs.

I’d sure like to see the Rusty back at new highs but I guess you can’t have everything (and if you did, where would you put it, Wright?).

So what do we do? Don’t fight the tape. As long as the market and most sectors can remain at or near new highs the trend remains up and the buy side remains the side you want to be on. Since the market only “blipped” in its pullback, there’s not a tremendous amount of setups that were generated. We have a few on the radar but may end up having to wait for so called rolling corrections if the overall market continues to chug higher. As usual, regardless of what you do, just make sure you wait for entries and honor your stops just in case. I’d love a market of eternal sunshine but like the commercial with the older lady literally crushing the candy, “that’s not how it works.” In the meantime though, it’s the only game in town. Arrg. I can’t believe I said that.

Best of luck with your trading today!

Dave