It’s hard to write about how yesterday was a good day while watching a big red futures number blink.
The futures are getting creamed pre-market.
Let’s put that aside for a minute and look at yesterday.
The Ps (S&P 500) had a decent day, gaining nearly ½%. So far, their solid uptrend remains intact.
The Quack (Nasdaq) had a decent day too, gaining well over ½%. This action has it stabilizing right above its March peak.
The Rusty (IWM) was a disappointment. It ended up only a smidge. So far, it has taken on a double top appearance.
Now, let’s factor in the overnight action.
Again, the Ps are getting whacked. They will probably have around a 1% haircut on the open. This really isn’t that much in the bigger scheme of things—provided of course, that’s it.
This opening weakness would put the Quack back below its prior highs and would obviously keep the Rusty looking dubious.
Gold stocks, led by the Juniors (GDXJ) had a decent day yesterday. Ditto for Silver stocks. Again, I still think a major bottom remains in place (in the stocks) here. As usual though, take things one day at a time. It looks like these stocks are getting a bid pre-market.
I hate to use the world hope, but hopefully the opening gap will soon exhaust itself. If this so called opening gap reversal (or as I call them OGRes) occurs, it would actually be healthy for the market.
So what do we do? The sky is not falling, yet. Wait to see how things shake out. If we get an OGRe than that would be a positive. If the market drops and keeps on dropping then we will have to reevaluate the situation. As usual, take things one day at a time. As a trend follower, it is our goal to detect the trend, get on it, and then ride it as long as possible. Covel’s analogy of riding a bucking bronco is a good one. The ride can be a bumpy one. This doesn’t mean hold on at all cost. Let stops take you out of positions that aren’t working. He who fights and runs away lives to fight another day. If you played the Gold stocks, look to take partial profits as your targets are approached, especially if we see some reversal action in the overall market in early trading.
Best of luck with your trading today!