The Ps continued to drift higher. Although they were up less than ¼%, it was enough to keep them at all-time highs.
Don’t get me wrong, new highs is a good thing. I just remain concerned about the continued wedging action in the Ps. Ideally, you want to see a market make new highs on vigor, not look back for a while, and then have an orderly correction. Rinse and repeat.
The Quack began to bounce back. On a net net basis, it hasn’t changed in over a week. Ideally, I’d like to see new highs on vigor here too.
Internally, I’m still seeing some corrective action in some individual issues. The action has the database producing setups.
Some areas that have been left for dead such as the Rare Earths, Gold, and Silver have been rallying nicely off of their lows. Keep an eye on these areas for transitional (i.e. early trend) patterns such as Bowties and First Thrusts. I have a feeling that a year from now, you’ll be thanking me—especially re: the Rare Earths. So, you’re welcome. My only concern is that the media has already picked up on the Rare Earth theme so we could have a false start or two.
Uranium has also been taking off and could provide new setups on pullbacks along the way.
So what do we do? The database is beginning to produce new setups but the overall market remains overbought. Therefore, it remains a dangerous environment to initiate new positions. As I preach, trading overbought environments can be damned if you do and damned if you don’t. If you don’t, they take off without you to become super duper overbought. And, if you do, they correct and take you out with them. Again, if you really really like a setup, then go for it. Just make sure that you wait for entries. As I preach (at the www.thechurchoftrendfollowing.com), sometimes this simply technique will keep you out of trouble.
Futures are firm pre-market.
Best of luck with your trading today!