The column/newsletter & Market in a Minute will resume on Wednesday 03/05/14. In a nutshell, the market sold off a bit but not nearly as bad as the rest of the world. So far, I view the move as nothing more than a needed correction. I still like the Gold and Silver stocks–jut wait for entries. Biotech is also setting up.
No new column today, (Monday, 03/03/14). In a nutshell, the indices are in an upward drift and remain overbought. I still like Gold and Silver stocks.
The Ps had a decent day, tacking on nearly ½%. This is enough to put them at all-time highs. I’m still concerned about how we got here in a sharp “V” type of manner but I’m not complaining.
The Rusty put in a similar performance—enough to keep it at all-time highs too. Like the Ps, it also has the high level “V” shaped recovery look.
The Quack gained well over ½%. This is enough to keep it at multi-year highs. It has the “V” shape here too except with a recent upward drift.
In an ideal world, the market would just go up. Unfortunately, that’s not how it works. Price makes a move and then the gains need to be digested. When a market corrects slightly from a run up or trades sideways, it helps the market adjust to its new price levels. I spent a lot of time talking about equilibrium and disequilibrium in Thursday’s chart show. Rather than spending a lot of time explaining this here, I’m giving the recordings out for free. You’re welcome. Go here to watch.
My point is that buying into overbought is usually a risky venture. This is one of the reasons that I am a pullback player. I like to see the weak hands shaken out of a trend and then I look to get in.
Before I digress too far, let’s a take a look at some sectors.
The Semis, Software, Drugs, Biotech, and selected other tech ended higher and remain in solid uptrends. We will likely see setups here on the next pullback.
Recently weaker areas such as Manufacturing and Retail have been coming back with a vengeance. They appear to be completing their “V” to return to their old highs.
Gold and Silver were flat. That’s okay though. They still look poised to make a new leg higher from their recent pullback. I still think the mother of all bottoms in place here. With commodity related areas, it will likely be a bumpy ride higher. We got knocked out of one yesterday-watch the chart show if you weren’t there for more details. As mentioned yesterday, if you missed the first run here (or got knocked out), here’s your second chance to get onboard.
So what do we do? I’m not complaining about the fact that the market is at new highs. Again, I just don’t like how we got here. I’d really hate to buy in with new positions at this juncture. So, other than Gold and Silver, I’d avoid the long side and let things continue to unfold. The good thing is, I’m not seeing a whole lot of setups (other than Silver and Gold) since the methodology requires a pullback. I’d avoid the short side. Don’t fight the tape. Yes, the market remains overbought but that, in and of itself, isn’t reason enough to short. Regardless of what you do, as usual, wait for entries, honor your stops, and trail your stops higher/take partial profits as offered.
Futures are flat pre-market (I’m publishing a little early today so that’s likely to change).
Best of luck with your trading today!
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