Not A Market For Monkeys

Random Thoughts

The Ps started weak but they soon found their low and then recovered to close well on the day. It was good to see buyers step up to the plate on the dip but this doesn’t change much longer-term. As I’ve been saying, on a net net basis, they haven’t made any forward progress in over 4 months. They also have triple peaks-May/August/September-to deal with. A few big up days would make all the difference in the world. Unfortunately, just the opposite would have the market looking a little ominous.

Speaking of Ominous, I don’t focus too much on the Dow but I do occasionally take a peek. It is looking a little toppy in here. The triple tops are much better defined than in the Ps. Also, its lack of forward progress is even more obvious than the Ps. And, for those keeping score, it has been below its 50-day moving average for nearly a week.

CHART SHOW TODAY at 11:00 AM Eastern. The password is the first word on page 155 of Layman’s. To sign up, click here.

The Nasquack also dipped but recovered to close flat on the day. It continues to look much better than the most other indices. It is a gnat’s eyelash below multi-year highs.

I hate to read too much into what turned out to be a flat day basis the Ps and Quack. Not much has changed. Technology, like the Quack itself, still looks pretty good. Areas such as Dugs, Biotech, Internet, and the Semis remain at or near new highs.

Outside of tech, there are still quite a few areas that are at or near new highs such as selected Energies, Hospitals, Selected Health Services, Diversified Services, and Selected Media, to name a few.

So what do we do? Nothing has changed just yet: As long as the market continues to hang in there, I would avoid putting on any new shorts. There is no need to be a hero unless the market shows signs of cracking. On the long side, I’d continue to focus mostly on tech. You have to pick your spots very carefully. This is not a market where the proverbial “stock picking monkey” can beat the market. Again, make sure your stock is in a solid uptrend or making a serious transition to an uptrend. Ideally, the trend should be a persistent and accelerating one. The stock should trade cleanly. If it looks like an electrocardiogram then fuggetaboutit. One the trend/transition in trend is identified, make sure you have a setup. Right now I’m seeing a few Trend Knockouts (TKOs)—email me if you need the pattern. Above all, wait for entries. As I preach, that in and of itself can often keep you out of trouble. We have had numerous stocks lately on the radar fail but also fail to trigger. Dodging as many bullets as possible is a crucial part of successful trend trading. Above all, honor your stops on new and existing positions just in case the market fails to follow through.
If you are not busy saving lives, building buildings, repairing automatic transmissions, or doing other great things, then come to the chart show today! I’m going to flesh all of the above out in detail.

Futures are flat pre market.

Best of luck with your trading today!

Dave