It’s Okay When Pigs Fly–Just Have A Chair

Random Thoughts

The Ps ended down a smidge on Tuesday. So far, they remain near all-time highs. Although they are still overbought, each day that they can stay at or near these levels will help to alleviate that condition. See recent commentaries and last week’s webcast about high level “V” shaped recoveries.

The Quack also ended down a tiny bit on Tuesday. So far, it remains just below multi-year highs. It too remains overbought but the longer it can hold these high levels, the better (obviously).

You know me, I like to dig a little deeper vs. taking what’s on the surface at face value. With that said:

Biotech accelerated nicely to new highs, gaining over 1 ¾%. The lower tier stocks here have been on fire. Yes, it might be a case of “when pigs begin to fly” but I’m not complaining. This is why we take partial profits and trail stops.

Drugs overall weren’t nearly as impressive but they still managed to close at new highs.

Retail came back strongly. This action has it pushing into overhead resistance. I wouldn’t rush out and buy here but it certainly is a positive development—the more sectors that support the market, the better.

Gold the commodity continued higher as the Gold stocks took a breather. Nevertheless, (again) I still think the mother of all bottoms is in place here. And yes, like Biotech, quite a few pigs are beginning to fly here.

Speaking of metals, Uranium took off on Tuesday. You’re welcome! Those who unsubscribed from my newsletter were right:  my free column is good for nothing.

Banks stalled a little in their retrace rallies.

Stronger area of technology such as Software, Internet, and the Semis pulled back a bit on Tuesday but so far, it appears to be just that.

Again, overall, Tuesday was a little better than the Ps and Quack would suggest. I know this because I dug through a couple thousand stocks and couple hundred sectors. I suppose this is no shocker when you look at the broad based Rusty (IWM). It actually ended slightly higher.

So what do we do? I’m still not seeing a tremendous amount of setups on the long side since the methodology requires a pullback. Conversely, I’m still not seeing many meaningful setups on the short side either because the market has gone up too many days (too many days in the pullback). Also, you really don’t want to fight the tape anyway. I am seeing some setups in the aforementioned lower tiered stocks in the Golds and Biotech. Just make sure you use proper money and position management. Take partial profits as offered and make sure you have a chair ready for when the music stops—trail your stops as offered.

Futures are flat to firm pre-market.

Best of luck with your trading today!

Dave