Stocks: The Good, The Bad, And The Ugly

Random Thoughts

The Ps had a decent day. They tacked on over ½%. This action keeps them at all-time highs.

It was mostly a big cap party but the Quack did manage to end up 1/3%. And, this is enough to keep it at multi-year highs.

The Rusty came in third with a little over ¼% gain. This was enough to keep it at all-time highs—albeit barely.

Let’s look at the good:

Like the indices, most areas remain at or near new highs. Consumer Non-Durables, Consumer Durables, Drugs, Energy, and Leisure to name a few. Areas at lower levels such at Metals & Mining continue to improve.

The Transports also ended at new highs.

Foreign shares (EFA) remain in a solid uptrend.

The Bad:

The Quack and Rusty have lost a little steam. They haven’t made much progress over the last week or so.

The Ugly:

There continue to be quite a few debacle de jours. SANM and DAN are the latest victims. See recent columns for others.

Prognosis [Not] Negative (My favorite Hugh Jackman movie ever!):

As I preach, you have to put together the clues and weigh the evidence. As you can see from the above, the good outweighs the bad and the ugly. You have to be careful not to fight the trend but you certainly don’t want to become to euphoric and ignore the warning signs as they present themselves.

So what do we do? Even though there is some bad and ugly, not much has changed just yet: I’m still seeing some setups in trending stocks that have pulled back. These include areas such as Solar/Alternate Energies, Energy-Oil, Metals & Mining, Internet, Hardware, and Drugs. Therefore, continue to look to add/add back on the long side. As usual, make sure you wait for entries. As I preach, this, in and of itself, can often keep you out of new trouble. Continue putting together your momentum watch lists (or pay me to do it for you). Stocks like QTWW should be on that list–I’ll do a Youtube soon on how to create momentum list. Once again, as long as the market remains near new highs, I would avoid the short side for now. Regardless of what you do, make sure you honor your stops once triggered

Futures are firm pre-market.

Best of luck with your trading today!

Dave