Here’s What’s Happening With Stocks: The Good, The Bad, And The Ugly

Random Thoughts

Take things one day at time. That’s good advice for life and even better advice for the markets, especially when they remain stuck in a range.

Let’s look at the scoreboard.

The Ps lost a little over ½%. The action keeps them in the middle of a sideways range, just about where they were last November. Although the arrow points sideways, they’re still less than 2% away from all-time highs. That’s nice but you still have to get there though.

The Quack (Nasdaq) managed to eke out a small gain. It too remains range bound but is just over 1% away from 14-year highs.

The Rusty (IWM) ended flat on the day. It also remains in a range. Longer-term it remains wide-and-loose. On a net net basis, it is trading around where it was a year ago.

The sector action is a little mixed. There’s some good, some bad, and some ugly.

Drugs managed to close at new highs. Biotech here had a decent day, up ½%, and isn’t too far behind.

A lot of areas remain stuck in a high level range, like the market itself. This includes but not limited to the Semis, Hardware, and Software.

Telecom has been waking up as of late.

Although Gold and Silver stocks ended lower on Friday, I still think a bottom remains in place here. In fact, this pullback is actually a buying opportunity. Do wait for entries though just in case.

Some of the bigger cap areas like Conglomerates, Consumer Non-Durables, and Durables turned down on Friday. Durables were hit the hardest, losing over 1 ½%. Although it’s too soon to call a top here, they do appear to be topping. A few big up days would fix this. Remain cautious here until/unless that happens.

The Trannys had the mother of all rallies on Thursday but gave up over 1 ¾% of those gains on Friday. This action has them stalling right at new highs.

Banks still look dubious. They rallied nicely on Thursday but turned back down on Friday. So far, they remain in a choppy downtrend. Should they begin to break down in earnest it could get ugly since they have a long ways to go. Take a look at a weekly chart here and you’ll get the picture.

Financials basis the XLF have formed a Bowtie down after just hitting multi-year highs. This is not a good thing. Ideally, I’d like to see it rally to negate this signal.

I think it is safe to say that things are a little mixed out there. Like the three blind men feeling different parts of an elephant, I think you can make a good case for up or down, depending on where you stand.

Don’t think too much. Act even less. Let things unfold. Paraphrasing Livermore, those players who feel that they must be in the market every day are building the base for your next venture. Well said Jessie. Let ‘em fight it out.

So what do we do? I preach about picking your spots carefully (it’s too bad there isn’t an in-depth course on stock selection, wait, there is! Click here). This is especially true while the market is stuck in a range. I know it’s cliché but right now it’s more of a market of stocks than a stock market. Be picky. Focus the strongest areas and the strongest stocks within those areas. Also, keep an eye out on emerging trends from low levels like the Golds and Silvers. For the most part though, “let ‘em fight it out.” If you trade too much during this range, like Alanis Morissette, you’ll look back and think, Dave had some good advice that I just didn’t take. Isn’t that ironic? Don’t you think? But I digress—thank goodness I had the foresight to name this column “Random Thoughts.” If you do really like setup just heed my daily mantra of waiting for entries and honoring your stops once triggered.

Here is last week’s Dave Landry’s The Week In Charts:

 

Best of luck with your trading today!

Dave