When we left off way last Thursday I was talking about the “pause that refreshes.” Markets have a big up day, take a day to consolidate their gains, and then have another big up day. And, that’s exactly what happened. It doesn’t always work this way so don’t rush out to trade it.
It is pretty cool when it does work though.
After a flat day, the Ps (S&P 500) tacked on an additional ½% plus. This is enough to keep it at all-time highs.
Ditto for the Quack (Nasdaq).
The Rusty (IWM) is a slightly different pattern. It sold off last Wednesday but did make back most of those losses last Thursday. It is just shy of all-time highs.
Metals & Mining blasted higher. The entire sector is now breaking out. Gold, which had been leading, actually ended lower on the day. So far, a big picture bottom appears to remain in place in Gold and Silver. I think you might thank me on that one. We’ll see! We could see setups in the other areas here on a pullback.
The internals look good. Banks, Insurance, Finance, and Transports made new highs.
Health Service made new highs. But Dave, what about Obamacare!?! Well, what about the situation in Nigeria?
I was once giving a seminar showing how bearish I was on oil stocks. Someone in the audience says very emphatically (in a Henry Kissinger type of voice) “What about the situation in Nigeria!” My reply was: what about the situation in Nigeria, with “so what” implied. The gentleman then proceeded to tell me all about the situation in Nigeria, and how it could make oil prices rise. Anyway, the stocks went down as the charts suggested in spite of the situation in Nigeria. I’m not always right (if I was, you’d never see my fat ass again), but more often than not it pays to ignore the news when trading. Trying to factor in news is an exercise in futility.
I need some new stories.
So what do we do? Things continue to shape up. I’d feel a lot better if the Rusty would break out but you can’t have everything (and if you did, where would you put it, Wright?). With the indices and many sectors at or near new highs, I don’t see any reason to fight the tape. Therefore, again, continue to focus on the long side. Unfortunately, I’m still not seeing a tremendous amount of setups just yet. Again, this is normal since the methodology requires a pullback. In the meantime, I still think Gold & Silver stocks look like they have the potential to make a new leg higher.
Best of luck with your trading today!
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