The rebound in the stock market today was a welcomed sign for bulls who witnessed their gains wilt in the face of the recent selling. We can nitpick with volume coming in lower, but all-in-all the price gains were pretty good. One thing we pointed out last night was the need to close above yesterday’s high and the stock market was able to accomplish the task. Housing data was released this morning was mixed. Mortgage applications fell while seasonally adjusted New Home sales jumped 18%. There were some positive moves in a few biotech names as well as some leaders. We are not going to suggest we are out of the woods just yet, but today was a step in the right direction.
A strong indication we may be out of the woods outside of the short-term oversold nature of McClellan is the move in Biotech stocks today. You can be sure there will be at least one new long from this group tonight. You will need to be a subscriber to get access. Biotechs had a tough time earlier this year and have been battling back. There is always opportunity if you are patient and follow a sound strategy. We will be looking to jump aboard this train and see if it can cough up some monster gains. One thing we will not lose sight of will be our exit strategy. Always important to cover your downside even if you think there is big potential in a name.
Yesterday we did mention two names potentially forming a bottom. Those two were FEYE and WAGE. Had you paid attention and saw the breakout you would have been able to get aboard the big move in WAGE today. WAGE is certainly showing accumultion over the last month and is now looking to surpass the most recent high from June. The stock did move quite a bit today, but given the overall pattern it is quite bullish.
Perhaps a slight disappointment was the Russell 2000 not being able to lead this market higher. Sure it is only one day, but given the lackluster performance this year by the index it would have been nice to see the index lead for once. Our job is to get on leaders and ride them hard until they signal their exits. We cannot force our trades and hope they go higher. If you try this approach it will only lead you to disaster and loss of your trading capital.
This market is looking up, but we are not out of the woods just yet. Another solid day like today alongside further positive action from leading stocks would be a welcome sign for this market. Until then, keep your exits in check and following Big Wave Trading.
