A positive for this market was today’s session not following through to the downside. Despite crude oil falling back towards Friday’s low the energy sector led the S&P 500 higher during Tuesday’s session. Rebounding in a big way was the Russell 2000 regaining over 14 points out of the 19 it lost during Monday’s trading session. Not a bad session following up the session prior to where we saw a lot of leading stocks take it on the chin. It is too early to tell if the sellers have been already washed out. It is steady as she goes.
Biotech stocks are no once again appearing to be a leading industry. It is no secret the ALXN breakout was a nice one, but there are others lurking to repeat the same pattern. One in particular we have eyed for a buy stop candidate. You have to subscribe to take advantage of these potential monster stocks!
We still remain elevated in terms of being overbought. One day does not count as consolidation. If we take out Monday’s high it will be chalked up as a simple pause in an uptrend. Those who employ cycle theory have noted this week was going to be potentially negative for those who are long. The key difference to cycle theorist and trend followers is quite simple. Trend Followers do not try and predict the next move. They simply ride the wave and get off when there is an indication of a trend change. On the other hand, those who employ cicles are trying to predict the next move. Regardless, having a plan of attack by cutting losses you will be well ahead of the game.
As far as economic news goes we will continue to see more items hit the newswires. Friday tops it off with the Jobs report for the month of November.
Lastly, keep an eye on high yeild debt. HYG and JNK have had some issues as of late despite rebounding during Tuesday’s session. Some believe high yield bonds are typically canaries in coal mines and will foreshadow how the equity markets will react. Stay tuned.
Remember, cut those losses short.
