Today’s failure to sell off further is a sign that this market is not as weak as some would like it to be. At the same time, the recovery leaves a lot to the imagination as volume was lower and we did not fully recover the Monday damage. Overall it was a solid session with many long signals triggered in our scans.
We have seven new long positions for Wednesday. This is either a signal that the market is healthy and wants to continue to rally here or it will be an ultimate fakeout. You can be sure that if these actionable signals fail, something more sinister is going to be around the corner in terms of price action. If these triggers work, more than likely we will be looking at a very bullish ending for the year.
All in all, while our model remains under a NEUTRAL condition, we still maintain a very long portfolio that will be quickly fully invested again once these new long positions are filled and if our Buy Stops get filled in the upcoming days. We are already long 3 of the 7 signals tonight as they hit our Buy Stops intraday. All 3 closed above where the orders were executed. A solid confirmation of the strength in today’s tape.
We continue to advise not to overthink this market. Low volume and illiquidity make it a dangerous tape to be heavily long but that is why Sell Stops exist. As long as you have hard Sell Stops on the books, you should be fine. This is a strong trending market still for bulls and until interest rates rise there really is no catalyst why this should not continue.
Our oscillators that we track are still overbought but are now quickly working off these conditions. Unfortunately, for those that want the market to immediately rally higher none of these oscillators are turning higher. They are all still trending significantly lower so further mixed trading should be expected despite the strong signals today.
Another positive for this market is the constant rotation. Today we noticed that the Homebuilders are setting up for some big moves across the board. On top of this, DRN triggered a Pocket Pivot Point signal. This leveraged bull RE play is currently in our Perfect Speculator scan giving confirmation to the strength in this industry group.
Alright everyone. Tuesday was a great rebound from the selling on Monday but until we close above the Monday HOD we are not out of the woods yet. Keep an open mind. Don’t be shy and take a free trial with us. Thank you. Aloha.
