Today was the perfect couterpart to yesterday’s massive rally s my timing system got more bullish today even as the Nasdaq shed a few points. Sure the Nasdaq underperformed relative to the Dow, but that’s been the story for most of this rally and it’s going to be interesting to see whether the Dow lifts up the Nasdaq or the tech index drags down the Dow. I think what were seeing is money moving into different sectors and I wanted to talk about why I tossed the disk drive index off my watch list today.
This sector showed a lot of promise after the big breakout on the 28th. I like the multi-day consolidation and the day to initiate new positions in that sector would have been the test of the 200ema on the 15 minute. After the next move up each subsequent purchase becomes risky and one really should have taken some money off the table already and allow the positions to work by now.
The sharp and fast move down in the disk drive index was all I needed to see to toss this off my watchlist today. Anytime it reverses a big day’s gains is a red flag and it’s best to avoid that particular sector altogether. No new areas of strength showed up on my scans tonight.
