Friday could be one of those landmark days that mark the end of this recent rally, and it’s sad that it took the protests in Egypt to be the catalyst for a sell-off. If we follow through and all three of the major indexes fall below the middle keltner channel, it will be a major bearish sign, especially given the size of the candlestick on the daily Nasdaq chart. Unless you were quick enough to get short intraday on Friday, I think it’s prudent to wait for continued weakness to initial short positions.
If you want to go long here be very selective about your stock picking and only buy the strongest charts. A few that showed up on my scans that look the best and have been big earnings winner this week are COHR, TNAV, and HP.
Market video at the end of this post.
When you look at an extended view of the Nasdaq, Friday’s sell-off doesn’t appear to be that bad. We’re still above the 50ema and well above the 200ema, where long term investors traditionally bail.
The VIX broke out of it’s recent channel and I would expect it to retest the 19 area before potentially moving higher. Note the bullish RSI action as it stayed between the 40-80 area primarily this entire consolidation move. The key is it didn’t close below the 30 level indication it had support.
Multi-month lows in the percentage of stocks above their 50ema on the Nasdaq. Market internals are definitely suggesting this market wants to go down.
I wanted to point out that the trade signals on the first chart within the video below are in weekly mode, and that they have daily (daytraders) and monthly (investors) signals as well. It really comes down to a preference. I find that the weekly are a nice swing trade and I’m in the process of incorporating them into a longer time frame strategy that I’ll be sharing in the future on my fanpage.
If you’d like to test drive this software to learn if these timing signals can help you in your market timing, or your individual stock selection, click here for a 30day free trial. MarketClub covers essentially any market you can possibly want to trade, but if you have any questions email me at tradewithzen@gmail.com
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