1. General Market
Markets closed the week on a green note which is encouraging. The DIA is the first of the 4 major indices to break through all key moving averages. QQQ on the other hand is lagging as it is still looking to clear the 50 DMA resistance. That said, the strongest indices look rather extended, some form of pullback and consolidation before a move higher would be healthy.
Weekly Performance:
SPY 3.94%
QQQ 2.11%
DIA 5.69%
IWM 6.06%
2. Sectors
Many sectors ripped higher on the right side of its bottoming base and more sectors look to be transitioning from Stage 4 downtrends to Stage 1 accumulation. This is encouraging and an indication of a potential bottoming process underway. That said, a few more days of consolidation before a move higher will be ideal. At this point, biotech, healthcare, insurance, financials, and growth stocks look really strong. Our market model in QQQ has also flipped to buy on Friday. TQQQ, LABU, and CURE looks actionable if it can manage to consolidate + hold gains before heading higher.
3. Industry Groups
Notable industry groups are (1) Retail/Whlsle – Auto Parts (up 24 spots, G5013), (2) Finance – Invest Bnk/Bkrs (up 22 spots, G8073), and (3) Consumer Svcs – Education (up 23 spots, G8240). Diving deeper into these groups, the strongest stocks look quite extended, thus building the case that more consolidation/pause is needed before we move higher.
4. Individual Stocks
Definitely notice a lot more stocks showing up on my screens now. However, many looking quite extended. My best bet this week going forward is to be patient and observe price action. Of note, CLH, WING, BIIB, and REGN has caught my eye.
5. Plan This Week
Given that we are still at the heart of earnings season, many stocks looking a little extended, and with major ECO events coming up, the best plan at this point is to be selective when opening any new positions. It pays to wait for stock setups to come to you. Risk this week is definitely elevated amidst the current counter-trend rally taking place so it pays to be more conservative. If this is indeed the market bottom that plays out like the 1963 market precedent, there will be plenty of time to identify market leaders and ride those trends for the next 7-9 quarters.
Disclaimer: This post is not to be misconstrued as financial advice but for educational and informational purposes ONLY. Please do your own due diligence and exercise risk management.