Another strong week for the Bulls, piling another 214 points onto the Dow and breaking through that 1060 SPX barrier. Our sentiment indicators that we watch as part of the TTTHedge.com trading group are still very strong and momentum is still in the Bulls side of the column. There was some weakening over the last two trading days with our 52 Week High (52WH) indicators coming in particularly weaker on Friday’s trading day.
Last week the RUT was our concern and needed to buck-up to the task in order convince me that this Bull had the fortitude to continue their run and it they did an admirable job, putting in 3 days of higher New Highs with a slight fall off on Friday. But what the RUT giveth the NYSE takes away, and today the NYSE is our concern having peaked its New Highs on Wednesday and now downhill since, perhaps just a little digestion, but one of our momentum indicators has switched from Bull to neutral on the NYSE New Highs. Worth watching next week. You can follow our new high data on our Twitter data feed all week long. Watch for strengthening or continued weakening day to day.
My best guess for the up-coming week is a sideways consolidation and some weaker attempts at putting in new highs, which should begin to signal a topping pattern here. Again any geo-political news could send us down as panic buying turns into panic selling. The good news for you bears out there is that the ADHD financial news cycle has moved from “when is the inevitable correction happening” to “10,000 Dow is now in the books”. Perhaps while everyone is looking for Dow to roll into that next digit the market will begin to correct.
So I am calling for a “Crew Cut” week here like we have had a couple of times already in this rally. A sideways action with the highs of the day attempting new highs and then selling leaving little stubby hairs. So my trading plan for the week will be to scalp from both ends when the setup seems right, using the A/D lines to define the direction for the trades. I am also looking to find stocks that are ready to break up or break-down. Last week I started adding a few more shorts than long, there are plenty of good short setups now, and I did very well despite my hatred for OPEX week. If we go into this sideways correction, good stock picking can help you out perform the market.
In our trading room this week we had some terrific calls. On Thursday we released a Zweig sell signal with a historically high overbought Zweig that had sold off from that level about 90% of the time. We may get another one in 5 to 10 years so quite rare. On Friday, Tom brilliantly shorted the open filling our coffers with plenty of loot first thing and the day just became more profitable all day long, closing out our portfolios with $6.7K of profit for the day and positioned short for Monday’s open with some strategic long hedges.
Have a profitable trading week and I hope to see you in the Markets.
Marlin – aka: redliontrader
http://redliontrader.com
http://TTThedge.com
Twitter: http://Twitter.com/Redliontrader
