The QQQQ created a nice bottoming tail over its 50-day average yesterday. This is a good start to end of the month buying. Now we are looking to see if tech can pull out of this first thrust pullback and make a higher high, which would indicate an uptrend is in tact. Right now it is best to interpret this as a ranging market however.
The reason why, we are not seeing a lot of follow through just yet. Stocks that promise to trend have been getting chopped up the same way they were early spring of last year. As such it's best to stay defensive and play the oversold bounces in areas that are ranging, such as the semiconductors, and don't get pulled in to breakouts, which have the potential to fail.
Understanding the type of market environment we are in will help you pick the correct strategy. If we see the QQQQ break firmly over $44.50 in the next week, then there will certainly be a plethora of strong long side set ups that will ensue. Until we see this happen though, it's best to bet against it and continue to focus on buying the dips and eshewing the breakouts.
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