Alright so we had a massive gap down at the start of the day (about 1%), but by the end of the day we hardly closed down at all. The action today you may be thought of as being bullish, it is in a way. I will explain.
It is bullish that we closed higher than the open on such a nasty gap down, however we are not out of the woods yet. We still have some potential for a further downside action but to get this downside action we would need to stay BELOW the highs of the today for more than today. This is something to watch in the coming days. I do not think that we should be uber bullish but then again being bearish is not working either. Let’s just wait it out until this wedge pattern tightens up a bit and we see where we go from here.
As you all know periods of expansion (past 2 days) lead to periods of contraction. Therefore in the next few days we will likely form a wedge to breakout from like we have seen a few times already this year.
Some individual names that look alright are as follows –
Apple showed some relative strength today and is something to watch in the next few days though the pattern is very choppy and not really giving a clean and clear move.
Google needs some time to build a new pattern but overall it is still in a strong trend but could use some tightening up first.
Banks also look pretty good day but then theme of this post remains the same, some tightening up is necessary if we are going to go blast higher again.
Keep a list of some strong names out there (I am). But I would be reluctant to buy too many names quite yet until some more charts tighten up a bit. There are some nice looking charts out there but overall the sectors as whole need some time. I will come back in once we set up more so across the board versus just one-two stocks that are setting up.
We will need to hold the low of today to keep the momentum in the upward fashion intact. As long as we hold that low we look as if we will continue higher. Something to watch. I am NOT calling the top, just simply saying take a break. Let’s see what happens.
Have a nice evening.