The market continues to perform well since IBD put it in a confirmed rally, holding all key levels. Buying dips has been working if you had the courage to trust this fickle market. Since Thursday's gap down, the S&P has climbed from a low of 1135 to today's high of 1220. That's an 85 point move! The volume in this move has been very light, however, and most if it can likely be attributed to a short squeeze. Whether or not this is a short squeeze or a confirmed rally, what we need to know is that we are coming into overbought territory with the oscillator climbing into the 70s. It is risky to chase longs after an extended 3-day move, yet shorting strength will be a tricky trade as we do not meet resistance until the 1250 level. This is a spot to sell some longs if you bought last week, or you can begin anticipating shorts, although it would be prudent to wait for higher prices before trying feelers. Let's take a look at a chart of the S&P...
The SPY are coming into overbought territory which means it is time to trim longs. There is minor resistance at the $123.50 level which is where the sell off accelerated. Today, we reached a high of $122.43, which means there is more room to run. New support levels are forming as we hold a gap above the $119 level. We can use $119.26 as a line in the sand if you are holding onto long positions. If we can continue moving with this strength, I would be a seller of all long positions as we reach $125.00. The SPY have been climbing higher on light volume the past few days. Expect a slow paced market this week as trading generally quiets before Holiday weekends.
Below are 5 charts from the Tech sector that indicate downtrends being broken to the upside. These show that there is strength among the 2011 market leaders, which is a very healthy sign for other stocks. Traders should look for a follow through day in the near futures but expect a few days of sideways action before moving higher.
For months, AAPL was weighed down by the uncertainty over Steve Jobs' health and futures with the company. Since the announcement lifted that cloud of uncertainty, it has traded with relative strength and is setup to trade back to all-time highs, which are only $15 away.
The SPY are coming into overbought territory which means it is time to trim longs. There is minor resistance at the $123.50 level which is where the sell off accelerated. Today, we reached a high of $122.43, which means there is more room to run. New support levels are forming as we hold a gap above the $119 level. We can use $119.26 as a line in the sand if you are holding onto long positions. If we can continue moving with this strength, I would be a seller of all long positions as we reach $125.00. The SPY have been climbing higher on light volume the past few days. Expect a slow paced market this week as trading generally quiets before Holiday weekends.
Below are 5 charts from the Tech sector that indicate downtrends being broken to the upside. These show that there is strength among the 2011 market leaders, which is a very healthy sign for other stocks. Traders should look for a follow through day in the near futures but expect a few days of sideways action before moving higher.
For months, AAPL was weighed down by the uncertainty over Steve Jobs' health and futures with the company. Since the announcement lifted that cloud of uncertainty, it has traded with relative strength and is setup to trade back to all-time highs, which are only $15 away.
BIDU put in a higher low after CCTV released its investigative report. Now it is breaking above a downtrend which should lead to higher prices.
AMZN has been a go-to for leading stocks during the first half of 2011. Now it is breaking above a steep downtrend channel and is only $15 points off its all-time highs.
GOOG is not acting as well as the other big cap tech names because of the depth of its pullback in August. However, this is a stock in one of the strongest sectors and the pattern should lead to higher prices.
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