Friday was the fourth day of the rally attempt that began on 8/6. The NASDAQ and S&P 500 were both rejected at their 50-DMA’s, despite closing above this key moving average the session prior. However, today’s pullback came on lighter volume across the board, which is constructive.
More importantly, high quality, growth stocks held up much better than the general market while it was plummeting last week and continued to build constructive bases as the general market rallied back this week.
Ideally, a follow-through day should occur on days 4-7 of an attempted rally and this coming Monday will be the fifth day of the current rally attempt. So, we will be on the lookout for a follow-through day to occur this week.
In the meantime, continue to keep track of the strongest stocks in the strongest groups, with the best fundamentals. The first of these stocks to break out when the market follows through, often become some of the most powerful leaders of the ensuing move higher. So, make your lists, set your alerts and wait patiently for the market to follow-through on its current rally attempt.
IMPORTANT: During earnings season, it is critical to check and recheck when a company is due to report earnings before initiating a position in their stock. These dates change and often at the last minute, so be careful.
The NASDAQ reclaimed its 50-DMA last Thursday, but fell back below on Friday, although volume declined, which is constructive.
The Russell 2000 reclaimed its 200-DMA last Thursday, but fell back below this key, long-term moving average on Friday, although volume declined which is a positive.
The S&P 500 reclaimed its 50-DMA last Thursday, but fell back below on Friday, although volume declined on the NYSE, which is constructive.
The DOW found support at its 200-DMA and rallied last week, although it didn’t reclaim its 50-DMA with the NASDAQ and S&P 500 last Thursday and ended the week below this key moving average.
Buy PINS on a big volume move through $35.21, with a sell stop at $32.25. (Price Alert: $35.21)