The major indexes rolled over and sold off sharply on very heavy volume last week. As of last Friday’s close, it appears as if the NASDAQ, S&P 500 and DOW are trying to find support in and around their 50-DMA’s/65-EMA’s. The Russell 2000 however, continued to lag badly. Its breakout attempt last Wednesday failed and by the close last Friday, it had broken below its 50-DMA/65-EMA, but managed to find support just slightly above its 200-DMA.
The distribution count rose to 5 days on the NASDAQ and 6 days S&P 500. This is a relatively high count, although the larger concern is the cluster of distribution that has appeared over the last week or so.
Despite last week’s sharp drop on the major indexes, quite a few of the market’s leading growth stocks exhibited noticeable strength and resilience. Continue to keep track of the strongest stocks in the strongest groups, with the best fundamentals. Set your alerts and be prepared to buy these stocks as they emerge from constructive bases on heavy volume, assuming the major indexes continue to establish support above their 50-DMA’s/65-EMA’s. Otherwise, minimize exposure until there is clear evidence that the market is back under accumulation again.
IMPORTANT: Earnings season is in full swing, so it is critical to check and recheck when a company is due to report earnings before initiating a position in their stock. These dates can change and often at the last minute, so be careful.
The NASDAQ broke below its short-term uptrend line and moving averages on very heavy volume over the prior three sessions and added two more distribution days to its count. However, it is trying to pick up support at its 50-DMA/65-EMA, which is a positive.
The Russell 2000’s breakout attempt failed last Wednesday. The small-cap index then proceeded to sell off on heavy volume and end the week back below its 5o-DMA/65-EMA.
The S&P 500 broke below its short-term uptrend line and moving averages on very heavy volume over the prior three sessions and added two more distribution days to its count. However, it is trying to pick up support at its 50-DMA/65-EMA, which is a positive.
The DOW broke sharply below all of its moving averages except for its 200-DMA on very heavy volume last week and then barely managed to close back above its 50-DMA on Friday.
Buy PINS on a big volume move through $35.29, with a sell stop at $32.25. (Price Alert: $35.29)