The action on the major indexes has been nothing short of disappointing since the NASDAQ followed through last Tuesday. As we discussed in the last report, when a distribution day immediately supersedes a follow-through day like we saw last week, there is about a 95% chance it will fail. So far, the current rally attempt remains intact, although volume has been weak as the market has rallied back over the last few days, which doesn’t inspire much confidence.
At the end of the day however, there is no better indication of the general market’s direction than the action of its leadership. Fortunately, there has been no shortage of high-quality growth stocks that have continued to exhibit strength and resilience and there are plenty of sound bases forming across the market’s broad-based leadership.
So, continue to keep track of the strongest stocks in the strongest groups, with the best fundamentals. Set your alerts and continue building long positions as entry areas present themselves.
The NASDAQ’s most recent rally attempt remains intact, but under pressure and it continues to trade below its 50-DMA, which is not ideal.
The Russell 2000 has rallied with the other major indexes over thew last few days, but it’s the only index that is still trading below its long-term 200-DMA.
The S&P 500 has rallied back from last week’s heavy volume break on light and declining volume and continues to trade below its 50-DMA, which is not considered constructive action.
The DOW rallied back with the other major indexes over the last few days, but is trading further below its 50-DMA than the NASDAQ or S&P 500.
Buy IONS on a constructive pullback to $69.45, with a sell stop at its 200-DMA.