Top 10 Report – January 29, 2020

Market Insight

On Monday, the major indexes gapped lower and sold off on heavy volume, following through on last Friday’s heavy volume selling, which was largely triggered by fears of the spreading Coronavirus.

Yesterday, the major indexes rallied back powerfully across the board. The NASDAQ and S&P 500 filled their gaps from Monday and reclaimed their 21-DMA’s, although volume declined from the day before, which is less than ideal.

The distribution count now stands at 4 days on the S&P 500 and 2 days on the NASDAQ, which is still far from concerning levels.

Continue to pay close attention to how rotation takes shape and focus on the strongest names in the strongest groups, with the best fundamentals. These are the stocks you ultimately want to own and be concentrated in.

Keep your emotions in check, stick to your rules and your plan and wait for the perfect setup and entry to develop, or do not trade. Remember, “buying right” is your best defense.

The Indicies

On Monday, the NASDAQ gapped down and sold off, following through on last Friday’s weakness. However, it rallied back powerfully yesterday, filled Monday’s gap and reclaimed its 21-DMA with feeling, yet volume declined which is less than ideal.

The small-cap Russell 2000 was the only major index to close below its 50-DMA on Monday and its rally back yesterday was by far the weakest of the four, maintaining its status as the laggard of the bunch.

On Monday, the S&P 500 gapped down and sold off, following through on last Friday’s weakness. However, it rallied back powerfully yesterday, filled Monday’s gap and reclaimed its 21-DMA with feeling, yet volume declined which is less than ideal.

On Monday, the DOW gapped down and sold off, following through on last Friday’s weakness. However, yesterday’s rally didn’t quite fill Monday’s gap and failed to reclaim its 21-DMA, not to mention volume declined, which was clearly much weaker action than we saw on the NASDAQ and S&P 500.



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January 28, 2020

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