Top 10 Report – October 23, 2019

Market Insight

The NASDAQ and S&P 500 have continued to make progress so far this week, albeit very little. Volume picked up on the NASDAQ, and depending on which service you use, either expanded or declined a little bit on the NYSE. Regardless, the distribution count is high, and most of the days are recent and tightly clustered on both exchanges. Yet, the major indexes are all still trading comfortably above their key moving averages, even the small-cap Russell 2000.

Heavy pressure remains on many prior leaders in the software sector, particularly cloud related names, like NOW, PAYC and TWLO, just to name a few. These stocks as well as many others in the group that have had huge runs over the last few years are likely to see much lower prices from here.

However, the number of constructive bases forming in the retail, medial/biotech, building/related, semiconductor and other technology groups continues to expand. This is what healthy rotation among the market’s leadership looks like.

So, continue to keep track of the strongest stocks in the strongest groups, with superior fundamentals. Set your alerts and be ready to initiate some long exposure, as entry areas present themselves.

Remember, is very important to have a clear understanding of what type, or style of trader you are. For example, traders looking to ultimately build just a few large, concentrated long positions will likely find that cash will be their best bet when the general market is in a corrective/digestive phase and high volatility is par for the course, like it has been over the last couple months. On the other hand, there are swing and day traders out there that thrive in this sort of environment and hence, have been very active.

The Indicies

The NASDAQ has continued to make progress towards all-time highs so far this week, albeit very little. Also, it is struggling to get through its next area of significant resistance and has continued to add further distribution along the way, which is not constructive.

The small-cap Russell 2000 continued to make progress above its moving averages so far this week and was the only major index to finish yesterday’s session in the black.

The S&P 500 has continued to make progress towards all-time highs so far this week, however little, and it still has significant overhead resistance to deal with immediately above its current level.

The DOW has actually drifted slightly lower over the last few days, although it is still holding up well above its major moving averages.

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October 23, 2019

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